How Governments Can Help

The difficult, abnormally wet growing season is being capped with a harvest from hell. If governments are interested in lending some support, here’s an idea that has merit.

This concept has been suggested by a number of farm groups. The way the fall is going, the idea is now especially relevant.

Why not provide a tax incentive for the purchase of equipment related to grain drying and proper storage? It could cover aeration equipment, grain dryers, heaters, temperature cables, perhaps even new bins.

The biggest problem with this approach may be deciding what should be covered and what shouldn’t. Grain carts facilitate getting grain moved out of fields that are too soft for trucks. Grainbagging equipment has become popular and can speed up harvest progress. An argument can be made to include every type of grain-handling equipment.

To be fair, any purchases already made this year should be retroactively included. In anticipation of the problems, many producers have already made grain-handling investments.

The incentive could be as simple as increasing the capital cost allowance so that the assets can be depreciated more quickly. Producers who couldn’t benefit from more capital cost allowance this year could carry it forward to future years when they could use it to decrease taxable income.

Alternatively, a tax credit could be provided. This is a direct reduction in tax payable. Many years ago, there was a business investment tax credit to stimulate the economy and many producers used it to purchase tractors and combines.

While some level of incentive makes sense, there’s no use having it so lucrative that a large artificial demand is created. That would just create equipment shortages and push up prices. It may be better to have the incentive in place for at least a couple of years so that demand doesn’t overwhelm supply.

This kind of government policy makes sense on a lot of fronts. More and better equipment would help producers preserve as much grain quality as possible.

It also has the benefit of helping to maintain markets around the world. Buyers are increasingly quality conscious and a lot of nasty problems can develop in grain that isn’t stored properly.

Governments are going to be under pressure to do something beyond crop insurance and AgriStability. This kind of broad incentive program would be easy to implement with long-lasting benefits.

However, as the old saying goes, you can’t make a silk purse out of a sow’s ear. The quality of this crop is going to be ugly and no amount of grain-handling equipment can reverse the damage.

The wet growing season has generated unprecedented disease levels in all the crops. The weeks of wet harvest weather is causing bleaching, sprouting and wrinkled seed coats in the cereals and pulses.

Now a heavy frost has laid waste to any crops that were immature. Canola is likely to be the hardest hit, but there will also be quality loss in many wheat and oat crops. Most chickpea fields were likely devastated, since they were just too green when the freezing temperatures arrived.

Nothing can change that, but the faster the crop can be harvested and dried the more value will be preserved and that’s good for the entire economy.

Kevin Hursh is a consulting agrologist and farmer based in

Saskatoon. He can be reached at [email protected]

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