Finding New Ways to Farm in a Capital Intensive Farming World

In southwestern Ontario there are a myriad of different management strategies for planting crops.  For instance, over the last few years there has been quite a bit of interest in the planting of cover crops into wheat stubble during late summer.  Some of these crops like oats are frozen by a Canadian winter.  Other more exotic cover crops over winter and spring to life in the warm weather of April.  Farmers plant right into the green cover crop.  It’s stuff you couldn’t even dream about many years ago.

Of course, the reason that we are able to do such things is because of the advance of some technologies, specifically chemical technologies.  The chemical herbicides and fungicides we use increasingly give us weapons of war to manage all of this biomass.  Needless to say, there are successes and failures evident usually in a very public way.  I have yet to join the cover crop movement.  However, I can understand where the management is coming from.

Increasingly, as I grow older and gain even more experience I tend to think that much of our farm management is specific to the particular micro geographical and micro climatic environment in which we find ourselves.  For instance, I farm two distinct types of soils.  The first type is kind of a sandy loam near Dresden Ontario, which I swear all you have to do is stir the dirt with a stick to get something to grow.  However, north of Dresden Ontario I farm about 500 acres of very heavy clay/rock.  There is no forgiveness in that soil at all.  It takes a special type of management and I think it is specific to this particular area.

I say that because everybody thinks they have the hardest clay in the world.  That may be the case, I don’t know.  However, as I’ve grown older I have learned new things about managing all these soils.  I take much from the extension agronomists on how to manage the soils.  Needless to say, I think the management on my farm is specific to my microclimate and geographic area.  I would wager the same type of farm management is paramount wherever you find yourselves around the world.  It is specific to the environmental conditions that you find yourselves in.

In my case, I needed to find a way to manage my residue a little bit more effectively.  I no till most of my crops and stale seedbed my corn.  This past spring I bought a Vertical tillage implement to help me manage the soils.  My litmus test is always how to make this implement pay for itself.  So this past week I found myself using it on my wheat stubble in an attempt to get that investment back.  It is always a challenge, economic payback and it certainly remains that way on Canadian farms in 2017.  Farm machinery to manage our farms simply costs a lot of money.  Managing those costs especially at a time when interest rates are increasing should prove a little bit more difficult in the future.

I was reminded of this over the last few days as a farm machinery salesman was quoting me the prices of some of the combines, tractors and other implements that he was selling.  He commented that he had just sold a combine for half a million and he couldn’t quite imagine how farmers handle these costs.  It’s like, what comes first the chicken or the egg.  In this case what comes first, the crop or the combine?  The bottom line is these high-ticket items excluding land make it difficult enough.  When you add land costs to the equation, we need some creative financing.

This is happening at a time when the Bank of Canada has recently raised its bank rate by 25 basis points.  With household debt at record levels in Canada, you have to think this has got to hurt.  In fact, there are some economists who feel maybe the Bank of Canada should have waited and kept interest rates down, that Canadian debt levels were just too exposed.  Ditto for the Canadian farm economy.

Of course this is not the 1980s, far from it.  Technology has moved on, but so has the cost of acquiring it.  Canadian farming continues to be a capital-intensive profession, vulnerable to that cost of capital.  However, just like the microclimate you farm in, managing that capital can be very specific, to your farm.  Management solutions can come in very precise and new ways.   I’ll continue to find new ways to farm.  Given our history and our current management challenges, new innovative thinking is the only way to go.