Agricultural Productivity Is Almost Like A Drug; We Just Keep Going After It

Canadian cash grain prices resemble something you usually see in a museum.  At least that’s the way it feels.  With such negative vibes surrounding me sometimes I feel that it might blind me from any future opportunity.  If Canadian beef producers could get through BSE, there isn’t an excuse for the rest of us.  We shall see.

Many of you are surely looking for the answer.  I know many Canadian farmers are looking toward government for a long-term risk management strategy from government as the best way out.  I think that is very important.  However, sometimes I think we take our own productivity for granted.  Give a farmers $5 and he’ll try to make $50 out of it.  We are very productive with our resources.  The problem is it is a vicious circle.  The more efficient we get, the lower cash prices seem to go.

Still, you have to marvel at our individual and collective productivity.  On my back concession, there is 24 hours in a day and one market.  The rest is based on my ability to work, innovate and jump through that window of opportunity opening.

On my 830 acres I almost farm it by myself.  When I finished my soybean planting recently I was taken back at the end of the day from all the work I had done as an individual.  I had sprayed 75 acres and turned around and planted that same 75 acres with the end of the day still an hour away.  “Back in the day” doing that same feet would take three guys and a day and a half.  In the intervening time my capital has replaced labour making me much more productive.  Ditto for all the other farms across North America.

That doesn’t make me any agricultural hero other than to myself.  I’m a little guy compared to the big farming operations that work in Ontario versus other parts of North American farm country.  For instance I once read about one farmer from Kansas who grew 8,335 acres of corn.  With his capacity to buy inputs in bulk lots on phosphorous and anhydrous his costs were $20/acre below what it would be if he had paid the price from the local supplier.  His savings alone made it so he could buy a brand new tractor with the money.  When I think I’m productive I often think of that guy.

In an economic sense farmers face what’s called a perfectly elastic demand curve for their “crop.”  In other words we are “price takers.”  It doesn’t matter how much we produce, it makes no difference to the price we receive.  So every spring hope springs eternal and all of us try to produce as much as we can at the least cost.  Price inevitably gets hammered and farm income problems arise.  One way to respond to that is increased productivity.

You see it everywhere.  I have a neigbour who bought a large used self-propelled field sprayer.  He’s a large farmer who every spring seemingly “lived in his old sprayer.”  I talked to him recently and he told me he’s having a hard time believing how much time he has.  He’s spraying so quickly and efficiently; it frees his time up to do many other tasks.

It’s the same thing for one of my fertilizer dealers.  He told me in his younger days the “fertilizer run” in my part of southwestern Ontario lasted two months.  “Now it lasts about seven days!” he said.  The same amount of fertilizer goes out, it simply it distributed and used so much more efficiently.

The productivity conundrum has always been part of the answer to our farm income problems.  Grandpa might have gotten $4 for his bushel of corn way back when, but he put it in a snow fence corncrib, which eventually filled up with rats.  He also got 40 bushels/acre.  The cash price for corn in my neigbourhood is about $2.30 bushel.  However, if I don’t have yields approaching 200 bushels/acre I’m increasingly being disappointed.

Governments have responded to this productivity paradigm as well by forging policies, which encourages improved efficiency.  One example of that is in Ontario where farmers who enroll in the Environmental Farm Plan can receive cost share money for efficiency boosters such as light bars and precision agriculture equipment.  Other provinces have similar programs typically cost shared with the federal government.

Stabilization programs like CAIS are designed to take some of this into consideration.  However, it is so discredited that’s almost laughable to think about.  Future stabilization or support programs will need to capture this productivity equation.  Missing it will only render any future safety net lacking.

Some of you might say grandpa made more money at the end of the day.  Hmmmmm, I doubt it.  What I do know is on my farm I use satellites to guide me through the field, night or day.  I cover more acres per hour than I could ever imagine even ten years ago.  And every day I try to do it better, faster, and more efficiently.  Ditto for everybody else across farm country.

The problem is age old.  At the end of the day “farm productivity” is killing us.  Others will say it’s our only hope.  It’s almost like a drug; we just keep going after it.  Ten years from now it’ll be something else.  Getting a decent farm income will surely lie in the balance.