Editor’s Take: Stress cracks but no fractures

Now is when the systemic shortfalls are beginning to show.

It’s only when a complex system is put under stress that underlying and underappreciated issues start to appear. Think of the 2008 global financial crisis as an example.

Prior to it being revealed as the precarious house of cards that it was, housing in the U.S. was viewed as the most stable of commodities and a fine foundation upon which to build the economy.

After all, houses only went up in price… and it all worked fine, for years, until suddenly, it didn’t. Only then it was revealed that many of these homebuyers couldn’t afford these houses, and that lenders had been asleep at the wheel, giving money to anyone with a pulse and a signature.

Related Articles

The great unwinding was swift and sharp, taking down global financial institutions and threatening the global economy.

We’re not in this position yet, either in Canada generally, or the national agriculture economy particularly — but we can see some risks building.

One of the biggest, from a producer rather than a consumer perspective, is the limited number of packing plants to process livestock into cooler- and freezer-ready meat.

Farmers have complained about concentration in meat-packing for decades. But in the COVID-19 scenario these plants have become hot spots for infections throughout North America.

As Dalhousie University’s Sylvain Charlebois wrote in a recent column, these sort of closures “… can be disruptive and, especially for farming, disastrous.”

Consumers will still largely get the meat products they want when they want them. Choice cut demand for barbecue season will be subdued this year while global demand has sunk. Producers have already been feeling the sting.

Attracting new investment to meat processing has never been easy but the current scenario has exposed the aging architecture and processes. It may spawn a rethink of how that sector is structured but that’s highly dependent on how long the current crisis lasts and whether there will ever be a return to business as usual.

Crop producers may have inadvertently benefited from the global economic turmoil that’s resulted in the pandemic. Their vital links to world markets are railways and ships, and neither seems to have suffered.

Rail transportation was actually most challenged earlier in the year when first weather, and then politics, interfered with fluid shipping on the network. Grain movement by rail actually increased in March, according to Quorum Corp., Canada’s national grain shipping monitor.

In a recent policy paper Richard Gray, an agriculture economist with the University of Saskatchewan, noted there are still some risks in rail transportation. Railways are less and less labour intensive, he wrote, “…with smaller crews operating larger trains.”

That’s good because they will have less trouble maintaining social distancing, but also means if they begin getting ill, that could become a vulnerability to the system. Right now though, Gray notes significant reductions in non-agricultural rail freight has translated into more resources to potentially move grain.

Similarly, the bulk vessels that handle grain are operated with small crews and life at sea is a life of natural isolation. COVID-related restrictions at their ports of call have only reinforced that, Gray writes. Less shipping of other kind has also translated into more capacity to move grain here.

That might not be great news for the quality of life of the crews manning these ships, but it does suggest that grain will likely continue to flow to market.

One area of concern is for pulse crops shipped by container. They’re experiencing the other end of the consequences of less overall global shipping, in the form of a shortage of containers to fill. Those primarily come in to Western Canada stuffed full of manufactured goods produced in Asia.

As our Ottawa correspondent D.C. Fraser reports in our April 30 issue, the story of the Canadian domestic food supply is one of surprising resilience, considering the challenges it has faced in recent weeks. As academic Mike von Massow stated in that article, “… the system bent, it did not break.”

That’s not to say there isn’t room for improvement, and even larger problems looming on the horizon. The truth is that we’re in uncharted territory, drawing the map as we go.

The Canadian Federation of Agriculture for one says the food supply system is struggling to provide the products Canadians want, and is calling for Canada to “… plan for a scenario without reliable access to agri-food imports.”

As the busy spring season gets underway it’s going to be important to keep an eye on these discussions, which could shape the sector for decades to come.

About the author

Editor

Gord Gilmour

Gord Gilmour is Editor of the Manitoba Co-operator.

Comments

explore

Stories from our other publications