deflation-good or bad for agriculture

[canolacrazy]

Headline: Canada's central bank shocks investors by cutting Canada's bank rate to 3/4%.
previous threads have warned of deflationary pressures in Canada. is the oil price crash just a blip or the first domino to fall leading to lower values for land, grain prices, inputs etc.
it might sound bad, but i'm not so sure. there might be a silver lining in having the value of cash increase rather than get eaten away by inflation. just wonderin'.

[ado089]

Deflation is bad for ag, at least most guys. Paying off those big debts with less dollars is going to hurt. It will also represent an opportunity for those with a cash strong balance sheet.

[Hopalong]

Do not think it particularly good or bad for an industry.
More to do with confidence, or lack of it, in our government to maintain stable economy and currency.
Deflation good for savers in funds that hold or increase in value, not good for spenders and borrowers.

[tweety]

Quite simply, deflation is best for people with money/ no assets/ no money, bad for those with assets.

It doesn't matter the industry.

Makes sense why corps are holding more cash today then ever?

[charliep]

A solid balance sheet and lots of working capital can help most businesses survive tough economic times.

[canolacrazy]

i'm probably in the same boat as most. have priced about half the old crop, very little of the new. haven't bought much fert or chem yet, but i guess the oil crash has got me spooked. i'm in my fourth decade of crops and have seen inflation in the eighties, some decent prices in the nineties, crap prices and good prices in 2000's, now runaway fusarium, but never have i seen oil take a dive like this and interest rates down to levels where you almost have to pay the bank to keep your money. i know errol was pretty jumpy i think, and i respect his opinion, however the old sayin' that there is always opportunity in every dark cloud. my gut says to price the other fifty, and wait on the inputs.

[charliep]

Actually they have dived this fast in the past 8 years. Different reasons/not saying the current situation is the same but July 2008 to December same year was an extremely fast drop. Cheap energy does a lot to increase consumption unless some other factor comes into play.

[URL="http://www.farms.com/markets/?page=chart&sym=CLH15&domain=farms&display_ice=1&e nabled_ice_exchanges=&studies=Volume;&cancelstudy= &a=M"]crude oil[/URL]

[charliep]

Loonie over the same period.

[URL="http://www.farms.com/markets/?page=chart&sym=D6H15&domain=farms&display_ice=1&e nabled_ice_exchanges=&studies=Volume;&cancelstudy= &a=M"]loonie[/URL]

[canolacrazy]

the price of oil and the loonie yes, but the last time the bank of canada rate was a hair above 0, probably the great depression. that's the one i'm concerned about.

[ColevilleH2S]

Charlie "Cheap energy does a lot to increase consumption" Maybe not as much as one would think. Here is a year over year Gasoline price to consumption chart I saw today. Other than the '70s oil shocks, consumption doesn't seem to move much due to pricing.


<a href="http://photobucket.com/" target="_blank"><img src="http://i335.photobucket.com/albums/m441/npksetal/Bucket/GasPrice_zpse8d9d1ec.jpg" border="0" alt=" photo GasPrice_zpse8d9d1ec.jpg"/></a>

[agstar77]

One minute they are telling us to save the next they are giving money away, MORONS. Harper is head of the class. Election coming do we need to inflate the economy to make things look good.

[Hopalong]

An old story that bears repeating.
Wheat board used to tell us that world demand was fixed and that we could not sell more wheat if we lowered the price.
Critics response was if that is the case, why not raise the price?
If lower dollar is good, why not support a govt that drives it even lower?