I don't accept the argument that because it is a world market we should not try to do anything to impact world prices.
I am not saying that we should commit economic suicide. Whatever we do should make sense. I think a properly designed program like what the Americans have in their CRP or what the Europeans have for the biodiesel and ethanol programs have a lot of merit. There are probably some aspects of all these type of programs that could be considered weaknesses.
In Europe their "set aside" program actually is linked to energy crops. Your government payment is forthcoming only if you plant a crop that is destined for processing into bio-energy. I like that much better than the US CRP (conservation reserve program). The CRP eliminates all economic activity on that land and can have very negative impacts on the community since there is less fuel, crop inputs and machinery being sold. Farmers whose land is in CRP are not allowed to even harvest hay unless there is a serious drought in the area.
I like the idea of paying farmers a "set aside" payment that actually encourages the growing of a non-food crop. The energy crops are a very good alternative. I also believe that green cover crops for plowdown are also good alternatives. In this case the farmer is growing a crop of nitrogen for future years.
A green cover program should be for four years where 25% of each participants acreage is enrolled. Over the four year course of the program the entire farm would be rotated through a legume plowdown year. Payment for this program would be somewhere between $50 and $100.00 per acre.
This program would not make sense on all land types in all geographic locations. It is sensitive to land values and moisture levels. If the program were implemented on 1/2 of western Canadian acres that would take out 1/8 of our production. If we started with 50 million acres then the program would be on 6.25 million acres each year for four years. At $100 per acre the program would cost the government 625 million per year and would remove 6 million tonnes of production.
As Saskfarmer observed our costs for freight, fuel, machinery elevation and handling, chemicals, and fertilizer would be reduced by up to 25% as well. Actually fertilizer costs would be reduced by a lot more than 25%. Fertilizer during the plowdown year would be zero and fertilizer during the following three years would be significantly reduced.
This program would reduce the risk exposure of those farms significantly. Soil health would be improved creating better long term sustainability. Capital costs could be reduced since 25% less crop is being harvested, stored and transported.
Again as saskfarmer noted there would be a huge push back from fertilizer companies, chemical companies, elevator companies, railroads, terminals etc. etc. etc.
This program may or may not influence world prices. I personally believe that any decrease in supply would be positive for prices. I don't care if others will try to increase their production in response to higher prices. That does not mean that we should not try to do the right thing.
The world has produced less wheat than it has consumed for 7 of the last 8 years. We are just barely growing enough food to meet the demands of a hungry world. The world is carrying an inventory of 135 million tonnes of wheat. From the buyers perspective this is more than adequate and they have bid the price down to well below the cost of production. If we could snap our fingers and make 50 million tonnes of wheat disappear prices might respond dramatically. Should Canada do its part to make some of those 50 million tonnes disappear? I think that we should. Our fair share might only be a few million tonnes per year. Ethanol and biodiesel will make a few million tonnes of grain disappear, but those initiatives are a few years away. Over the course of a few years some countries will increse their production and the impact may be lessened. A green cover program could be put in place for 2007. I say, "Let's do it"!!
I am not saying that we should commit economic suicide. Whatever we do should make sense. I think a properly designed program like what the Americans have in their CRP or what the Europeans have for the biodiesel and ethanol programs have a lot of merit. There are probably some aspects of all these type of programs that could be considered weaknesses.
In Europe their "set aside" program actually is linked to energy crops. Your government payment is forthcoming only if you plant a crop that is destined for processing into bio-energy. I like that much better than the US CRP (conservation reserve program). The CRP eliminates all economic activity on that land and can have very negative impacts on the community since there is less fuel, crop inputs and machinery being sold. Farmers whose land is in CRP are not allowed to even harvest hay unless there is a serious drought in the area.
I like the idea of paying farmers a "set aside" payment that actually encourages the growing of a non-food crop. The energy crops are a very good alternative. I also believe that green cover crops for plowdown are also good alternatives. In this case the farmer is growing a crop of nitrogen for future years.
A green cover program should be for four years where 25% of each participants acreage is enrolled. Over the four year course of the program the entire farm would be rotated through a legume plowdown year. Payment for this program would be somewhere between $50 and $100.00 per acre.
This program would not make sense on all land types in all geographic locations. It is sensitive to land values and moisture levels. If the program were implemented on 1/2 of western Canadian acres that would take out 1/8 of our production. If we started with 50 million acres then the program would be on 6.25 million acres each year for four years. At $100 per acre the program would cost the government 625 million per year and would remove 6 million tonnes of production.
As Saskfarmer observed our costs for freight, fuel, machinery elevation and handling, chemicals, and fertilizer would be reduced by up to 25% as well. Actually fertilizer costs would be reduced by a lot more than 25%. Fertilizer during the plowdown year would be zero and fertilizer during the following three years would be significantly reduced.
This program would reduce the risk exposure of those farms significantly. Soil health would be improved creating better long term sustainability. Capital costs could be reduced since 25% less crop is being harvested, stored and transported.
Again as saskfarmer noted there would be a huge push back from fertilizer companies, chemical companies, elevator companies, railroads, terminals etc. etc. etc.
This program may or may not influence world prices. I personally believe that any decrease in supply would be positive for prices. I don't care if others will try to increase their production in response to higher prices. That does not mean that we should not try to do the right thing.
The world has produced less wheat than it has consumed for 7 of the last 8 years. We are just barely growing enough food to meet the demands of a hungry world. The world is carrying an inventory of 135 million tonnes of wheat. From the buyers perspective this is more than adequate and they have bid the price down to well below the cost of production. If we could snap our fingers and make 50 million tonnes of wheat disappear prices might respond dramatically. Should Canada do its part to make some of those 50 million tonnes disappear? I think that we should. Our fair share might only be a few million tonnes per year. Ethanol and biodiesel will make a few million tonnes of grain disappear, but those initiatives are a few years away. Over the course of a few years some countries will increse their production and the impact may be lessened. A green cover program could be put in place for 2007. I say, "Let's do it"!!
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