Ontario farmers seeing higher prices, less demand for wheat

As the Russian invasion of Ukraine continues, millions of tons of grain are stuck in the country, threatening the global food supply and driving up the price of wheat.

Ontario farmers will be working hard to grow as much crop as they can, according to the chair of Grain Farmers of Ontario.

"I feel in general we always have that moral responsibility...to like maximize what we can grow to have safe food for Ontario, for Canada, for the world," said Brendan Byrne, who is also a grain farmer in Essex.

Russia and Ukraine account for more than a quarter of the world's wheat exports. The price of wheat was already rising coming out of the pandemic, and locally, a wet fall led fewer farmers to grow the crop this season, according to Byrne.

Amid the conflict, the price of wheat has gotten so high that it's become harder for Ontario farmers to sell, according to Don Kabbes, the general manager of Great Lakes Grain.

Wheat planted today will sell for just under $14 a bushel, according to Kabbes. (A bushel of wheat is about 27 kilograms). About a year ago, the price was a little more than $7 per bushel.

"It has really reduced demand for wheat," Kabbes said.

Great Lakes Grain markets grain for around 4,000 farmers in the province. In Ontario, the primary wheat crop is soft red winter wheat, which is used in things like cookies and crackers, Kabbes said.

A large portion of the province's wheat is also sold to make food for livestock. But since there are multiple crops used in feed rations, the feed mills have flexibility in what they buy up. With corn costing less, those buyers are less keen on buying as much wheat, Kabbes explained.

Even for milling-quality wheat, the mills "seem to be backing off a little bit as well."

"It just has not been in very big demand. Exporters haven't really been coming to Ontario to buy that wheat to get it exported to another country, because the price has just gone extremely, extremely high," he said.

But he sees hope on the horizon, saying that high prices have a tendency to fix themselves.

While farmers are seeing higher prices for their wheat, they're up against other obstacles. The price of fertilizer is way up, and so is the price of fuel — both factors linked to the conflict in Europe — so it's much more expensive to get products to market.

Much of the fertilizer supply comes from Russia, and that was hit with a tariff by the federal government after the invasion began.

"Fertilizer was already kind of a really high expensive piece last fall when we were looking at it. There were already some issues at play, and that's been kind of escalated based on what's happened in the Ukraine," said Byrne.

These factors have created a perfect storm where consumers will likely see higher prices for their bread, according to Byrne.

"There certainly is a lot of things in that chain that lead me to believe that prices could be going up, as we see with inflation," Byrne said. "But I don't see it as just being with farm costs in what's happening there. It's grocery stores, it's fuel, it's logistics, it's trucking, all those extra things."