Tab Rising for On-Farm Building Projects

Producers planning on-farm building projects could be doling out a lot more money amid rising material costs.

With lumber prices skyrocketing and steel up substantially as well, agricultural building costs have increased by as much as 35% from pre-pandemic levels, according to the Guelph, ON-based Canadian Farm Builders Association (CFBA). The cost of labour has risen as well, as builders struggle to find the qualified workers they need.

Last fall, an analysis conducted by Farm Credit Canada found that the price of lumber for wood frame construction and manufacturing of products for construction and renovation had risen significantly, doubling from June to September 2020. The increase was mainly due to the lockdown at the start of the COVID-19 pandemic, which triggered a boom in construction and renovation projects, resulting in an unexpected increase in lumber demand. Steel costs also recently touched a new high, jacking prices for both cladding and structural steel.

Éric Lemaire, FCC senior appraiser, said lumber prices did decline after the peak hit in September, but added they are now back to the same point, or even slightly higher, than the threshold reached in early fall.

“It's clear that current construction costs are higher than they were before the pandemic,” Lemaire said “We don't have specific numbers related to this, but for sure it's higher.”

But rather than simply abandon projects amid the rising costs, it appears farmers are instead working harder to stay on budget.

“At this point there does not seem to be a recognizable slowdown [in agricultural construction]. However, people are being more cautious and looking for ways to cut costs on builds,” the CFBA executive committee said in an email message.

To help farmers navigate the higher building costs, FCC has made some suggestions, including opting for a closed bidding process to guarantee material prices and potentially exploring other construction material options. Farmers who have the luxury of delaying their projects may also be able to wait for building costs to come back to earth, although labour scarcity could be a longer-lasting problem, even if lumber prices do eventually retreat as expected.

Source: DePutter Publishing Ltd.

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