In this life I like to think that I have traveled to the far corners of the earth. Africa and South America I have yet to get to it but someday will eventually come. Needless to say I read with interest, Kieran Gartlan’s series of articles this past week on the American experience of farming in Brazil. I have had family members go to that country as well as friends and neighbors but so far I have never experienced the expanses of Brazilian agriculture.
I have however stood in the southern hemisphere fields in Australia that stretch to the horizon. I’ve also talked to Bangladeshi farmers about their fertility program for all those rice paddies on the other side of the world. It would seem everybody has a different way of going about things. At the end of the day, wherever you are it’s all about being successful and getting a profit.
I noticed in Kieran Gartlan’s series of articles that the greatest limitations to success in Brazil seems to be credit, working capital, cultural change, red tape and the proverbial weather. However if you work hard and hit it just right it looks like Brazil is a land of opportunity and there is all kinds of money to make. A little bit of luck would surely come in handy too.
The big difference between farming here and farming in those far-off places is the existence of a government business risk management policy available to farmers to even out revenue fluctuations. For instance it looks to me in Brazil there is the price of soybeans with a wide basis variation, a mediocre credit infrastructure and a somewhat dodgy business environment. On the other hand here in Canada our supplying managed commodities get a cheque every week, keeping revenue stable and over time getting increases to cover costs. These differences in agricultural policies are inherent in our culture and are there for a whole host of reasons, with one being that farmers have fought hard for them through the years.
This agricultural policy environment is characteristic of North America and Western Europe as well as Japan. Regrettably, as Canadians our agricultural policy environment is uneven among us. There is a huge dichotomy between the supply managed agricultural sector of this country and the rest of us. In 2009 and going into 2010 the Canadian agricultural policy outlook is increasingly fractured and storm clouds are all over the horizon.
The saving grace for most Canadian farmers outside the supply managed sector has been low interest rates and relatively high grain prices. The value of the Canadian dollar in the $.80 range is also been a defining factor in Canadian farmers competing with the world. Outside of hogs and cattle, for the most part Canadian farmers have been able to survive and thrive over the last few years by taking advantage of opportunity born through biofuels as well as record low interest rates. The question is how long will this continue and do we have an agricultural policy and vision in this country, which will sustain us?
Key to that future will be what happens when interest rates double and triple and quadruple? Think about it this way, how easy has it been for you to expand your operation or to enhance your operation with land and equipment over the last three years? Outside of the Canadian livestock sector it’s being as easy as it’s ever been going back several decades. There have been warnings about this from such esteemed agricultural economists like my former professor, Dr. George Brinkman. George has documented the huge rise in Canadian farm debt over the last several years and has warned how this could come back to bite us if interest rates go up. Aside from George’s warning there is also the specter of the high fixed costs that we have for land especially in places like Ontario and Québec. When you are competing against people in Brazil these high fixed costs show how uncompetitive we truly are.
It is not this way in every region of Canada. For instance in Western Canada there is much more agricultural opportunity if you are willing to work. For instance with lower fixed costs for land in Western Canada, I would argue there is more opportunity just like some would say in Brazil. Needless to say, despite where you are in Canada having an agricultural policy that works for Canadian farmers seems as elusive as ever.
There are many culprits for that and the latest is federal agriculture Minister Gerry Ritz. He is an opponent of the Canadian Wheat Board and an opponent of any federal participation in any risk management plan for Ontario farmers. However he might just be a pawn for a government that does not seem to have a vision for what type of agricultural policy they want. That’s fair if that’s what you want but the last time I stood in front of 10,000 farmers on Parliament Hill, I didn’t think that is what they wanted.
In many ways governments cannot be faulted for the amount of support they have put into Canadian agriculture “after-the-fact “. In the past there has been significant contributions of support to Canadian agriculture generally speaking after the cow left the barn. In the meantime of lower interest rates and higher prices the vision for such policy always goes out the window and that’s where we are right now.
I mentioned those 10,000 farmers who stood in front of me in 2006 on Parliament Hill. It is true I don’t think that it could be repeated right now or if ever again. The unfortunate thing is it’s during times like these that agricultural policy should be built and administered to make the way ahead a bit smoother when the rough water comes. In Canada, we are still looking for that agriculture policy that works. Spare me, it seems I’ve been digging for it for years and from time to time I have to tell everybody nothing has changed. Finding an agricultural policy that works for all Canadian farmers is on going, but moving at glacial speeds. Despite that, we need to get there. Brazil and others have us in their cross hairs.