Next week will mark the 30th year of writing this column. I was a little grunt from Dresden Ontario then intent on going to graduate school. Now I’m an old grunt still in Dresden Ontario trying to get my corn off before the snow flies on the weekend. Needless to say, over the last 30 years I’ve harvested corn in the snow a few times. Maybe this year will be one of those years.
For DTN, it’s being 22 years, so long, I doubt if even they would remember. However, sometimes there are magic moments when it means a lot. Last week, as I was preparing to travel to Guelph to speak on the grain markets to the Agromart group, I got a call from my soybean buyer. There was somebody at Jackson’s Seed Service in Dresden Ontario, who was from the United States and an avid reader of my columns. I was told, he would like to meet me and can you drop in. Long story short, I walked in the door and was greeted by Mr. Jeff Laskowski, a farmer from Plover Wisconsin, and his wife, who were doing some post harvest touring. Mr. Laskowski, said, his intent was to travel to the nearest elevator in Dresden Ontario and ask where Phil Shaw was. So there we were, face-to-face talking about our respective lives brought together by DTN. It was a nice moment.
I think Jeff Laskowski and I are of about the same vintage. Needless to say, we had lots to chat about before I had to leave for Guelph. We even had an excellent tour of the soybean processing facility at Jackson Seeds in Dresden. My soybeans are processed there, put in bags and into containers for hungry consumers in Asia.
It is always nice when a DTN subscriber drops in, especially from the United States. Several years ago I had the same thing happen with a DTN subscriber from Ohio. He had family in the Detroit area and he made the small jaunt over to Dresden to look me up. For any of you reading this in the US, remember that. I’m always open to a visit.
In agriculture, change is our only constant. I constantly say that when I speak in public. For instance, even this year the soybean crop took me deep into November and because of that I’m combining corn with cold snowy weather on the doorstep. However, no matter what happens, I’ll tap out another column each Thursday might. There are people out there who appreciate the thoughts of an agricultural economist who masquerades 100% of the time as a farmer. It is served me well.
As I have grown older, just like everybody else I’ve had to adjust. That change thing in agriculture never seems to go away. I can honestly say that one of my greatest challenges as a farmer and an agricultural economist has been this era of low interest rates. For instance, in the last week since the election of Donald Trump, there’s been much talk about interest rates rising. In fact, today US Federal Reserve Chairman Janet Yellen strongly hinted a rate hike was coming in the US. This is after a couple Canadian banks raised their rates this past week. For instance, RBC raised its five-year fixed-rate mortgage 30 basis points to 2.94%. It also raised its for your rate to 2.79%. Borrowers with amortization rates longer than 25 years will even be paying more.
You can imagine when I look at those numbers I am stunned. It is so difficult for me to truly comprehend how some people can be shaking in their boots regarding an interest rate hike to 2.94%! With this as a backdrop, I read with interest a piece in the Toronto Star about the Canada Mortgage and Housing Corporation doing stress tests on their mortgage guarantees to see if they can survive a serious financial storm. This came a day after I learned that Farm Credit Canada does the same type of routine stress tests on their loans. At the end of the day, in both scenarios we’re talking about stress tests on loans below 5%. Having borrowed money over 20% back in the day and paid for a lot of my land with interest rates in the teens, it’s hard for me to relate. Simply put, it’s a new day, in fact, it’s been a new day for a while, where credit is easy.
It has spawned a generation of younger farmers who know no different. It is also created by default a group of farmers like me who are still captive to the bad old days of 20% interest rates. It was so crushing; we’re always looking over our shoulder, even though many of the players in that 1980s drama are long gone.
However, maybe I’m the only one. Needless to say, it’s nice to have visitors like Mr. Laskowski. It’s kind of an affirmation that my experience in agriculture, might have rubbed off on a few.