As margins are expected to decrease this year for farmers, economic sustainability, innovation, and growth are at risk. So, what can be done to maintain profitability?
Earlier this year, farm management specialist Crystal Berthelette delivered a presentation on finding profit in 2025 at the Central Region Crop Meetings. She addressed the current cost-price squeeze, Manitoba Agriculture’s production scenarios for 2025, the importance of farmers identifying their own production costs, cost-cutting strategies that do not compromise yield, and ways to seek out opportunities to ensure profitability.
“Profitability is always important,” she said. “But in the 2025 crop year, grain prices are down from the highs of 2022 and 2023; however, crop input prices are not coming down as quickly. Additionally, land and machinery prices are rising continuously. A farmer’s margin is anticipated to be decreasing for 2025, which can put farm economic sustainability, innovation, and growth at risk.”
Average crop prices per bushel have been on a steady decline since 2022, which saw historically high prices for virtually all crops. Canola was priced at over $26 per bushel, wheat at around $16, soybeans at $20, and oats at $10. As of January 2025, canola is at $14 per bushel, wheat at around $8, soybeans at $12, and oats at just $4. This represents a significant drop: canola prices have fallen by 46 percent, wheat by 50 percent, soybeans by 40 percent, and oats by 60 percent in less than three years. While prices have decreased, the average cost of production per crop has risen since 2020. For instance, the cost to produce wheat was just under $400 per acre in 2020, but it has risen to around $575 per acre in 2025, which is a decrease from $620 per acre in 2022. Oats have increased from $350 per acre to $510, canola from $410 to $625, and soybeans from $380 to just over $500 per acre over the same period. When examining production costs, the majority of the expenses are allocated as follows: land accounts for 18%, fertilizer for 16.5 percent, equipment for 15 percent, seed for 12 percent, crop protection and pesticides for 8 percent, and fuel for 5 percent.
“[Farmers] cannot guarantee profitability but knowing their own costs to identify their breakeven yield and price is one major step,” said Berthelette. “Maintaining their yield while cutting some costs (efficiencies) can reduce potential loses.”
Cost-cutting strategies that do not compromise yield include:
– Conducting soil tests: guessing can lead to over- or under-application of inputs.
– Reducing fertilizer only if the timing or placement is improved: applying fertilizer in the spring is recommended if possible.
– Timing pesticide applications properly: poor timing can reduce overall yield.
– Investing in proven practices and products: seek out local third-party testing.
– Making informed decisions about equipment and land: excessive capital investment for your farm size can burden your operation.
When it comes to fertilizer, it’s important to follow the 4Rs:
– The right source: matching the fertilizer to crop needs.
– The right rate: aligning the amount of fertilizer with crop requirements.
– The right time: ensuring nutrients are available when the crop needs them.
– The right place: keeping nutrients where the crop can effectively use them.
“Farms cannot continue to produce food for Canada and the world when they operate in perpetual losses,” said Berthelette. “Any normal business might fold in the face of the financial losses many farmers face in a poor year. Farms are often asset rich and cash poor, making capital investments and growth a challenge at times.”
Despite farmers doing everything they can to achieve profitability, they face numerous challenges beyond their control.
“Hurdles are weather, unexpected changes in policy, trade, increasing costs,” said Berthelette. “Also, the ability to make sound decisions at opportune times. Major loss factors could be risking yield with poor agronomic decisions (including fertilizer) or missing opportunities to lock in profitable grain prices.”
Berthelette noted that the tactics for farmers remain consistent each year—identifying each farm’s profitability and understanding marketing opportunities are key to managing farm finances.
“Farmers should understand their costs to produce and store the crop, plus they need to know the grain price needed make profit,” said Berthelette. “Then they would have a marketing plan in place to achieve their goals of selling the grain at breakeven or profit-making prices. With grain prices down and crop input prices remaining high, it just may be harder to achieve as much profit in 2025.”
