Comments on Agricultural Policy

[charliep]

Just to keep this thread going.

Parsley - I will leave the CWB comments/meeting you mention to other particpants. I owe you information on industry involvement (money deducted through) and maybe get some discussion going on your industry involvement concerns there.

WRAPper - To make my opinion known (maybe generate discussion), I am not a big fan of government production controls (acreage or intensity) - farmers can make decisions better on their own. If land is relatively poor quality, the farmer can make this decision to put to some other use. Feedback on rental (depending on community) is good land rents are high but poor quality stuff is getting dumped.

If government is to invest money, then I would favor (my opinion) providing incentives to private business (eg. bio fuels). The push is to create markets versus cut production.

The conservation reserve program is an example from the US. My understanding is CRP has taken a lot of land out of crop production that shouldn't have been there anyway. It has likely also provided ability to move more money into inputs for the productive land. The impact on US crop production has been minimal.

If you really wanted to have an impact on production, you would have the government announce another LIFT program similar to the late 60's. The issues that we face next years is wheat carryover will be mid to lower quality and need satisfy high quality customers and a risk Mother nature would sign up on the program (drought or whatever).

Hopefully the above is taken in the spirit and not as absolutes. I also hope others participate.

[AdamSmith]

Oh No, Not Another Dog and Pony Show!

I'm reminded of Dr. Phil's great words of wisdom. "So, How's that been working for you so far"?

This industry needs to embrace just two words. "Creative Destruction"

this ripped from Wikipedia, the free encyclopedia

Creative destruction
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Creative destruction is the colourful expression introduced by the economist Joseph Schumpeter to describe his view of the process of industrial transformation that accompanies radical innovation. In Schumpeter's vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies that enjoyed some degree of monopoly power.

What more do you need to know?

[WRAPper]

Charlie

I certainly agree the free market approach is the best and that economics will dictate the viability of the usage for the land grains/grass/bush. But we can't say thats what happens in Canada with our differing and various leanings marketing structures and governmental policies.

I wasn't old enough when the lift program was used in the 70's others would have to fill me in on what transpired there Canada is not the force it was in the world grain trade in 1970 and from what I read the LIFT program was in place for 1 year and was deemed as unsucessful even then.

But what I am tired of are the constant stream of non functional government programs and Ad hoc payments. Despite the fact I cash the cheque like everyone else on here I do wonder if it's truly whats best for the industry.

The best idea I've heard is to do a complete mirror of all US programs in Canada but that won't happen. Perhaps in Alberta with the revenue insurance we see it a bit but to a somewhat diminished level.
Perhaps it's time to pull a New Zealand and let the chips fall where they may. At some point the question may have to be asked " The patient is on life support what do we do?"



It's always good to discuss all ideas with an open mind thats the only way forward.

Regards

[WRAPper]

Also I should have mentioned I am always a great supporter on new usages for ag. based products either ethanol , bio diesel ,bio plastics , etc
As long as they as economical feasible and make sense. They are starting too and will continue to and I believe we'll see some support for that industry coming forward from minister horner in the future.

[wmoebis]

WRAPper, the chips are already falling. Check out the auctions this spring. These are not retiring farmers,1/2 section farmers or even 1 section farmers. These are the guys that swallowed up small ? viable farms. Not to disrespect them for trying.
We were told buy large multi national CEO's and economists that this was the only way that agriculture could stay viable in Canada.
CP CN to told us they had to restucture to keep transportation viable. We let our polititions etc. buy in, at who's expense are they now viable. We aren't.
We let fert. and chem. companies into our collages and teach our kids that to stay viable we have to farm with chemicals and fert. to the max. Who is viable the chem and fert companies.
They have taken our kids away from the farm and given them the jobs. There is only so many acres of farm land in the world and these guys don't give a damn who's farming it as long as they are using there products. They would rather deal with 1- 100,000acre producer than 10,000- 1000acre producers.
Multi national grain companies said we have to rationalize to stay viable we let them rip down our viable grain system and build high troughputs that are now having to be replaced or competed with by producer car loading facilities. Who is viable? My closest elevator is 80 miles away where it used to be 6.
The new wave is value added. Try get some on farm value added going. All you will get from buerocrats is financing for research, if you are an accredited research station, or that you have to be big big big.
Every time the price goes up on one commodity grain, cattle, oilseed everyone jumps on board and we flood the market. The chemical companies, the fert companies, the machine companies show us the best way for them to make a buck and we jump to it.
The chips are falling. Who's going to be there to pick them up. Or who will be there to care as long as the multi national have cheap product to turn into food to sell to stay viable.

[parsley]

wmoebis

Very interesting observation, that producing more and more solves the problem. VOLUME solves income/farming

It hasn't.

You have interestingly left some questions for familyfarms to quander:

1. Is 'big' the best for family farms?
2. Is 'big" best for small towns/rural?

My farmdebt contacts tell me that the folks who are really in trouble in Saskatchewan are the guys who have
massive acres. HUGE Operating loans, advance loans, poor markets, while the smaller guy is hanging on. Is that what you hear?

Parsley

[sawfly]

the biggest are suffering the most.with negative margins the last few years. more acres more losses
smaller producers are more likely to have off farm employment to help cover losses
we are just lucky that, in these times there are decent jobs availible in most areas.
if this continued (loseing big farms) im not sure what will happen,
will we have pasture and cows ranchland. the smaller grain guys with jobs wont expand to meet the same fate.

[wmoebis]

Parsley
My farm debt contacts (my banker) tells me if it is working for you don't change because things aren't always as they seem ?
My coffee shop buds tell me I can't make it the way I am going ?
I am a small farmer my biggest challange seems to be my marketplace and political policies.
As examples: last year I sold all my barley crop to a local hog barn that went broke. The gov't through the court system saw that their Ceo's and accountants got paid but not us suppliers. I was told by ag economists that Saskatchewan farmers were poor buissness men and that we should expect this.
I did my enviro farm plan and asked if I could up grade my machinery to airseeder and was told that I could put new openers or GPS on existing but not buy machiney. I use discers. I wonder how GPS would help on my discers in my hills?
On the other hand there is getting to be a lot of good used big machinery out there that I can farm my place faster possably cheaper and more efficiantly.
Last year I went from a 410 mf combine to a 1480 IHC for very little money. WOW I took off my crop and went and helped two different neighbors finish theirs.
Is big best for small towns? Look at our landscape. I guess if you are the Govn't getting rid of the small towns is best. If you want to live and raise your family in this life style no.

[sawfly]

the whole thing is about national intrests. the usa and EEC . decided on production, which feeds secondary manufactureing and market dominance.

and in the end pay the farmers out of the national proceeds.
is that what we want, if it is then most of the other issues , like wheat board or not, or prices are meaningless.

encourage all out production, and secondary processing (ethanol biodiesel,feedlots,organics)
any attempt to cut back production only hurts us as a nation and benifits other countries.

[AdamSmith]

I think the biggest challenge facing farmers today is the lack of capitalization on too many farms. A well capitalized farm is in much better shape to weather this financial storm than a farm that is under capitalized. Size isn’t so much a determining factor. A well capitalized large farm is in much better position today than an undercapitalized small farm, and visa versa. Probably the biggest reason a farm is undercapitalized is because that farm expanded too much too fast. It doesn’t matter whether it was a 300 acre farm expanding to 900 acres within 1 or 2 years or a 3000 acre farm expanding to 9000 acres in 1 or 2 years. It’s all in the debt/equity ratios.

The guys who I see in trouble are guys who doubled or tripled their land base over a very short period of time. The guys who expanded more slowly and at a more moderate pace seem to be in better shape.

It’s a bit of a tightrope to walk. You know, it’s the risk-reward thing.

Machinery costs are killers right now. I’ve had this little running debate with my father about what is the biggest negative influence, facing grain farms today. He insists its input costs. I think its capital costs in Machinery. Yes, seed, fert, and chem. cost are high but really not that much higher than say fifteen years ago. Yet the price of new SP Combine or a new airdrill is out of this world. I’ve bought both recently and there are some days I think I would be better off pulling the old discars around. But I wanted to go one pass and that required a huge capital outlay. When I started farming my dad had 28 feet of IHC 100 DD press drills and they were used for 20 years. My Bourgault 5710 airdrill is built ten times better than the old 100’s so I think it should last as long.

I really don’t care about new paint, but when you want to change and update technology that requires massive outlays of capital and massive debt.

I don’t know whether my sons will farm (they are only 15 and 11) but I can guarantee you when the time comes for them to make that decision, if this farm isn’t well capitalized, I’ll insist they do something else with their life. But if all I have is old beat up equipment for them to use they’ll take a pass on the farm anyway.

It’s a real Catch 22.