Farmers are facing a tight squeeze this fall. Commodity prices are low, and the lower input prices that they’re used to this time of year are not materializing.
Keystone Agricultural Producers president Jill Verwey says it’s a tough time for growers.
“Being able to make a profit this year is going to be pretty slim,” she says. “I think even with some really good yields, guys are still feeling the pain going into the fall.”
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To a large extent, the problem is that there is so much uncertainty about where prices, both for commodities and inputs, are heading.
“Going into spring, we were looking at record-high costs of inputs, and today, we’re looking at $7 cash bid prices for wheat,” said Verwey. “And in terms of input costs, we’re not seeing those lower seasonal levels that we historically have seen.”
Manitoba Agriculture business management specialist Darren Bond says there is a lot of volatility in commodity prices right now.
“In late July, canola was $2 a bushel more than what it is right now. So over that four- or five-week span, we’ve seen quite the drop,” Bond says.
The recent labour dispute at Canada’s railways is partly to blame for this volatility, as grain elevators lowered their prices to discourage deliveries in anticipation of a suspension of rail services.
“Thankfully, we don’t have a strike or lockout right now, but it has created a slowdown in deliveries for railcars for the elevators, and until that gets back up to speed, it will be reflected in their bids,” said Bond. And on top of that, there’s the perennial harvest lull in prices.
“All of this is piling on to the uncertainty.”
Decisions await
When producers look at their production costs and see all of the uncertainty in commodity prices, the challenge leaves many farmers wondering what to do.
“If we’re talking this fall delivery, there’s only so much time they can take to decide before the producer would need to buy and apply,” Bond says. “Whether that’s going to be a month from now or six weeks from now, there’s a finite amount of time to make that decision.”
However, depending on how their cash flow looks, many farmers may not even be able to afford fertilizer this fall.
“Cash flow is really going to have a significant impact on farming operations going into this fall and planning for the ’25 season,” Verwey says.
Of course, those looking at spring applications have the luxury of time.
“The producers that I’m talking to are looking at the grain prices, looking at the high input costs, and they’re waiting to see what’s going to happen,” Bond says.
On the commodity price side, he says, some farmers are also waiting to see if there will be a price bump after harvest. But again, that luxury of being able to wait for a better price isn’t available to everyone.
“There are considerable bushels still sitting in bins from last year,” Verwey says. “How much on-farm storage do we have? How long can guys keep the grain in the bin? They’re going to have to pull the trigger sooner than later, so that they can meet commitments.”
On top of that, Verwey says, there’s no guarantee prices will turn around.
“I’m really skeptical about seeing a fast rebound in those prices,” she adds.
Inform your choices
When it comes to fertilizer application, Bond says, it’s important for farmers to be as informed as possible, and post-harvest soil testing can help producers strategize in uncertain times like this.
“In some areas, there are some decent crops, and that could tap into those soil reserves, making them less, so more fertilizer is required,” Bond says. “Other areas are in poor crop situations. So again, they might be looking and thinking they might not need to do a fall application.”
But we also had some extreme conditions this year, with a very wet spring.
“Did we lose nutrients in terms of nitrogen and phosphorus? We don’t know yet,” Bond says. “That’s why we’ve got to get out and soil test once the crop is off.”
This is especially important this year, with low commodity prices and high input prices.
“We want to make sure that we’re not overapplying those inputs,” Bond says. “We want to make sure that we’re making the correct decisions. And the best decisions are informed decisions.”
While this year might be an outlier, farmers have dealt with tight margins like this before, he says.
“Low commodity prices are not a new thing to farming. High cost of production is not a new thing to farming. The cost-price squeeze, again, is not a new thing to farming. This is something that farming has seen time and time again.”
It may be a hard pill to swallow for farmers, but Bond says it’s ultimately what the producers do in good years that will determine how they fare in the poor years.
“If producers made wise investments, paid down some debt, or put money in the bank, that’s really going to make it easier to get through these tough times,” he says. “That’s farming, but that’s also every other business out there.”
