B.C. farmers were already under siege from the ongoing supply-chain interruptions and rise of fuel and labour costs – but the Ukraine-Russia war certainly isn’t making the situation any better.
The Optimist reached out to several local farmers to get their analysis on the situation in Delta and farther afield.
Delta South Liberal MLA Ian Paton, who has decades of farming experience in Delta, says the main obstacles farmers around the world are facing come down to the ‘three Fs,’ – fuel, fertilizer and feed.
First, let’s look at fuel
Russia is the world’s third largest oil producer (with the United States and Saudi Arabia ahead of it) but it is the world’s largest oil exporter to global markets and the second largest crude oil exporter after Saudi Arabia, reads the International Energy Agency’s February fuel report.
Even before Canada banned crude oil imports from Russia on Feb. 28 in condemnation of their invasion, Canada was not importing any crude oil from them and haven’t since 2019. But that hasn’t stopped sky-high prices at the pump.
Of course, fuel was already expensive within Metro Vancouver before the war began, but a few weeks ago, it reached a high of $2.14 per litre.
Experts cite supply chain issues and the war-induced uncertainty surrounding the crude oil supply, a significant amount of which comes from the now-globally-sanctioned Russia.
“Those of us responsible for only fuelling one vehicle felt – and are continuing to feel – the crunch but imagine farmers who have 40 tractors to fill up,” said Paton. “You can imagine now what they’re paying for diesel, compared to what they were paying a couple of years ago. It’s absolutely insane.”
On March 25, B.C. Premier John Horgan and Minister of Public Safety/Solicitor General Mike Farnsworth announced that ICBC will be providing a one-time $110 rebate to drivers and a $165 rebate to commercial drivers to ease the fuel price burden.
Eligible ICBC customers can expect to receive their rebate by May or June, but for farmers who are spending up to hundreds of thousands of dollars each year on fuel, this rebate won’t come close to ever tickling their input costs.
Peter Guichon of Delta-based Felix Farms agrees that fuel costs are significantly increasing their 1,200-acre operation’s input costs. He says he’s predicting as much as an 80 per cent increase, compared to last year, in the farm’s annual fuel bill this year if diesel and gas continue to be this expensive.
Now, onto fertilizer
“The issues with fertilizer first surfaced all the way back late last summer, early fall, with issues that arose out of China with supply, and they’ve just been compounding since that time, which has resulted in increases anywhere from 45 to 65 per cent on fertilizer costs,” says Murray Driediger, president and chief executive officer of the locally-grown produce distributor BC Fresh headquartered in Delta.
“But these types of increases in supply-chain issues were long apparent before the invasion of Ukraine – fuel costs, as well ... The situation in Ukraine has probably escalated some other issues that were already out there,” he adds.
According to BC Stats, Canada’s number one import from Russia in 2021 was mineral, chemical and nitrogen-based fertilizers, which backs up Driediger’s thoughts – though fertilizer costs were already increasing before war broke out, the lack of usual shipments Canada would receive from Russia continues to hit farmers hard.
“Some farmers are saying if they cannot actually get fertilizer delivered to their farm, they might not even plant the crop ... Because if you plant a crop with no fertilizer, you’ve got a complete dud on your hands, so fertilizer is extremely important to any particular that you’re growing,” added Paton.
The disruption, again, comes from the imposed sanctions, as well as Canada removing Russia from their most-favoured-nation list of trade partners. North Korea, and now, Belarus and Russia are the only countries to be removed from the list, which means all goods from these countries are subject to a 35 per cent tariff when imported.
Guichon, who is also the chair of BC Fresh, calculated that Felix Farms could see their annual fertilizer bill increase around 66 per cent, compared to last year, and has bought “a bunch” of fertilizer ahead of time to prepare for shortages.
“I mean, when you can’t get something, the price goes up because of that,” he summarizes. “We haven’t seen one thing that’s stayed flat – everything, [all our costs].”
And finally, feed
And when it comes to how the war has affected “feed” supplies, like wheat, barley and corn that would be milled into feed for both humans and livestock, the usual exports that would come from Ukraine and Russia are no longer leaving the countries.
The Kiel Institute for the World Economy – a German-based institute focused on economic research and globalization issues – named Ukraine as one of the most important grain exporters in the world, while highlighting how countries who rely on their exports could have their food and livestock’s feed supplies impacted.
Though Ukraine exportation halt isn’t negatively impacting Canada as severely as other countries, the “good side” of this feed shortage is the price of these crops in Canada could improve for Canadian farmers, says Paton.
However, because of the increasing input costs that farmers are facing, including trucking costs, folks could see an increase to their produce and food prices.
“Absolutely everything is going to be changed in our society right now with the cost of transportation and also the cost of supply-chain interruptions ... Everybody’s going to be impacted by the input costs of farming going through the roof,” says Paton.
As for supporting farmers in Delta, Paton, Driediger and Guichon all agree that shopping locally, buying at Delta farmers markets and food stands and looking for B.C. and Canada-produced food at the grocery store are all good ways to go.
“We, [the produce industry], at this particular point don’t see an end in sight in the near future and suspect it’ll be some time in the second half of this year before we start seeing some return to normal, providing no further disruptions,” says Driediger.