Peaking Propane Prices Pinch Poultry Producers

Just like any other product that is largely derived from petroleum, propane costs have shot up significantly in the last couple years. For most of February 2007, propane was slightly more than $2 a gallon. This February, it was about $2.58 a gallon, up about 29 percent.

The propane market in Northwest Arkansas is stable, said Don Anderson owner of Anderson’s Gas & Propane Inc. in Hindsville. Prices increases have hit poultry farmers especially hard, though, he said.

“There’s nothing we can do about the world markets,” Anderson said.

As with other commodities, propane prices fluctuate constantly. Dealers recently saw a one-day increase of 44 cents, said Shannon Nuttall, district manager for Synergy Gas in Springdale.

Fuel costs have doubled over the last five years, he said.

“It’s put a lot of strain on poultry growers,” Nuttall said.

An average chicken house can use 4,000 gallons to 5,000 gallons of fuel a year. So it can be advantageous for farmers to negotiate a price and secure a year’s worth of fuel.

This works to the farmer’s advantage if the price of fuel goes up. Such recent price fluctuations have forced Synergy to be conservative in how it buys fuel, Nuttall said.

The company primarily services residential propane customers. As recently as five or six years ago, about half of its customers were agricultural, Nuttall said. That number fell by about 10 percent each year, and has since leveled off, with about 20 percent of the Springdale supplier’s customers coming from the agricultural sector.

The fuel has other agricultural uses besides heating growing houses, said Larry Snodgrass, executive director of the Arkansas Propane Gas Association, based in Lincoln. It can also power refrigerators and air conditioning units, and can be used both to burn off weeds in crop rows and to sanitize empty chicken houses using a tractor-pulled device that scorches the ground.

It can also fuel both farm and highway vehicles, with lower levels of emissions and with 95 percent of the power and fuel efficiency of gasoline-powered vehicles, Snodgrass said.

Propane is a byproduct of refining petroleum and natural gas. Most propane used in the United States is produced in North America, meaning that increased use of the fuel in vehicles would reduce dependence on foreign resources, he said.

With the Fayetteville Shale Play, more propane will be produced close to home.

Despite these factors, fewer people each year are using propane to power their cars and trucks, largely because of the price of permits. The permits cost $150 a year for farm-only vehicles and $200 a year for highway vehicles.

Snodgrass is a lobbyist for the propane industry in Arkansas. Each year the industry tries to do away with the permits, but has had difficulty gaining the legislative traction to do so. If the permit costs were eliminated or significantly reduced, it is likely that more people would use the fuel to power their vehicles, he said.

“It’s as out of date as the sidesaddle,” Anderson said of the propane permits. “You don’t pay $200 to get a diesel permit.”