The COVID-19 pandemic has already changed the normal way of doing business for many producers, and now it is also making it more expensive to erect new farm buildings.
In a website post this week from Farm Credit Canada, senior appraiser Eric Lemaire and Olivier Biron, manager, valuations, noted that in the past few months, the price of lumber for wood frame construction and manufacturing of products for construction and renovation has risen significantly - doubling from June to September 2020.
That increase is being felt in all sectors, including agriculture, with those building categories in which wood is more commonly used the most heavily affected. For example, a multi-storey broiler barn could cost up to 30% more to build now than it did last spring. On the other hand, a hog feeder barn with a partial concrete structure may only cost 5 to 10% more, the pair said.
According to Lemaire and Biron, the lockdown that came at the start of the pandemic led to a boom in construction and renovation projects, resulting in an unexpected increase in lumber demand. With lumber mills also forced to curtail production due to the pandemic, a supply and demand imbalance resulted, forcing prices sharply higher.
Other factors are also at play in rising construction costs, they said, said, such as labour shortages, new social distancing rules on construction sites and a scarcity of other materials.
Although it’s impossible to hedge against every risk of price fluctuation, Lemaire and Biron said some strategies are available to cope with the lumber price increase, including potentially delaying the intended project if possible, and exploring other, less costly building materials.
Source: DePutter Publishing Ltd.
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