The days have grown very warm and thoughts of thunderstorms are dashing around me. Where once I hoped that the rain would stop, now I’m on the other side of the ledger hoping the rain makes everything better. Needless to say, I suppose it’s time to put it on the past. The rain will come and surely there will be new problems and opportunities ahead.
When you are involved in agriculture there are so many things that you don’t know. For instance, my whole job as a farmer is a learning experience. I make mistakes all the time usually based on out guessing the weather. However, the key is to learn from all our mistakes and to do better next time. However, at the end of the day, you don’t know what you don’t know. It will likely be that exact same way next spring when my planter goes to the field. Interestingly enough, I did learn something today I didn’t know very much. On my Twitter feed I had an Ontario equipment dealer tweet about a grey market tractor. I had no idea what a grey market tractor was, so I asked him what he was talking about. He told me that they had a tractor in the shop, which came from Europe, and there was no way that they could get a wiring diagram or parts for this tractor. He simply signed off by saying sorry. I thought that was kind of interesting. I have written a fair bit on gray market tractor hacks dealing with the internal software. However, the term “grey market tractor” was never in my lexicon. The equipment dealer went onto say that these tractors were not meant to be sold in Canada. He said that these tractors are configured for other countries like Japan and Russia. Wholesalers bring them over to this country. He said there are some instances when parts can’t be sourced and sometimes the PTO even turns in the opposite direction. However, the one common denominator is that these gray market tractors are cheap! That’s why they turn up on Canadian shores.
Apparently, this is a much bigger deal in Western Canada than it is in eastern Canada. Needless to say, I drive quite a few tractors to make my living and the idea of a grey market tractor for whatever reason seems quite appealing. I always like to save money. However, maybe it’s all those trips to Bangladesh, where I saw Chinese tractors in the paddy fields. On my last trip there 18 months ago I couldn’t get over the number of Chinese tractors I saw in the fields. I’m sure if I imported one of those Chinese tractors into Canada from Bangladesh with all the corresponding Chinese lettering, I’d get myself a gray market tractor.
Of course, now is probably not the best time to import a Chinese grey market tractor into Canada. We still have serious problems with our Chinese friends, all having to do with Huwaei and the resultant cancellation of trade in Canadian canola, pork and Dairy semen. Then of course on the other side of the border our American friends still cannot get a trade deal with China. So it’s very likely there’ll be no grey market tractors flooding the United States anytime soon.
As all of you know I’ve been fairly pessimistic about the Chinese American trade dispute when it comes to our agricultural commodities. In my mind, the Chinese didn’t really need American soybeans as bad as the Americans thought they did. This issue is getting somewhat more muddied now because of the problems with African swine fever in China, which is obviously affecting demand for protein. Examples of the Chinese looking the other way for agricultural commodities are abundant
I recently read an article where the Chinese were looking to import more soybeans from Russia. Russia is a major player in the world wheat trade, but extremely minor in soybean production and exports. We all know that the Chinese increased their imports of Brazilian soybeans to satisfy some of the soybean deficit. Needless to say, the Russians see opportunity here, just like a lot of others in the world to satisfy what was a voracious Chinese appetite for soybeans. At the moment, Russian soybean exports to China are less than 10% of the decrease in US soybean sales to China over the past 10 months. However, both sides are talking a big ball game of trying to increase that soybean trade, which doesn’t bode well for us in North America. It was so deliberately thrown away.
I’m hoping one day that lightning might strike and I will wake up to an ironclad China US trade agreement, which will once again open the floodgates of American agricultural commodities to be exported to China. At the same time would such an agreement facilitate the import of Chinese tractors back this way? Forget the grey market, how about new shiny Chinese tractors in Canadian and American farmyards?
About 13 months ago, this seemed all possible. However, now, it’s a huge geopolitical challenge. Price of course is always the lowest common denominator. Cheap prices can often serve as the lubrication of the agricultural economy. Despite the recent rise in corn prices, prices are cheap enough. As this week grows hotter, let’s hope the right combination of variables comes together, to get this trade deal back on the road.