Bumper Crops and Oveerproduction are Recipes For Economic Disaster

[oneoff]

The reason farming has never been considered a true business is because farmers don't act like businessmen. When supplies are burdensome and depressing prices; we only make moves that will destroy profitability for even more crops.
It is reported that North Dakota farmers grew at least 50% higher durm yields last year; but will end up with significantly lower total dollars for that crop. Everyone; including farmers have conceded that there is a multiyear problem upcoming; but the corrective actions are certainly not being seriously considered. Why is that not considered to be the ultimate poor business decision? This is a classic example for just about any crop that anyone can name.
In case some have not noticed; the production side of farming seems to have more years of hoping to break even and hoping that repeating what didn't work well this year will have better results next year.
Meanwhile the business side of the industry doesn't deliberately take financial hits by giving away their potential profits by automatically cutting their prices to the bone. Its almost like glyphosate is the losss leader for the industry; but no oyher input or supply is following the price of grains and oilseeds down to total inprofitability.
We all need to do our share to balance what is being offered for sale to what the market will absorb at prices that produce sufficient profits for sustainable farming operatons.
Tell me it can't be done.
I will agree; but probaably for additional reasons.

[charliep]

Curious the different direction this thread and your next/Jagfarms.

Was at a major conference in February and their theme was Sustainability.

Quote from the agenda.

One of USDA’s top priorities is promoting sustainable agricultural production. The
Department’s goal is to ensure that the Nation’s farms and ranches are profitable assets to
their communities and preserve the land for future generations. While sustainability is the
theme, the economic outlook and commodity supply and demand prospects are at the core
of the Forum program. Other important and topical sessions will focus on food prices, farm
income, the changing dynamics of rural America, global commerce, health and food safety
issues, organics, conservation, renewable energy, and climate change.

Interesting the number of topics covered including impact of climate change (yes, at a US
conference) and meeting the needs of a 9 bln people planet by 2050.

Questions out your posting. How much do production decisions in Canada impact world
prices? Is our market share of different export crops increasing or decreasing? A definition
of competitiveness is the ability to maintain or expand market share.

If agriculture is not profitable, why are land prices increasing? Is land a productive asset
that pays for itself or an investment based on expected increases in value down the road?

Are farmers as a business ready for a world that can test to a 1 part per million? You pick
on the seed but farmers had also better be ready for things like the Wal Mart sustainability
index including a full audit trail.

Actually optimistic about the future given the challenges we face.

[wmoebis]

Just food for thought!

What if we were to all to grow only production contracted cereals, pulses and oil seeds.

If all the marketers gave out production contracts on only what they know they can sell, at given price, then the rest is your own risk. However they would have to take delivery on those contracts first. No spot delivery until it was all delivered.

I am talking every commodity wheat, durum, peas, canola etc.

We could then make up our mind on what we can grow best, at what price we are willing to grow and stick with that. We wouldn't have growers in nontraditional areas growing commodities that don't suit thier areas as good.

For example. If every extra acre is seeded to red lentils this year we know what will happen to the price. However if only production contracts were accepted maybe the incentive wouldn't be there and if there was extra, prairie red spring, contracts out thee we would switch to that. thus holding the price of lentils steady and hold the price of the CPRS steady at the same time.

Just food for thought!

[ajl]

The main reason for the additional production is increased rainfall in the US durum area with a small increase in seeded area. Agriculture is so weather dependent that you cant predict production very well. So it will always be boom and bust. That said we desperately need the weather to take out some surplus this year.

[Jagfarms]

charliep

How much do production decisions in Canada
impact world prices?

I think with Durum, canary seed, and Lentils what
we do in Canada has a big effect on world prices.


Is our market share of different export crops
increasing or decreasing? A definition
of competitiveness is the ability to maintain or
expand market share.

I have not looked that close at this but I can see
that as a farmer we should be watching this.


If agriculture is not profitable, why are land prices
increasing? Is land a productive asset
that pays for itself or an investment based on
expected increases in value down the road?

It was profitable for the last 3 years and I think as
farmers we are always hoping it is going to get
better. We are always thinking next year will be the
year we make money. We keep hoping things will
turn around. We will luck out and seed the right
crop that will be the winner this year. Just like
picking the winning race horse. I think we are in
for a few bad years in a row and that is why the
land prices do not make sense to me at this time.


Are farmers as a business ready for a world that
can test to a 1 part per million? You pick
on the seed but farmers had also better be ready
for things like the Wal Mart sustainability
index including a full audit trail.


I think we will have to go this way. There will be
more IP programs and buyers will want full
traceability of the commodities they buy.


Actually optimistic about the future given the
challenges we face.

I think if we change and go with it there will be
opportunity in the future. It is going to be tough
and we will need a bit of luck as well.

[oneoff]

It has been correctly pointed out that weather has a major effect on crop production. What hasn't been mentioned is how humankind has deliberately tried to influence that factor. There is even a fairly widespread belief that by manipulating the crop seeds; it has already given us a significant control over the weather factor as regards yields. Lots more research and GM tinkering to come on that front forever into the future.
Then there are weather modification projects that go on as quietly as possible. On the other hand are the side effects of our unsustanainable use of resources with our unsatiable appetites and push for at least 9 billion to stress the planet even more.
We certainly are doing our best to influence the weather; without any more idea of the consequences than there was with Triffid flax.

[charliep]

Interesting how things always come back to triffid.

Will note the issues around genetic engineering (I'm assuming you consider other breeding technologies such as mutagenics, hybrid seed, traditional breeding programs enhanced by knowledge of gene mapping) okay.

Getting beyond flaxseed and triffid, genetic engineering is one of the tools that has enabled the world to meet growing protein amd energy demand.

One of my favorite charts is one that illustrates soybean consumption (and by inference production) has increased by over 50 % in the past ten years. China is the reason but Europe buys GM modified soybeans/meal. GM technology is one of the factors that has allowed Canada to meet the growing demand for canola and actually provides a competitive advantage over Europe and Australia.

US corn production has increased by over one third in the past ten years. Started in the 9 to 10 bln bu range. Today 12 to 13 bln bu. Has allowed the US to develop and biofuels industry and hold corn prices in the $3.50 to $4/bu range when traditional prices have been $2 to $2.50/bu. The higher valued loonie has taken away this benefit in Canada but I don't thing US farmers would go back to 10 years ago.

Kinda like the story of the bear and the two hikers. Is Canada putting its running shoes on or are we the ones running slow/waiting for the bear to eat us?

[charliep]

I always enjoy reading foodnavigator email. Here is an article in today email that should stir some interest. The world is a changing.

[URL="http://www.foodnavigator-usa.com/Publications/Food-Beverage-Nutrition/NutraIngredients.com/Research/Australian-scientists-developing-omega-3-rich-plant-sources/?c=jYz%2BwZTNAeVYZGp3SiEkKQ%3D%3D&utm_source=newsl etter_daily&utm_medium=email&utm_campaign=Newslett er%2BDaily"]foodnavigator[/URL]

[LWeber]

CHICAGO, March 5 (Reuters) - The Minneapolis Grain Exchange said on Friday it would lift a rule that requires a delivery warehouse to deliver non-genetically modified wheat against MGEX futures, if requested by the party taking the wheat.
The regional U.S. grain exchange said the rule, in effect since 2004, would be eliminated starting with its March 2012 spring wheat futures contract.
"The commercial marketplace will sort through the issues, should transgenic wheat enter into the supply chain," MGEX President and Chief Executive Mark Bagan said in a statement.
"We want to be very clear that this vote does not endorse or oppose the use of transgenic wheat varieties. Rather, our action is rooted in the best interest of our market participants," Bagan said.
Currently no genetically modified wheat is grown on a commercial scale anywhere in the world due to opposition from consumers and food industry players.
Monsanto Co <MON.N>, a leading developer of transgenic corn and soybeans, backed off a plan to commercialize a genetically modified, herbicide-tolerant spring wheat in 2004. At the time, the wheat industry feared the new wheat would hurt U.S. export business.
The Minneapolis exchange said its owners voted to eliminate the restriction following the unanimous recommendations of its contracts committee and board of directors.

[parsley]

Well, that leaves the market open for Monsanto to liberally sprinkle GM wheat into all wheat export shipments, aa there is ample seed to do so,(grown in so many test plots on many of the seed growers' farms who simply don't care about protocol).

Monsanto can then declare all wheat shipments are GM contaminated,wring their hands in feigned disbelief, as has happened with Triffid, and then howl that the tolerances must go up and up and up and up.

Introduction by stealth.

(Have THEY developed the testing protocol and own them, so farmers must pay for each test until terminator crops kick in?)

I imagine BASF have the Terminator gene tucked in every future food crop they can muster, as well. That's their best tool for maximizing profit. (Well, we had to do it....the testing became sooooooooooooooooooo expensive)

Another benefit, if you think along food war possibilities, .... is addressing food aid liabilities in hungrier and hungrier countries...
thrump, thrump, thrump..solved by a genetic human Terminator marker to minimize population. Why, it could be Monsanto's hallmark.(tic)


THE committee cold buy a daisy once a week for 52 weeks and that should do it nicely! Their genes survive, those don't, their genes survive, those don't,their genes survive, those don't, their genes survive, those don't.

Designer civilizations! How quaint.

I can only hope Monsanto's president stops eating organic food and eats Terminator grain from plots.

Central planners will love this one. Pars