It is one of the most bearish times that I can remember in the grain market over the last 5 years. It is so intriguing how times change. Last week I told you that the bulls were emaciated and starving. After the USDA report tomorrow, it might be just piling on. Who knows, maybe the USDA will even raise the corn yield to 169-170 bushels per acre. Of course, by the time any of you read this we will already know.
So let’s forget that for the time being. The last few weeks have been full of speculation in raw numbers from the USDA, which has led to this bearish spiral. Meanwhile, crops have been growing rapidly across the US corn belt as well as here in Ontario. Too much water has been the order of the day for many fields across this province. I was very interested in reading today that the Ontario corn yield is being predicted to be down this year simply because of the uneven crop. My crop was late planted but looks good. However, it doesn’t quite look that way right across the province.
Needless to say, 3 million acres of soybeans don’t lie. That is a record crop in Ontario to go along with the record crop in the United States. Give me some rains in August and hopefully I’ll have that 60-bushel per acre yield marker on my forehead. Needless to say, it’s been quite a week here in Ontario. I might be dreaming about my 60 or so per acre soybean yield, but her decision on the Ontario government this past week regarding neonicotinoids pesticide as everybody on their ear. Last week the newly elected provincial government announced that they would be reviewing neonicotinoids use in Ontario. Everybody took that to mean a ban is coming.
The Ontario agriculture minister Jeff Leal said, “Ontario wants to move away from the widespread use of neonicotinoids based pesticides. He went on to say that he was committed to finding a balanced approach, based in science that addresses the important role both pollinators and growers play in Ontario’s agri-food system. Of course, there was nothing said of this in the Ontario election campaign just past. You can imagine the vitriol coming from Ontario farmers as well as the big agricultural companies who make millions of dollars from neonicotinoids. It was like the fix was in.
That part of the debate is simply dirty politics. Somebody could’ve made the announcement during the election campaign but didn’t. Lots of farmers who are politically active may like taking shots at the government. I can understand how the Grain Farmers of Ontario might feel a bit betrayed, finding out about this through an article in the Globe and Mail newspaper. It certainly wasn’t top-drawer.
Since then the conference Board of Canada has come out and said restricting the use of neonicotinoids would cost Ontario Farmers $630 million a year. They said that restricting the use of these pesticides would lower yields and drive up costs for corn and soybean farmers. We can debate the numbers but there is a lot of money at stake here. Big Ag also has a lot at stake here, because they make millions of dollars in profit on the sale of seed treated with neonicotinoids. They also operate in an agricultural economic environment of oligopolistic competition effectively limiting farmer choice when it comes to neonicotinoids pesticides. In many cases for seed corn, there is no ability not to buy seed without it. Soybeans on the other hand are commonly planted with without seed treatment.
Most seed corn is all sold that way; you have no choice in the matter. In my mind, it’s not necessarily about science, but more about price discrimination from the seed companies. They charge a large premium for that and you do not have any choice whether you want it or not. My soybeans on the other hand are not treated, I’ve done tests and I’ve seen no yield bounce or benefit so far. Needless to say, I have lots of friends in the agricultural industry who think any restrictions of neonicotinoids are a sign of the apocalypse. Seed corn over $325/unit gives me the same feeling.
To put it simply, people are prickly, touchy, sensitive and vitriolic about the neonicotinoids issue. You’ll hear a lot about the “science” on this issue. However, like I’ve told you a million times, when good science meets bad agricultural economics, good science loses”
The government announcement regarding neonicotinoids sandbagged our farm organizations. Meanwhile beehive numbers and beekeepers numbers are up substantially. The most lucrative honey market is the farm gate or overseas. Cheap foreign honey blends from Argentina and Australia line supermarkets in cute bottles.
It’s quite a buzz and for the next year, it will surely be quite a debate.