It’s predictable.
Crop prices increase, giving farmers a long-needed rest from having to wring every last cent from their operations just to break even, but input prices rise too, cutting into potential profits.
Recently, fertilizer prices have been in the spotlight based on work done by Manitoba’s Keystone Agricultural Producers. It showed prices in central Manitoba have increased by about $40 per tonne since December for the most commonly used fertilizers on the Prairies.
Three prairie general farm groups have asked governments to investigate.
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Prices had been softening for most of the previous month, but heading into the Labour Day long weekend, the price drops were startling.
Perhaps most antagonizing is news from a KAP commissioned study that showed fertilizer prices in North Dakota to be significantly lower than those on the Canadian Prairies, even though some of the North Dakota supply is produced in Brandon.
The federal Competition Bureau has rejected calls for an investigation, but it has a narrow definition for what would prompt it to take action. Market dominance is not illegal in Canada. The bureau can step in only when it believes companies have abused their market positions through predatory pricing, collusion or some other illegal practice.
There is no such evidence in this case.
The fertilizer industry maintains the situation is simply a matter of supply and demand.
Supplies are short, so prices go up.
Canadian production is shipped around the world, so production within Canada does not necessarily equate to better prices here.
As well, the KAP study was too localized and too short-term to give an accurate picture, the industry says.
Still, it’s irritating for farmers.
While allowing the open market to set prices is generally a good idea, constant vigilance is required to ensure fair market practices are at work.
Rather than dismiss an investigation out of hand, governments must ensure everything is above board.
Beyond that, governments play a key role in encouraging investments that promote more competition and expansion in sectors where it is needed.
The Easter report in 2006 called on a Liberal government to institute polices
that would encourage more farmer power in the marketplace. This continues to be a sound plan. Mergers and expansions
among agri-business companies have reduced competition and limited farmers’ ability to shop around.
But there are signs that companies are listening. Viterra chief executive officer Mayo Schmidt has said his company will not take advantage of the recent crop price spike by charging farmers more for grain handling and farm inputs.
It’s a good business plan that places
long-term goodwill above earning a few extra dollars in the short-term.
Farmers may doubt such statements, saying they’ve heard it all before, but they can and doubtless will hold Viterra and other companies accountable.
They have done a good job so far in drawing attention to the issue and must continue to exert pressure to ensure appropriate actions can be taken when called for.
Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Ken Zacharias collaborate in the writing of Western Producer editorials.
