Terry Wilkinson has trouble believing the glass is half full this spring.
“With the U.S. recession, I don’t think we’re going to see the prices (for crops) that we’ve got right now are going to hold,” said Wilkinson, who farms 1,000 acres near Melita, Man. “And the prices aren’t that good right now. So, I’m concerned.”
Combine those expectations for lower crop prices with a potential for fertilizer shortages and rebounding input prices this spring and Wilkinson isn’t questioning what he will seed but how much time he’ll dedicate to farming.
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“I’ve taken a job in the oil patch (in Manitoba) part time,” he said.
“My decision is whether to put in less crop and then devote more time to the oil patch …. That’s the part I’m penciling in right now.”
Wilkinson’s mood isn’t representative of all farmers in Western Canada, but it is a clear-cut change from the euphoria of last year when grain farmers celebrated what market analysts called the new era of high commodity prices.
A consistent irritant for producers these days, however, are input companies that continue to price their product as if that new era was a reality.
“We had a short window where these grain prices were very strong,” said Agricultural Producers of Saskatchewan vice-president Jeff Simpson.
Producers he talks to are sick of manufacturers’ adherence to high input prices, even though it’s obvious that crop prices have fallen.
“These manufacturers think that the grain prices are $9 wheat forever and they haven’t realized that prices have dropped substantially,” he said. “They’re right down at the bottom of the charts.”
Despite the concerns over unrealistic input costs, Simpson, who fams near Ruthilda, Sask., feels upbeat about his prospects for 2009.
He thinks wheat, which was trading at slightly more than $6 US per bushel last week on the Minneapolis Grain Exchange, has the potential to bounce higher this summer.
“I believe there’s going to be a run-up on prices in Minneapolis and Chicago,” he said, explaining his optimisim is based on his technical interpretation of the charts.
“I think that will happen in mid-summer and that will be an opportunity to lock in your grain prices.”
Simpson also thinks now is a great time for growers to lock in the basis for wheat.
“Your basis contract might be the lowest of the year. It’s negative 34 cents for hard red spring (last week).”
Keith Gardner, who farms near Lenore, Man., is taking a more neutral approach to costs and potential returns this year.
Gardner, who usually grows wheat, barley, canola and peas on his 1,500 zero-till acres, said most crops pencil out the same this year.
“This year, although the numbers aren’t terrible, there’s nothing super exciting,” said Gardner, who sees his returns as slightly better than break even, based on current prices for inputs and crops.
He said he tries to avoid the guessing game of predicting what crops will be hot. Instead, he bases planting decisions on agronomy.
“It’s farm rotation first, mostly because we find that if we don’t follow our rotation then disease problems will (arise),” said Gardner, who has the habit of pausing for a moment to ponder a question before providing a careful answer.
What does get a rise out of Gardner, however, is the discrepancy between oil prices and the price of fuel and fuel price variability.
“Fuel prices have been just all over the map, just within the province,” said Gardner, who uses websites such as gasbuddy.com to get a better handle on fuel issues.
Wilkinson said high fuel prices are a particular conundrum for him because they take money from his pocket to run his farm but provide him with an off farm job.
“Fuel was one of my top input costs last year because, with cattle, I have a tractor running 365 days per year,” he said.
“But the oil (industry) is kind of saving my bacon a little bit.”
