Why Canada's 2022 Crop Might Be The Most Expensive Ever

As temperatures warm up and it comes time for farmers to sow the season's crop, those in Canada predict that they are going to be looking at one of the most expensive operational years ever. CTV News reports that high inflation, expensive diesel fuel for farming equipment, and manufacturing disruptions for products like fertilizers seem to have increased the cost of doing business for farmers. Inflation in Canada hit a 30-year high this week as it reached 6.8% (via Al Jazeera).

CTV News spoke with Calgary-based agricultural producer Tara Sawyer about these rising costs and noted that the prices of fertilizer and diesel fuel cost close to twice as much as they did in 2021. To make matters worse, many of the country's farmers had minimal profits last season. Sawyer says their final yield was reduced by about 30% last year due to a terrible drought.

"Most farmers, including us, saw a 30 per cent reduction in our yields, so we need to be able to have really good yields come out this year in order to pay for that. But in our region, we're already horribly dry, so we're concerned," Sawyer said.

High commodity prices may be saving grace

One boon for much of the agricultural industry is that the same economic forces raising their costs are also raising the prices for their commodities. According to CNN, corn commodity is valued at 778.25 cents per bushel. That's up from this time last year when it was valued at 656.00.

Wheat has seen an even higher increase. It spiked from 793.75 cents per bushel on February 13, 2022 to 1,201.50 on February 27, 2022, and has remained high since then. This meteoric value increase is likely due to the Russian invasion of Ukraine. According to CNBC, Russia and the Ukraine produce about 30% of the world's wheat. And, as Russia continues to be under severe economic sanctions amid the ongoing conflict in Ukraine, the price of wheat seems poised to remain high.

Farmers will need a remarkable yield to make up for the high buy in costs from this season. LeftField Commodity Research's Jon Driedger says that even with average yields, many farmer stand to make a profit this year (via CTV News). "For those farms that are fortunate enough to harvest a normal crop or even better, it could be a great year. But there'll be a lot of farms for whom that's looking awfully precarious right now," he explained.