Rising wheat prices not a silver bullet for Alberta farmers

Rallying global wheat prices — driven higher by Russia's invasion of Ukraine — are leading some to wonder if Alberta producers will pivot their seeding plans in the coming weeks.

But farmers, who are already dealing with soaring costs, say those higher prices come with few guarantees, adding it may not convince many of their peers to shake up their plans.

Together, Russia and Ukraine account for around 30 per cent of global wheat exports, but the current conflict in the region means their production will be curbed. 

Lynn Jacobson, president of the Alberta Federation of Agriculture, said that while the chance for farmers to take advantage of the global shortage is there, it comes with some strings attached. 

"Your opportunity is really going to be dictated by conditions in your area and what happens on your farm. If you get enough rainfall, you can do exceptionally well," said Jacobson. 

Adequate moisture is just one factor that farmers are looking at heading into this season. 

While wheat prices have gone up, so have the costs of inputs farmers need to grow their crops, like fertilizer and fuel.

On top of that, many of the province's producers are still feeling the impacts of the 2021 drought and are shorter on cash than usual. 

How to finance this year's crop will be top of mind for many farmers, said Tom Steve, general manager of the Alberta Wheat and Barley Commission (AWBC).

Farmers also aren't ruling out the possibility of another drought, which may affect what seeds will go in the ground. 

"It's a complicated situation because it's a bit of a double-edged sword," said Steve. 

"[Regarding] high wheat prices, it's whether farmers will be able to broker a crop to satisfy those needs in the marketplace."

Why farmers may, or may not, make the switch

Stephen Vandervalk is a fourth-generation farmer who operates near Fort Macleod, Alta. He doesn't think that higher wheat prices will change farmers' plans too drastically. 

"I think you'll see some more wheat go in, but even with this price increase, [wheat] isn't necessarily that much better to grow relative to other options." 

Vandervalk said that high prices for commodities across the board — including barley and canola — means that farmers won't be rushing to replace everything with wheat. 

Maintaining a diversified portfolio and sticking to proper crop rotations to maintain soil health is just as important for farmers, said Vandervalk. 

"You're kind of stuck to your rotation," he said. 

"The best-case scenario is maybe you can add 10 or 15 per cent of your acres to wheat on top of what you originally were going to do." 

The nature of harvest and seeding cycles means that farmers aren't always in a place to react to trends broadly and quickly. Most favour long-term propositions over short term thinking, said Steve with the AWBC. 

Greg Sears, a grain and oilseed farmer near Grande Prairie, Alta., said his crop plans have been in place since November and he doesn't intend to change them drastically. 

A bigger picture 

Two other main variables will account for farmers being able to make their profit margins: weather and the cost of inputs, such as fertilizer.

"I think that the biggest factor of all is the environmental conditions," said Jacobson.

Last year's drought remains fresh in the minds of many.

"We went from our best crop on average in history to our worst crop on average in history. So it was a dramatic change, for sure," Vandervalk said. 

Sears said that while the effects of the drought varied from farm to farm, it left him with a lot of empty bins. 

"I've got about maybe 10 per cent of my production left to get off the farm, and even a lot of that has already [been] contracted. So we're not going to see the benefits of the current skyrocketing prices on commodities, which is unfortunate."

With prices of fertilizer, crop insurance premiums and fuel also going up, Sears said what he is seeing is an increase in the risks that farmers are going to take to get this year's crop in the ground.

"[That] basically means that in order to keep a margin of revenue, i.e. the profit in place, we need to see continued strong commodity prices on our sales," Sears said. 

Certain crops are more costly to grow than others, said Steve, so farmers may look to increase acres of more drought-tolerant varieties that don't require as much fertilizer. 

"A lot of farmers are a little short on cash going into seeding, so they're going to try to minimize their input costs. That might tip the scales slightly in favour of cereal crops like wheat and barley, because canola is a more expensive crop to grow."

While Steve said he thinks the crop sector has shown its resilience "time and time again," another year of drought would put a severe strain on grain farms. 

"We've really seen how the combination of a few events, be it weather or geopolitical or transportation, can really cause problems," added Sears.

"I think it just highlights how important it is to have good, stable food systems and agricultural policies so that we can keep a stable supply of food products out there."