At the recent St. Jean Farm Days, Darren Bond, Farm Management Specialist with Manitoba Agriculture, delivered a sobering message to farmers: it’s time to sharpen their pencils and prepare for tighter margins in 2025.
“Commodity prices have come down quite a bit, while input costs have only slightly decreased,” Bond explained, describing the cost-price squeeze impacting profitability. According to Manitoba Agriculture’s cost-of-production analysis, many key crops in the province will lose between $30 and $50 per acre, factoring in all expenses, including land and equipment. The outlook suggests leaner times ahead, requiring careful financial management from farmers.
“There is still opportunity for profit, in my opinion,” Bond added, encouraging farmers to focus on controlling costs, improving efficiency, and adapting to the shifting economic landscape.
Bond said land and equipment costs will vary significantly among farmers. Those with higher equity or less debt, often older farmers, may still see some profit this year.
“In contrast, younger farmers or those who recently expanded using debt could face greater challenges. However, there is still potential for profit,” he said.
Grain pricing will be crucial this year, as always, but rallies are becoming fewer, shorter, and more unpredictable.
“Knowing your cost of production and profitability points allows you to make quick, informed decisions—something that could be essential to turning a profit this year.”
Farmers need to take their cost management even more seriously this year. In the past, during years of strong profits ranging from $150 to $200 per acre, a $40-per-acre mistake was easier to absorb. However, in a break-even year like this, that same $40-per-acre mistake could turn breaking even into losing $40 per acre, significantly impacting working capital and future decision-making.
In tight-margin years like this, small moves can have a big impact. Staying on top of costs and management is critical as the industry pivots from recent good years to a more challenging environment.
“It’s essential to sharpen your management focus, rely on accurate data, and be ready to make informed decisions quickly,” said Bond.
Sharpening management practices is essential when looking ahead. While many producers are adapting and becoming more diligent, some still hope the good times will return. However, preparing for tighter margins requires proactive planning and realistic expectations.
Grain prices no longer show the vibrancy seen in past years, and some producers have been slower to adapt to this reality. However, our producers are among the best—smart, resourceful, and capable of adjusting. The key is to act sooner rather than later.
“Much like steering a ship toward shore, making course corrections early provides more options and better outcomes, while last-minute decisions leave far less room to manoeuvre.”
Bond said the challenges of cost and pricing are not new.
“Our parents and grandparents dealt with similar issues. What sets this era apart, however, are the sheer costs involved.”
Equipment prices are astronomical, and while fertilizer costs have decreased slightly, they remain high relative to grain prices. These elevated costs increase the risk for farmers, as even a small loss per acre can quickly escalate due to the larger scale of operations today. Despite these changes, farming remains rooted in familiar challenges: managing too much or too little moisture and adapting to unpredictable conditions.
Farming demands planning and adaptability, especially in a year where the stakes are higher due to the larger dollar amounts involved. While Mother Nature hasn’t changed, the scale and complexity of modern farming require sharper pencils and savvy decision-making. The key to this is knowing where to cut costs without compromising yield.
“If you cut $20 in costs but lose $40 in yield, it’s not a great trade,” said Bond, emphasizing the importance of protecting production.
Fertilizer is a prime example. Managing fertilizer more efficiently—such as applying it in bands closer to when the crop needs it—could save $10 to $20 per acre. Minor adjustments across the operation can turn a projected $25-per-acre loss into profit.
“These critical decisions should happen now, during the planning phase, because once the season begins, the focus shifts to execution, leaving little room for adjustments. Planning and focusing on cost efficiency can make all the difference in a tight-margin year,” Bond said. •
— By Harry Siemens