Lambton warden concerned for area farmers
Lambton County’s warden is worried about the state of farming in the current economic climate.
Kevin Marriott, the longtime mayor of Enniskillen Township, discussed rising interest rates, the cost of land, and the price of fertilizer during the inaugural Chamber of Commerce State of Sarnia-Lambton Business Breakfast.
Marriott said he’s a little concerned with what could happen over the next five years.
“We’ve been in a pretty long term, solid uptick in prices but if that turns down at the same time as interest rates keep going, it could turn into another 1980s episode again where a lot of farmers ran into financial troubles and had to downsize or even some, at the worst case scenario, went bankrupt.”
Earlier this month, the Bank of Canada held its key interest rate at 4.5 per cent, keeping the rate unchanged for the first time in nine meetings. However, the central bank did not rule out future rate hikes.
Marriott said he could see interest rates climbing to six, seven, even eight per cent.
“When [farmers] are used to two per cent and all of a sudden you quadruple that with how heavy some of the debts are, it could be quite a serious situation.”
Inflation hit 5.9 per cent in January after peaking at 8.1 per cent in June 2022.
Marriott said every inflation cycle can’t be fixed unless the central bank raises interest rates enough to squash them.
“Last year, [economists] thought this was going to be very temporary and there’s signs now that it’s not. So, farmers will need to look at those rates and pay down as much debt as they can. I really think they should be trying to pay more down instead of expanding, because that’s what happened in the 80s, people expanded too far.”
Marriott said most farmers haven’t felt the impact of rising rates yet but they will soon. He also said that the price of land has nearly quadrupled in the past 10 years, and the price of fertilizer continues to soar.
“All costs are going up, and fertilizer — you’re not just talking 10 per cent or 20 per cent, we’re talking 100 to 200 per cent, so it’s very serious.”
Marriott said the increased cost of fertilizer is definitely impacting prices at the grocery store.
Despite his concerns, Marriott said the agriculture sector in Enniskillen continues to grow — a large turkey farm was welcomed to the area within the past year.
“We were able to accommodate them with the water and the power that they need, and it’s a nice addition and it’s a large operation, so I would say we have all sectors covered now.”
Lambton County is the largest producer of wheat in Ontario, and Enniskillen is the largest producer of wheat in the county.