In the early 1980s, the wheat board developed an idea called the Market Assurance Plan (MAP). That was back when there were perennial transport bottlenecks and the whole crop could sometimes not move by the end of the crop year. Even if it could move in total, it could be feast or famine for supply of some grades. Some years there was a shortage of high-grade, high-protein wheat for premium customers. Some years there was more than enough and some had to be sold at a discount.
Under MAP, the board would have more consistent supplies, and farmers would be offered storage payments to hold on to certain grains or grades, and/or the opportunity to wait for a higher price.
The idea was floated as a trial balloon at district meetings that year, and to say it was shot down would be an understatement. CWB opponents seized the opportunity to brand MAP as the next step in the board’s plan to socialize grain production and marketing, and protests became the subject of nationwide media coverage. Board staff returned to lick their wounds and MAP went back on the shelf for good.
Ironically, if MAP was socialist, at the time it would not have been nearly as socialist as the system in the U.S. That was back when American farmers still had to reduce production to be eligible for support programs. And many of those giant elevators that you see in the U.S. were financed by government programs to pay for grain to be held in a three-year reserve. Unlike the U.S., MAP wouldn’t have controlled production, it would only have financed storage.
The U.S. production-control programs ended with the 1985 Farm Bill, leading to a long price war with the EU. Interestingly, in the U.S. today we have $3 corn and $4 wheat, about the same as in the early 1980s, and those grain elevators built in the 1970s and 1980s are full to bursting with unsold grain. As University of Tennessee economists Daryll Ray and Harwood Schaffer have written in these pages, it could be much cheaper for the U.S. government and more profitable for farmers to bring back the supply management system.
The perennial problem
Don’t hold your breath on that one, but perhaps it’s time to revisit some kind of storage system for Western Canada. In fact, it should be asked if we can have sustainable agriculture without one.
The latest reason for this to come to mind is India’s abrupt decision to impose a 50 per cent duty on Canadian peas. You can’t find a better success story than the growth of pulses, especially peas. They’re another rotation option. They produce their own nitrogen, reducing fertilizer expense and greenhouse gas. They’re nutritious, and they’re attracting value-added processing such as the new Roquette plant in Portage la Prairie.
Now prices have tanked, raising concern that farmers will cut pea acreage this year, only to have prices rebound if India has another poor crop and cuts the import duty. Then we’re back in the perennial farm problem — prices are highest when you don’t have any to sell.
Canola is another example of how short-term price fluctuations are encouraging bad long-term management decisions. We all know that canola should be planted one year in four (by the neighbours). But since they’re not following that practice, they’re encouraging development of more pests and diseases, including clubroot, which threatens the health of the whole canola industry.
Then there’s herbicide resistance, against which one of the best defences is crop rotation. If you take a long-term view, canola/wheat doesn’t necessarily pencil out better, as demonstrated by Manitoba Agriculture’s Anastasia Kubinec in an analysis of crop insurance data on the yield and cost benefits of good rotations. Using six years of actual prices, she found that a canola/winter wheat/flax/oat/canola/wheat rotation returned $24.50 more per acre than canola/wheat.
The carbon tax issue got most of the attention, but if you read past that section in the Manitoba government’s Climate and Green Plan, there are some intriguing references to soil and water management, including establishing a Centre of Sustainable Agriculture. Let’s hope the government follows through — one of the centre’s jobs could be to do some more number crunching. Following proper rotations is No. 1 of the list of sustainable practices — what would happen if everyone did? Would there be a market for every crop every year? If not, would there be a market over two or three years?
There’s already taxpayer support for the cash advance program to allow farmers to hold on to grain — should it be extended to allow them to hold longer? Should cash advance and crop insurance be combined somehow?
In real estate, it’s location, location and location. In agriculture, it’s rotation, rotation and rotation. Maybe there are better ways for farm programs to help farmers to do the right thing, both agronomically and economically.