Grain price jump unlikely
If you were thinking of doing a little madcap spending this spring, those plans are probably on hold if you watched Market Prospects ’97 last Sunday.
The eight-part TV series was organized by Saskatchewan Agriculture, the Agriculture Institute of Management in Saskatchewan and the University of Saskatchewan’s department of agricultural economics and extension.
Speakers Joe Glauber of the United States Department of Agriculture and Harvey Brooks, of the University of Alberta and formerly of the Canadian Wheat Board, dispelled any hope that grain prices will soon recover the strength they had in 1995-96.
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Last year’s runup in prices was due to three years of consumption outpacing production and a U.S. winter wheat crop imperiled by drought.
Prices soared, encouraging the world’s farmers to seed more wheat. This and good weather led to record crops in the European Union, Australia, China and near records in Canada and Argentina.
Exporters suddenly had lots of grain and a competitive market. After about 18 months of no export subsidies, the EU reinstated them last September.
Europe now has subsidies of about $30 a tonne for wheat and $48 a tonne for barley.
The U.S. hasn’t retaliated yet, but maintains that if the EU steps too far out of line, it will reinstitute Export Enhancement Program spending.
Under GATT, export subsidies must be reduced, not eliminated. The starting point is from their peak use in the early 1990s, so that by 2000 the U.S. will still be able to legally spend $500 million on EEP.
The new 1996 U.S. Farm Bill is expected to allow farmers to make seeding decisions based more on market prospects than government programs. In Europe, land set-aside programs are being reduced.
Both changes could lead to faster changes in production and perhaps more volatility in prices.
The last speaker, Alvin Ulrich, an agricultural consultant with Biolin Research Inc., said China could be the wild card in future world agriculture markets.
The Asian giant has great productive capacity. But consumption is also booming thanks to a growing population with increasing incomes and the ability to buy more meat, particularly pork.
And that will probably be discussed in more detail when Market Prospects ’97 looks at livestock markets on Feb. 22.
The series is shown in Saskatchewan on the BBS network’s Farmgate show Sundays at noon and will be shown again on SCN beginning March 18.
