Canadian farmers are more concerned about their financial realities in the face of sticky input prices and lower commodity prices compared to a year ago. Many say they are looking to manage their costs where they can, as expenses are one area that can be changed for a growing season, unlike the weather.
As a part of the October Canadian Farmer Sentiment Index, RealAgristudies asked farmers about where they plan to focus cost-cutting measures. There are some clear no-gos, such as selling off land, but equipment spending and some product use is likely to get cut first.
The largest focuses of cost saving based on farmers saying “definitely” or “likely” were spending on equipment, using more generic products, and reduce the use of some in crop products (foliar sprays and biologicals). The most definite cost saving area is in equipment spending with 24 per cent of respondents saying “definitely”.
The areas least likely to be touched by cost saving are selling land, staff reduction, and cutting chemical rates.
If we look at what I’ll call core agronomic practices, farmers intend to forge ahead as planned. Only 17 per cent will skimp on seed costs, 17 per cent will cut fertilizer costs and 10 per cent will lower chemical rates. (Note: I got these numbers by adding “definitely not and unlikely”).
In cost management, it’s critical to ensure that you are not cutting costs that may end up hurting more significantly than the original cost would have been. For example, cutting all fertilizer application on the ’24 crop would likely lead to significant yield loss which would lead to a more significant financial loss. My dad often referred to this as “save a nickel to spend a dollar.” (Editor’s note: the other way to look at this is ROI — spend one dollar to make three or more).
Below are the actual rankings of each cost-saving measure. Remember that each is on a scale out of 5 ,with 1 representing “definitely not” and 5 being “definitely.”
If you have any additional questions or comments on this data, please send me an email [email protected]. A big thank you to our insights panel for participating in this months study as this provides a clearer picture of potential cost cutting strategies.
