Policy & Advocacy

Diesel fuel is a foundational input in Canadian agriculture, powering the equipment and transportation systems that enable farmers to produce and move food. Tractors, combines, grain trucks, irrigation systems, livestock operations, and other essential farm equipment all rely heavily on diesel fuel. As diesel prices rise, farmers face significantly higher operating costs at every stage of the production cycle, from planting and harvesting to transporting commodities and inputs.  

The recent surge in diesel prices has placed additional financial pressure on farm businesses already coping with market volatility, rising interest costs, labour shortages, and increasing input expenses. Unlike many other businesses, farmers often have limited ability to pass these higher costs into the supply chain. Most agricultural commodities are sold into highly competitive domestic and international markets, where prices are determined by global supply and demand rather than by individual producers. As a result, increased fuel costs frequently come directly off a farm’s bottom line.  

Higher fuel costs also impact farm investment decisions. Canadian producers must continually invest in equipment, technology, productivity improvements, and environmental innovations to improve their productivity, sustainability and remain competitive. When fuel expenditures consume a larger share of farm operating budgets, less capital is available for investments that improve efficiency, enhance sustainability, and support long-term growth.  

The effects of rising diesel prices extend well beyond the farm gate. Food products must be transported, processed, packed, stored, and distributed before reaching consumers. Increased fuel costs ripple throughout the food supply chain, affecting transportation providers, processors, wholesalers, retailers, and ultimately Canadian consumers. These pressures are especially significant in rural, remote, and northern communities where transportation distances are greater and food distribution costs are already elevated.  

Maintaining Canada’s food security requires more than producing food. It also requires a resilient and competitive food system capable of moving food efficiently from farms to consumers. Policies that help mitigate extraordinary fuel-cost pressures can support business investment, preserve production capacity, strengthen supply-chain resilience, and contribute to long-term food affordability for Canadians.  

The Canadian Federation of Agriculture continues to advocate for measures that help farmers manage exceptional cost pressures, maintain competitiveness, and continue investing in the future of Canadian agriculture. This includes support for temporary relief measures during periods of extraordinary diesel prices, maintaining fuel tax relief, and strengthening access to working capital through programs such as the Advance Payments Program.