As the accompanying table illustrates, returns in the grain industry are tightening. These are Saskatchewan numbers, but Alberta and Manitoba will show similar trends.
While some producers will harvest 140 bushel per acre oat crops and 60 bu. per acre canola crops, provincial average yields are much lower and can serve as an indicator of overall economics and the relative profitability of crops.
Please check the assumptions and methodology below the table to see how the numbers were derived. Note that net margin per acre is what remains to pay fixed costs, including machinery depreciation and land investment. For most operations, more than $100 an acre is required and this is before any return to owner labour and management.
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Worrisome drop in grain prices
Prices had been softening for most of the previous month, but heading into the Labour Day long weekend, the price drops were startling.
Several observations flow from the table. First, you can see the importance of canola as the largest acreage crop when it shows the best net margin.
Second, returns from durum are dismal and trail all the other cereal crops.
And last, the pulse crops are showing dismal returns. Lentils and chickpeas used to be top revenue performers. Not now.
It will be interesting to see the 2019 acreage shifts precipitated by these changing economics.
Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at kevin@hursh.ca.
