Rising input costs amid supply shortages stressful for Sask. farmers

After a tumultuous year of poor crop yields following weeks of dry conditions, Saskatchewan farmers and agricultural associations say pandemic-induced inflation and supply shortages are causing their input costs to spike.

"We're seeing fertilizer prices increase by a multitude of 200 per cent or even 300 per cent, depending on when you've purchased," said Kenton Possberg, a farmer north of Humboldt, which is east of Saskatoon.

According to Statistics Canada, prices for ammonia and chemical fertilizers rose 0.5 per cent month over month in February, which was a 10th consecutive monthly increase. On a year-over-year basis, prices in that product group were up 88 per cent.

Possberg — who is also a director at Western Canadian Wheat Growers Association, a farm advocacy organization — said increasing natural gas prices through the fall caused the uptick in fertilizer prices. 

"Some fertilizer plants closed down because it was cheaper for them to sell the energy that they had … for profit than to make fertilizers. That caused supply disruptions," Possberg said.

Possberg said in early 2021, the price for fertilizers was around $400 per tonne, which became $700 to $800 per tonne in the summers.

"Through the winters, the prices approached $1,100 a tonne."

Sanctions on Russian exports further increased the prices. Typically, Canada imports about 660,000 to 680,000 tonnes of nitrogen fertilizer from Russia each year.

"Russia is a major exporter of fertilizers. So the replacement cost, if you needed to buy now, could be in the $1,300 per tonne range," Possberg said.

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

"A major supplier of glyphosate in February called a force majeure [an unforeseeable circumstance that prevents fulfilling a contract] because they were unable to get one of the key ingredients to make glyphosates," Possberg said.

"Farmers would have to cut back. It could change how some farm this spring. It's not just the price of the inputs, but the availability in general."

High input costs unlikely to ease in 2022

Canadian production of crops like wheat, canola, barley, chick peas, lentils and mustard seeds in 2021 was significantly lower than the previous three years, according to data from Statistics Canada.

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

"Because if you don't produce as much crop, but your costs are double, your risk will also be double." 

Ian Boxall, president of the Agricultural Producers Association of Saskatchewan, said amid supply shortages, grain producers are facing "increased prices on input, double to four times [higher] on some products."

Though commodity prices are high, so are input prices, Boxall said, which are beginning to cut into farmers' margins.

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

"Last year, it was about $280 a tonne. This year, I paid $775 per tonne. That's just my nitrogen costs. We've also seen an increase in phosphate and others," he said.

"We're seeing shortages in access and availability of parts. If my tractor breaks down, am I going to be able to get the parts to fix it?"

He said many farmers are concerned about these in addition to ongoing labour shortages. 

"Drought scares me more. If we continue to see these disruptions within our supply chains, 2023 has me concerned. Will I be able to afford the fertilizers, especially if there is a drought?"

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

Possberg is also concerned about the cost of production continuing to increase.

"2022 is going to be a lot riskier than 2021. But the way prices are shaping up, 2023 could be a much more extreme risk year ... if commodity prices fall but input prices stay the same," Possberg said.

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

"Prices of wheat are up, so income is up, but the expenses are also up for fertilizer, fuel, parts, farm herbicides, transportation, and carbon tax. We're dealing with shortages and cost increases," he said.

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

Seed prices, fuel costs add to risks

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

"Crops like corn and soybeans are also expensive to grow and so are their seeds," he said.

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

"Seeds are being assigned a higher value just because the cost of the grain itself is higher, plus cleaning. If you're buying certified seeds, there are additional levies and charges," Stone said.

He said his canola yield last season was "one of the worst" he's seen, coming in 60 to 70 per cent lower than expected. Now, he's faced with "tripled and quadrupled prices for key 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 poorest yield. Gas prices went high and they're high again now," Bennett said.

He said the risk is more profound this year, with supply disruptions a major part of the equation.

"Canola is $21 a bushel — that's great. If you're growing out 30 to 60 bushel, that'd be exceptional. But there's not enough fertilizer booked or on farm to grow a 30- or 40-bushel crop across Saskatchewan," he said.

His fuel bills have also doubled since last year.

"Carbon taxes are just unrealistic," he said. 

"I'm not a polluter — I care about my soil more than most, as it affects me every day," he said, but "people in Ottawa don't have a clue how industry works."

Stress on farmers

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

"There's a lot of concern and growing stress among farmers with these input prices," she said.

Kelly could only produce about 50 per cent of her usual crop last year. 

"Seeing prices of crop inputs inflate, we're worried about 2023, not knowing market prices," she said.

As a co-founder of Do More Agriculture — a Saskatchewan organization that advocates for mental health in the farming industry — Kelly has been speaking with farmers across the province and country.

"With the pandemic, increase of prices, battle with adverse weather, that stress is mounting. We're encouraging conversations for farmers to reach out. I know for many, prices are keeping them up at night," Kelly said.

"We farmers are eternally optimistic people. We go into each year with hope. But going into this season with all this, it's a cause of concern for many."

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