Rising diesel prices pinching profits for CA farmers, spiking costs for consumers
AI-generated summary reviewed by our newsroom.
- San Joaquin Valley diesel averages $7.30–$7.50 per gallon amid crisis.
- Russ Tavlan of Moonlight estimates his production costs rose about 6%.
- Higher fuel costs push grocery inflation and strain farmers and transporters.
As diesel prices already at record levels keep going up, San Joaquin Valley farmers are seeing their operating costs swell amid concerns that prices for consumers also will continue to rise.
Diesel prices in California now average around $7.30 to $7.50 a gallon depending on location and are up by nearly $3 a gallon prior to the start of the war in Iran.
And with no clear signs that the crisis is ending, experts estimate diesel prices will remain high through the summer and well into the peak of the Valley’s harvest of tree fruit.
This time of year, thousands of workers and hundreds of diesel-powered tractors and semi-trucks are deployed into the Valley’s orchards as part of the annual harvest.
Russ Tavlan, owner of Moonlight Companies in Reedley, said the impact of the higher diesel cost has its thumbprint in every facet of agriculture, most notably the vast distribution network that moves Valley fruit worldwide.
Moonlight Companies is one of the leading growers, packers and shippers of tree fruit in the region.
“In some instances, refrigerated freight from west to east has almost doubled from last season,” Tavlan said. “It’s unfortunate that the majority of this increase happened after we negotiated our pricing contracts for this season, so we’ve been incapable of passing the increases on to our customers.”
Tavlan estimates his cost of production has risen 6% over last year.
“Everything from electricity to fertilizer, plastic to cardboard, is all up because of higher diesel costs,” Tavlan said. “This does not include our national freight distribution increases. I’ve traveled the country like an evangelist, making only one promise I can guarantee: The products we grow will cost more next year because of this year.”
Already, the price of groceries rose 2.9% in April compared to the same month a year earlier, according to the Department of Labor. It was the highest year-over-year inflation rate for groceries since August 2023.
Daniel Sumner, agriculture economist at the University of California, Davis, said fuel prices hit farms and food consumers hard.
“An important fact is that when fuel prices go up, it affects farm costs directly and raises consumer prices. It also puts pressure on marketers. The same economics applies to the fuel costs in processing and marketing,” he said.
Grower and trucker takes a hit twice
For some in agriculture, the spike in fuel prices is hitting them on two fronts.
Greg Markarian, a third-generation farmer and trucking operator in Fresno County, is one of those trying to maneuver through this latest crisis.
On the trucking side, Markarian hauls mostly farm-related cargo and has added a fuel surcharge for his services. He was reluctant to do that, but he is paying $2 more per gallon for diesel than he was just a few months ago.
“You have to find a way to make up those added costs,” he said. “I hate charging people more, because you don’t want to lose a customer, but what else can you do?”
Markarian, who grows cherries, almonds and citrus, is starting to see a slight rebound in the price for almonds as it inches closer to $3 a pound. It’s a bright spot, and Markarian will enjoy it, for now.
“I worry about this farm every day,” he said. “I get up early and look over our operation to make sure that when I am buying something that I really need it. Or can it wait?” he said.
Smaller-scale growers have some price control
Small farmers also are feeling the pinch as they travel the state to sell their fresh fruits and vegetables. Unlike larger-scale farmers who market their produce through packing houses that in turn sell to grocery stores, small farmers can raise their own prices if they sell direct to consumers.
Rebecca Torosian, of Tory Farms in Dinuba, said she is thankful her customers understand the effect higher fuel prices has on her operation. She drives several hundred miles a week delivering her prized peaches, nectarines, plums and pluots to farmers markets in San Francisco and Santa Cruz.
Seven years ago, Torosian was selling her fruit for $2.25 a pound, but then costs began to rise, including labor, fuel and farm chemicals. She has incrementally raised her prices to her current rate of $5 a pound.
“We tried to hold our prices for two or three years, but after this year, there was just no way,” she said.
For some, the solution to help farmers battle high diesel prices and other rising costs may come in the form of another government bailout.
In December, the Trump administration announced a $12 billion relief package for farmers who suffered losses as a result of tariff hikes and a loss of foreign export markets.
One farmer, who asked not to be identified, said he does not believe all farmers will weather this latest storm or rising costs. “Some people are barely hanging on,” the farmer said. “The government gives subsidies to the airlines and to the auto industry, it’s in the country’s national security interest to help save the farmers.”
Sumner, the economist, said bailouts and subsidies invite a different set of challenges.
“Bailouts shift costs to the national debt and raise interest rates by adding to Fed borrowing,” he said. “Taking wealth from grandkids to subsidize consumers and farmers now is attractive now. But hard to call it anything other than a political solution for now.”
