Are crop advancements counterproductive? Some producers think so.
It’s certainly true that when a crop becomes easier to grow, production can outpace demand and cause the price to drop. This is particularly the case for crops with a set, finite market and few alternative uses.
This issue came up at the recent Durum Summit held in Swift Current, Sask., and was well articulated in the producer panel session that concluded the meeting.
Durum typically commands a price premium to spring wheat, and it has a higher yield potential. So why is durum grown on roughly six million acres in Western Canada while spring wheat acreage is nearly three times higher?
It’s simply because durum production is not well-suited to the higher moisture regions of the Prairies.
Maturity can be an issue, as can kernel sprouting, but the main impediment is fusarium head blight. Durum is significantly more susceptible than spring wheat, which is why production is concentrated in the brown soil zone of southern Saskatchewan and Alberta.
Fusarium was not a big issue in last year’s dry summer, but it certainly was in 2016. A high percentage of the durum crop was seriously downgraded. In most cases, producers with crop insurance coverage were well compensated through quality factors.
Without this significant financial backstop, would fewer producers be growing durum? Would that mean reduced production and therefore better prices? Quite possibly.
More research is focused on developing durum varieties with improved fusarium resistance. If the fusarium threat can be reduced, will that also correspond to increased acreage and production with correspondingly lower prices? Again, quite possibly.
On a range of crops, production levels in Western Canada have a huge impact on world prices. The more we grow, the lower the price is likely to be. In addition to durum, this is also true for high protein spring wheat, lentils, field peas, flax, oats, mustard and canaryseed.
It’s not the same situation on corn or soybeans, where we’re a minor player in world markets. And it’s not quite the same direct relationship on canola, either, because canola competes in the huge worldwide vegetable oil market.
However, on the crops where we’re a dominant player in the world market, it’s logical to question the overall value of research, which produces higher yields, makes a crop easier to grow or expands the area of adaptation. It’s better to limit production and keep the price up, some believe.
Don’t try to solve the straw management issue in flaxseed, don’t take the itchy out of canaryseed, the lodging out of peas or the harvest problems out of hemp. We’ll grow too much and flood the market.
There are serious flaws in that thinking.
First, when the price of a crop gets too high, it discourages use and leads to substitution from other alternatives. Common wheat can be used to make pasta if durum prices become too extreme. Other pulse crops can replace the protein from field peas or lentils.
Second, high prices encourage production in other regions of the world. Any crop we grow can also be grown somewhere else if the price gets high enough. Farmers in Eastern European nations get increasingly interested in flax and mustard when the price skyrockets.
We’re lucky to have many crops where we have established a competitive advantage, but that advantage can’t be maintained without continued research. Even when you’re on the right track, you’ll get run over if you stand still.