Some states have allowed temporary use of tax-exempt diesel for harvest transport.
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***Note from The Tennessee Conservative – this article posted here for informational purposes only. Per The Tennessee Lookout’s republishing guidelines, this article has been edited for length.
Article by Cassandra Stephenson, Tennessee Lookout [CC BY-NC-ND 4.0]
With diesel fuel prices in Tennessee hovering near all-time highs above $6.10 per gallon, two state lawmakers are asking Gov. Bill Lee to temporarily allow farmers and loggers to use cheaper tax-exempt diesel to transport their harvest on public roads.
Tennessee Rep. Rusty Grills, a Newburn Republican, and Bolivar Republican Sen. Page Walley wrote letters to Lee in late September encouraging the governor to allow farmers and loggers to fill their trucks with a cheaper dyed diesel through Nov. 15.
“All I’m trying to do was just help take a little bit of the burden off of the extreme amount of fuel that farmers are having to use to haul their grain (and other products),” Grills said in a Monday interview.
Farmers and loggers have special permission to purchase diesel fuel without sales and use tax, so long as it is only used for off-road farm machinery and timber harvesting equipment, according to the Tennessee Department of Revenue. The tax exemption reduces the per-gallon price by around 50 cents in Tennessee.
The tax-exempt diesel fuel is dyed red to differentiate it from normal diesel fuel, and it is against the law to use dyed diesel to power vehicles that use public roads, with very limited exceptions.
Taxes collected on regular diesel fuel purchases pay for road maintenance. Off-road farming equipment — like combines, tractors, backhoes and cotton pickers — does not put wear and tear on public roadways, making it tax-exempt.
But during harvest season between September and November, farmers and loggers must transport their crops to points of sale in trucks that do traverse public roads, requiring hundreds of gallons of regular diesel fuel.
Lee’s office did not respond to a request for comment.
Diesel prices in Tennessee reached a record high on Sept. 22 at $6.22 per gallon, according to AAA’s Fuel Prices tracker. A year ago, a gallon of diesel fuel cost an average of $3.43 in Tennessee.
On Wednesday, the national average price for a gallon of diesel was $6.42. Economists attribute the rising cost mostly to the United States’ war in Iran, with other international market factors like the war in Ukraine contributing a lesser amount.
Grills is a 9th generation farmer who manages his family’s historic Dyer County farm alongside his father and brothers. He said farms cannot wait for more favorable economic conditions; the farmer “either gets his crop out of the field when it’s ready, or he loses it.”
A combine used in the field can burn up to $1,000 of dyed diesel a day, Grills said, and trucks hauling harvested crops make multiple trips to and from farms over the course of a harvest season. He’s not sure how much money his proposed temporary exemption would save farmers or cost the state in lost tax revenue.
“I’m just looking for any opportunity to cut an expense for the ag sector and the forestry sector,” Grills said. “When the bulk of their fuel usage is in the months of September and October, this is a hard time for fuel to be at an all-time high.”
The fuel price squeeze comes after two difficult years for farmers who faced rising input prices, reduced demand amid trade wars and tariff negotiations, and adverse weather conditions.
Walley said that agriculture and forestry are the state’s largest industries, and these businesses already have access to dyed diesel.
“We wanted to make it more available to them … so that we can provide them with at least a very modest break in the costs of getting this harvest in,” he said. “That’s not to diminish everybody’s desire for opportunity to pay less at the pump, but this is foundational to our state. That is our largest business and our food supply chain.”
The governors of Alabama, Texas, Nebraska and Louisiana have already issued such exemptions for agricultural and timber producers, drawing skepticism from some lawmakers. The White House is also considering federal actions that could temporarily alleviate fuel price increases, including a potential export ban on U.S. refineries to boost domestic supply that has also been scrutinized by economists.
“The President wants to see gas prices at the pump fall and is evaluating all the options on the table,” a White House official wrote to the Lookout on Monday. “Ultimately, President Trump will make the decision that is best for the American people.”
One Response
Good, but the root cause NEEDS addressed.