Farm to Table : Rising Whole Food Production Costs

"We're seeing [costs] rising in just about every input across the board for us."

"That's a huge cost difference [grain drying rising from 2021 at $15,00 to $30,000 for 2022]. How can we allow Mother Nature maybe to do a little more of this?"

"The numbers we have penciled in today [labour costs in view of a 6.8 percent inflation rate] are static, but it will change over time, and it has to, because as an employer we have to make sure that our employees are viable." 

"[If wheat or barley was selling for a lower, more typical rate, his farm would be] deep in the red."

Humphrey Banack, Alberta farmer, Alberta Federation of Agriculture board member

Farm equipment moves down a Southwestern Ontario road on May 26. Photo by Mike Hensen/The London Free Press/Postmedia Network

In view of global economic upheavals over the past few years, most notably the pandemic years, and more latterly, the Russian-imposed war in Ukraine, the cost of living everywhere has risen. On tens of thousands of Canadian farms feeding the nation, farmers are coping with scarcity of fertilizer and skyrocketing diesel prices, among the first to realize the broadeer impacts of Russia's invasion of Ukraine.

The impact on the world of the two nations now at war who are among the world's largest wheat producers and exporters has shocked grain markets; the high demand for grains and  high prices for whatever grain is available is threatening food availability in economically marginalized economies. While Canada doesn't face the kind of situation that threatens scarcity in Africa and the Middle East, it has its own production and distribution problems.

Canada, like Russia and Ukraine, is a major exporter of grains to world markets. The invasion of Ukraine has placed a stranglehold on grains and oils from both Russia and Ukraine, and grain exporting countries like Canada are expected to fill in some of the scarcity gaps worldwide. This, at a time when one of the single largest costs for farmers annually is fertilizers when a major source of fertilizers globally; again, Ukraine and Russia, is being cut off.

Farmers in Canada as elsewhere are now not only concerned with rising prices but with the issue of acquiring enough fertilizer for their crops to enable good yields. Wheat, canola, barley and oats would have cost the average Canadian grain farmer $60 to $65 per acre in fertilizer costs in 2021 but for this year costs are in the range of $130 to $140 per acre, giving the average farm of 778 acres an increase of roughly $56,000 for fertilizer alone.

Then there is rising fuel costs to consider; diesel for tractors and other farm machinery and natural gas indispensable for grain drying. In Canada, costs are topped up by a federal government-charged carbon tax to further burden farmers who must purchase tens of thousands of litres of fuel for seeding and harvesting. Farmer Humphrey Banack farming near Camrose Alberta, estimates his fertilizer bill rose from $450,000 to close on $1 million for this year.

His 8,000-acre farm used about 175,000 litres of fuel in 2021. He is now able to store 90,000 litres of fuel on his farm after purchasing new fuel tanks, allowing him to shop the market, avoiding buying fuel when it is needed, and paying whatever price the market bears. This year he expects fuel costs to be about $258,000 as opposed to the $142,000 he spent in 2021. Grain requires drying when it comes off the field, before it can be stored and transported.

Where in recent years farmers were paying $1.50 or $2 per gigajoule for natural gas to dry grain, this year it will be more like $4 or $5. Crop insurance has risen this year reflecting higher crop prices, and labour costs are set to increase as workers require higher pay reflecting the increased inflation rate pushing up consumer costs.

Food prices are expected to rise between five and seven percent through 2022. Depending on the goods, farm costs make up only about 20 percent of a grocery item's cost. High energy prices that increase production costs for farmers, are also driving up the cost of grocery items. "Energy is really the major, major cost item. So something that happens at the farm level doesn't necessarily translate into higher food prices directly because there's so much else going on", explained Alfons Weersink, agriculture economist, University of Guelph.

Photo shows harvest on a Saskatchewan farm. Inflation and supply chain disruptions due to the COVID-19 pandemic and more latterly, the Ukraine conflict, have farmers concerned about their costs, producers say. (Tory Gillis/CBC)