What’s the Deal with Diesel?

The cost of fuelling a tractor has risen by 40% since February, and still fallen by 20ppl from its peak.

Farmers have had an 80% duty reduction on red diesel for many years. That has saved farming approaching £400m per year at 2024 prices. Government is reducing this further on Monday to 6.48p/l from 10.18p/l. Yet diesel, while necessary, is still dear.

For most farmers, it is difficult to plan a cost-saving purchasing strategy for diesel; you fill the tank when it is low regardless of the cost. Stockpiling is not easy.

Tractor diesel accounts for around 3% of total farm costs (about half that of fertiliser), equating to 1p/l milk and £7 to £14/t combinable crop.

To save money, you might consider reducing field operations, especially the fuel-rich ones like ploughing or subsoiling, but if they were cost effective at 50ppl, they probably still are at 90p, that is unless you can change your entire system more profitably.

Overall, the cost of fuel over a tractor’s say, 10,000-hour life, is likely to match the capital cost of a new vehicle in real terms. Perhaps a more fuel-efficient tractor is a better way to save money long-term. And have you calculated the costs of those far-away fields?

Management tweaks reduce fuel use, such as using the most appropriate size vehicle you can for the job, checking tyre pressures, throttling down when possible and avoiding idling. Tweaks all add up.

If tractor diesel becomes dearer around the world, and farming output consequently suffers in some areas, higher farm output prices might end up justifying the cost. We cannot tell – indeed, wars might end on Monday pushing things back! The costliest error though is incorrectly reading the market and running dry from missing out on a critical delivery slot. The dearest mistake is not having fuel at all so don’t get caught without fuel when the weather suddenly says “go”!

Calculating the costs of your farm system and layout are more important than trying to save 1p/l on guessing the market.

Figures and calculations in this piece are sourced from the Nix Pocketbook 2026.