Livestock and special crops point to a new future
The latest news affecting grain markets might be gloomy for crop farmers, but it is good news for livestock producers.
Next year promises to be profitable for cattle producers and a time of recovery for hog farmers.
The supply-demand cycle was already moving into the segment that favors producers, and low feed costs will help boost profits even more.
The low grain costs will also help other livestock producers in supply-managed dairy and poultry and the newer areas of bison, elk and specialty livestock production.
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This is important for several reasons. Obviously, farmers with mixed operations will have a more balanced income with livestock receipts offsetting losses on the crop side.
Also, it will emphasize to the whole agricultural sector the importance of continued diversification. Livestock prices and crop prices often run counter cyclically.
Like the individual mixed producer who enjoys a more balanced income, a provincial agricultural economy can also benefit from balance.
A healthy livestock sector has the resources to grow, and that is important because we need more cattle and hogs to increase the domestic demand for feed grain.
It is increasingly clear that high transportation costs are one of the things making the farm income problem worse than during the low grain prices of the early 1990s.
The chance of profitable grain production is much lower when you have to pay $40-$50 per tonne to move the product to port.
Many farmers are probably tired of hearing the sermon on diversification.
We’ve heard frustrated producers cry out many times that they’ve diversified as far as they can and still they have trouble making ends meet.
But long-term statistics show that prairie farmers are more resourceful than they might think.
Look at special crops.
In 1991-92, Canadian farmers, mostly in the West, produced 1.27 million tonnes of peas, lentils, mustard, dry beans, canaryseed and sunflowers. That was an enormous increase, given that just 10 years before almost no one grew these crops.
But this summer, farmers grew an estimated 4.18 million tonnes, an increase of 230 percent over 1991-92.
Along with the growth in production has been growth in cleaning, bagging and processing plants, which now directly employ an estimated 2,000 people on the Prairies.
Diversification does not guarantee profits.
But it does reduce risk and expand the overall agricultural economy and as Martha Stewart says, that’s a good thing.
