It was the best of times; it was the worst of times.
That opening line from Dickens’s A Tale of Two Cities came to mind as I pondered the divergent views of Dan Basse, president of AgResource Co., and Jeff Rubin, former CIBC chief economist and now author, whose latest book is The Carbon Bubble.
Basse spoke at the windup of the CWB crop tour July 24 and painted a not-so-optimistic picture of crop markets in the coming years, with production easily keeping pace with new demand, resulting in weak crop prices.
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Meanwhile, Rubin is out promoting his book, which says that the world is slowly reacting to the threats posed by climate change by lowering demand for fossil fuels, particularly those expensive to extract such as Alberta’s oilsands.
He says climate change will create new challenges for global food production in most places, but Canada might be in the rare and lucky position of seeing improved agricultural prospects.
Basse’s negative outlook has a shorter time horizon of five years than Rubin, who is looking ahead decades.
For almost a year, Basse has been lamenting the lack of a new global demand driver for crops. The ethanol boom that saw the amount of corn processed into the biofuel grow to about 38 percent of the U.S. crop is now over.
The explosion of food demand from China is slowing. In coming years, world food demand growth from population and income growth will be 1.7 percent per year.
The high crop prices of recent years have brought an additional 175 million acres of land into production worldwide, he notes.
That land, as well as the productivity increases from higher yielding seed and other technology, can easily feed the world, he says.
Indeed, he thinks global seeded acreage will decline over the next few years.
Meanwhile, Rubin says farmland is Canada’s hottest asset.
Crop production will suffer in many parts of the world as the planet warms, but Canada’s longer growing season is beneficial, he argues. The boundary of crop production will move north and the area suitable to growing corn and soybean crops is expanding.
As well, agricultural commodity prices will stand up better than energy commodities, he says.
He suggests Canada should capitalize on this advantage and concentrate on becoming a food superpower instead of an energy superpower.
Now, Rubin was also the guy who forecast $200 a barrel oil in 2008, back when he was chief economist at CIBC. His book, Your World Is About to Get a Whole Lot Smaller, flowed from that prediction.
He now admits he did not adequately factor in how expensive oil limits economic activity and spurs development of new technology such as shale fracking and more efficient vehicles.
Basse’s forecasts have also been off the mark.
Last fall, he said corn futures could fall as low at $2.75 a bushel and soybeans around $7, but corn did not fall below $3 and soybeans have not been below $9.
While neither forecaster is perfect, both have points that are worthy.
My own belief is that the strong crop prices of the past 10 years were a welcome aberration. The future might hold much more volatility and extremes of production and prices.
As Rubin says, climate change will likely present challenges to farmers, but science is also creating opportunities.
More frequent bouts of extreme weather could hammer down production in bad years, but the improved productive capacity from new technology could create bigger surpluses in good years.
The greatest impacts will be felt if and when tipping points are reached. Trajectories in climate and technological development are not necessarily straight lines.
Temperature changes might creep along for decades until a huge part of an ice sheet at one of the poles breaks off and rapidly melts.
Or genetic scientists might learn a little each year about how plants function until suddenly a big picture appears and traditional ideas about yield limits are broken.
The pace at which technology develops is getting faster. Who knows what developments in genetics, artificial intelligence, robotics, nanomaterials and supercomputers have in store for us?
I can’t say whether the future of farming will be the best of times or the worst. The only sure thing is that they will be interesting times.
