Farmers appear to have both wise and inexplicable views on whether or not farming is a good industry in which to invest, says the economist who helped design the Canadian Agricultural Outlook Survey.
“I’m not a psychologist and I think some of those skills are probably required to interpret all this information,” said Al Mussell, whose firm, Agri-Food Economic Systems, oversaw the survey and its analysis, in a presentation at CropConnect.
Mussell acknowledged being surprised by a number of the results uncovered by the survey of more than 450 subscribers to The Western Producer and other Glacier FarmMedia publications.
The most inexplicable to him, although not entirely unexpected, was the fact that less than one-third of farmers expecting to soon begin easing out of farming have any real succession plans.
“Only about 30 percent of those folks that knew that in the coming years, the short-term future, they were going to need to make these ownership changes … had a formal succession plan,” said Mussell on Feb. 17.
“Those assets are going up in value (from both land appreciation and continued investment by the farmer) and they know they’re going to have to wrangle with this, and they are not particularly well-prepared for it yet.”
More understandable to the economist’s mind was the seeming contradiction in farmers generally being cautious about the near term future of farming in general, but confident in their own situation, and the similarly contradictory view of most that land is overpriced, but they’d like to buy more anyway.
Mussell said the farmers who answered the survey might have already invested enough in their farms to feel confident about their particular farms, even if they think most farmers will do less well.
“They’ve retrofitted and they’ve retooled,” said Mussell.
And part of maximizing the per-unit cost of machinery and other technological systems is using it on as big an acreage as possible.
That creates the “treadmill” situation many farmers live with, in which they “continually invest in new technology, some of these new technologies lead to land investments, which lead to further technology investments.”
While many have speculated that lower crop prices will lead to lower land prices, Mussell said there are still factors that make land demand high.
Many farmers plan to buy land in coming years. Far fewer say they plan to sell any.
Here is the 2015 Canadian Agriculture Outlook Survey.