Farm input pricing available in Canada, if you dig for it

Alberta, Ontario producers have better access to information

CNS Canada – When putting a crop in, costs can add up fast. Seed, chemicals, fertilizer are all expenses which vary year to year and it isn’t always easy to know if the price producers are paying is the best price.

Producers can spend their time calling and visiting different retailers shopping around for the best deal, but that quickly adds up in time and money. Farming is a business and saving money when putting in the crop can pay off in the long run.

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However, in some parts of Canada it is easier to find out if producers are getting a good deal. In Alberta and Ontario there are publicly available farm input surveys, which provide average prices for farm inputs. Across the rest of the country that information isn’t as easily available and isn’t nearly as detailed. And in some cases it’s available through private companies.

There are currently two main farm input price surveys in Canada, a survey from Alberta Agriculture and Forestry and the University of Guelph Ridgetown Campus’ Ontario Farm Input Monitoring Project.

The monthly Alberta Agriculture and Forestry survey was started in 1976 and collects information from up to 25 centres across Alberta on 54 farm inputs. The input list is periodically reviewed with new inputs added as needed and others dropped or modified.

Alberta Agriculture and Forestry partners with the Alberta Federation of Agriculture (AFA) to complete the survey, using AFA representatives to collect the data each month. The data is then sorted, calculated into averages, compiled into various tables by the Alberta government and published online.

The only report similar to Alberta’s currently in Canada is done by the U of G Ridgetown Campus. The U of G’s report has been published at least three times a year, starting in 1993.

U of G’s report covers 46 different inputs such as fuel, fertilizer and pesticide prices. They send out survey enumerators to locations in Ontario and the United States, standardizing and then sorting the data, publishing the averages online.

“It provides assurances to (producers) that we do work in a North American market. Grain flows freely back and forth across the international border, between Canada/United States. So this…ensures that the pricing here is competitive with their U.S. counterparts,” said Ken McEwan, director of the Ridgetown Campus for the U of G.

In Saskatchewan, the provincial government used to do a farm input survey. In 2002 it was discontinued. Since then the Agricultural Producers Association of Saskatchewan (APAS) has paid attention to the situation and last year decided to do something about it.

For phase one of the project APAS completed a survey of Saskatchewan producers and found that 91 per cent of respondents said they would use a farm input survey if it was available. APAS also collected a listing of different commodities producers would like to see on it.

APAS is now starting the second phase of the project, a feasibility study. They are looking at possibly applying for funding from the Canadian Agricultural Partnership and are considering other options for further research such as partnering with a grad student or university researcher.

A number of reasons spurred APAS to action on the issue, including the federal government’s funding model. Currently Alberta’s survey is used for federal programs, like AgriStability, even though input costs in Saskatchewan and other provinces may differ.

APAS also believes situations have changed for producers with inputs playing a larger role on the farm now. The group has heard from younger producers that they want access to information to lower input costs to help stabilize their farm finances.

“The business model wasn’t for such high use of inputs (in 2002). It wasn’t such a huge component and farms were smaller. I think when you’re looking at the size of current farm operations and the amount that they are spending in inputs, the relative risk of making money or losing money is higher,” said Duane Haave, general manager of APAS.

While APAS is looking into bringing the survey back, a new private company which provides price transparency has set up shop on the Prairies and Ontario. The American company, Farmers Business Network (FBN), expanded into Canada earlier this year. The farm management technology company offers a range of services, including a price transparency tool.

Producers who sign up for the service can submit their farm input costs. FBN then gathers the information and disperses it anonymously amongst their user network so producers can compare costs.

“We’re building a digital farm economy, an independent farm economy online that gives farmers, our members, much more pricing power. It gives them much more intelligence and it gives them much more access than the current industry provides,” said Charles Baron, co-founder and head of product for FBN.

FBN is still a relatively young company, just having launched in the United States in 2015. However the company’s price transparency tools have had an effect on the American agriculture industry. According to Baron, through FBN’s data collection it found producers can be paying two to even three times as much as their counterparts for products.

“There was no price transparency in the market (before us), meaning it was very difficult for a farmer to actually shop around for inputs,” Baron said.

When asked, those in Canada agreed that producers’ having more access to information is a good thing and helps to level the playing field for manufacturers, retailers and producers. However, they cautioned that producers have to make sure they’re getting accurate information.

“More information is always preferred to less. Now the question becomes is making sure the information you get out of it is accurate and that you can actually use it then to go off to make some management decisions,” said McEwan.

Farm Credit Canada (FCC) also offers information on farm input pricing. Once a year, the crown corporation publishes an online outlook report about Canada farm input pricing. FCC uses publicly available data such as the Alberta government’s survey.

“We want to try to add value in terms of the industry and point out trends that might not be as in your face,” said Craig Klemmer, senior agriculture economist with FCC.

The report breaks down different trends in farm input costs and then combines it with economic factors such as the Canadian dollar’s value. FCC’s goal with the report is to help producers gain knowledge to use in their production planning.

Both the Canadian and American governments also provide public information on farm input pricing online. Statistics Canada publishes quarterly reports for farm input costs across the country, while the U.S. Department of Agriculture (USDA) publishes regular reports.

The Statistics Canada report has been around in varying forms since 1961, however since 2011 the data has been strictly administrative. Meaning there is no survey done to specifically collect data for it; instead the data is collected from surveys done by other groups and from other Statistics Canada’s surveys such as the industrial product price index and the consumer price index.

The USDA’s cost and return estimates report covers a variety of farm expenditures. The data breaks down the average cost of everything from chemicals to farm labour for major U.S. crops in various agriculture areas across the country.

In Canada, other jurisdictions, besides Alberta, Saskatchewan and Ontario, have voiced interest for farm input surveys. At U of G, McEwan has heard there is interest in the Maritimes for a survey, particular amongst potato growers. Quebec producers have also showed interest. Both Manitoba and British Columbia do not have surveys.

While having access to the information is helpful for producers, there are still other factors which influence farm input purchasing. Through its research into implementing a farm price survey APAS has found there are some limitations for producers when it comes to shopping around.

“There’s certainly a distance issue. There’s a lot of travel that has to take place if you’re going to go to an alternate supplier and I think that might affect the way pricing works,” Haave said, adding APAS hasn’t been able to determine how much bulk purchasing affects pricing in Saskatchewan.

Having access to the information does however provide a benchmark for both producers and retailers. In Ontario, McEwan has found both retailers and producers find the survey helpful.

“The relationships I like to think that retailers have with their customers are stronger than just simply the price that we supply. So I think (the survey) allows for good communication,” he said.

About the author

CNSC

Ashley Robinson writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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