Derryn Shrosbree, founder of 33seven, joins BNN Bloomberg to discuss the effects of the rising cost of fertilizer and fuel. <\/p>\n
Unless the conflict in Iran improves, rising fuel and fertilizer costs will trickle down to groceries in just a few months, says a farming expert. <\/p>\n
With the closure of the Strait of Hormuz, about a third of the world\u2019s fertilizer supply cannot move<\/a>. As a result, urea and dry nitrogen, which are essential components for growing crops, have jumped by hundreds of dollars per tonne, explains Derryn Shrosbree, a farmer and advocate with 33seven, a Toronto-based advisory firm for farmers.<\/p>\n These price hikes mean it now costs a farmer $40 to $60 more per acre just to plant and maintain their crops, he says. <\/p>\n \u201cThat\u2019s obviously impacted the cost of inputs for the farmer, says Shrosbree.\u201dIf this continues, yes, we\u2019re going to run into shortages.\u201d<\/p>\n \u201cAnd that will be a very tricky thing for the consumer, because prices will spike fast.\u201d<\/p>\n He says farmers are seeing a $500 per tonne increase in urea, which is a part of base fertilizer, and also a $250 a tonne increase in dry nitrogen.<\/p>\n Overall, he expects a 10 to 15 per cent increase in base commodity prices, though this will fluctuate significantly depending on the product type.<\/p>\n No supply shortage<\/p>\n The effects of high fuel and fertilizer prices will lag because there is no current supply shortage for farmers, says Shrosbree.<\/p>\n He says Canadian farmers have already stockpiled enough fuel and fertilizer on-site to plant their crops for the upcoming season. <\/p>\n \u201cWe will get into the field with no problem with enough nitrogen, urea, sulfur, phosphates, etc,\u201d says Shrosbree.<\/p>\n \u201cSo we\u2019re hoping that things calm down a little bit, and by harvest time, which is sort of September time.\u201d<\/p>\n He says if farmers face severe diesel shortages by harvest season, it will affect the crops. <\/p>\n \u201cCombines are very thirsty machines, and go through diesel at a rapid rate. So we definitely want to get this thing done and dusted, so to speak, by hopefully September.\u201d<\/p>\n \u2018Not all doom and gloom\u2019<\/p>\n He says the current energy market turmoil is similar to the initial shock of the 2022 Russia-Ukraine conflict<\/a>, where oil prices spiked and then stabilized as the global supply adjusted to a new normal. <\/p>\n \u201cSo we\u2019re sensing that this will happen again here,\u201d says Shrosbree.<\/p>\n He says that, in the meantime, it is \u201cnot all doom and gloom\u201d. With the Bloomberg Commodity Index up six per cent year to date, he is expecting strong exports.<\/p>\n He also says the Canadian canola industry has seen significant relief regarding tariffs on exports to China with Canola seed tariffs<\/a> down to less than 15 per cent. <\/p>\n \u201cSo we\u2019re super optimistic for a great season, and I think that the commodity prices will more than offset the input prices,\u201d says Shrosbree. <\/p>\n \u201cAs you know, Canadian farmers are extremely resilient. We\u2019re used to taking hockey pucks to the face constantly. So we will find a way around this, like we do on most of our challenges.\u201d<\/p>\n Canadian government has been helpful<\/p>\n A federal assistance program for farmers has been particularly useful, says Shrosbree.<\/p>\n