Guest column/Why the Rover Pipeline is good for Ohio’s farmers
Ohio’s farmers compete in an increasingly tough global marketplace. Our competition comes not only from other Midwestern states. We go up against farmers thousands of miles away, and all of this competition puts constant pressure on prices. It is extremely tough to keep a farm profitable these days, which is why we need to take advantage of every efficiency and cost-cutting measure we can.
One major and particularly challenging expense is energy. Farmers can shop around for deals on feed or equipment, but energy expenditures are tougher to manage. You can’t take the pickup truck down to the energy store and stock up on power during a clearance sale. Farmers have to hope that energy providers can find ways to lower costs.
In the United States, farmers spend about 30 percent of their operating capital on it. For perspective, energy is considered unaffordable for a residential household if it costs 6 percent or more of household income.
So anything to reduce energy rates can have a big impact on farm profitability. That is why the Ohio State Grange supports sound energy projects like the Rover Pipeline.
During the past 40 years, natural gas has accounted for between a third and a half of farms’ fossil fuel energy. The Rover Pipeline will bring 3.25 trillion cubic feet per day of natural gas from the Marcellus and Utica shale gas reserves to the Midwest. That is enough natural gas — every day — to power more than 15 million homes.
A 2015 report for the Ohio State Grange concluded that for too many farms, “revenues are insufficient to cover costs. High costs, including high energy prices, and a lack of energy options for many rural areas are a genuine problem for agricultural producers, particularly in the Midwest.”
“One of the likeliest sources of potential cost savings for Michigan and Ohio agriculture is expanded use of natural gas,” the report found. “Energy is a major component of farm production expenditures, accounting for over 30 percent of costs.”
Lower energy outlays can help farms stay profitable when crop prices fall. And lower energy outlays can make American agricultural products more competitive in overseas markets.
For corn, a 1 percent increase in prices translates to a 1.64 percent decrease in exports. The global market is that sensitive to prices, which makes it critical that we find ways to keep expenses down.
Keeping overhead low means farmers can stay profitable even when prices for their products fall. As the 2015 report put it, “lower prices are not necessarily a disaster for farmers if costs are also kept low. Among other things, lower prices mean increased revenues from agricultural exports, potentially a great benefit to farmers if they can keep costs down. Either way, high or low prices, cost control is crucial to economically viable farm operations.”
Importantly, underground pipelines like Rover are the safest means of transporting natural gas from production sites to consumers. Project officials have voiced their commitment to completely restoring any area affected by construction. And once in operation, Rover will provide safe and efficient access to natural gas for farmers, manufacturers, businesses, and consumers throughout the Midwest.
In our modern global agricultural market, increasing the regional supply of natural gas by more than 3 trillion cubic feet per day can have a noticeable impact on farm budgets. It can help reduce a major expense, and that can give farmers more breathing room when prices fall or expenses go up in some other area.
The Rover Pipeline will make it easier for Ohio farmers to stay in business. It will help Ohio manufacturers, too. The state’s entire economy will benefit from lower, more stable energy prices and more profitable businesses.
Ohio needs projects like the Rover Pipeline. The sooner they are completed, the sooner they can start helping our farmers compete.
(White is president of the Ohio State Grange.)