While most of our seeding plans have been locked in for months due to rotations and seed purchases, like most grain farmers, we’re still doing some fine tuning at the margins.
Should we grow lentils? Nobody seems to be predicting that Indian import markets will change any time soon. But they grew so well last year, and with a dry year in the cards, disease shouldn’t be a problem.
Canola’s been profitable for us. But we came out of the fall with very little moisture and there’s barely any snow on the ground now. What if we buy the seed, plant the crop, put in the fertilizer and… it doesn’t come up?
To get a little more information, I went to see John DePutter speak in Weyburn at an event sponsored by the Farm Credit Corporation.
A new paradigm
After the boom from 2008 to 2012, things have been fairly gloomy for U.S. farmers. And, John DePutter says, it doesn’t look much better for this year. “For a lot of U.S. farmers, corn and wheat are below production costs,” he said.
U.S. land prices are starting to show some wear and tear. A February farmland price report from the U.S. Department of Agriculture’s Economic Research Agency shows that cropland values in the U.S. Northern Plains increased 10 per cent during 2003 to 2008, then 16 per cent during 2009 to 2014. But in the period from 2015 to 2016, Northern Plains land values fell by two per cent. It’s certainly not a crash, but it is a decline that reflects the drop in cash grain and oilseed prices, the report says.
The USDA is forecasting next year’s U.S. farm cash income to be slightly lower than 2017, which was already far below the highs of 2011, 2012 and 2013.
In Canada, we’ve missed the worst of the poor ag income issues they’ve been seeing south of the border. Our low Canadian dollar is the biggest factor that’s been working in our favour. In Weyburn, John DePutter called this factor “The Great Canadian Dollar Bonus Program.”
If you’ve spent the winter planning an Easter break trip to Disneyland, you might think a low dollar’s not ideal, but if you do the math on the production we’re selling into world markets, our low Canadian dollar has been keeping our prices up.
The Canadian dollar isn’t the only factor that has worked in our favour. DePutter also pointed to our diverse selection of crops. This really hit home for me when I took a drive through Iowa a couple of summers ago. They aren’t kidding when they talk about “corn and soybeans.” You could drive for miles without seeing any other crop growing.
Another factor that’s been keeping our farm incomes up is what DePutter referred to as a “technology revolution” — developments in precision ag, gene editing and all kinds of other areas of ag technology.
So while it’s not as gloomy here as it is south of the border, we probably don’t have an ongoing boom in front of us. “I don’t think you’re going to be looking at those highs from 2012-13 for a long, long time,” DePutter said.
We might see some moderate rallies here and there, “but not huge bull markets,” he said.
When you’re going through an extreme, he said, referring to the years of high prices we’ve recently gone through, “you know there’s a flip side.”
If you want to make a sad person happy and a happy person sad, look to an old Persian saying: “This too shall pass.”