BY: Leigh Anderson, Senior Economist, Farm Credit Canada
Editor’s Note: This article was written in September 2025, and the market dynamics may have changed.
It’s already clear that 2026 will bring new challenges for farm profitability. While input costs have decreased from their 2022 peak, they remain high and are trending upward again. Unlike 2022, when strong commodity prices offset rising costs, 2026 is shaping up differently: crop prices are forecast to decline, squeezing margins and impacting productivity. This pressure is intensified by global trade disruptions, notably Chinese tariffs on Canadian canola and peas.
With margins under pressure, managing costs is more important than ever. While trade and geopolitical issues are largely out of your control, focusing on what is within your control can make a difference. Decision aids, agronomic advice and other value-added support from input suppliers can help farmers make better decisions, improve efficiency, and boost revenue.
Rising Input Costs
Canadian farmers are expected to spend $22.5 billion on crop inputs in 2026, potentially rivaling the record set in 2022. The largest expense, fertilizer, is forecasted to approach $10 billion. Inflation is driving up costs for chemicals and seeds, while fuel is the only major input projected to decline in price. Fertilizer prices, especially nitrogen, have remained elevated due to increased American corn acreage and strong global demand, particularly from India and Europe. In Canada, high fertilizer prices have led many farmers to delay purchases, hoping for better deals amid market uncertainty.
Market Dynamics and Price Pressures
American farmers are set to harvest a record corn crop, which, combined with lost Canadian export opportunities to China and ongoing United States–China tariffs, is expected to push commodity prices lower. As prices fall, farmers may become more cautious in planning next year’s acres and inputs, focusing on cash flow and profitability.
Crop price ratios, such as soybean-to-corn and canola-to-wheat, help guide planting decisions. Currently, these ratios favour oilseeds due to strong biofuel demand, but future demand and acreage will depend on the resolution of trade disputes with China. If China’s tariffs persist, both soybean and canola prices could drop further, potentially shifting the ratio back in favor of cereals like corn and wheat by spring.
Since corn requires more nitrogen fertilizer, any shift toward increased corn planting will drive up nitrogen demand and prices. Monitoring crop price ratios is essential for anticipating fertilizer market trends.
Fertilizer Affordability
The fertilizer-to-crop price ratio measures the cost of fertilizer relative to expected crop revenue. For 2026, this ratio is projected to show slight declines in affordability, with potential for further increases if crop prices fall and fertilizer costs rise. This scenario presents downside risk for crops and upside risk for fertilizer, making input decisions even more complex.
Global trade and geopolitics continue to influence fertilizer supply and pricing. Russia’s war in Ukraine remains a key factor, affecting energy and fertilizer costs. A peace deal could ease prices and restart European nitrogen plants, while continued conflict would keep prices high. U.S. tariffs on Russian fertilizer may raise costs, especially in Eastern Canada, which relies on U.S. imports. China has resumed limited exports of urea and phosphate fertilizers, which could help ease global shortages if volumes increase.
Strategies for Efficiency
Despite external uncertainties, farmers can focus on what’s within their control. Building strong relationships with input suppliers and agronomists, and using economic decision tools, can help improve efficiency and profitability. Practices like 4R Nutrient Stewardship—applying the right fertilizer source, rate, time, and place—are now used on over 25 million acres in Canada, helping reduce costs.
Economic thresholds guide decisions on pest and fungicide treatments, focusing on profitability rather than field appearance. Tools like fertilizer efficiency calculators and fungicide thresholds help optimize input use and avoid unnecessary spending. Aerial spraying is gaining popularity for its speed and reduced crop damage, and while it’s slightly more expensive per acre, it can be cost-effective when accounting for losses from ground equipment.
Bottom Line
Canadian farmers face a challenging outlook for 2026, with elevated input costs and softening commodity prices squeezing margins. Global trade tensions and geopolitical instability add further uncertainty. In this environment, finding cost efficiencies and focusing on productivity gains are more important than ever. Leveraging agronomic expertise, decision tools, and collaborative supplier relationships will be key to sustaining profitability.