No one-size-fits-all answers on farm

We all complain about sticker price shock at the grocery store, but when it comes to inflation, farmers have been eating at least some of it on our behalf.

Even before the Middle East firestorm broke out Feb. 28, farming was becoming disproportionately expensive.

Manitoba Agriculture extension economist Darren Bond told a webinar this week that compared to five years ago, farmers’ overall costs of production have risen around 50 per cent — well above the general inflation rate of around 20 per cent. Whether buying new equipment, repairing what they have or acquiring more land, they are often faced with double-digit increases annually.

Can they rent their way out of the bind? A farmer hoping to avoid paying a 46 per cent price increase in the cost of a new sprayer will pay 72 per cent more for a rental than they did in 2020.

Commodity prices have strengthened, but not enough to compensate for the surge in costs. And markets are more volatile. Production costs, on the other hand, are a bit like bread dough — they never fall as much as they rise.

The price for urea, a commonly used form of nitrogen fertilizer, is up to $1,125 this month from $830 per tonne last fall. Anhydrous, another widely used form of nitrogen, has gone to $1,600 per tonne from $1,300. Potash and sulphur prices have also spiked. Diesel prices have risen by approximately one-third.

For every Iranian leader or oil installation targeted by Israel and the U.S., Iran has retaliated, targeting oil and gas operations and water desalinization capacity in the region.

The Iranian regime may lose this war, but it’s making sure the rest of the world loses, too. It will take years to repair the capacity already lost in the fighting.

Few predicted how badly the war would rattle the global economy. No one can say when the current conflict will end. All we know is it has lasted longer and had more far-reaching impacts than expected.

It’s a smack-on-the-head preview of what lies in store as world powers jostle for control over key resources in a changing climate. The implications for food security are catastrophic as the politics of scarcity kick in, further destabilizing global food production and pushing the world’s most vulnerable towards famine.

For example, China, one of the world’s largest fertilizer exporters, served notice this week it is now restricting its exports to protect domestic food production. Others are sure to follow.

Farmers must make decisions in real time, which means they are in a constant state of recalibration as the economics around their decisions change.

Producers who loudly protested a highly controversial federal government initiative a few years ago to reduce greenhouse gas emissions by improving fertilizer-use efficiency will now be forced by economics to employ some of the very same tactics.

Farmers do have some wiggle room when managing the cost-price squeeze, especially when it comes to nitrogen fertilizer. Some will shift wheat acres into soybeans this spring because wheat requires heavy doses of nitrogen and soybeans are a legume that produces its own.

With access to the right equipment, a farmer can toggle between fertilizer products and application methods. For example, anhydrous ammonia costs more up front than urea — but urea prices have risen disproportionately.

Placing fertilizer below the soil surface, preferably close to the sprouting seed, is typically more efficient than broadcasting it where it can dissipate into the atmosphere. Applying in the spring is better than the previous fall. However, those efficiencies could be moot if seeding is delayed, which reduces yield, or consumes more fuel, or if a farmer must invest in different equipment.

Every farm operation is unique, which can make budgeting a lonely process. Each change a farmer makes has a cascading effect on other production decisions, such as weed control. There are no one-size-fits-all answers — but there is a common ground zero.

Bond-stressed farmers who know what it costs them per acre to grow each of the multiple crops in their rotation are best positioned to make sharp decisions by day and sleep better at night.

Laura Rance is executive editor, production content lead for Glacier FarmMedia. She can be reached at lrance@farmmedia.com.