Rising input costs amid supply shortages stressful for Sask. farmers
CBC
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."
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."