Cash Market Moves             09/21 09:53

   Harvest Costs Climb with Added Fuel Surcharges, Squeezing Farmers Margins

   Higher harvest costs, including fuel surcharges, are reducing farmers' 
profitability.



Mary Kennedy
DTN Analyst

   Diesel prices above $6 per gallon are adding to the economic pressures 
farmers already face, with fuel surcharges driving costs even higher.

   "Given the significant amount of diesel utilized on the farm and for farm to 
market deliveries, the "fuel" line item in a farmer's budget will continue to 
look increasingly ugly and alarming," Mike Steenhoek, Executive Director Soy 
Transportation Coalition, told DTN in an email.

   "While it is less understood and appreciated, another way high fuel costs 
insert themselves into agriculture and the broader economy is in the form of 
fuel surcharges instituted by various transportation providers, whether taxis, 
Uber, railroads, airlines, and ocean vessels," said Steenhoek.

   In July of 2025, Union Pacific (UP) fuel surcharge was quoted at 28 cents 
per mile versus July 2026 at 71 cents per mile. That is in addition to railroad 
tariff increases and secondary shuttle freight costs, etc., for shippers who 
eventually pass it on to farmers. Here is a link to the UP carload 
mileage-based standard Highway Diesel Fuel (HDF) fuel surcharge program: 
https://www.up.com/shipping/surcharge/mileage

   As for grain haulers and other truckers, FreightWaves notes on their 
website, "The shipper usually pays the fuel surcharge as a separate line item 
on the freight invoice. In some contracts, the consignee may be responsible 
based on terms of sale and billing arrangements." Here is more on how it works: 
https://www.freightwaves.com/checkpoint/fuel-surcharge-in-trucking/

   "One of the realities in the agricultural supply chain is that when 
transportation costs go up for a variety of reasons (fuel, service disruptions, 
etc.), those costs are disproportionately passed onto the farmers in the form 
of a lower price (i.e., a more negative basis) at the point of sale," said 
Steenhoek.  

   "In any industry, when transportation costs go up, there are three options: 
1.) Pass those costs onto the customer in the form of higher prices; 2.) The 
shipper absorbing those costs; or 3.) Passing those costs onto the supplier in 
the form of a lower price offered. For the soybean industry and much of 
agriculture, those costs are largely passed onto the farmer in the form of a 
lower price offered per bushel," according to Steenhoek.

   Many transportation businesses that charge fuel surcharges will likely 
continue raising them while the U.S. and Iran conflict keeps fuel prices, 
especially diesel, elevated. Some surcharges adjust weekly and might be 
percentage-based, like UPS and FedEx, for example. Others, such as those used 
by railroads, are adjusted monthly and are mileage-based.

   "Fuel surcharges are one more example of a leak in the profitability bucket 
farmers are currently experiencing and another reason why farmers are among 
those most anxious to see future relief at the pump," said Steenhoek.  

   Weekly U.S. On-Highway Diesel Fuel Prices: 
https://www.eia.gov/petroleum/gasdiesel/

   Read more here on diesel price impact on farmers: 
https://www.dtnpf.com/agriculture/web/ag/news/farm-life/article/2026/09/13/diese
l-prices-pinch-farmer-profits

    

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow her on social platform X @MaryCKenn




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