The following article appeared as a CBC Editorial by Laura Rance on the CFBMC website:
That’s the situation that more and more farmers are facing. It’s most acute in Prairie grain farming, but the same scenario can be found in farm accounts across the country and in just about every commodity: Income is flat and being drained of its vitality by inflation while short-term debt is being converted to long-term liabilities.
Even with government transfers, low interest rates, and a low dollar that boosts returns on export commodities, farming is no longer a paying proposition for more and more families. But aside from giving up, what do you do?
The first step, says University of Guelph economist George
Brinkman, is to stop deluding ourselves with myths. One example, he says, is the belief that all we need is a level playing field – that North American producers are the most competitive in the world. We’re certainly productive but we have environmental constraints such as shorter growing seasons. And we spend an awful lot to produce what we grow.
Brinkman cites the emergence of South American countries as world leaders in grains and oilseed production. He also points out that if
South Americans can produce cheap grain and oilseeds, they will soon be producing cheap livestock too.
Brinkman says farmers here must improve their understanding of costs of production and their ability to capture premiums through
differentiated marketing.
Henry Nelson of the Manitoba Farm Debt Mediation Board says he used to get laughed out of the room when he suggested grain farmers move into livestock. Now he sees farmers putting land they once considered “too good” for forage into pasture land because it generates higher returns and lowers costs.
The risk, he fears, is that the new converts, in their enthusiasm, will do the same thing to livestock production that they did to grain
farming – erode their profitability by spending too much chasing economies of scale.
But Nelson is hopeful too. He sees a new focus on keeping capital costs down and the bottom line healthy. Whether that will be the saviour of farmers is still unknown. What is clear is that another trip to the bank or the government to buy more time for the same old approach is a doomed strategy.
For CBC commentary, I’m Laura Rance, a farm journalist in Sanford, Manitoba.
_________
Several concerns are raised here: How do we deal with the South American markets, especially in terms of beef? What is being done to watch what is happening there. I'm not sure we can sit back and say that they have things llike FMD, so they can't export. Brazil for one is working very hard to get their status cleaned up. They have something like 160 million cattle. What happens when these are ready to go?
How do we break the cycle of wanting more subsidies, safety nets, government help?
How do we better utilize our inputs so that we can get more from the land?
One thing that confounds me is that we keep trying to be the lowest cost producer, which doesn't work and we shouldn't be aspiring to. Ianben has brought up several times in various threads that we need to know the value of what we are producing.
Where do we start?
That’s the situation that more and more farmers are facing. It’s most acute in Prairie grain farming, but the same scenario can be found in farm accounts across the country and in just about every commodity: Income is flat and being drained of its vitality by inflation while short-term debt is being converted to long-term liabilities.
Even with government transfers, low interest rates, and a low dollar that boosts returns on export commodities, farming is no longer a paying proposition for more and more families. But aside from giving up, what do you do?
The first step, says University of Guelph economist George
Brinkman, is to stop deluding ourselves with myths. One example, he says, is the belief that all we need is a level playing field – that North American producers are the most competitive in the world. We’re certainly productive but we have environmental constraints such as shorter growing seasons. And we spend an awful lot to produce what we grow.
Brinkman cites the emergence of South American countries as world leaders in grains and oilseed production. He also points out that if
South Americans can produce cheap grain and oilseeds, they will soon be producing cheap livestock too.
Brinkman says farmers here must improve their understanding of costs of production and their ability to capture premiums through
differentiated marketing.
Henry Nelson of the Manitoba Farm Debt Mediation Board says he used to get laughed out of the room when he suggested grain farmers move into livestock. Now he sees farmers putting land they once considered “too good” for forage into pasture land because it generates higher returns and lowers costs.
The risk, he fears, is that the new converts, in their enthusiasm, will do the same thing to livestock production that they did to grain
farming – erode their profitability by spending too much chasing economies of scale.
But Nelson is hopeful too. He sees a new focus on keeping capital costs down and the bottom line healthy. Whether that will be the saviour of farmers is still unknown. What is clear is that another trip to the bank or the government to buy more time for the same old approach is a doomed strategy.
For CBC commentary, I’m Laura Rance, a farm journalist in Sanford, Manitoba.
_________
Several concerns are raised here: How do we deal with the South American markets, especially in terms of beef? What is being done to watch what is happening there. I'm not sure we can sit back and say that they have things llike FMD, so they can't export. Brazil for one is working very hard to get their status cleaned up. They have something like 160 million cattle. What happens when these are ready to go?
How do we break the cycle of wanting more subsidies, safety nets, government help?
How do we better utilize our inputs so that we can get more from the land?
One thing that confounds me is that we keep trying to be the lowest cost producer, which doesn't work and we shouldn't be aspiring to. Ianben has brought up several times in various threads that we need to know the value of what we are producing.
Where do we start?
Comment