If You Think US Fertilizer Prices are High, Canadian Farmers Are Stuck With Surprising Fertilizer Tax

As Ontario, Canada farmer Julie Maw scouts her wheat fields, it’s the moment of truth for the record number of acres planted across the province this year.

“There’s some brown, but there’s a lot of green,” says Maw, as she digs up wheat to check the roots. “It’s a solid consistency, so I think it’ll make it.”

The soft red winter wheat crop is breaking dormancy across the region, and this year, farmers are uncovering fields with promising yield potential.

“It has some good roots, considering the winter,” Maw says.

The crop looks strong, which comes as a surprise to Maw and other area farmers.

“We haven't seen much rainfall,” says Maw, who says last year’s crops struggled due to dry weather. “We have a lack of snow, a lack of freezing temperatures. It’s going to have an impact, I think, unless the clouds open up between now and planting. Hopefully it’s just not during planting.”

Maw and her husband, Kyle, are the third generation on their Lambton County farm. In addition to the ground they farm, the Maws have a seed business and do some custom farming work. Just this year, Maw became one of two females to ever serve on the Grain Farmers of Ontario (GFO) board of directors. All the various hats Maw wears from day to day are also what allows her to keep a pulse on agriculture beyond what she can see on their farm.

Lately, the buzz from farmers is about the uncertainty of what to plant this year, especially with high input prices.

“Last year was a tough year with input costs the way they were,” Maw says. “It wasn't just seed that was expensive, but fertilizer was expensive, gas was expensive. People saw that fluctuation and that increase, and the larger scale farms can muffle that a little bit easier than our smaller farms. Some are waiting until spring to put in those orders because of availability of income.”

Maw says that’s a shift from the past five years, when farmers were eager to put in seed and input orders to save with early discounts. However, that changed this year, and it all has to do with concerns about prices and available cash.

Crosby Devitt, CEO of GFO, understands the angst, as he says the risk tied to this year’s crop is high.

“Going into spring, farmers probably have more invested in their crop in 2023 than they've ever had in their entire career of farming,” Devitt says.

Brendan Byrne farms in Essex County, Ontario, but he’s also the current chair of GFO. When we talked to Byrne a year ago, fertilizer availability was an issue. Russia had recently invaded Ukraine, which posed problems getting vessels into Canada. The uncertainty was high, but a year later, Byrne says fertilizer availability across Canada has improved. The bad news for farmers is fertilizer prices are still high.

“We were able to get the supply in last year, it was very tight, but those boats that arrived had to pay a fertilizer tax tariff when Russia lost its ‘most favored nation’ status for Canada. We were hoping that [the tax tariff] would be worked out between fertilizer companies and the government, but it ended up not being done,” Byrne says.

The fertilizer tax was imposed after many farmers had already paid for their fertilizer for the year. With the new policy put into place, it meant any vessel coming into Canada from Russia got taxed. The fertilizer tax was then passed on to farmers, which Byrne says came as a shock to many.

“After crops were planted, tariff bills arrived for farmers to then pay,” Byrne says. “[GFO is] still trying to work with the federal government to get that money back into farmers’ pockets.”

That fertilizer tariff is still in place on any products from Russia, but buyers have been able to source products from other countries, for now.

“They have said if supply is very tight, they might have to bring in a ship. [GFO is] still trying to rectify the tariff situation.”