A continued look at the areas where farmers can try to limit their risk exposure during this period of unprecedented economic volatility.
Planting decisions
Leigh Anderson, a senior economist at Farm Credit Canada (FCC), says that farmers are talking with their agronomists and crop input suppliers to make this spring’s planting decisions.
“These plans could include changing what crops they plant, adjusting fertilizer use or revising yield targets that make economic sense in the current environment,” he says.
Most producers’ acres are locked in due to rotation requirements and, depending on the producer, only 10 to 20 per cent of their land could be considered swing acres, says Darren Bond, a crops farm management specialist for Manitoba Agriculture.
Bond adds that more important than U.S. trade when switching acres between crops is high fertilizer costs, which were high even before the Middle East conflict.
Fertilizer
How producers manage fertilizer this year will be key to their profitability, says Bond. Effectively using the 4Rs (right source, right rate, right time, right place) will ensure they get the most out of fertilizer.
“There is a difference between being cost effective and cheap,” he says. “Cost effective is where every decision is analyzed and only outputs that provide an adequate return receive investment. Cheap is just cutting expenses because something seems too expensive.”
Taking steps to achieve maximum yields, while cutting expenses that provide little to no return, will be the keys to success in tight margin years, says Bond.
Livestock operations
External factors will affect livestock operations as well, but more so by weather than economic news, Anderson says.
“Cattle producers are awaiting spring weather to see pasture and hay conditions which will impact their ability to expand,” he says. “Meanwhile, the hog sector has faced a challenging winter for disease pressures, which has pressured supply.”
Anderson notes that Canada’s livestock herd expanded according to the January 1 inventory estimates released by Statistics Canada. StatCan reported the Canadian cattle herd rose on January 1, 2026, in the first year-over-year increase since 2018. During the same period, StatCan data shows that Canadian hog inventories fell due to higher international exports and slaughter in both Eastern and Western Canada.
Cow-calf production remains a labour-intensive enterprise, improved margins or no. Photo: Geralyn Wichers
Bond notes that beef margins are currently decent, but there remains a two-fold challenge when it comes to expansion, especially in the cow-calf industry.
“One is that it is very expensive to expand one’s cow herd, whether it be through retention (lost revenue) or purchase,” he says. “Secondly is that cow-calf production is very labour intensive, with many looking at the time and dedication that is required for an expansion, and simply deciding it’s not worth it.”
Equipment replacement
Producers will also take a hard and long look before purchasing equipment so that they don’t overextend themselves, according to Bond.
Used equipment might be more attractive in a year like this. It comes down to a cost benefit analysis between the two situations, Bond says.
“Used equipment comes with a lower price tag, which is the biggest attraction,” he points out. “However, new equipment comes with warranty, a longer lifespan and dealer support.”
Weighing these options, while considering risk tolerance levels, will be the largest element in how farmers choose to equip themselves. Some will decide to hold on to their iron for an extended period.
“That fear of overextending oneself will keep iron on the farm longer until the margins improve,” Bond says.
Thanks to falling commodity prices, higher operating costs and lower profits, Anderson says that farmers are cautiously approaching their equipment replacement decisions, placing greater emphasis on their price per acre equipment costs.
“Farmers are looking for cost-saving measures, including delaying purchases and planning to further reduce equipment costs,” Anderson says, adding that FCC expects overall used equipment sales to outperform new ones.
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