Association studies factors that affect prices of important inputs and hopes a permanent survey could be established
The Agricultural Producers Association of Saskatchewan continues to work on a project that aims to learn more about farm input prices in the province.
APAS launched the Agricultural Price and Risk Management Project in August 2017 to learn more about the factors that affect the prices for important agricultural inputs such as fuel, fertilizer and farm chemicals.
The goal of the project was to examine the feasibility of implementing a permanent farm input price survey for Saskatchewan producers.
Unlike Alberta, Saskatchewan has not had a farm input price survey since 2002.
In 2016, APAS members passed a resolution to explore the need for such a survey. Some members felt an annual price survey or database would provide timely input pricing information and assist growers with input purchasing decisions.
Over the past few months, APAS has been canvassing its members to see if there is support for a permanent farm input price survey and whether growers think such a survey would result in greater price transparency.
The results have been encouraging.
“I think there’s always been concerns in Saskatchewan about farm input prices, especially since the province stopped doing (an annual survey),” said APAS president Todd Lewis.
“Farmers here have always wondered if a permanent survey would be something worthwhile or something that we could put together in Saskatchewan.… Phase 1 of our project certainly shows that there is an interest in it.”
Phase 1 was aimed at gathering basic information.
Among other things, growers were asked to complete an online questionnaire at www.apas.ca/input-price-survey.
As of early last week, 153 growers had completed the survey.
Of those, nearly 93 percent said they would use a farm input database to help make input buying decisions if such a database were available.
Respondents offered different views when asked whether shopping around for essential farm inputs is likely to result in cost savings.
Nearly 59 percent said it is very important to shop around when buying farm machinery, compared to 52 percent who said it’s very important to shop around when buying fertilizer.
Only 27 percent said shopping around is likely to result in lower prices for fuel purchases.
Similarly, when asked whether prices for key inputs are negotiable, nearly 60 percent said fuel prices are not negotiable, compared with 31 percent who said machinery prices are negotiable.
Survey respondents were also asked about bulk or volume purchasing.
The APAS project is trying to determine if large volume purchases can result in lower unit prices.
Lewis said group purchases may result in significant cost savings for smaller operators.
“I think Phase 2 of our project … will show that volumes are a big part of pricing, and if that’s the case, does that mean that a group of smaller farmers should get together and buy as a conglomerate, as a big unit, and then split their inputs between themselves?” said Lewis.
“If big producers are seeing lower price, then maybe smaller producers can organize themselves so they can take advantage of some of that bulk pricing.”
Reindorf Yeboah, an APAS researcher who has been managing the input pricing project, said most farmers who responded to the online survey identified fertilizer, fuel, seed and chemicals as the most important inputs on their farms.
A smaller number identified machinery, vet medicines, building supplies and livestock feeds as inputs.
Yeboah said written feedback from respondents was mostly positive, suggesting growers would like more information about pricing and the factors that affect input costs.
“Ninety-two percent said they were interested in this, so it shows there is strong support for this research,” Yeboah said.
In the second phase of the project, Yeboah will take a closer look at factors such as the effect of bulk purchasing on input prices, the effect of cash purchases as opposed to purchases made on credit, and the effect of loyalty programs that are used by input suppliers.
Lewis said Saskatchewan growers have long expressed an interest in an annual price input survey, but the province has shown no inclination to get involved.
It is unclear whether APAS would be interested in managing such a project, he added.
For now, APAS wants to learn more about farmers’ needs and whether they would find additional information useful.
“The initial results of our work show that certainly with chemical prices and fertilizer prices, people are very interested in what their neighbours are paying,” he said.