Staring Into My Face 32 Years Ago

Phil 32 yrs

Last week I stared into my face 32 years ago.  Most of us don’t get that chance very often or at all. I had been invited to speak to Bill Litwin’s Farm Business planning class at the Ridgetown College, University of Guelph last September.  It just so happened that this past Tuesday was my time to give the guest lecture.

32 years ago I was a student at the University of Guelph attempting to get my undergraduate degree in Agricultural Economics.  At the time, I had a whole bunch of things going on and the “vision thing” certainly wasn’t one of them.   As a young student at the University of Guelph, I just wanted my degree, and get my career off to a good start.  32 years later I was back in front of students trying to give them the best advice I could.

I told them it was all about “vision”.  Where did they want to go with their lives and what were they doing about that now?  I emphasized the fact that they needed to make plans that led to their dreams.  In essence, if they knew where they wanted to go at this very young age, it would pay off for them in the future.

I told them at some point in their lives when opportunity knocked, they’d need to reach up and grab the brass ring.  In other words, sometimes we don’t realize our potential in this world, but if we reach for the stars and know where we are going there will come a time when we’ll be able to attain much more than we had ever envisioned.  Reaching out and grabbing that brass ring is what life is about.

I was speaking to these agriculture students at a time when the agricultural economy has not been hotter.  Commodities are an investment vehicle of choice now, albeit, some wise farmers might liken that to going to the casino.  Needless to say, it was pretty obvious that these young agriculture students were poised to capture the employment wave caused by the latest upsurge in commodity prices.

I had many questions and at the end of the day I got a nice note from the professor telling me that I made an impact on the students.  In fact he said that it was pretty clear I made an impression on how beneficial good farm planning can be.  However, one of the questions made me think twice.  Asked by a young Oxford County student, he said how can we be poised to benefit from the hot agricultural economy if farmland is going to cost him $5-$10,000 an acre?  He said that if interest rates ever went up, he would no longer be able to make the payments.  I almost did a double take when I heard his question.  I looked down on my cellular phone to make sure it was not 1978 when I was in Ag school.

The point being his point was entirely relevant to the present day situation.  The last few years and especially in 2011 the higher grain prices combined with other factors have led to a huge increase in the price of Ontario farmland.  You could also make an argument that the higher prices for grains as well as stable incomes from the supply-managed sector have been capitalized back into land.  This in effect was becoming a barrier to entry for young agriculture students.  Mr. Phil Shaw, agricultural economist, how do we deal with that?

I gave him my standard answer, I dunno!  However, I went on to say that we do not know what the price of land will be in 10 to 15 years and price movements up and down are a normal part of any farming operation.  It’s simply something you have to deal with.  He responded by telling me he expected interest rates to go up and that this is a real issue.  Of course, he is very right. The old fixed cost price squeeze so inherent in the history of agricultural economics is rearing its ugly head again.  At least in Ontario, economic barriers to entry for new farmers are cropping up everywhere in 2011.

In his recent column on DTN, my colleague John Sanow muses that given the historical tight supply and demand situation both domestically and globally for corn the 2008 high price of $7.65/bu will be like “dust in the wind” if we have some production problems in 2011.   I don’t want to put words in John’s mouth, but that’s like saying we’re about to blow by that record like a hot knife in warm butter.  Of course the question is how is this new agricultural price environment going to affect those agriculture students I was staring in the eyes last week?

I really don’t know.  For those of us who have fought the wars through the years, maybe now this is our time.  For the agricultural students looking at us as obstacles to making their way I’d ask them to bide their time.  The new agricultural economy, with the commodity market now resembling more of an investment vehicle will surely have long employment coattails. The key for them is to plan where they are going.  Have a vision for what you want to do.  Then when the opportunity presents itself, reach for the sky and grab the brass ring.  I was like you a time ago.  There is no substitution for excellence at any level. Your time will come.