I am in quite a mess; in fact I suppose many of us in southwestern Ontario think we are in quite a mess. I have a farming career that spans all of my life going back at least 35 to 40 years. It just so happens this year I am off to the latest planting start ever. Wet weather has meant I have nothing in the ground and another inch of rain today pushed that way into next week guaranteeing me that dubious distinction. However, to those close to me I like to say that I’ve been here before with 23% interest rates.
Believe it or not the memory of that makes it easier. Back in the day I worked a lot harder not getting as much done as I do today. Simply put, I don’t steer tractors anymore and my machinery is so much bigger. I armed myself with technology and now I am ready for whatever I’m dealt. However, the times we are in are not hard times and frankly, that makes it so much easier.
Of course it wasn’t always that way. Many of you will remember the last hard times we had in Canadian farm country. In 2006 I mounted many stages fighting for a better agricultural safety net for Canadian farmers. Those were tough days 8 years ago. We had low prices and not very good prospects and unfortunately we had no good Canadian agricultural stabilization policy. The last big push came at the Ottawa Solidarity farm rally in April 2006. Many of us went home hoping our government would make things better. Little did we know that we were at the start of the ethanol revolution and prices in the next 8 years would be much better than we ever expected. We are still waiting for a Canadian agricultural policy with sustenance.
So that brings us to the waterholes of 2014. In many ways for the farmers that have 8 years experience or less there is an absence of memory of crisis in agriculture. This is from an industry, which has always been plagued by the nuances of uneven agricultural economics. What it means is that we are constantly plagued by overproduction. There are good times and bad and volatile revenues are our constant. Many years don’t give us prices to make any money. The last few years have been very different, profits have become freer and of course interest rates are like cocaine, when it comes to cheap money nobody can enough.
I’ve said that those interest rates are like testosterone to the agricultural economy. When you add them to profitable prices consistently like we’ve seen for the last 8 years its like oxygen. Even people like me, who’s been through the wars start thinking it might last forever. However, the history of agriculture tells us that is not the case. Of course the question is are those times coming back and will it be consistently bad over several years?
I certainly don’t want to be accused of being a conspiracy theorist or a market bear on the future of agriculture. In fact, you have to be a bit of an optimist to have a history of staring out into the mud and hoping you can get something to grow to sustain yourself through the year. I only bring it up because sometimes I think we have too much of the prosperity gospel in agriculture. Our industry is a great industry, but those pesky uneven agricultural economics always lurk in the background as the great equalizer. We have to remain humble.
One of my many interests are the nuances behind the economic 2008 meltdown with Bear Stearns, Lehman Brothers, AIG and all the others. If you heard me speak in public, I often quote those dark days. It was a time when the neighborhood ATM machines came within only a few days of not working anymore. You talk about panic? That would’ve been a catastrophe for us all. The question I have is how prepared is Canadian agriculture for possible uneven and even unprofitable times ahead?
Will catastrophe come? For Canadian agriculture, I very much doubt that. However, if the stars align the right way this year and Mother Nature decides to play nice, we might be going back to the old days again. Add the canary in the coalmine, ala a surprise spike in interest rates and we would have a real mess on our hands. I’ve been there before and I’m not talking those flooded fields. I might even be captive to it. Needless to say, there is an absence of crisis right now in agriculture. That is not a natural thing in this business.