Even with oil now trading below US$40 a barrel, down from US$147 last July, Canadian farmers should prepare for higher energy costs in the longer term, Farm Credit Canada warns.
But today’s oil and gas prices give farm and agribusiness operators a chance to “re-evaluate their current energy practices and plan how they will manage their energy needs in the future,” said Brenda Frank, senior director of strategy and business insight for the federal farm lender.
“Throughout the world, energy supplies that are inexpensive, safe and easy to recover are increasingly scarce,” Frank said on the release Monday of a feature on the subject in FCC’s semi-annual Knowledge Insider publication. “Many experts agree that we are at or near peak oil production. These factors suggest that higher energy prices will likely return.
“This temporary respite from higher energy costs offers a window for agriculture producers and businesses to develop a transition plan that will help them succeed in the energy environment of the future,” she said.
The Knowledge Insider describes the path to a “secure, sustainable energy future” as including new and diversified energy sources, improved energy conservation, better engineering and efficiency in farm buildings, new kinds of “agro-energy” businesses ranging from carbon credit markets to equipment sales, and “increasing change management skills.”
The piece explores world energy supply, growing demand (particularly in emerging economies), energy exploration, refinery construction, weather, speculation, forward-contracting and OPEC quotas.
However, Frank said agriculture is “uniquely positioned to influence a sustainable energy future.
“Whether growing crops for biofuels, using rural land for wind and solar installations or simply having easy access to waste materials for biogas, producers and industry entrepreneurs understand the conversion of energy from biomass,” she said.
Among the questions FCC suggests that farmers should ask themselves:
- Where are my biggest energy costs and where are the opportunities?
- Can I contribute to electricity production?
- What could I do if energy wasn’t a limiting factor?
- If I change or invest in a capital project, what will it cost and is it the right thing to do for my business?
- Can I substitute or convert energies or technologies? What if I can’t diversify sources?
- Could I scale back my operation and exploit a local niche? Should I move my operation, diversify or change my business model?
As well, FCC suggests farmers should ask themselves what resources are easily accessible. “Use microclimates and geology to your advantage,” FCC urged in the report. “What are your sun days, wind potential? Don’t take the vendor’s word for it. Find out for yourself with tools like RETscreen.”
FCC also urged farmers to “map out your as-is state. Plot your work flow. Draw your farm or agribusiness buildings and activities. Include transportation, driving, heating, field work, pumping water and anything else that consumes energy. Conduct your own energy audit. While you look for better energy solutions, watch for other opportunities that may open up.”