MOOSE JAW, Sask. – Farmers attending two conferences here recently decided that while they can’t control grain prices, they can do something about input costs.
Western Canadian farmers spend about $8 billion a year on inputs, director Ron Gleim told a Saskatchewan Association of Rural Municipalities meeting, repeating comments he made a day earlier at another Moose Jaw conference, Farming for Profit.
“If we could take 10 percent of that and put it in our pocket, we could double or triple our take-home pay,” Gleim said.
The largest portion of input costs – $2.4 billion – is spent on grain handling and transportation, followed by depreciation at $1.35 billion, and fertilizer, chemicals and seed worth $1.25 billion, he said, noting the latter category also carries high interest rates in the range of 18 to 24 percent.
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Gleim suggested producers in Western Canada form a huge buying co-operative. They could finance the co-op through a federal loan program at six percent interest.
“We could buy our fertilizer in unit train lots and we could basically deliver them to farmers at certain elevators,” he said. “If we could save 10 to 20 percent … we would put a lot of pressure on the grain companies and input dealers.”
But Saskatchewan Wheat Pool director Rod Dahlman told the Farming for Profit conference that input costs are eating up grain companies’ profits, too. He said grain companies have tried to do their part for producers, holding tariffs low “to our detriment.”
“We’ve driven the volumes up to 10 million tonnes until we make any profits at all,” he said. “If you think there’s any money in the grain business, you’re wrong.”
Dahlman also said the pool makes a big commitment to producers through a deferred inputs program at zero interest.
Gleim agreed, but said producers still get hit with the interest if they don’t, or can’t, pay the bill in the fall.
Some Saskatchewan rural municipalities have formed a petroleum buying group to save money. In an interview, Gleim said an input co-op would be much larger.
“We have to look at all the options and look at whatever vehicles will work,” he said.
“This is really the only thing we can do. If we don’t send some messages out to young people that this is a profitable business, they’ll never come back.”
Rural councillors agreed with Gleim, voting to research ways to put competition into agricultural input markets.
