Grainswest - Winter 2022

Winter 2022 grainswest.com 31 be 10 cents, or maybe 20—it’s entirely discretionary—just compounds the issue as farmers are squeezed for more. “It doesn’t surprise me and it’s unfortunately in line with what we’ve heard from farmers over the past five years,” said Backman. “It indicates the contractual terms have been increasingly shifting risks onto farmers. It takes a year like this to see how far that process has developed. It’s concerning because farmers have viewed contracts in the past as a form of risk mitigation. They’ve been able to rely on contracts as a tool to ensure timely movement and steady cashflow.” With what some feel is a raw deal in a bad year, Backman said this may cause farmers to be more scrutinous when signing contracts. “Due to some of the penalties associated with the buyouts, they may be changing how they view contracts,” he said. “They may view contracts as risky in the future.” Additional economic hits continue to play out in other ways for farmers. Commodity prices are fantastic, which is always welcome, but it’s on the back of certain inputs likewise being priced at all-time highs. Anhydrous ammonia was priced between $1,200 and $1,500 in November while various farmers told GrainsWest their local fertilizer dealers were pricing 46-0- 0 fertilizer at more than $1,200 per tonne, double the price from a year ago. Similarly, glyphosate has been routinely quoted at $12/L or more, also double. Phosphorus crested above $1,300 and potash was more than $900. Add a tighter seed supply to the equation and 2022 is shaping up to be a pricy year. It also makes forward selling risky. Because supplies are tight, farmers are hesitant to make presales in the event they can’t even purchase seed. According to Fertilizer Canada, various supply chain problems have helped drive certain issues with procurement. China reduced its exports of nitrogen fertilizer, Belarus, a huge potash producer, faces political sanctions after civic upheaval and unrest, while massive storms in the U.S. Gulf region have all been sizable disruptions over the last 12 months. Chad Andrukow, general manager of agronomic consultancy Point Forward Solutions in Camrose said retailers are only buying fertilizer when a farmer confirms a sale. “It’s just because of the concern of the volatility,” he said. “Back in June-July, retailers were definitely speculating even then. The price of nitrogen has risen $600 a tonne. [With] that rise, there’s been a lot more hesitancy on retailers to go and buy fertilizer.” Many farmers are now resigned to wait until February or March, hoping prices will have come down, but supply remains the biggest overall issue. “What I’m being told from retails, is even if prices drop, it’s going be a challenge to get that product farmers want to get their hands on if they want to buy,” he said. However, he added, there is still reason to think 2022 can be profitable for farmers. “Commodity prices are nearly double what they were last year so the return on investment is still there as long as they hold until next year’s harvest.”