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Tips for when crop profits appear elusive

Assess in-crop spending relative to the crop that is coming

Profits are going to be a challenge for canola if current prices persist.

They are depressed in part because China, Canada’s largest canola seed market, isn’t buying.

But most other crops aren’t looking much better.

To improve profitability farmers can cut costs and/or increase production, says Manitoba Agriculture farm management specialist Roy Arnott. Both are easier said than done.

Cutting costs can result in reduced yields. And because the weather might not co-operate investing more in inputs doesn’t guarantee higher yields.

Manitoba Agriculture’s 2019 cost-of-production spreadsheets assume farmers will spend a fair bit on inputs, Arnott said in an interview May 1. If that’s your farm, finding ways to save on inputs could help.

If the canola crop is mediocre and the weather dry, a farmer might skip spraying a fungicide to control sclerotinia, Arnott said.

Roy Arnott.
photo: File/Lorraine Stevenson

“In-crop management decisions, more so on the fungicide side, are going to be examined a lot more closely,” he said.

When profits are expected to be elusive farmers should review discretionary spending, he said.

“Is this the year to think about replacing the four-wheel drive and the combine? Maybe not,” Arnott said.

“There’s going to be a lot of caution out there in terms of purchasing. If you’ve got to make a change you have to change, but this is not the year where you say, ‘well, while we’re at it (we’ll replace this too).’”

Prices fluctuate. Old-crop canola prices are around $9.50 a bushel. Last year they varied between “$9 and something and $12 and something,” and might have averaged $10.50, he said.

“But the reality last year was most of the canola was sold at $11 or higher because farmers are selling into the rallies and peaks,” Arnott said. “That’s normal. I think you’ll see the exact same thing this year.

“You need to make pricing decisions on your own costs and yield. If you can make money at $10 a bushel then sell a portion.”

Arnott doesn’t see farmers shifting seeding intentions much this spring. But if profitability projections are much the same next year, farmers will look for relatively cheaper crops to grow, such as soybeans and oats, he predicted.

The good thing about canola is it has higher yield potential, Arnott said.

“It does amazing things in Manitoba,” he said. “There is upside yield potential. Areas that can grow 40 bushels an acre can also grow 50. That’s pretty hard to plan for, but it can happen.”

Farmers face a challenge due to lower prices, but shouldn’t panic, Arnott said.

“Farming has always been a long game,” he said. “It takes almost a career of farming to get the farm paid for. You’re constantly changing, buying and selling equipment, land et cetera, but it takes a lifetime to get there. There’s ups and there’s downs, good years and bad years. We’ve had a good run. You don’t want to think about bad, but we’ve seen the pricing in the ’80s and… if history has taught us anything it’s going to happen again. So we’re kind of in the middle of one of those challenge periods and it’s going to take good, old-fashioned farming and management to get out of it.”

About the author

Reporter

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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