Farmers prepare for impacts on business from skyrocketing diesel prices

Rising gas prices are top of mind for all Canadian consumers these days, but the problems go much deeper than the bill at the pump. Skyrocketing diesel prices have enormous impacts on various industries, especially farmers.

“My expenses last year were about $38,000 on diesel for the year. This year I’m expecting that to be close to 50 thousand, if not more,” said Catherine Kroker-Klassen, with Manitoba egg farmers.

“It’s just something we have to accept, and we keep going, and hopefully next year could be a better year.”

Kroker-Klassen is a fourth-generation grain farmer with her brother near Landmark, Manitoba. She says her equipment uses diesel exclusively, leaving her little option other than eating the higher costs.

“We are absolutely concerned; it makes me a little nervous, actually, just to talk about it. My brother and I spend quite a lot of time over the winter coming up with a budget and planning, and okay, what crops are we going to put in and all those things, and do our best, but then when things like this happen, that budget is out the window, and there’s nothing we can do about it,” said Kroker-Klassen.

Adding to the pressures on farmers, one economics expert warns that the war in Iran is also causing a shock to fertilizer prices.

“Particularly ammonia or nitrogen-based fertilizer.  That kind of fertilizer takes a lot of energy, and typically those factories or facilities are located near oil fields or other energy-rich areas such as behind the Strait of Hormuz, and this is going to affect all the input costs for farmers,” said Dr. Shiu-Yik Au, an associate professor of finance at the University of Manitoba.

Dr. Shiu-Yik Au says the ultimate concern is a trickle down to consumers, telling city news we haven’t seen a situation like this since early 2022, when Russia invaded Ukraine. Back then, grocery prices went up 8.9 per cent year over year.

“I don’t know if it’s going to rise by 8.9 per cent in this crisis, because there was also a triple whammy of the pandemic ending as well as the shock of a lack of supply from Ukraine, but it will definitely increase the cost of food for consumers,” said Dr. Shiu-Yik Au.

For Kroker-Klassen and other farmers, with equipment set to be pulled into the field in a matter of weeks, they have no choice but to plow ahead.

“Yeah, the supply and the costs are there, and we’re going to have to deal with that, but the focus now is getting equipment ready and getting out there and planting those seeds. We know we need to produce food; the world needs to eat,” said Kroker-Klassen.