Too much production

[cowman]

I have come to believe farmers have just become too darn efficient at producing food or at least the food we can produce here in the artic! All we can grow is basically grain and grass. We produce too much of both and no one wants it at a decent price and yet what can we do? It is too darn dry and cold to grow anything else.
The sad part is with a global economy we can't even grow grain and grass and compete with countries like Brazil and Australia. Maybe we need to turn Saskatchewan, and parts of Alberta and Manitoba back into a big wilderness park for the natives and the tourists? Charge rich Europeans and Japanese to come out and shoot the buffalo and Indians, or something?

[cakadu]

We are over producing on some things and that is hurting us. It is my understanding that we could be producing other crops because they have made advances in crop development. Crops that would not normally have grown here i.e. flax have varieties that I understand will grow in climates like ours. Many new and exciting things are being done with flax fiber these days.

It seems to me we keep looking to the past and what didn't grow then, when maybe what we should be doing is looking to the future and what might possible grow now.

I'm really beginning to believe in the notion that the best way to predict the future is to create it.

[15444]

I know the idea of supply management is not one that is particularly liked in the Agri-ville forums, due to the fact that it does eventually make it impossible for new guys to get into the market. But as the hog industry goes down the tubes and the cattle industry faces collapse, what could be better then have guaranteed markets with adequate prices? I do not look forward to selling $0.20 culls and $0.60 calves for the next 7 years.

Hopefully something good will come out of the findings of the USDA as it wraps up it's investigation in the next week and a half.

[cowman]

Well I think supply management got a black eye because of how the quota system was set up, not necessarily because it was a bad idea? I mean how the value of the quota became vastly over inflated?
Just about every industry in the world practices supply management, although on a more sophisticated scale. When trucks aren't selling does Ford lower it's price and produce more to try to compensate? No they cut back production. When farmers can't sell their grain/cattle/hogs at a profitable price what do they do? Raise more! Beat out the neighbor...not too smart?
I see the price of milk has risen in the store. The reason given for the increase...lower prices for cull holsteins...thus a need for a higher price.
Supply management was a good idea. Unfortunately, in our greed, we didn't listen to Eugene? I guess he probably feels vindicated?

[grrrr]

How could supply management work in the grain industry? In 2002 barley in my area ran 15 bu. In 2003 it ran 85 bu. Under supply management rules would I not have been penalized for under producing one year and over producing the next?

[carebear300]

I don't know the solution either but like usual have to give my observations of the situation. First of all the notion that we can produce new crops that will make us profitable, from past experience going down that road, I really wonder!!!!! I did the lentil thing, and am still doing it, but all of a sudden lentils are worth about half of what they were. I grow peas and I remember quite vividly at the last meetings I attended at crop production week at Saskatoon, that we couldn't produce enough peas to affect the market, alas wrong again!!! In fact this year there apparently was another speaker that told everybody there that they would have to grow eight times as many peas to fill the extra demand. It won't happen if we grow eight times as many peas we will have to pay somebody to take them. I wish I could be more optomistic but past experience tells me that the prairie farmer can produce more of just about any crop that is practical than what we can sell proftiably. It would take no time at all for us to grow way too much of that new flax that they keep talking about. Maybe supply management is the only solution.

[Horse]

I guess I may just as well add my 2 Cents worth, if we were to go to low imput low yields mabey more of us could survive, hard on fert and chem co but mabey its thier turn to come up with a solution instead of letting us do it. On the call of the land I think it was someone did a study on gross and net $ / acre you know who came out on top ,the amish in indiana I think . Their net was (dont quote but as I rember ) !37$/ acre and in texas high imput operators was -18$/ acre now I am not sure I would like to farm with horses as I am a little to young to have real first hand experiance. But no imput for tractors power ph gas mabey it could be done any one interested.

[cakadu]

Supply management only works in the domestic market - it won't work in the global marketplace unless everyone buys into it.

How many will have to fall in order to make sectors like beef and grain conducive to the supply management scenario?

It might work for some, but who will get to be the lucky ones that get into the system? How would quota be priced and what would happen to grain where you are not producing for many months of the year?

[ianben]

Supply management on a global scale is exactly how I think we should think.

The internet gives us the means.

There is not over production just a shortage of people who can afford to pay. The rich get their food cheaper and cheaper and the poor go hungry.

Farmers only need to co-operate on the amount they offer for sale to get higher prices.

Cowman is right we are too good at production and believe the more we produce the richer we should be.

A man bought a rare stamp for $1million and destroyed it. Mad?
No. He owned the other which is now worth$5million.


Using the internet and within a week you could get predicted feeder numbers for next fall. Find feedlot/packer requirements and match the numbers.

All cull 10/20% next week or as they are born and get a fair price for what you produce. Matching numbers to demand by price is an ugly way with much pain.

Then fix a minimum price which leaves everyone a profit all the way up the chain without the need for the producer getting involed in areas he has little knoledge

I believe the internet offers farmers an oppertunity to regulate supply rather than manage production by giving us the same advantage mega corporations have of a pricing and market reshearch division.

Lets try to provide a service of good wholesome food but charge what the market will stand like everyone else

[plato]

I question whether supply management would work in the grain industry especially if world Govts fail to get on side. Why would American and European farmers cut production when they are being paid well for all they can produce. Our world wheat stocks are at historical lows but the price of wheat is still in the dumps.
I read that Canadas grain production is 5% of total world production. If this is true the grain we produce is nothing but the worlds dockage

[cowman]

Supply management can work in a domestic market. It would be very tough to make it work in Canada for beef, hogs, and grain because we have such a small population. But it has worked for poultry and dairy. It might not have been pretty or ideal but it did work. What would it mean for beef and grain? Well it would mean about one third of the beef farmers would have to go and probably two thirds of the grain farmers. I guess we would need to turn about half the land into parks or something?
I'm not really up on how grain is priced and if the two price system is still in place for wheat. There used to be two prices. One for Canadian millers and one for export. The Canadian millers price was whatever the market could bare while the export price was competitive. Believe it or not the millers often got poorer quality wheat...and paid twice as much as the quality export wheat! And to top it off Canada lent the importers the money to buy it! A lot of which never got paid back!
Countries like Japan do this all the time. A case in point is Kubota tractors. A Kubota will cost you almost twice as much in Japan as it does in Canada. They use their high domestic price to subsidize their exports. The local Kubota dealer showed me the actual figures. In reality we do the same thing here with milk, I believe?

[farmboy1]

Very few dairy products are exported. There is an allowable amount needed for export in order to balance the domestic market. There is an off-setting allowable amount of importation as well. Depending on what happens in the near future re: BSE trade rules, this could be a viable time to explore s/m in other commodities. If no one wants our beef, pork, etc., it may be time to change the rules for other countries wishing to export to us. The Canadian gov't seems to be the only gov't lately to embrace WTO subsidization rules. Our gov't has done the boy scout thing and dropped a lot of ag. support because "it's the right thing to do" for free trade. Have the Merkans or the EU? HARDLY!!!!!! For s/m to work, you need domestic prod'n controls, import controls, and price controls. Will it change the consumer price? Not a chance. However, the producer will get a fair percentage of a re- distributed pie. Where will that fair price come from? The ones making huge profits now. Is that communism? It must be- if the producer can make a living at it.The Merkans are making huge profits in the beef sector right now because they have the closest thing to s/m they will ever have. They have supply problems- there is no glut of beef in the market. There could be, but politics is protecting their producers. I fail to hear any howling from US producers at this time that the consumer is being ripped off. This hemisphere is full of beef that the US could access if the consumer was being ripped off, but they don't want it. One bit of mis-information about s/m is that it protects inefficiencies. This is simply not true. In the dairy sector, quota prices are not used in the COP formula. The pricing structure will not allow it and should not allow it. This would make it too easy to bid up the price. The dairy industry has a HUGE problem with quota price and new entrants and they know it. To buy quota, producers are having to amortize loans over a longer term all the time. As far as making a living goes, the price paid to producers is set up so that only the most efficient (33.3%) are going to receive a profitable living from it. It is incumbent on the rest to tighten their belts and figure out how to do a good enough job to get up there. However, the better the best do, the better the worst must do in order to stay in business. If you look at agriculture, it is the producers who always receive the lowest returns for their efficiency gains. They will just be able to survive a little longer. However, in s/m as in other commodities, efficiencies usually are attained by larger operations. The consumer is demanding a better product, safer, and cheaper all the time. However, they are beginning to hate "factory farms". They are driving us to get better (hence,often bigger), but don't want to compensate us. This is a tough one. They want cheaper food, nicer stores, better selection, fewer pesticides, blah, blah, but don't want to pay more. The retailers are making more profit every day, so where does that leave the producer? Holding the smaller, lighter bag of cash - the leftovers. S/M works. The large corps. don't like it because their price is controlled. However, they still make excellent profits. Talk to your grocer and see how they'd do if the dairy case was removed from the store. However, the producer has a fair share of it and their are no big price spikes. There have been no big price swings in beef either- at the retail level. Personally, I think the consumer is being ripped off more in the non s/m commodities. Or maybe not. They are probably paying a fair price for beef. Am I getting a fair price? Only when I sell freezer beef. Definitely time to explore this s/m philosophy in a little more depth- and soon.

[ianben]

Supply management with quotas is not what my internet vision is about.

Farmers everywhere have the same problems.
I farm in EU but subsidies do not save you for the same problems of BSE and weather,and perhaps even more the power of the people we deal with in getting a fair price. They as you would expect factor our subsidies into the price we are both charged and offered.

Also we have no real idea of what quantity of any commodity is acctually needed and no idea of how much nature will allow them to produce anyway.

I think we could harrness the internet to give us this basic marketing information. Allowing us to sell perhaps only a percentage of what we produce in one year but at a price which leaves a profit.
Then give us information of products that are really wanted leaveing us to make managment decisions on real knowledge rather than gut or irational year on year trends.

Would it not be nice to have grain left from a cheap 80bu yr to sell in 15bu drought.
You are all trying to make decisions on what to do for the best in the beef sector with no real guidance. I faced the same problem post 96 and choices are really few without any real information.
I choose to scale right back and diversify as far from agriculture as possible.
I still believe today this is the best way to stay farming and manage individual risk. Income from as many sectors of the econamy as possible.

Mega farmers without some form of controls on supply and production with make mega losses at times. Just look at hogs.

Many individual farmers using the internet could become an equal force to the multinationals and dictate prices after all they need the food we produce to survive and make a profit for their shareholders.