Ag producers expect challenges to continue into 2022

Posted on January 11, 2022 by 40 Mile Commentator

The coming 12 months could be another turbulent year in agriculture, specifically in the first two quarters, experts warn.

“My concern going forward is how we’re starting off 2022,” Steve Dziver, owner of Commodity Professionals Inc., said in a recent interview with Alberta Pork Producers Development Corp. “We’re not starting in a great spot.”

There are several threats to the 2022 production year, Dziver said, including lasting drought conditions, inflated commodity and energy prices, high feed costs and supply chain interruptions.

Dziver believes drought conditions will remain through the first half of 2022, but hopes to see improvement in the mid- to late-summer. The Canadian Drought Monitor lists Medicine Hat as experiencing ‘extreme drought,’ along with Redcliff and Brooks. Taber and Lethbridge are listed as ‘severe drought.’

“If we get into planting in the springtime period and (drought) conditions haven’t changed, the unfortunate reality is that there’s not a whole lot that can change between now and the next crop,” Dziver said. “We could start to see the El Nino pattern come in later in the year when we might turn to a bit of a wetter prairie weather, which stretches Alberta, Saskatchewan and Manitoba … It wouldn’t be an event which would be big enough to push us into harvest delays; more so what they’re talking about is a late summer resurgence of moisture, which in a growing season is very welcome.”

Drought conditions in 2021 resulted in lower yields, a large feed shortage and increased feed prices. Dziver doesn’t expect to see changes to feed prices in the first half of 2022.

“Simply put, for feed prices, there is no fundamental change expected in the first and second quarter. The 2022 third and fourth quarter really just comes down to whether we get rain,” said Dziver. “The good news is, I don’t expect we’re going to see a lot more increases. From what we’re seeing today, we’ve somewhat plateaued on some of those commodity prices and really it’s going to come down to what that next year’s crop looks like.”

While feed prices may remain steady, Dziver believes commodity and energy prices, as well as labour costs, could increase. In 2021, inflation for goods in Canada reached 4.4 per cent and for services, 2.1 per cent. The Bank of Canada is predicting “inflation will stay high during the first half of 2022 and ease back towards two percent in the second half of the year.”

“It hurts now. It’s going to probably hurt for at least another half year. The only plus out of this is meat prices are going higher too,” said Dziver.

Moving into 2022, he encourages Canadian producers to work together and continue building local connections.

“I think we’ve got each other’s backs when it comes to looking towards 2022. As much as we can say we’re a bit of a divided market with packers and producers and the feed companies and the trucking companies and the vets and the medications, we’re all still one industry.”