Under the Agridome

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It is that time of year again. In southwestern Ontario, it's been a bit of a different early spring as wet, cold weather has kept us off the fields. Last year at this time I was finishing planting my corn on May 1 while this year, I've yet to put any seed in the ground. At the end of the day that might not mean anything, depending on how the rest of the year goes. In fact, last year even though I had my corn planted by May 1, I didn't get soybeans completely planted until I gave up towards Canada Day, July 1. There is no short supply on risk in any farming year.

You have heard me say that risk management never grows old. In many ways that's a mantra for this column, but it also is exactly what we do every day as farmers. For instance, I've been doing preventive maintenance all spring, as well as making judgments about fertilizer applications in dodgy soil conditions. Decisions will be made based on the weather forecast and, of course, based on the costs which stare me in the face every day. Like other farmers, we put thousands of dollars in the ground hoping something will grow. History tells us it will. However, the same history tells us it might be quite an uneven story before we get to the finish line.

Simply put, we make decisions based on the risks around us and based on good agricultural economics. Every incremental marginal cost has to be covered by marginal revenue for it to make sense. All our decisions along the way relate to that. Whether you realize it or not, you are measuring that risk every hour of every day, especially when you are in the field.

There can be great rewards from that. Case in point: When I started farming, I was paying 23% interest rates. For whatever reason, I managed to get by during a 45-year career. Ditto for many other people involved in farming who have similarly long careers. However, it hasn't all been about winning -- it's more about staying the course. There can be hiccups along the way, and I saw two things this week that reminded me of that.

One was a study published by Farm Credit Canada. It talked about accelerating land prices versus farmland rental rates widening the divide between what farmers pay to buy land and what they pay to rent it.

The study looked at the rent-to-price ratio which compares cash rental rates per acre with the value of cultivated farmland per acre. A falling ratio means land values are rising faster than rental rates. What the study found was Canada's average rental price ratio fell to 2.35% in 2025, down from 2.5% in 2024 and even higher earlier. Most of this was taking place in the Prairie provinces. In Ontario and Quebec, not so much, as our farmland value growth has been somewhat tempered recently. This is compared to an overall Canadian farmland values rising 9.3% in 2025.

This is a little bit of agricultural risk management from a 30,000-feet view. Of course, it varies across the country. There are all kinds of structural limitations including the propensity to work as you get older which can limit everything. Nobody with memories of the 1980s ever wants to get overextended.

That appears to have happened to Monette Farms, a huge farm with associated companies that landed in the Company's Creditors Arrangement Act protection earlier in April.

DTN has reported how Monette Farms is one of the largest farming operations in North America with 350,000 acres in both Canada and the United States.

Monette Farms owed a syndicate of financial institutions originally $950 million with $830 million outstanding, which was due April 15. According to The Western Producer, the lenders included: FCC, Bank of Montreal, Royal Bank of Canada, Canadian Imperial Bank of Commerce, TD, Canadian Western Bank, Conexus Credit Union, and Export Development Canada.

There is a lot more on this -- it's on everybody's mind in Western Canada.

In DTN's recent story by Environmental Editor Todd Neeley, he noted what Darrel Monette said in an affidavit he filed about how his farm reached the point of default.

"Between 2017 and 2022, the company expanded using debt and growing revenue from $45 million to $198 million and earnings before interest, taxes, depreciation and amortization, or EBITDA, from $20 million to $83 million.

"By 2024, Monette revenue hit $347 million but EBITDA collapsed to just $37 million. He said the crush came from expansion into lower margin produce and cattle segments, high interest rates and flat real property valuations," Neeley's story reported.

(You can see DTN's story on it, "Monette Farms Faces $900M Insolvency," including what the Canadian government is asking farmers who have open contracts with Monette Seeds to do, at https://www.dtnpf.com/….)

I was aware of Monette Farms, but like most things Western Canadian, it was from a distance. I found it hard to fathom, based on the stress test that banks and others put on farmers to borrow money. At the end of the day, you need to wonder how this happened. There was surely a risk management story to tell, but it looks at least for the moment something was missed.

It is also hard to say -- and of course I always keep in mind -- that could happen to me. As farmers, we take huge risks while we depend on nature and biology to bring things home. That might mean renting land like in the FCC study, and it might mean taking even greater risks challenging the outer fringes of agricultural economic efficiency by building a mega farm across several provinces and states. At the end of the day, we have to make it all work.

Maybe that's why some of my grain marketing orders hit this week. Or maybe that's just dumb luck? Well, it might have been dumb luck but it's also my attempted risk management as well. The challenge for all farmers as we start making so many decisions in the field this spring is to keep that discipline front and center, even when the noise gets loud and the examples get big.

The story of Monette Farms is a reminder that scale doesn't eliminate risk, it can magnify it. Whether you're farming a few hundred acres here in southwestern Ontario or stretching across provinces out west, the same rules apply: Protect your downside, be realistic about your margins, and don't let optimism outrun your balance sheet.

As we head into the heat of planting, with costs high and conditions less than ideal, the goal isn't perfection -- it's survival with opportunity intact. At the end of the day, staying the course through the tough years is what gives you a chance to catch the good ones when they come.

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The views expressed are those of the individual author and not necessarily those of DTN, its management or employees.

Philip Shaw can be reached at philip@philipshaw.ca

Follow him on social platform X @Agridome

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