As fuel costs rise, South County farmer Tom Ikeda’s profit margin keeps shrinking.
On Friday, the average cost for a gallon of regular unleaded gasoline in San Luis Obispo County was $4.39, up 57 cents from the same time last year, when prices were at $3.82 a gallon. Diesel prices were even higher, at $4.58 a gallon. Last year at this time, diesel prices were $4.17.
San Luis Obispo County was tied with San Francisco on Friday as the second-most expensive market in the state for gas; Santa Barbara County was most expensive, averaging $4.41 per gallon.
Ikeda, who runs Ikeda Brothers, a vegetable-growing operation, said the high fuel costs have forced him to make adjustments.
“We have about 20 tractors of all different sizes and they need a lot of horsepower, so they burn a lot of fuel, and I’m running those tractors seven days a week, several hours a day. The costs add up,” Ikeda said. “It makes it a lot tougher to make a profit.”
Ikeda said he is not passing his higher costs on to the consumer, in part because he can’t easily do so — farming competitors in other countries have cheaper labor and thus can undersell his produce.
Ikeda said he has spent up to $15,000 a month to cover diesel expenses.
“We’re using hundreds of gallons of diesel a day,” he said. “The work that has to be done has to be done, and we have to use our equipment to do it. There’s nothing we could do short of parking our vehicles and walking around, and that’s not time efficient.”
To curb the impact of rising diesel costs, Ikeda just purchased an $8,000 storage tank for his ranch in Oceano. The tank will enable him to purchase diesel fuel by the truckload, making it less expensive. Still, Ikeda said, it costs about $30,000 to fill the tank. “I haven’t gotten the gas bill for this month. I don’t want to see it.”
Ikeda goes through countless gallons maintaining and harvesting his fields. Once the crops are picked, they must be hauled from the field to a cooler several miles away.
“It all cuts directly into our bottom line,” Ikeda said.
The cost of doing business is also jumping for Lori Nunes. She owns and operates Kunfusion, a food truck that travels an average of 35 miles a day around San Luis Obispo County. Nunes sells Asian fusion cuisine out of her Chevy P30 Step Van. It costs her about $800 a month to fill up the food truck with regular gasoline.
But the big truck, which gets about 3.5 miles to the gallon, isn’t the only machine that requires gasoline. Nunes also uses gas in an onboard generator and propane to fuel the kitchen equipment.
“It’s affecting my bottom line,” Nunes said. “Fuel is my second-most-costly expense next to food.”“If prices continue to go up,” she added, “I’ll have to start raising my costs, and I would hate to pass that along to my customers. I love them.”