Southeastern Manitoba farmers face soaring fuel, fertilizer prices caused by Midde East war

Southeastern Manitoba farmers are facing extra strain ahead of the spring planting season as fertilizer and fuel prices surge due to the escalating conflict in the Middle East.

Randolph-based farmer Kevin Peters is watching the price turmoil closely. He plants rye, canola, wheat, soybeans, corn and sunflowers on his 7,500 acres. Peters locked in pricing for his year-long fertilizer supply in November and considers himself lucky.

“There’s always concern about geopolitical issues.” he told The Carillon. “Whether it has to do with trade or, in this case, fertilizer supply…it can really affect imports and exports for a lot of things.”

The United States and Israeli attacks on Iran began Feb. 28, striking multiple targets throughout the middle eastern nation and killing its Supreme leader Ali Khamenei. Iranian military personnel retaliated, launching missiles and drones at neighbouring nations and vessels passing through the Strait of Hormuz, which flows between Oman, the United Arab Emirates and Iran, grinding the shipping lane to a halt. The New York Times reported on March 25 at least 17 ships have been struck since the conflict began.

Spring planting often brings a bump in fuel usage for Peters, and he was tipped off by his fuel supplier to stock up before the price spiked further. Peters filled his 12,000 litre fuel storage at $1.30/L on March 6.

A good harvest last year has afforded him some reserves, but margins are still tight as expenses such as fuel and fertilizer aren’t showing signs in decreasing soon.

“Things are challenging and things are sometimes a bit tough. But at the end of the day, I think we (farmers) all love what we do and and take pride in producing, you know, good, clean food,” he said.

Keystone Agricultural Producers president Jill Verwey said it was difficult to find a clear price because of the uncertainty in the region. In the fall, urea-based fertilizer was roughly $800 per tonne, but that has rocketed to $1,400 per tonne, she said. Much of the Manitoba’s nitrogen fertilizer is supplied by the U.S., which is shipped through the middle eastern passage.

Input costs haven’t declined at the same rate as commodity prices for wheat or soybeans since before the COVID-19 pandemic, adding extra strain to farmers’ narrow margins, Verwey noted.

“If we want to expand or invest, you know, there’s, there’s less and less dollars available to make those critical investments on the farm,” she said.

There may be more fertilizer demand in the spring planting season because the wet fall prevented many farmers from fertilizing their fields after harvest, she noted.

Verwey expects farmers to be conservative when pursuing capital investments while weathering the market instability.

Gas prices in Manitoba jumped from 122.7 cents per litre on Febrauary 21 to 169.7 on March 24, according to fuel pricing index GasBuddy. In Steinbach, prices hovered at 173.9 cents on March 25.

Jonathan Friesen, an agronomist with Clearview Co-op, said the fertilizer sector has suffered prior to the Iranian conflict, with Canadian plants closing down and the high amount of corn planted in the U.S., which demands urea.

“This whole thing with Iran was really probably the worst timing we could have here when it comes to fertilizer and really just added fuel to the fire,” he said.

The Middle East is one of the top global nitrogen and urea fertilizer producing regions, with 35 percent of global supply floating throughout the Strait of Hormuz, Friesen said.

“Comparing commodity prices to fertilizer prices, the affordability of it, it’s some of the worst it’s ever been right now,” he said.

Friesen recommended farmers should track costs carefully and lock in pricing for the spring if supply becomes an issue.