Rising input costs amid supply shortages are stressing Saskatchewan. Farmers

After a tumultuous year of low crop yields after weeks of dry conditions, Saskatchewan farmers and farm associations say pandemic-induced inflation and supply shortages are driving up their input costs.

“We’re seeing fertilizer prices go up 200% or even 300%, depending on when you bought it,” said Kenton Possberg, a farmer north of Humboldt, east of Saskatoon.

According to Statistics Canada, ammonia and chemical fertilizer prices rose 0.5% month over month in February, marking a 10th consecutive monthly increase. Year over year, prices for this product group increased by 88%.

Possberg – who is also a director of the Western Canadian Wheat Growers Association, a farmers’ advocacy organization – said higher natural gas prices during the fall caused fertilizer prices to rise.

“Some fertilizer plants closed because it was cheaper for them to sell the energy they had…for profit than to make fertilizer. This caused supply disruptions,” Possberg said.

Possberg said in early 2021 the price of fertilizer was around $400 a ton, which rose from $700 to $800 a ton in the summer.

“During the winters, prices approached $1,100 a ton.”

Kenton Possberg said sanctions on Russian exports and disrupted supply chains have driven up fertilizer prices. (Submitted by Kenton Possberg)

Sanctions on Russian exports have further increased prices. Typically, Canada imports approximately 660,000-680,000 tonnes of nitrogen fertilizer from Russia annually.

“Russia is a major fertilizer exporter. So the replacement cost, if you were to buy now, could be in the range of $1,300 a ton,” Possberg said.

Glyphosate, a chemical compound widely used in herbicides that control broadleaf weeds and grasses, continues to be in short supply.

“A major glyphosate supplier called force majeure in February [an unforeseeable circumstance that prevents fulfilling a contract] because they couldn’t get one of the key ingredients to make glyphosates,” Possberg said.

“Farmers should reduce their expenses. It could change the way some farm this spring. It’s not just the price of inputs, but the availability in general.”

High input costs unlikely to decline in 2022

According to Statistics Canada data.

Now, with inflation and disrupted supply chains, Possberg said the risk to farmers this season is “exponentially higher”.

“Because if you don’t produce as many crops, but your costs are doubled, your risk will also be doubled.”

Ian Boxall, president of the Agricultural Producers Association of Saskatchewan, said amid supply shortages, grain growers are facing “a double to fourfold increase in input prices [higher] on certain products.

Although commodity prices are high, so are input prices, Boxall said, which are starting to squeeze farmers’ margins.

Ian Boxall said that although commodity prices are high, input prices are starting to squeeze farmers’ profit margins – a trend that raises concerns for the future. (Submitted by Ian Boxall)

Boxall, who grows wheat, canola, oats and pulses on his farm in the Tisdale area in the northeast of the province, has seen rising nitrogen fertilizer costs.

“Last year it was around $280 a ton. This year I paid $775 a ton. That’s just my nitrogen costs. We’ve also seen an increase in phosphate and such,” said he declared.

“We are seeing shortages of access and availability of parts. If my tractor breaks down, will I be able to get the parts to fix it?”

He said many farmers are worried about this in addition to ongoing labor shortages.

“Drought scares me more. If we continue to see these disruptions in our supply chains, 2023 worries me. Will I be able to afford to buy fertilizer, especially in a drought?”

Boxall advises farmers to secure inputs for 2023 as soon as they see prices drop.

Possberg is also worried about the continued increase in production costs.

“2022 is going to be a lot more risky than 2021. But the way prices are going, 2023 could be a much more extreme risky year…if commodity prices go down but input prices stay the same,” Possberg said. .

Brett Halstead, farmer and chair of the Saskatchewan Wheat Development Commission, said crops like canola and wheat cost more to grow because they have higher fertilizer requirements. (Submitted by Brett Halstead)

Brett Halstead, chair of the Saskatchewan Wheat Development Commission, said all farmers are feeling that anxiety for 2023.

“Wheat prices are up, so incomes are up, but expenses are also up for fertilizer, fuel, parts, agricultural herbicides, transportation and the carbon tax. We are facing shortages and cost increases,” he said.

Halstead said crops like canola and wheat are more expensive to grow because they have higher fertilizer requirements.

Seed prices and fuel costs add to risk

But for crops like legumes, Halstead said seed costs are higher.

“Crops like corn and soybeans are also expensive to grow, as are their seeds,” he said.

Rob Stone, a farmer near Davidson, said seed prices are also rising as the cost of the grain itself rises. (Submitted by Rob Stone)

Rob Stone, a farmer near Davidson, has already started thinking about next year’s crops and cost structures.

“Seed is given a higher value simply because the cost of the grain itself is higher, plus the cleaning. If you buy certified seed, there are levies and additional fees,” Stone said.

He said his canola yield last season was “one of the worst” he’s seen, 60-70% below forecast. Now he faces “triple and quadruple prices for major crop protection products,” including herbicides like glufosinate, 2,4-D and MCPA.

Jeff Bennett, a farmer from Dodsland in western Saskatchewan, is in the same boat.

“Last year was the weakest return. Gas prices went up and they’re high again now,” Bennett said.

He said the risk is deeper this year, with supply disruptions forming a significant part of the equation.

“Canola is $21 a bushel, that’s great. If you are growing 30 to 60 bushels, that would be exceptional. But there’s not enough dedicated or on-farm fertilizer to grow a 30 or 40 bushel crop across Saskatchewan,” he said.

Dodsland farmer Jeff Bennett said his fuel bills had doubled since last year and the carbon tax was an added cost. (fractured photograph)

His fuel bills have also doubled since last year.

“Carbon taxes are simply unrealistic,” he said.

“I’m not a polluter – I care about my soil more than most because it affects me every day,” he said, but “people in Ottawa have no idea how the soil works. ‘industry”.

Farmer stress

Lesley Kelly, a grain farmer from Watrous, southeast of Saskatoon, said while moisture levels are good on her farm, supply issues persist.

“There is a lot of growing concern and stress among farmers with these input prices,” she said.

Kelly was only able to produce about 50% of her usual crop last year.

“Seeing the prices of agricultural inputs inflate, we are worried about 2023, not knowing the market prices,” she said.

Lesley Kelly is a farmer and co-founder of the Do More Agriculture Foundation, a Saskatchewan organization that champions mental health in the agriculture industry. She says that for many farmers, high input costs are a major source of stress. (Delia Crittenden Photography)

As co-founder of Do More Agriculture, a Saskatchewan organization that champions mental health in the agriculture industry, Kelly has spoken with farmers across the province and the country.

“With the pandemic, the rising prices, the battle with the weather, that stress is increasing. We encourage conversations for farmers to reach out to each other. I know for many, prices are keeping them up at night,” said Kelly.

“We farmers are eternally optimistic people. We go into each year with hope. But going into this season with all of this is a source of concern for many.”

You can call the Farm Stress Line toll-free at 1-800-667-4442.