On Tour in Southern Ontario: The Farm Economy is Strong

    I’ve spent this week talking about grain and farmland prices across southern Ontario.  Tonight I find myself in my old college town, Guelph Ontario, a stopover on my BDO Canada speaking tour of southern Ontario.  Two more engagements left, finishing off next week in Little Britain Ontario near Lindsay.  It is what it is, but it sure gives me a pulse on the Ontario farm economy.  For the most part, it’s rarely been healthier.

People have come out in great numbers and many DTN subscribers have chatted with me about the challenges in 2012 fields.  If there is one constant, it’s the fact, the crop was better than expected.  Almost everywhere I go people say that, even in a place like Walkerton Ontario, where standing corn was burning up last August when I spoke on the grains on behalf of Farm Credit Canada.

Interestingly enough, sometimes it’s better to be lucky that prepared.  This morning while engaging in a brief preparation for today’s speaking event, the latest crop production statistics from Statistics Canada were released.  They are pegging 2012 Ontario production at 338.5 M bushels of corn with a yield of 153.2 bu/acre with soybeans coming in at 120.3 M bushels, with an average yield of 46.5 bu/ac.  In the case of corn it was the biggest Ontario corn crop ever.  In a year with constant drought affecting large swaths of Ontario that was flat out incredible.

I quickly lifted the information into a Power Point slide in order to show the Woodstock Ontario farmers gathered in front of me.  It’s an incredible figure, which could have been so much better based on yields I’ve heard the last week, 200 bushels corn fields being beside half that, depending on where the rain fell.

To me these new Ontario field crop statistics say one thing.  It reinforces the notion that corn is agronomically superior to soybeans and wheat in every way.  Corn yields in Ontario give more consistent high yields vs. soybeans, which means more corn next year, in fact, more corn everywhere.  This fact alone is a significant factor in why farmland costs have skyrocketed across Ontario.

There is a new confidence among farmers on the tour.  In fact, you can almost feel the aggressive nature of many of the farmers present.  They are buying land, equipment and almost at the starting gate for 2013, even though a few fields of corn are still left in Ontario fields.  The tour name, is “Agriculture more than ever”, and from what I see, Ontario farmers believe in that.

I get questions about grain and farmland prices, but I’m consistently getting the question about American debt, the fiscal cliff and the sanctity of the American dollar.  In other words, Ontario farmers know the US economy is still a big problem.  I respond by telling the story about US quantitative easing and the sanctity of printing the world’s default currency.  I maintain, the US is in no danger of losing its default currency status.  I can’t think of anybody who thinks of bushels of corn values in Chinese Yuan on this side of the world.

Farmers continue to buy land.  While some farmers eyes glaze over when hearing of land trading over $16000/ac, others are selling.  Others are thinking of selling.  Maybe the time is now.  I’ve had farmers come up after I speak, asking me about how they are looking for land and what do I think.  It tells me the land is strong.  That record Ontario corn crop doesn’t lie.  Clearly, there is a lot of money in Ontario agriculture looking for a home.

Much of that is turning toward buying farms.  It is true that I say in my presentations that land is a tangible choice, especially when considering buying some strange unintelligible financial product offered by your local bank.  People can see land, touch it and feel it.  It’s almost a free for all.

However, is it the time to buy?  That of course is the quintessential question I get.  What happens if 20% interest rates return, like we had in 1981?  However, that’s ancient history to the many new young people involved in Canadian agriculture and who am I to tell them its not.  In many ways, I recognize the fact my internal attitudes toward debt are shaped by that time.  I need not inflict that on agriculture’s youth.  We may never see those times again.

So the future is bright for Canadian agriculture looking toward 2013.  I don’t have to tell you that, essentially as I stare into “your eyes” during this tour, you are telling me back.  It’s been an amazing time in Canadian agriculture lately and we surely don’t want it to end.