What record diesel prices mean for Canada’s agrifood system, from farm profitability to food inflation

Diesel prices in Canada reached record highs this autumn and, despite recent stability, remain historically elevated. Prolonged periods of high prices are having widespread impacts, from the farmer to the processor to – potentially – what consumers pay for their groceries. We unpack the farm-to-table fallout from high diesel prices in this report.

Already tight farmer profitability will be squeezed further

The Government of Saskatchewan released its 2026 cost of production guide in January (notably before the war in Iran began) which provides us a starting point to assess costs for the three major soil zones in that province. If we shock the price per litre used in the guide by 80%, we see that canola margins are compressed anywhere from $14 to $21 per acre, all else being equal (Figure 1). We get a similar range for different crops in different soil zones. Keep in mind this is at the extreme end of scenarios, given we assume all diesel used for the entire growing season is priced at today’s higher price; some relatively cheaper diesel may have been used earlier in the year.

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