The fuel market is a volatile one, with uncertain prices that can negatively impact farmers. COVID-19 has added more unpredictability, with petroleum and propane costs increasing in 2020. Demand is outpacing supply, driving up prices as reserves dwindle. To ensure that your farm has the resources it needs at a price you can afford, develop a contract with a local COOP. 

What Is a Fuel Contract? 

A contract is a written agreement that lasts a specific time between a client and a fuel wholesaler. During the life of the deal, the client only buys fuel from the supplier. In turn, the wholesaler provides the product to the customer. The volume and price won't change regardless of supply or market value. 

What Are the Benefits of a Fuel Contract?

Supply Security 

There are instances where pipelines and refineries temporarily go down. In Wisconsin, there might be tornadoes, floods, and blizzards throughout the year. These unpredictable factors cause fuel shortages that can reduce crop yield and cost farms money. When entering into a contract, the wholesaler makes you a priority. Regardless of circumstances, you'll have the products you need to keep your farm thriving. 

Cost Reliability 

For a small down payment or a full prepay, the fuel price gets locked in. Farmers no longer need to worry about buying at or budgeting for unpredictable expenses. Contracts also help farmers avoid costly price inversions. Product scarcity can drive the price of unbranded supplies far above branded and contracted resources. However, the contract ensures that your costs remain the same and the farm remains profitable even during an inversion. 

Time Efficiency

Farmers are at their best when they can focus on their yield and growing their business. They shouldn't have to spend time attempting to predict and outguess the market. With a contract, farmers won't have to find suppliers or budget and re-budget to account for financial fluctuations. That's time better spent on your business. 

When Should Farmers Sign a Contract? 

Farms benefit the most when signing a contract between mid-January and late-February. There are seasonal and year-long options along with features that can be customized to your farm's unique needs. With a stable fuel source and guaranteed pricing, your equipment will be ready for the busy times ahead. 

For over 100 years, Allied Cooperative® has provided vital services to farms throughout Adams, WI. This customer-owned COOP offers various fuels, including propane and refined, to ensure your equipment is ready for the season ahead. COOP members also benefit from their logistical transport guidance and 24/7 emergency assistance. Their agronomy division can also help farmers grow healthy crops and protect them from weeds and pests. For more information on their extensive services, visit their website or call them at (800) 247-5679.