The looming scarcity of fertilizer threatens to make the upcoming crop year a high-risk venture for agricultural producers across Canada.
Canadian farmers are currently navigating a perilous game of chance, grappling with a dramatic surge in fuel and fertilizer prices. Since the outbreak of conflict involving the U.S., Iran, and Israel, and the subsequent choking of vital oil and gas shipments through the Strait of Hormuz, prices for essential inputs like diesel and fertilizer have nearly doubled. This escalating geopolitical tension is creating a ripple effect across commodity markets, potentially turning the next crop year into a significant gamble for farmers.
For over a century, the families of Bruce Bird and Dave Reid have cultivated their farms in Cremona, a region northwest of Calgary. In a proactive, yet risky, move last fall, both farmers made the decision to pre-purchase their fuel and fertilizer supplies for the current growing season, with seeding activities just two weeks away.
“We’ve tied up hundreds of thousands of dollars,” stated Bird, 48, who manages approximately 1,300 hectares of farmland. The rising cost of fuel is also prompting food suppliers to implement surcharges, a move that could translate into even higher grocery bills for consumers.
“Had I not been able to justify the cost involved, I would have been a minimum of $100,000 further behind for exactly the same product, the same rates, the same everything,” Bird explained, highlighting the potential financial peril. Despite the strategic savings, Bird emphasized that the overall costs remain exceptionally high. “Our preplanning comes at such a cost. I don’t need to go to Vegas; I live in Vegas,” he quipped, underscoring the inherent risk in modern farming. He echoed his grandfather’s wisdom: “You have to have deep pockets to play the game. So you’re sitting at the table losing money, then you throw another chip on the table and say, ‘Let’s go’ because you believe.”
Reid, 49, is preparing to plant approximately 1,012 hectares this year. “Pre-buying in the fall was a gamble because people were suggesting prices were going to be going down in the spring,” Reid admitted, reflecting on the uncertainty of market predictions. He noted that diesel currently costs about $1.50 per litre for agricultural producers, who benefit from an exemption from excise taxes. However, Reid stressed that even with this exemption, the operational costs remain daunting. “Your tractor can go through a thousand litres in a day. It is a lot of money. Grain prices are not great right now, and that’s part of the problem. Margins are thin,” he elaborated, painting a clear picture of the financial squeeze. “You still have your equipment payments, your land payments, so you have continuing expenses whether you do it or not,” he added, emphasizing the relentless nature of farm overheads.
Jill Verwey, who, along with her family, farms over 4,000 hectares near Portage la Prairie, Manitoba, brings a broader perspective. She serves as a vice-president of the Canadian Federation of Agriculture and president of Keystone Agricultural Producers in the province. Verwey highlighted the significant volatility within the agricultural industry, which further compresses already thin profit margins. “We’re still going to feel the impact on fuel prices, which are up significantly, and the last I heard fertilizer was up 40 percent,” she reported, detailing the stark increases. “Last diesel shipment was $1.51 a litre. I would guess it probably doubled, really. When I was doing my budget last spring, I was probably at 80 cents a litre,” she recounted, illustrating the dramatic price escalation.
Verwey acknowledged that while farmers might consider switching to crops requiring less fertilizer, such operational adjustments offer limited relief. “If you reduce your fertilizer, then you’re going to reduce the overall yield potential, and then you’re losing your profitability per acre. So you try to tighten your belt on any additional costs that you might have and make some tweaks,” Verwey explained, outlining the difficult trade-offs.
Dr. Asim Biswas, an agriculture professor at the University of Guelph, affirmed that this is an exceptionally challenging period for farmers. He predicted a definite shortage of fertilizer, noting that despite Canada’s domestic potash reserves, other crucial fertilizers still necessitate importation. “It will be awfully expensive. And the other thing is we may not have the amount of supply to apply to the right level that farmers will want to do it,” Biswas warned, pointing to both cost and availability issues. “Right now, the situation is maybe someone already ordered, but it’s not delivered. It’s stuck somewhere. We don’t know how long geopolitics will affect its delivery to us. Everything is out of our control,” he lamented, highlighting the global supply chain vulnerabilities.
Biswas cautioned against the temptation for some producers to forgo planting this year, deeming such a decision a potential mistake. “Many times farmers are thinking, ‘I’m not going to grow any crop this year,'” he observed. “It’s a very difficult situation, because once they do that… it’s going to hit our trade, it’s going to hit our economy and it’s going to affect internal food security,” he concluded, emphasizing the broader economic and societal ramifications.
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