Every year, as seeding begins to ramp up, there’s no shortage of uncertainty.
One can hope for the best, plan for the worst, and still find themselves in the weeds as an unexpected event or uncontrollable variable comes home to roost.
Yet that never seems to stop the farmers of Manitoba, or even give them much pause. Farming is quite simply what they do, and they’ll go about their business as best they can.
This year there’s an extra helping of uncertainty, as the market for their most significant annual crop has suddenly been thrown into disarray with the ban of canola seed shipments to China. When approaching half your market for any product is suddenly thrown into limbo, that’s enough to give anyone second thoughts.
Just when this situation will be resolved is anyone’s guess. It could come well before this season’s crop is harvested. Or it could drag on for years as other similar situations like the BSE crisis.
Whenever one of these sorts of things blows up, it’s just a matter of time until some pundit pontificates along the lines of ‘hopefully cooler heads will prevail.’ Surely, the received wisdom holds, the adults in the room will recognize the unalloyed value of trade for both parties and work to clear the barriers.
However, it’s becoming less certain recently whether that picture is as clear as it once was. Around the world citizens are restive. Politicians, sensing the direction of the wind, are beginning to view trade deals through a ‘to the winner the spoils’ lens, rather than seeing benefits to all.
In that light, it’s going to make it even more important for producers to work hard to take the emotions out of the decision-making process to make sure they get the best results for their farms and families.
For example, they may want to hold on for the return of higher canola prices — but will that really be the right play? Or is it just blindly hanging on waiting for the good times to come again?
Are they better off to accept that, once again, the game has changed, and they’ll need to change their strategy when they play it?
That could mean having a marketing plan that understands the basics: cost of production per bushel, what a profitable price is and a plan to capture those prices when they appear, however briefly.
Or it may mean pursuing a cost-containment strategy that seeks to lower the cost per bushel of their production and thus making those profitable interludes more common.
Doing that requires a reset of thinking from a few years ago when bushels were king, and high prices papered over a lot of decisions that otherwise may not have made as much sense.
That may mean idling less productive acres, and eyeing profitability in production decisions, rather than simply swinging for the yield fences every time, costs be damned.
One thing is clear — despite the rhetoric of a few years ago, it appears it was not in fact ‘different this time.’ High prices once again fixed high prices, the world is once again more than adequately supplied with grains and farmers are, once more, price-takers.
It happened because farmers around the world responded to the powerful market signal to grow their productivity. From Brazil to the Black Sea and all stops in between, grain production rose.
Now in the aftermath, things have once again tightened. Exactly for how long is anyone’s guess. The United Nations is still forecasting global population to rise to 9.7 billion by 2050, which many pin a lot of hope on for the sector.
But underlying that headline number is another reality. Most are going to be added to the world’s poorest countries where populations already struggle to feed themselves. As has been pointed out more than once, modern famines are almost never related to unavailability of food.
They’re either political or economic. Farmers already produce enough food, we just can’t figure out a system that gets that food into the hands of the hungry, who right now can’t afford to pay for it.
For many years freer trade has been promoted as that mechanism, which would improve the standard of living for some of the poorest.
Now that model is in doubt, so too must many of the rosy forecasts be re-examined, at least in the short term.
In this case farmers will need to be their own ‘clearer heads.’ It would seem most are up the challenge, as our Allan Dawson reports this week for our May 2 issue.
They’re largely sticking with their rotations and continuing on as usual, albeit with a clear eye to the horizon and what new challenges may crop up in the future.
Hopefully, over time and coming trials, these will be the clearer heads that prevail this time around.