GRAYSON CO., Va. – Virginia diesel prices have climbed more than a dollar per gallon in the past month alone — nearly two dollars higher than a year ago — and farmers who depend on fuel for virtually every part of their operation are running out of room to absorb the hit.
At Meadow Creek Dairy, Farm Manager Jim Feete said diesel touches every corner of the business.
“Everything we touch uses diesel fuel,” Feete said. “It’s almost anything we do — at some point it has to be moved a significant distance.”
Costs climbing, milk prices flat
While diesel costs have surged, Feete said the price dairy farmers receive for their product has not kept pace. Milk prices, he said, remain stuck in decades-old territory.
“The prices are very comparable to the ’80s and the ’90s still,” he said, “and the cost of moving that milk from your farm is going to be a huge issue for the majority of dairies.”
That gap between what it costs to produce and ship milk — and what farmers are paid for it — is widening with each price increase at the pump.
Surcharges trickling to consumers
Feete said local farms are not choosing to raise prices on their own, but fuel surcharges from shipping partners are already passing costs down the chain — from farm to retailer to consumer.
“A lot of the costs are being added to the customer without our choice,” he said. “Everybody we ship through has a fuel surcharge, and that’s just rising every day. That’s just transferred to our customers, who transfer it to retail. I’m sure that the prices are already changing, but we haven’t chosen to change our prices yet — but we may be forced to soon.”
Feete added that raising prices carries its own risk. “We can’t afford to raise them to a point where they can’t be sold,” he said.
‘Do I really want to do this anymore?’
Feete said the instability created by rising fuel costs has made long-term planning nearly impossible and is forcing farmers to ask hard questions about the future of their operations.
“I don’t see how you can take risks right now because things are so unstable,” he said. “This last year has been the first year that it’s becoming clear that this may not be as sustainable as we thought in the long term. So if something doesn’t change in the next few years, I think a lot of agriculture is going to be asking itself, ‘Do I really want to do this anymore?’”
He said he does not expect fuel prices to meaningfully retreat.
“Usually what happens with fuel prices is they don’t go down significantly,” Feete said. “We’ll see a dip, but over the years, every time they’ve taken a step up, they’ve never really retreated.”
Southwest Virginia among the cheaper markets
According to AAA and GasBuddy, Southwest Virginia still has some of the lowest diesel and gas prices in the state. Even so, Virginia’s average price remains higher than most surrounding states — and prices across the region have topped six dollars per gallon at many stations.
Agriculture is among the industries most dependent on diesel, and analysts and farmers alike say the current price environment is compounding pressures that were already challenging for small and mid-size farms.