Wakeup Call

[StrawBoss]

Wakeup Call.

I feel sorry for all the people and animals that are having a hard time to survive, because Mother Nature sees a correction is needed.

People are out of control worldwide with their expectations and no considerations for each other.

The stock market needs a correction. It is hard to believe that public corporation’s CEOs don’t know their company’s financial status and give themselves good management bonuses when their company is losing money. ( FRAUD in the highest level )

Unions have lost all commonsense and think that Governments and corporations have unlimited supplies of money.

Farmers lost their good management skills and only see today’s problems, but the writing was on the wall for the last three or four years. (The drought started about three years ago in parts of western Canada.)

Rapid expansions with no future plan is what’s happening all over the world, ( Yes farmers are in the same boat. ) bigger is not necessarily better.

A few people on this web suggested price control on primary farm products and that may be the only way to make farming a sustainable business in the future.
It was also suggested that if you can’t sell your grain at a profitable price, then keep some in the bin. It sure would look good this year if some of the bins where still full of grain and a few stacks of hay and straw. That would also stabilize the supply and demand. ( May be something to think about )

It is amazing after a few good years that farmers forgot how to manage the weather changes. This is a very hard lesson handed down by Mother Nature, but we don’t give up easily and should be wiser next year.

[AdamSmith]

Hi StrawBoss;

We all need a good wakeup-call every now and then. I farm in SW Manitoba and we had our wake-up call in 1999. With too much rain in May.

There are no quick solutions, and farmers in the drought areas can't expect any quick recoveries. In a sense, I still consider 1999 to be one of the most important cropping seasons of my farming career. As it caused me to examine closely how I ran my business and what I needed to do to not only survive but prosper as well.

I discovered I needed to change a few things, as in do them better and I discovered that some of what I was doing was indeed the right way to do things. 1999 gave me the confidence that I can manage my way out of a situation brought on by mother nature.

But the key is INDIVIDUAL MANAGEMENT. Answers are not to be found from governments or by placing regulations on others within our industry.

I just shudder any time I hear some stupid notion that requires some grand scheme or some limitation on others ability to profit as the answer to farmers financial problems.

The roots of all grand schemes like Focus on Sabbatical and the CWB or even supply management is the desire to have rewards without risk. American and European addiction to subsidies are rooted in the same destructive desires.
You say bigger is not better, well it is my belief that there are no hard and fast rules on farm size. Bigger only means bigger risks and bigger potential rewards, if managed properly. And that is where good business management and good risk management come in.

Risk management is a subject, which has been too narrowly defined in my opinion. To some it means just hedging but hedging is only about 10% of risk management. Risk management starts with evaluating the degree to which you as an individual can accept risk and that may or may not lead to hedging your crops. Risk management also means evaluating timing of decisions. I've found good timing and the ability to recognize proper timing for making certain decision to be just as, if not more important, than anything else when it comes to business management and risk management.

I could go on forever here, so I will end my little sermon with this simple message. Take responsibility for your risks and manage them wisely and the rewards will follow.

[TOM4CWB]

AdamSmith,

I couldn't agree more on risk management.

This year, the true risk managers will be the prosperous farmers, and it doesn't matter how good a person is on production, other than to make sure the farm is ready to produce next year, the Lord willing...

Obviously hedging this year was a bad idea, but the cost of risk management of a good hedge program is not that great if done with a consistant marketing plan.

Frost last night in northern Alberta, tonight looks worse... 5C at 10:00pm...

Big area that is clear and cold...

Wakeup call for sure, hail this afternoon while unloading hay rail cars...

Obviously we will have to work together with our neighbours in the future... like many did in the past...

[pandiana]

I talked to a fellow at the Olds fair last weekend. He and his wife run a dairy with his parents. The parents are ready to retire and are dispersing their 72 head dairy herd. He will go back to teaching. With quota and cows, they expect to net 1.4M. On the other hand, I could sell 50-60 beef cows to buy a new pickup. Supply management eh.

[StrawBoss]

AdamSmith you are right, good management with a future plan is the key to any prosperous business.
Farmers are all individuals and like to manage their own farming business, but should also realize that we need cooperation in some areas like crop insurance.

I think the grain marketing in Canada needs to be upgraded.
The producers should have a choice CWB or open market for all grains.
The CWB should issue free export licenses to producers and grain handling companies with no buy back, but we still need some control because of the world trade agreements.
This means that the producers along the USA and Canada border will gain and the hell with the rest. Oh but just a minute this may upset the US farmers with our cheap products and we may end up with another elk ranch.

Or get rid of the CWB and give these individuals a chance to prove that we don’t need Government help to survive and maybe our reputation will change ( from whiners ) to good managers. This will make the poor market managers shapeup or ship out, or will this mean more competition between producers?

[AdamSmith]

Strawboss;

Where does this assumption that only the farmers who live close to the border will benefit under a free market system? Canola prices are higher the further north you go not less.

Many of today’s assumptions which are based on a controlled system will change once the single desk ends. And the first myth which will be refuted is that a free market will only help large farmers close to the border. If prices are higher closer to the border it will only be because we are closer to established American processing. But it is quite probable that milling and malting capacities will increase across the prairies as a response to transportation costs and that equilibrium will shift. We assume that grain will only flow south, but if our transportation system can offer a more cost effective way to ship grain out of the US Northern Plains why wouldn’t the opposite happen? American grain moving north. American Canola comes into the Canadian system, why not wheat?

Just because something happens in a controlled system doesn’t mean it will happen that way in a free market system. In fact just about every assumption that the free market nay-sayers babble on with, are false assumptions because they don’t understand this critical point.

pandina, your story about the dairy farmers is quite telling. I’m not a dairy producer but my family and myself are consumers of milk and this just shows me that the consumers of milk in Canada are being taken to the proverbial cleaners by this industry. I don’t know which are more greedy, dairy farmers or major league baseball players?

[TOM4CWB]

Strawboss,

I have done the buyback and hauled into Montana.

If I could directly access the World market through Vancouver, instead of replacing US wheat, which in turn gets exported into the international market, I could net another $20/t on top of US prices.

This system we have now is failing and needs upgrading, and trend wheat production numbers (the lower #'s) are the proof we are being squeezed out of the international market.

Individual initiative will always be more efficient than government administered regs, hands down.

But the CWB issue is really a food security and control issue... too bad the government wouldn't be honest about why it really is keeping the CWB.