Talking Market Volatility in Alberta

Slide2Call it the great abyss, call it what you want.  This afternoon when I got up in front of 600 plus people at the AAAF provincial conference in Edmonton Alberta, I talked about “all of us being Canadians” even though in this country, agriculture is divided up into three distinctive regions.  In fact I called those three distinct regions, Ontario, Quebec and the West, three distinct agricultural countries.  Getting an opportunity to speak and bridge the gap between those three countries is always a challenge.

I was speaking on the topic of “Market Volatility and the Changing Economic and Political Environment in Canada.  It was well, received, with one major flaw thrown into the presentation.  About half way through the presentation, emergency bells went off, throwing me a bit and throwing the audience.  The audience was very interested in the commodity volatility session, so with loud bells ringing every three seconds, it was challenging.  I raised my voice and soldiered on.  There are firsts for everything, this time it was simply my turn.

I really enjoy any visit to Western Canada, but these professional visits I find fascinating.  It is such a different culture with different farming practices that sometimes, it’s so hard to get around on.  For instance I shared the stage today with Roy Rutledge, a legend in the Western Canadian beef industry.  Roy knows Canadian beef better than anybody and he delivers it in a cowboy style, which I could never imitate.  I’ve read his work for years, and sharing a stage with this Western Canadian legend was great.  I actually had breakfast with him in the morning, where he filled my head with beef stories, while schooling me on the economics of cattle.

I also shared the stage with Kevin Hursh, who farms in Southeast Saskatchewan but also has a very large communication and consulting business in Western Canada.  I’ve read his work extensively over the years; so putting a face to the name was very meaningful.

Of course the question is should Western Canada be bullish?  I don’t think I can remember a time when things look so good for Western Canada.  For instance it doesn’t happen too often that grains and beef are bullish and that’s exactly where we are.  I talked to one farmer who had 3600 acres if canola north of Edmonton.  He got 60 bushels/acre from his 2010 crop, priced at about $12-$13/bushel.  That’s not rocket science and not everybody gets those yields, but he’s doing fine.  Ditto across Alberta.

Of course I always learn more about the differences within Canadian agriculture wherever I go.  For instance the Alberta guys talked a lot about the wild animals, which intermingle with their crops and livestock.  I brought up the subject of bears in crops in Northern Ontario.  They responded to me by what I should have thought was obvious.  Depending where you are in Alberta, there are lots of bears in your crops.  Add cougars, deer and elk into that equation and you surely get some challenging critters roaming the prairies and foothills of Alberta.

Interestingly enough, there is always a discussion about politics at these meetings.  From an eastern perspective, I just don’t get it.  There is always lots of political angst at these Alberta conferences, but they vote the same every time.  The Conservatives rule rural Alberta and I cannot see that changing.  There is now something new called the Wild Rose Alliance, which is a spinoff from the ruling provincial Conservative party.  I met some of there supporters there, but really it’s just a big Conservative soup.  For an easterner, it just looks like one big political party having an elbow fight.

One thing that was entirely obvious was the concern about fixed costs in agriculture during these bullish times.  With beef and grains in bullish territory, machinery and land talk wasn’t far behind.  Many Alberta farmers I met talked about the last time good times had hit and much of their profits were capitalized into machinery and land.  When the lower prices came, which they invariably do, many were left holding the wrong end of the bag.  Nobody wanted to go there again.  However, you know the way it is in agriculture, farmers smell money and they reinvest looking for a better day.

Friday, January 21st, I’ll board a plane leaving snowy Edmonton making my way back to southwestern Ontario farm country.  In my life I’ve had the opportunity to speak to the three agricultural countries in Canada, the West, Ontario and a real rarity, Quebec.  It is all so different, culturally, agronomically, topography, etc.  I like bridging those divides.  I hope I get another chance to tell the same story in Western Canada again some day.