AN UPDATE ON FARM INPUT PRICES 2000-2004
by Ken McEwan, Economics Research Group Ridgetown College, University of Guelph

The Ontario Farm Input Monitoring Project was developed to provide consistency in reporting prices of farm inputs and to provide a basis for discussion and comparison of price differences between Ontario and neighbouring U.S. regions. Data reported in this update was supplied by this project which is funded by Agriculture and Agri-Food Canada. Table 1 reports average 2004 fertilizer prices for Ontario, as well as a comparison of five year average prices between Ontario and the U.S. For all but one fertilizer product listed in the table, the prices in 2004 were higher than the five year Ontario average. Prices for 2003 and 2004 were similar for most of the products listed, while prices recorded in 2000 were the lowest of the five years. A comparison of the five year average fertilizer prices for Ontario and the U.S. shows that Ontario prices are higher for six products and lower for three. Liquid fertilizer prices in Ontario were 11.3% higher than for the same product in the U.S. A total of 17 pesticides were collected and results for four are included in Table 1. For all four products listed in the table, the average price for 2004 was higher than the five year Ontario average. For two of the products listed, the five year Ontario price is higher than the five year U.S. price. Dual II Magnum is 21% lower in Ontario than in the U.S. When assessing five year average prices for the entire group of pesticides, however, the results are mixed with Ontario having higher prices for five of the seventeen products.
Table 1 includes price data for coloured diesel. The average 2004 price was approximately 17% higher than the five year average Ontario price. Table 1 also provides an estimate of what prices in Ontario might be for 2005. Using price data for the years 2000 through 2004 in a computer forecasting model produced the results shown. There is an indication that all fertilizers are expected to increase in price in 2005. Increases in the range of 2% to 4% over 2004 are predicted for potash and phosphate products. There is the likelihood that nitrogen products such as Urea, 28% and Ammonium Nitrate will also increase by this amount. However, anhydrous ammonia is expected to increase by 7.2% over 2004. Interestingly, the fertilizer trade is predicting nitrogen fertilizer to be in short supply this spring, with a significant price increase. Pesticide price estimates for 2005 indicate that there is likely to be a slight increase in prices. Three of the products listed in Table 1 show approximately a 3.7% increase but the price increase for the group of seventeen pesticides will be about 1% to 2%. Fuel prices have fluctuated wildly recently but, surprisingly, the computer model predicted a price decrease of 4.5% for 2005 for coloured diesel. It is unknown what will ultimately happen to fuel prices due to uncertainty in the oil producing countries. In summary, it is likely that most fertilizer and pesticide prices will increase in 2005. It is anticipated that nitrogen fertilizer will increase by at least 4%, while potash and phosphate prices have the potential to increase by 2% to 4%. With respect to pesticides, the 2005 price increase is likely to be 1% or 2%, and fuel prices are expected to remain volatile