I like to tease a younger farmer in the neighourhood. He’s a very successful organic soybean and wheat farmer. Typically he sells his crops for triple or quadruple what the rest of us do. However, he doesn’t use commercial fertilizer, the whole nine yards. Beating the weeds is his annual challenge.
I have often thought maybe I should go down that road. Wouldn’t it be one way for me to beat the cost/price squeeze? Using no commercial fertilizer or herbicide is the stuff dreams are made of. I’d have to learn how to cultivate and hoe again. That’s not so good.
However, a funny thing happened on the way to the forum. I visited my friend earlier this year and complimented him on his weed-less organic soybean field. He looked at me exasperated and explained that he might end up selling those organic soybeans for the same price I do, about $5.40/bushel. He told me the market had evaporated for organic soybeans. The Chinese had begun exporting them to Canada.
I thought how preposterous is that? What’s up with my friend not being able to market his organic soybeans like he always did? Do you mean Canada’s cheap food policy is starting to extend to the profit-laden world of organic? It didn’t make much sense to me. How would the Chinese be able to produce organic soybeans, ship them to Canada and effectively spoil my neigbours organic market?
A professional confirmed this to me recently in the grain storage business when he told me bagged Chinese organic soybeans were being landed in Toronto at $13 a bushel. That’s a lot lower than what my friend had been getting for his soybeans. The Chinese pick them by hand, bag them and get them to Canada. It’s one of the first examples I can think of where China is not a consumer of Canadian agricultural commodities but a competitor.
That is totally against our agricultural culture. For quite a few years now agricultural economists have mused about China being this insatiable potential consumer of our agricultural commodities. Their potential importation of corn has been dangled in front of us for years as a way where we might benefit. I don’t think anybody thought of the Chinese actually sending commodities the other way.
Hopefully that will not become a trend. Canadian farmers might not think of themselves as “insular” when it comes to agricultural trade. For many of us especially in western Canada it’s our lifeblood. However, nobody really thinks of commodities coming this way from places like Asia. Sure we always have our American pals to worry about. But that is part of our agricultural culture. We understand cheap American corn, etc. Getting around on this Chinese soybean deal takes awhile.
Is this “globalization” which we like? Does competing with the Chinese in soybeans seem the same as competing with our Brazilian friends? Or is it just a harbinger of things to come. Is money like water? Water runs to the lowest point. Does agricultural capital flow from the cheapest source?
I recently read a piece from Dtn News about New Zealanders setting up big dairies in Missouri. The story was about Grasslands Dairy, a New Zealand company that left New Zealand looking for “greener pastures”. The following is a direct quote from an AP report on your DTN News segment.
“After considering spots around the world, including Europe and South America, Grasslands Dairy relocated to Missouri because of cheap land and abundant grass, a perfect combination for their profit-driven dairy philosophy.
Grasslands oversees a 700-cow pasture-based operation, far larger than the typical 150-cow farm. North of Harwood, another New Zealand operation, Focal Dairy, has a herd of 2,500 cows and wants to eventually graze 3,500.”
Wow! Your loyal scribe has been to New Zealand a couple of times. Answer me this question. How does a country with 4 million people, 4 million cows and 12 million people find the wherewithal to come to the US and produce milk, which could be easily done by our American friends? There are answers. $12,000 an acre for land in New Zealand might be one reason. However, it is what it is. One man’s circumstance might be another’s opportunity. For North American farmers, that might mean more interaction from abroad, which we’ve never imagined.
So does it make you want to pack up and grow grain in Paraguay, beef in Australia, or have a southern hemisphere mirror farm in Brazil? Some of you may feel that you may and some of you may already have done it. However, most of us are staying put. Staying ahead of the competition we cannot yet see may be our greatest challenge.