by Treena Hein

2008 prices were up over 2007, but should decrease slightly for 2009 season

DUE TO A combination of factors, farm input prices were substantially higher in 2008 compared to the previous year, but producers should find that costs drop somewhat this spring. In comparison with the US, fuel and fertilizers cost slightly more in Ontario in mid-fall 2008, and pesticides were the usual 50 percent more.

These are the overall findings of Ken McEwan, professor of economics and business at University of Guelph, Ridgetown campus. McEwan has been conducting the Ontario Farm Input Monitoring Project for 15 years with research associate Randy Duffy.

“This annual study involves a quarterly survey of farm supply stores to collect cash retail prices on bulk fuels, fertilizers, and pesticides,” says McEwan. Prices on 44 farm inputs were analyzed from a minimum of three retail outlets in each of eleven centres in Ontario, four in Michigan, one in Ohio and one in Indiana.
 
At the time of the final 2008 study (October 1st) in comparison to the same point a year previous, fuel prices have risen an average of 23 percent and fertilizer prices a whopping 128 percent. Pesticide prices held their ground, showing an average increase of only two percent.

FERTILIZER PRICE JUMP
The high jump in fertilizer price over the past year was similar in Ontario and the US centres studied. “This is because there’s an ‘integrated’ North American fertilizer market, where anyone can import it, and because the raw materials come from all over the map,” says McEwan. He attributes the massive hike to higher global energy prices.

In comparison to mid-2008, fertilizer prices in October 2008 increased substantially. Nitrogen fertilizer products increased by 23 to 58 percent ($109 to $425 per tonne). Phosphate products jumped anywhere from 26 to 64 percent, showing increases of $311 to $578 per tonne, and Muriate of Potash increased by almost 50 percent or $313 per tonne. Liquid 10-34-0 was up 64 percent or $501 per tonne.

Anhydrous Ammonia prices October 1st 2008 ranged from $815 to $1,701 a tonne with an average price of $1,499. Urea prices ranged from $800 to $1,280 a tonne. Nitrogen Solution (UAN) prices ranged from $430 to $710 with an average price of $574. Mono-Ammonium Phosphate prices ranged from $1,240 to $1,601 per tonne with an average price of $1,491. Di-Ammonium Phosphate prices ranged from $1,250 to $1,565 with an average price of $1,486. Muriate of Potash prices averaged $970 per tonne with a range from $815 to $1,201. Liquid 10-34-0 ranged from $500 to $1,640 with an average of $1,280.

FUEL
Although fuel prices in Ontario rose an average of 23 percent from October 2007 to October 2008, average fuel prices in October 2008 showed a small drop from mid-2008.

Regular Unleaded Gasoline decreased by 13 percent or $0.17 per litre, Diesel Fuel (coloured) decreased by 16 percent or $0.21 per litre and Propane (farm dryer) decreased seven percent or $0.05 per litre.

On October 1, 2008, Regular Unleaded Gasoline prices ranged from $1.05 to $1.21 per litre with an average price of $1.12. Diesel Fuel (coloured) averaged $1.08 per litre with a range of $0.94 to $1.15. Propane (farm dryer) prices ranged from $0.52 to $0.71 per litre with an average price of $0.61 per litre.

PESTICIDES
From 2007 to 2008, pesticide prices in Ontario held their ground, showing an average increase of only two percent. These costs also stayed steady from mid-2008 to October 1st.

At that point, Roundup Weather Max was up $1.41 per litre or about 10 percent; 2,4-D Amine prices ranged from $6.97 to $9.60 per litre with an average price of $8.56. Atrazine prices ranged from $5.29 to $8.34 per litre. Banvel II averaged $38.09 per litre with a range of $34.50 to $42.43.

Accent prices ranged from $1.80 to $2.28 per gram. Dual II Magnum prices averaged $36.76 per litre. The price for Pursuit ranged from $213.64 to $274.75 with an average of $244.61 per litre while Roundup Weather Max varied from $12.00 to $17.04 with an average price of $15.53 per litre. Sencor prices averaged $66.55 per kilogram with a range of $60.80 to $86.00.

REFLECTIONS ON THE FINDINGS
McEwan expresses surprise at some of the variability that exists within the Ontario marketplace for the same product, after factoring in aspects like level of competition, distance to market and market size. “It’s only a matter of hours in terms of the trucking,” he says, “but prices in Eastern Ontario tend to be more than expected in comparison to south-western Ontario.”
 
When asked his predictions for 2009, McEwen is cautiously optimistic. “Energy costs have come down,” he notes, “which should mean fertilizer costs should follow.”

However, McEwan says the fact that retail outlets often acquire their supplies in the fall – in this case during the fall of 2008 when supplies were more expensive than those being purchased now – means growers may not see the decline they should. “It depends when the company you’re dealing with acquired their supplies,” he says.

Overall, McEwan hopes the data will continue to be useful to farmers in dealing with retailers or adjusting their practices. “Inputs are 30 to 40 percent of the cost of growing crops, and information on specific prices and overall trends help growers to maximize profit.”