This afternoon I took a walk in my soybean field like I’ve done many times before. In fact I’ve been walking through soybean fields since the 1960s, pulling some of the same weeds that I pulled way back when. Of course the ground has shifted under my feet during that time as our whole agricultural economic environment has changed. Add all the technology to the mix over the years and it’s a whole new world. It’s great for me because I’ve been through the wars. I look forward to many, many more good years on the farm.
I say that because some of my writing has led some people to believe that I am on my last legs. LOL, nothing could be further from the truth in my mind, but when you are a published writer almost anything can be taken from the written word. I even heard this past winter that I sold all my farms! That was certainly news to me.
Needless to say, sometimes you do realize how old you are when younger people contact you to ask advice. This happened more than once this past week. Two students from agricultural colleges, who were looking for advice on the future of agriculture, contacted me.
I have been writing this column for 28 years. So I have seen a lot of change and I’ve heard a lot of platitudes. Back in the day, I used to hear that we had to sharpen our pencil and seek out new markets. In 2014, with the USDA coming out today with record corn and soybean yields, maybe I’ll be hearing again. However, I needed to tell the students something.
The two students asked me my opinion on what were the 2 greatest challenges and 2 greatest opportunities for Canadian agriculture in the next 10 years. I told them that in my opinion you had to divide Canada into 3 different distinct agricultural regions, the West, Ontario, and Québec. Each region is unique in their production practices with cultural and linguistic differences.
I told the students that one of the greatest challenges over the next 10 years in Western Canada is to find a more efficient way to move grain. It is been no secret that grain transportation has been difficult for all of Western Canadian history. It is also true that last year’s crops were 30% better than normal and we certainly have seen 30% better than normal problems with moving it. Basis levels have been abysmal and the economic loss to Western Canada has been substantial. It continues today if you check the cash prices available to producers in Western Canada versus other parts of North America. This challenge must be met over the next 10 years.
In the Ontario and Québec I said one of the greatest challenges would be the transition of the supply management model for dairy and feathers into something else. I do not necessarily support that, but governments are fickle at the best of times and we’re already seeing an erosion of our dairy economy because the government wants free trade with Europe. Our American friends have always wanted access to our supplied managed sector and is not beyond the realm of possibility over the next 10 years that some or all of that will be dealt away for greater trade access. That transition in the East will probably be even bigger than the move away from the single desk Canadian Wheat Board in western Canada.
In terms of the two opportunities for Canadian agriculture I talked about the value added concept where we can differentiate our agricultural products to garner a better share of consumers’ revenue. I gave the example of how wheat and corn is transformed into ethanol in many places across Canada effectively creating the value-added market for a commodity. I also wrote to the students about how you can do it more at the micro level close to urban centers by direct selling beef, pork or any other agricultural commodity. These opportunities always will exist for the people who are willing to make the human capital investment to get it done. The second part of that opportunity has to do with our low interest-rate environment. As you all know I have called it the testosterone within our agricultural economy. As long as we have these low interest rates, it makes things easier even with the low prices that we have now.
Of course the great challenge may come when those interest rates change. I don’t think we’ll ever see 23% interest rates again in my lifetime again but double digits would certainly shake things up.
At the end of the day, those two students are really no different than I was back in 1981 leaving University for the first time. Little did I know I’d go back for a Masters, buy land, take risks, pass and fail and hope for another day. The only constant I could give those students was change. In agriculture, that’s what we face everyday. Embracing it is key. I hope they hit the ground running.