Alberta farmers are facing a tough harvest season this fall due to record-high diesel prices, which have nearly doubled compared to last year. Kody Traxel, who runs Traxel Ag Ventures near Seven Persons, says his fuel costs have skyrocketed, with diesel averaging $2.18 per litre. He estimates that harvesting his high-yield corn crop cost upwards of $100,000 in fuel alone, and his total diesel expenses for the year could double as his farm operates more equipment.
Graeme Crosbie, a senior economist at Farm Credit Canada (FCC), notes that diesel prices have reached unprecedented highs during the harvest season, adding to the financial strain on farmers who were already dealing with tight margins. The federal government extended a fuel excise tax holiday on diesel until January 2027, and the Alberta government paused its provincial tax on diesel for three months starting October 1. Despite these measures, farmers like Traxel are still feeling the pinch, with diesel costs cutting into their profits.
The rising fuel costs are being passed on to consumers, as trucking companies apply surcharges on deliveries. Traxel mentions that a recent load of gravel for his farm's roads and feedlot came with a significant fuel surcharge, making the transportation costs exceed the price of the materials themselves. While farmers may find small efficiencies, the need for diesel in operations like harvesting remains unavoidable.
Crosbie estimates that rising diesel prices could cost Saskatchewan farmers an extra $37 to $49 per hectare, with similar impacts expected in Alberta and Manitoba. For a 2,000-hectare farm, this could translate to an additional $70,000 to $100,000 in fuel expenses alone. Traxel remains uncertain about his farm's profitability compared to a decade ago, stating, 'Nobody's getting rich, that's for sure.' He has not passed on the rising fuel costs to his clients this feeding season but may have to do so next year if diesel prices stay high.
The impact of these surging diesel costs on food prices remains unclear. FCC economists note that past increases in diesel prices have had varying effects on food inflation, with changes typically appearing six to 12 months later. Crosbie highlights that the strength of the Canadian dollar against the U.S. dollar also plays a role in food prices, particularly for imported fresh produce.