For more than two years, Manitoba farm leaders have been looking at the palm of agricultural policy and foretelling doom.
The life-line of subsidies and safety nets has been cut short, they warned farmers. Adapt and diversify now, or face uncertain destiny in cycles of low prices.
Now, farmers across the Prairies are seeing the planets aligning in what many fear is a portent of disaster.
This crop year, for the first time, farmers will be paying the full cost of their freight.
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Crops are withering or drowning. Yields will be lower. Quality is suffering. And prices are abysmal. The only things going up are costs.
“Couple everything together and you’ve got some major economic problems for this fall,” said Les Jacobson, a farmer from Arborg, Man. “We’re going to be hit with a sledgehammer right between the eyes.”
It was easy to pass off the prophecies when prices were more reasonable, crops were average or better, and government cheques to make up for the loss of the Crow rail subsidy came in the mail.
In black and white
But when Canadian Wheat Board outlooks show returns $30 per tonne lower than 1996-97, and $80 per tonne lower from 1995-96, the $40 per tonne average freight cost in Manitoba is hard to miss, said Jacobson.
“When you don’t have the volume to sell, couple that with the quality, plus the low prices, that equates to very, very little dollars on a per-acre basis,” said the president of Keystone Agricultural Producers.
“It’s cost us more to get the crop in and get it to this point, and now we’re looking at the other side of the ledger for the income side, and we’re being hit pretty hard.”
Some will have a difficult time paying off operating lines of credit. And cash advances, often used for cash-flow through the fall, won’t go as far as usual.
A farmer would need about 65,000 bushels of barley to get a $50,000 cash advance, noted Jacobson. Farmers who have diversified operations will have an easier time riding out the low prices.
Crop insurance may help farmers hurt by Mother Nature. And farmers who have socked away money into the Net Income Stabilization Account have something to fall back on this year.
“If your farm triggers out everything that’s in your NISA account, then what do you do if … there’s low prices next year?” said Jacobson.
He noted this is the first year since the end of the price-supporting Guaranteed Revenue Insurance Plan, designed in times like these.
At the breakfast table, in line at the bank, at coffee shops and a recent KAP meeting, conversation is consumed by initial prices for wheat and barley.
“It’s a hotter topic than the weather,” said Jacobson.
Even the chief commissioner of the Canadian Wheat Board is talking about the omens.
“The Canadian safety net program, for the young farmer with the big fixed costs plus the big variable costs, certainly isn’t sufficient to cover,” Lorne Hehn said last week. “For the young farmer who can’t fall back on depreciation or can’t fall back on savings, if world prices don’t improve, as a young farmer said to me this morning, ‘I can’t make it.’
“And I believe he’s right. I think government will have to deal with that.”
