As millions of people headed to the grocery store to purchase their ingredients for Thanksgiving this week, rising energy prices were driving up costs at every stage of agricultural production, adding new pressure on both farmers and consumers.
The Consumer Energy Alliance, a nonprofit energy policy group, released a report earlier this week finding that higher fuel and electricity costs are straining farmers’ operations, making it more expensive to produce staples such as milk, meat, and cheese. In 2024, farmers and ranchers spent $49.2 billion on energy, excluding electricity, according to the report.
“Every aspect of the farm-to-table story required energy to get the potato from the ground to being mashed, baked, or served au gratin. This is why grocery prices are intertwined with energy prices, which directly affects farmers and in turn, families,” the report reads.
According to the CEA, fuel, fertilizer, and electricity account for between 19% and 37% of farmers’ total operating costs. For an average 466-acre farm, annual expenses would increase by $14,000 to $31,000 if diesel prices rise by $2 per gallon and natural gas prices increase by $2 per million British thermal units.
As of Wednesday, the national average for diesel is $3.77, up from $3.54 a year ago, according to AAA. The report noted that the national average gas price is $3.04, which is slightly lower than last year’s average of $3.06.
CEA president David Holt told the Washington Examiner that diesel is “a huge component of farm costs” and that higher energy prices ripple down to the consumer. He said if a farmer is relying on and paying more for diesel fuel, then the price of corn, eggs, or chicken is going to be more expensive.
President Donald Trump has vowed to lower grocery prices for consumers, but the cost of groceries continues to rise.
According to the Consumer Price Index released last month, grocery prices rose 0.3% from August to September, following a 0.6% increase from July to August. Overall, grocery prices were about 2.7% higher than they were a year earlier.
Holt added that with roughly 98% of farms being family-owned, rising energy costs are making it increasingly difficult for producers to maintain household income.
Missouri Farm Bureau President Garrett Hawkins welcomed the CEA’s report, spotlighting energy policy in food production, but emphasized that farmers and ranchers are “price takers,” not drivers of grocery inflation.
“Farmers and ranchers aren’t driving up the cost of goods at the grocery store. We’re doing our part to keep producing,” Hawkins told the Washington Examiner.
“Even though we are reeling from negative margins, producers continue to do what they do best, producing safe, abundant, affordable food that leads to ample choice at the grocery store, and we’re not able to pass those costs on. We are hurting just like other consumers,” he said.
Rising energy costs have affected not only farms but households nationwide and have been linked to the growing electricity demand from artificial intelligence and data centers.
According to the most recent Consumer Price Index report, the Bureau of Labor Statistics found that electricity prices increased by 5.1% over the year ending in September, nearly double the overall inflation rate.
Trump has promised to slash energy and electricity prices in half and has implemented policy changes that favor fossil fuels over renewable energy. However, despite the change in energy policy, experts expect energy prices to continue rising over the next couple of months.
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Holt said the CEA has sent the report to every member of Congress to draw more attention to how the rise in energy costs is affecting farmers.
“We’ve got to look at this affordability issue across the board and make sure that we’re doing all we can to highlight it, recognize it, and bring the energy, the focus on energy to bear that the economy needs, including our farmers,” he said.
