A s the seeding window closes, the unseeded acreage projections are staggering. But it’s difficult to know how governments should respond or if they should respond at all.
The Canadian Wheat Board says Western Canada will have the lowest wheat acreage since 1971. Barley acreage is expected to be the lowest since 1965.
Pressure is mounting for governments to do something and the politicians have been dutifully touring the hardest-hit regions.
While politicians always want to appear responsive and caring, in this instance they should avoid knee-jerk reactions.
The easiest change, and one suggested by the Opposition NDP, would be an increase in the Unseeded Acreage Payment available through Saskatchewan Crop Insurance. While it would be reasonable to remove the silly five per cent deductible on this $50-an-acre payment, governments should avoid the temptation of any major increase in the support level.
If the Unseeded Acreage Payment is too lucrative, it’s a slap in the face to the producers who tried really hard to get as much land seeded as possible. It isn’t healthy for unseeded land to potentially end up with a better net return than cropland seeded into muck or land that has been water damaged after being seeded.
Inequity in support programs can give governments more grief than no additional support at all.
In addition to crop insurance, many grain producers should be able to access some support through AgriStability. In fact, producers with a large, unseeded acreage may want to apply for an interim payment. It’s pretty easy to estimate your farm income in advance of the year end when a lot of your land is unseeded.
Some producers are suggesting that governments could help out by offering low-interest or no-interest loans, similar to what was offered to General Motors. Others say that more borrowed money is the last thing the industry needs.
One interesting idea is to offer producers an advance against future support from the AgriInvest program. Under AgriInvest, producers contribute an annual amount which is matched by government. The funds can be withdrawn when needed.
Future AgriInvest amounts could be estimated based on past history. The amounts per year are not large, but if producers in need could get an advance on projected AgriInvest funds for the next five years, that would help tide them over until the 2011 growing season.
Many industries that rely on grain production will also be hard hit this year and they don’t have government-supported insurance programs.
The new crushing plants coming on stream in Yorkton, as well as all the existing plants will have difficulty accessing enough canola. Farm input suppliers, many of them independents, will see business dramatically reduced.
Amidst all the difficulties, there could also be some amazing success stories. Producers who were able to seed all or at least most of their acreage could end up with some tremendous yields given all the moisture.
On top of that, a number of commodities including canola, lentils and canaryseed have seen strengthening prices due to the production shortfall that’s now anticipated.
The overall picture and the role governments might play will become clearer as the summer proceeds. This is one instance where a government response shouldn’t be too hasty.
Kevin Hursh is a consulting agrologist and farmer based in Saskatoon. He can be reached at [email protected]