A few weeks ago I felt the earthquake, which was centred in the American Midwest.  A few years previous I felt an earthquake while vacationing in Tennessee.  I’ve been to California quite a few times, but have never felt a big one.  Needless to say, that’s OK with me.

To me having the earth move underneath my feet would be completely disconcerting.  I’m sure my DTN colleagues and ex-California ex-pats Aine Gianobili and Elaine Kub could tell a few stories.  However, increasingly as I careen into the 2008 planting season I’m being challenged by economic factors, which are moving beneath me like an earthquake.  Finding a way to manage this change is increasingly becoming my greatest management challenge going forward.

Set aside the whole food inflation/biofuel/China: India agricultural debate for another week.  Sure, it’s the big story for anybody working in the media who discovered agriculture last month.  However, we deal with that journey every day.  It’s like old hat.  The hard part going forward will be the basic economic challenges, which are currently weighing on Canadian farm country.

For instance many of you know I’ve driven a 23-year-old Dodge truck seemingly forever.  However, last year it finally stopped running and I bought a new Ford F-150.  The first time I filled it up with gas, the pump kept running past $50.  I almost had a seizure when it hit $90.  (Yes it has a bigger tank)  So with oil prices up toward $112/barrel last week it cost $140.  I run around my farms for a while and then I have to fill up again.  This time it costs me $165.

Yes, you can make an argument that high gas prices are good for ethanol, which eventually is good for me.  However as you all know it doesn’t stop there.  This past week I’m spreading fertilizer, which is costing more than double what it did a year or two ago.  So am I glad I can contract corn for $5 plus?  Say again.

More troubling going forward is the economic calamity currently taking place around me.  I mentioned this to another farmer today and he said “what calamity?”  So I went into the American problem with their sub-prime mortgage problem and how that has caused much economic hardship, which is shaking the Quebec and Ontario economy to the core.

For instance in the final quarter of 2007 the Ontario real gross domestic product grew at only .1%. (Ontario Ministry of Finance)  Figures for the first quarter of 2008 could surely be negative and if you take the push in corn, wheat and soybean prices out of the mix, it’s surely a sorry economic picture for the Ontario economy.  It’s gotten so bad that the Toronto-Dominion Bank issued a report last week that said Ontario would be eligible for federal equalization payments as early as 2010.

For my American readers that’s a big deal.  In our Canadian confederation the rich provinces have always shared with the poorer provinces to sustain Canadian standards across the country.  It’s called equalization payments and typically through the years tax money from Ontario flowed out into other regions of the country specifically the Maritimes, Quebec and parts of the west.  It was done so “Canadians” would have a “standard” when it came to all things Canadian like “health care” and the potpourri called “Canadian agricultural policy.”

However, with oil being $112, Alberta is now flush with gobs of cash, Saskatchewan is set to follow and Newfoundland and Labrador are knocking at the door.  Money from those regions is set to flow into Ontario.  In Canadian economic terms, that’s like an 8.1 on the economic Richter scale.

The one redeeming factor in all this is all the cheap money.  The US Federal reserve cut interest rates again this past week.  The Bank of Canada rate sits at 3%.  If you want something “agriculturally speaking” in this country there is a line up of suitors willing to give you money.  The low interest rates (I know it’s a stretch) have even had the effect of lessening the crisis in Canada’s livestock sector.

To me, all of this is like the ground slowly becoming quick sand.  It’s made worse by our “Jekyll and Hyde” Canadian cash grain market where producers cannot price grain into the future.  That has been an earthquake.  As hard as I try to listen to senior DTN analyst Darin Newsom talk about DTN Index Futures during his web cast yesterday, a Canadian solution seems so elusive.  However, let me tell you something.  When grain prices retreat someday Canadian farmers won’t be happy that they were forced to hold the bag.

So as planters roll this week, its time to consider your wallet.  Yes, this is our time.  However, opportunity does come with its challenges.  I want no more earthquakes.  However, a few after shocks, we can expect.