Stephen Nicholson, global sector strategist of grains and oilseeds for Rabobank, said the U.S. hard red winter crop is big and getting larger as the weeks tick by.

On the surface that sounds like it would be bad news for Canada’s spring wheat growers, but he said big yields often correlate to low protein levels for U.S. HRWW. That means U.S. flour millers will need to buy some Canada Western Red Spring wheat for blending purposes.

The other big factor in the spring wheat market is struggling crops in Russia and Ukraine. It has been blazing hot in the Black Sea region and there was no relief in sight as of mid July.

SovEcon is forecasting 84.1 million tonnes of Russian wheat production in 2024-25, down from 92.8 million tonnes last year.

Conditions are particularly bad in Rostov, where Reuters is reporting that grain production will decline by 38 percent compared to last year.

Hot weather has also hurt Ukraine’s crop prospects.

“According to experts, dry and hot weather has caused wilting, dying, and death of plants in some areas,” SovEcon stated in a recent report.

Nicholson said importers will be forced to come to Canada for wheat this year because they won’t be able to find enough in other major exporting regions.

MarketsFarm analyst Bruce Burnett is forecasting a record 27.8 million tonnes of Canadian spring wheat production.

Nicholson doesn’t doubt that forecast.

“Driving the countryside this week, there’s unbelievable looking crops, and the canola is gorgeous,” he said during an interview at the Ag in Motion show, which was held July 16 t0 18.

The outlook for durum is not as rosy. He is forecasting a building of global stocks this year.

Burnett thinks Canada could harvest 7.4 million tonnes of the crop, up from four million tonnes last year. That would be the second biggest crop in the last 10 years.

“The durum prices will be a little depressed this year,” said Nicholson. “We kind of have to be prepared for that.”

He expects continued strong demand for canola oil from the U.S. biofuel sector due to its low carbon intensity score.

That’s a good thing because Canada could have a lot more to sell.

Burnett is forecasting a crop of 20.6 million tonnes, a 2.3 million tonne improvement over last year.

“Canada is not the only game in town, but it is the 800-pound gorilla,” said Nicholson.

UkrAgroConsult is forecasting a 21 percent reduction in Ukraine’s canola harvest due to the combined effects of a six percent decrease in seeded area and a seven percent drop in average yield.

Australia is expected to harvest a normal crop after three years of phenomenal production, said Nicholson.

The Australian government is forecasting 5.39 million tonnes of production, down from the previous three-year average of 6.92 million tonnes.

“That will help Canada’s competitiveness because Canada is going to have the volume to move,” he said.

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In the writing business, that’s what’s we call “irony,” since a lot of ink in this issue turns out to be devoted to contingency planning.

On page 6, you’ll see Lee Hart’s chat with our mutual friend and previous colleague Maggie Van Camp, who has made a mission of helping farmers navigate the practicalities and potential pitfalls of planning for succession. In Maggie’s case, such foresight was invaluable following her husband’s unexpected death, and she’s now making similar plans as her own children approach full-time farming age.

On page 19, Ross McKenzie fires up the spreadsheets to help irrigators calculate their best use of water, against the very real possibility of allocation cuts if snowpack remains low and slows the flow from the Rockies this spring.

In the Cattleman’s Corner section on page 27, our columnist Heather Eppich tells of the arrival of her new baby girl (congratulations!). The family took extra care to plan their trip home during January’s cold snap — a weather event which might have taken other less cautious people by surprise considering how warm late 2023 and early 2024 have otherwise been.

Even your tractor may soon be a better advance planner than I was this week. On page 10, Doug Ferguson tells us about the work of SB Quantum, a Quebec company using quantum magnetometers to measure fluctuations in Earth’s magnetic field, so as to better set a self-driving tractor’s directional heading, where other GPS-based systems’ maneuverability may be limited by the need to correct for heading errors.

Now, back to the irony: I didn’t plan in advance for this issue to wind up with such a focus on planning. It just worked out that way. Our columnists and friends this week will advise you against expecting things to work out in your favour — and believe me or not, so will I.

Is that “planning for failure” — a practice one of my favourite cartoon characters quite unfairly mocks as “even dumber than regular planning”? Of course it’s planning for failure, because there’s a big difference between expecting to fail and knowing what your options will be when or if circumstances don’t pan out as expected.

Case in point: the ag finance arm of Rabobank — which last year announced its entry to the Canadian farm-level lending market — just published its latest North American agribusiness review, which offers caution against bullish economic indicators. For Canada specifically, the lender emphasizes our battle against inflation is “not yet over.” The energy complex has been seen as the main driver pushing headline inflation lower, but Rabobank cautions that “relying on lower energy prices to slow price pressures is more prayer than policy” and it does see some upside for oil prices as 2024 progresses.

As for weather, the lender notes the expectations for our current El Niño winter to make the transition to neutral, and then move to La Niña conditions this summer. In other words, “North America is poised for a wet spring, accompanied by warmer temperatures across Canada and the northeast United States.” If that climate pattern pans out as expected, that “should significantly benefit wheat and other spring crops, setting a promising stage for the 2024 season.”

However — because of course there’s a “however” — it notes the possibility of unexpected cold fronts going through wheat-growing areas of the U.S. Plains and cautions that for U.S. agriculture in particular, the transition from El Niño to La Niña, and the pacing of same, “will prove critical this summer… and underpins the uncertainty we are facing in 2024.”

As for fertilizer markets, “costs have to come down, and hopefully they will,” RaboBank writes, as an “increasingly weak outlook for grower margins should pull input prices lower.” However, it says, given the seasonality of prices and the factors we see at play in geopolitics and trade in 2024, some of that downtrend “may be timed out of the 2024 planting season.”

Hopefully we’ll have more on this report and other analysis as we get closer to seeding, but as I said, the deadline is looming — and wouldn’t you know it, this report just landed unexpectedly on my desk today.

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During the Wednesday webinar, Andrick Payen showed current price ratios of U.S. soybeans to corn and wheat are above two, which means soybeans are roughly double the price of the grains. The soybean/corn ratio had been as high as three in June. As a result, he projected an increase in U.S. soybean acres to 88.6 million in 2024, but declines in U.S. corn acres (91.2 million) and acres for U.S. all wheat (47.5 million). However, the total U.S. acres of corn, wheat and soybeans altogether are expected to plateau at 227 million acres in 2024.

“Acres are re-adjusting to what we saw before this year,” Payen explained. “The U.S. is really not expanding acres. We’ve seen the last couple of years that there’s a battle for acres. After the peak that we’ve seen in 2014-15 (231 million), we haven’t touched that high-water mark over the past eight years.”

In Canada, the price ratio between canola and spring wheat has softened since the beginning of summer, with Payen commenting that demand for spring wheat remained very strong.

He also showed that despite a large increase in canola acres and a similar decline in wheat acres throughout the early 2000s, acreage numbers for both crops have plateaued since the 2010s and are nearly equal. Payen believes there could have been a larger amount of canola acres if it weren’t for growers’ strict crop rotations.

“Wheat and canola have taken more of the planted area in Canada with canola and wheat representing close to 50 per cent of planted acres,” Payen said. “In order for canola to expand, it needs to be in rotation with other cereals, given that principal field acres are not expanding. With the price environment that we’re seeing between canola and wheat, we’re expecting canola to grow next year, close to 23 million acres.”

Payen also cautioned that the numbers are largely dependent on the amount of moisture received throughout this coming winter.

He expects U.S. corn and soybean farm gate prices to be left virtually unchanged in 2024-25 at US$4.34 and US$12.64 per bushel, respectively. The price of Canadian canola is projected at C$714.47 per tonne for 2024-25, largely unchanged, while Canadian wheat prices should be down slightly to C$325.52/tonne. All four prices will be above their five-year averages.

“While it’s good that we’re going to see prices that will be higher than those in the past five years, input costs continue to be a concern and we’re not expecting margins to be as strong as in the past two years,” Payen said.

RaboResearch grains and oilseeds strategist Stephen Nicholson recounted what he heard from Canadian growers at Ag in Motion last July at Langham, Sask. during a question-and-answer session with media. The main topics of conversation, according to him, were weather conditions, crop rotations, disease pressure on canola, crushing capacity and developing more weather-resistant varieties of corn and soybeans.

“They’re dealing with the same issues that U.S. farmers are dealing with, whether they’re commodity prices, input costs and disease pressure in canola,” Nicholson said. “The exporters in Canada are struggling mightily with margins to export out of Canada…Over the next several years, I expect to see a reshuffling of export capacity and ownership there.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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The Canadian arm of Rabobank — an Amsterdam-based farmer co-operative lender, providing banking, leasing and real estate services in more than 38 countries — announced Tuesday it’s getting set to offer “financing, risk management and partnership solutions” to primary producers in this country.

For now, the company said, it plans to focus on a “core market” of the three Prairie provinces, served by a remote workforce rather than physical branch offices.

Rabobank’s Canadian arm has operated out of Toronto since 1997 and today has a staff of about 20 providing loans, asset-based financing, private placements, merger-and-acquisition services and risk management products among others.

It describes its Canadian business so far as “food and agribusiness industry-specific,” for wholesale clients across much of the value chain.

At the farm level, though, the Canadian arm’s work has until now been only indirectly, through “third-party vendor finance partnerships.” For example, Rabobank has provided financing on crop inputs to an estimated 12,000 farmers via Richardson Pioneer’s ag business centres on the Prairies.

The company said this week via email its decision to enter the farm lending business will have no impact on its offerings through third-party vendors such as Richardson at this time.

In a joint venture with Calgary-based Telus Agriculture, Rabobank in 2021 also took ownership of Minneapolis tech firm Conservis, whose software products gather and integrate farm-level data from platforms such as Climate FieldView, the John Deere Operations Center, Crop Data Management Systems and Rabo AgriFinance.

Since Rabobank’s arrival in Canada, “we’ve gained a deep understanding of the marketplace and how Rabobank can best serve Canada’s leading growers,” Paul Beiboer, Rabobank North America’s CEO, said in a release Tuesday.

Expanding its Canadian portfolio to include direct farm-level lending has already been an ongoing project for nearly three years, the company said Tuesday, noting it’s already met all national and provincial regulatory and licensing requirements.

Rabobank said it plans to offer “short- and long-term debt options” at the farm and ranch level. “We will be a one-stop shop for Canada’s agricultural term and operational lending needs, as well as other financial services and risk management products,” Marc Drouin, Rabobank Canada’s general manager, said in Tuesday’s release.

Rabobank has also already named Roxane Lieverse as its new head of Canada agricultural banking, to be based in Calgary. Lieverse, up until October, was director of Alberta agricultural banking with Scotiabank, and previously was a regional manager for National Bank of Canada.

Lieverse is also now building a “dedicated team of relationship managers” for the ag lending business, Rabobank said.

The company is now “onboarding several experienced and talented relationship managers,” she said via email, adding that it’s entering the market “with skilled bankers who truly understand agriculture and want to support industry growth.” Meanwhile, she said, farmers will be able to contact the company via its general email.

In Rabobank’s release, Lieverse said the company plans to “do business with our customers at their kitchen table (and) meet face-to-face with clients to listen to their needs and understand their operations.”

Rabobank’s approach, she said via email, will focus on a “partnership model” with a producer. Such producers, she said, “tend to take a longer-term, growth-based view of their operation and understand that they need a financing partner through the industry cycles.”

Setting Rabobank apart from other lenders in the same market, she said, is the bank’s “deep global research… which prospective customers will benefit from, as they navigate the global impact on their operation.”

In a separate interview this week with Rod Nickel of the Reuters news service, company officials said that out of the total Canadian farm lending market, currently dominated by Farm Credit Canada and the big six domestic banks, Rabobank aims to command a 10-15 per cent share within 15 years.

“The number of young farmers is actually growing and the country is on track to become the world’s second-largest food and agricultural products exporter,” Beiboer said in Tuesday’s release, describing Canada as “an attractive and logical market” for Rabobank to work with farmers and ranchers as well as its current corporate clients.

— Article updated Jan. 14, 2023 to include additional information from Roxane Lieverse of Rabobank.

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Telus Agriculture and Rabo AgriFinance, which is headquartered in St. Louis and serves U.S. farm customers, announced Monday they’ve jointly bought software firm Conservis for an undisclosed sum.

Conservis comes to the joint venture already handling farmers’ financial reporting data via the Rabo AgriFinance platform since 2018, along with data from Climate Corp.’s Climate FieldView platform, the John Deere Operations Center and Crop Data Management Systems’ crop chemical database.

The Minneapolis company’s products are meant to allow a farmer to integrate as-applied and yield data directly from those platforms into a “unified view” of the business, with “no extra hardware or manual data re-entry required.”

Thus, “with all your activity records in one spot, you can decide to share reports with landowners, regulators and lenders using data directly from your fields at any point in the season,” Conservis says on its website.

“Understanding your true cost, including cost per bushel and per acre will help ensure you make informed decisions that yield higher profits.”

Calgary-based Telus Agriculture has been shopping for farm management platforms since before Telus created the new ag unit last year, among them Decisive Farming, Farm At Hand, Muddy Boots and Feedlot Health Management Services.

The joint owners said their vision for Conservis is to deliver an “even more robust” platform across a “diverse range of crops and livestock.”

For its part, Telus Ag’s existing tech portfolio is expected to “help enhance the Conservis platform’s functionality” and include access to Telus’ Agricultural Data Exchange (ADX) and Agricultural Services platform (ASX).

The new owners said they “remain committed to Conservis’ strict data privacy standards,” emphasizing farmers on Conservis will still own their data and will still control when partners — Rabobank and Telus Ag included — get that information. — Glacier FarmMedia Network

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The new farm, which began construction in March and started operations at the first of its 21 buildings in September, epitomises the breakneck pace at which huge, industrialised hog breeding facilities are replacing small, traditional farms, many of which were wiped out by the worst animal disease outbreak in recent history.

The shift, under way for years, has accelerated sharply, fuelled by huge profits at corporate producers since African swine fever ravaged the country’s herd and sent pig prices soaring to double the previous record.

Corporate farms weren’t spared by the epidemic, but as prices jumped, they quickly recouped their losses. Muyuan’s profits grew 1,413% in the first nine months of 2020 to 21 billion yuan ($3.21 billion).

“We have hit a very favourable period for development. Pig prices are very high, our profits are really good, and cash flow is really ample,” Qin Jun, Muyuan’s vice general manager, told Reuters at the company’s headquarters in Nanyang city in central China.

In the race to take share, companies like Muyuan are designing higher-density automated farms, betting they can keep disease out while increasing efficiency to satisfy the country’s huge appetite for pork.

Muyuan’s new mega farm near Nanyang, which will eventually house 84,000 sows and their offspring, is by far the largest in the world, roughly 10 times the size of a typical breeding facility in the United States. It aims to produce around 2.1 million pigs a year.

If it works as planned – and other producers follow suit – the world’s top pork consumer could reduce purchases from the global market, upending a booming meat trade that has supported farmers across the world.

Bigger is better

With piles of cash, Muyuan and others are building bigger and faster, aiming to grab market share while the sector rebuilds.

Muyuan will spend about 40 billion yuan this year on new pig farms, Qin said, about eight times what it spent two years ago, and roughly double the capital automaker Tesla is projected to spend.

Small farmers, meanwhile, are struggling to get back on their feet amid costly new disease-prevention requirements.

China’s hog herd, the world’s largest, shrank by around half in 2019, causing an 11-million tonne pork shortfall that far exceeded global supplies. Imports of all proteins have since surged, sending prices from Brazil to Denmark to record highs.

“It has an experimental element,” Qin said of the 3 billion yuan farm.

“We will employ fewer people and use more technology,” he said, pointing to “intelligent” feeding systems, manure cleaning robots, and infrared cameras to detect when pigs have a fever.

High-rise facilities are increasingly popular in China amid a scarcity of suitable land. Though corporate producers have an edge in winning land deals with local governments thanks to their clout and promises to create jobs by building slaughterhouses too, Muyuan recently attracted controversy for planning 55 pig farms on 1,000 hectares of Henan’s cropland.

Qin says the issue is resolved and the firm has already leased land to produce 80 million hogs.

The mega farm can house five times as many pigs as a regular farm on the same area. Its density carries huge risk, however, with diseases including the swine fever virus still circulating in China, and no vaccine or cure available.

“Large farrow-to-finish projects with high animal density are a long-term concern because once a pathogen enters, it’s very difficult to control or eliminate,” said Gordon Spronk, chairman of Pipestone Holdings, a Minnesota-based pig producer and veterinary services company.

Muyuan says it has overhauled its production process since the swine fever outbreak. Grain for feed is sterilised before being piped into the on-site feed mill from outside, avoiding possible contamination of the farm by trucks.

Inside the pig housing, air is filtered, and thermal imaging cameras are being trialled to check pigs’ body temperatures. To protect the farm’s biosecurity, Reuters was not given access to the farm.

The new measures are impressive as long as they are managed properly, said Michael Ellerman, vice general manager at Aspire, a Suzhou-based pig farm consultancy.

Ellerman and Qin both said staffing the high-tech facility could be tricky. Many of Muyuan’s more than 50,000 new hires are inexperienced, Qin added.

That will be a growing worry as pig prices fall. Production costs across the industry are still much higher than before the swine fever outbreak, but output is lower because of a shortage of breeding pigs.

“The risk is that prices could fall below cost. If prices fall below 20 yuan [per kilogramme] next year, some big companies are going face losses,” said Xiao Lin, an analyst at Shenzhen-based Win & Fun Investment.

Muyuan’s costs are lower than most, at just over 14 yuan per kilogramme in the third quarter, it says. More automation could lower costs further.

But a disease outbreak would undo any gains.

“At the moment they’re okay if there’s some losses in the herd [because of the high prices],” said Pan Chenjun, senior analyst at Rabobank. “But the risks are rising.”

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China has reported 113 outbreaks of the contagious disease since last August, though farmers and industry insiders say several outbreaks are going unreported.

African swine fever, which does not harm humans, has a high mortality rate in pigs and has no vaccine or cure.

Chinese pork production will fall by up to 20 per cent in 2019, Oscar Tjakra, a director of food and agribusiness research at Rabobank, told a conference in the east of the country. China typically accounts for around half the world’s output of the meat.

That means local production this year of between 50 million and 51 million tonnes, Tjakra told Reuters on the sidelines of the event, down from last year’s 54 million to 55 million tonnes.

The U.S. agriculture department’s attache in Beijing has forecast pork production at 51.4 million tonnes this year, down five per cent from 2018, with imports seen at two million tonnes.

China’s pig herd declined by 15 per cent in 2018, according to Rabobank estimates, Tjakra said.

Pork production increased in the first three quarters of 2018, said Zhu Zengyong, associate professor at the Agricultural Information Institute of the Chinese Academy of Agricultural Sciences (CAAS), but declined significantly in the fourth quarter after the disease began spreading rapidly.

He cited official data issued by the statistics bureau, which shows the number of slaughtered hogs fell 1.2 per cent in 2018 to 693.8 million heads.

Pork output last year was 54 million tonnes, the bureau said.

The disease has totally disrupted the production plans of many major companies, added Zhu, with some halting expansion because of the disease.

Other speakers said the drop in output would hit feed demand hard.

China’s pig feed demand in the 2018-19 crop year that runs from October to September will fall 12 per cent and soymeal demand in the same period will drop 5.5 per cent, said Li Ning, general manager of commodity trader Living Water Trade (Shanghai) Co.

Li Qiang, chief consultant at Shanghai JC Intelligence Co. said he sees pig feed consumption down 25-30 per cent in 2019, and overall feed demand down from 12 to 15 per cent.

— Reporting for Reuters by Hallie Gu and Dominique Patton.

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The intergovernmental body, in a monthly update, put total grain carryover stocks at the end of the season at 504 million tonnes, up from a previous projection of 498 million and the prior season’s 475 million.

“Wheat and maize account for nearly all the expected stocks expansion,” the IGC said, noting stocks were set to rise despite a strong increase in consumption.

Agribusiness bank Rabobank said this week record-high stocks should keep world food prices low during 2017 even as inflation starts to rise in many developed economies.

The IGC raised its forecast for the 2016-17 world corn (maize) crop by seven million tonnes to a record 1.042 billion tonnes, mainly reflecting improved prospects in the United States and Brazil.

The move followed the U.S. Department of Agriculture’s upward revision to an already record U.S. corn harvest earlier this month.

World wheat production in 2016-17 was seen at a record 749 million tonnes, up one million tonnes from its previous forecast and well above the prior season’s 737 million.

The IGC said world wheat harvested area for the 2017-18 season was projected to be almost unchanged with reductions in the U.S. and Kazakhstan balanced by increases in Russia and North Africa.

“Conditions for recently sown 2017-18 winter wheat in the northern hemisphere are mostly favourable,” the IGC said.

The IGC also raised its forecast for 2016-17 global soybean production by four million tonnes to a record 336 million tonnes.

“With harvesting complete, U.S. output could increase by 11 per cent year-on-year, while planting in Brazil is well advanced in key growing areas, notably Mato Grosso,” the IGC said.

World rice production in 2016-17 was also seen at an all-time high, rising to 485 million tonnes, up from a previous forecast of 484 million and the prior season’s 472 million.

“With many Asian producers likely to cut better crops against the backdrop of improved growing conditions, world rice output in 2016-17 is projected to expand,” the report said.

— Nigel Hunt is a Reuters correspondent covering agriculture from London.

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It was a hard message to take in. Hudnutt said, “We were able to make $400 and $500 an acre in net profits over the last few years, with $7 corn and $14 beans. Even though that cost structure was increasing, we were able to make money.”

Hudnutt said good times drove complacency. Now that things look a little less bright, “a new normal is ‘how do we manage our loss?’ We’re used to what the normal became: those high prices.”

With lower grain prices in the forecast, farmers are going to have to manage their cost structures.

One of Hudnutt’s suggestions for action is to take a look at production costs — not only across your whole operation, but also for each individual parcel of land. With that information in mind, look at rental agreements. With each piece of land, he said, ask yourself “Should I keep it or let it go?” For many farmers, he said, the decision to let land go and farm fewer acres requires a mindset shift.

Another suggestion to lower costs is to look at new machinery purchases. With lower commodity prices, “Maybe rolling every year or every two years or every three years isn’t appropriate for me.”

Locking in input costs is another possibility. While Iowa farmers often lock in lease rates or costs for seed corn, Hudnutt said, “they’re not as active in fertilizer.” He also things farmers might be able to take advantage of more opportunities to lock in chemical prices.

Land prices

After years of rising equity, partly due to increases in land prices, Hudnutt said, “balance sheets are going to get worse. “

He was careful to say that Rabobank is not calling Midwest land prices a bubble. “We’re not looking at a 30, 40, 50 per cent decrease in values. We think we’ll see a correction.”

However, any correction will hurt a farm’s balance sheets if the statements have been adjusted each year to reflect rising market prices for land.

Over the last 10 years, Hudnutt said, “several million acres of marginal land came into soybean and corn production.” This happened because farmers were able to make money doing it. Now some of that land will be taken back out of production. Not so much in the Corn Belt, he said, but in the western states and the South.

• Click here for excerpts from a Rabobank paper entitled, “Land Values 2014: At the Tipping Point”

Hudnett suggested that farmers take a good look at their own marginal land. “It may not be a bad time to get rid of it,” he said. “Cash is going to be very important over the near term.”

This year and in the years to come, Hudnutt said, farmers may need to focus on limiting losses, rather than locking in profits. “That’s, I think, a hard pill for some of us to swallow.”

From a lending point of view, Hudnutt is clear that Rabo AgriFinance is sticking with the U.S. market through this downturn. In fact, he sees some upside. “I think it’s a lot easier in bad times to identify a good producer than it is in the good times. Good times mask a lot of producers that were marginal or average. But tough times, that’s where the cream rises to the top.”

Global Picture

Stephen Nicholson is part of Rabo AgriFinance’s food and agribusiness research and advisory group, a corporate team of more than 80 analysts in 14 countries. Nicholson expects tough times ahead in the Midwest. “We’re going to see the marginal producers probably struggle,” he told farmers.

“There’s going to be some change in ownership of land and farms in the U.S. with this downturn in grains and oilseeds.”

Nicholson expects lower commodity prices to result in more diversification. “Here in Iowa, it’s been grain and oilseeds,” he said.

In the Dakotas and Kansas, farmers have expanded into corn and soybeans. Nicholson expects some of that to change. “That land will either go fallow, or we’ll see them go back and produce wheat.” Generally, Nicholson, said, “We’ll see different types of crops produced that they haven’t produced in a number of years.”

“Right now it looks a little grim,” said Nicholson. Some farmers may be having a hard time seeing a light at the end of the tunnel. However, he said, “We still have droughts. We still have demand-led rallies. And I think that those aren’t going away.”

There have been big changes in world markets. “Over the past 20 years, the United States has become the supplier of the world,” Nicholson said. “In the last five years we’ve seen that change dramatically. Our share of the world grain trade is much smaller than it used to be.”

In the past, U.S. supply problems would be felt around the world. Now, world supply of agricultural commodities is more diversified.

Nicholson mentioned logistics as a major issue in world agricultural exports. Brazilian farmers face tremendous challenges with the road network: “mud, potholes, narrow, two-lanes, speed bumps in the oddest places.”

“The good news for American farmers is they [Brazilian farmers] can’t get their production from where it is to where it needs to go. The bad news is that they can produce a lot of grain really fast.”

And it’s not just the roads the cause logistic problems in Brazil, Nicholson said. “It’s truck, roads, rail, ports — the whole thing.”

As Canadian farmers know, Brazil isn’t the only country with logistics issue. Nicholson referred to the low prices corn growers in the Dakotas are seeing due to rail transportation problems. He also said some U. S. processors are having trouble getting the raw commodities they need, “and they’re paying astronomical prices to get it there.”

Water is another challenge on Nicholson’s radar. Water quantity and quality. “In Iowa we don’t have a problem with water, but we have an issue with water quality.” Some Midwest farmers have trouble with nitrogen leaching. “I think that is a huge issue everywhere,” Nicholson said.

Despite changing markets and logistic challenges, Nicholson has seen a lot of recent worldwide investment in the agriculture industry (including Glencore’s purchase of Viterra). He doesn’t see that slowing anytime soon, as countries and corporations scramble to develop or maintain access to food supplies.

“We think there’s going to be lots of investment in agriculture.” †

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