Here’s the bad news farm supply dealers at an association meeting had to swallow: crop prices are bad now, will probably stay bad through the spring, and there is little hope for better prices until well into 2006.
The market outlook session at the annual meeting of the Independent Dealers Entrepreneurial Association said no major crop appears headed for a price rally in time to encourage farmers to invest more heavily in their 2005-06 crop.
But Niverville, Man., farm supply dealer Allan Kroeder said he and other dealers across the Prairies aren’t despairing about the coming year. They’re going to have to act on faith.
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“In our business we rely on the farmer’s basic nature and basic desire to be productive,” said Kroeder in an interview.
“We expect that if there’s no obvious way to make extra money (by jumping into a promising crop), a farmer who wants to continue farming will want to do a good job and maximize his production.
“Farmers aren’t there to do a bad job or cripple their own operations. They’ll restrain their spending a bit, but crops in our systems can’t be grown without significant inputs.”
Farmers gamble every year when they plant a crop, taking on the risks of weather, pests, diseases and unexpected market conditions. But supply dealers also take on risk as they prepare for each growing season.
Kroeder, a director with IDEA, said dealers can’t allow pessimism to overwhelm them just because the tough times may continue for the year. They need to have rational expectations for their business performance and also show their dedication to the industry by believing in it.
“We expect to see a reasonable year, not a great year, but not a disaster,” said Kroeder.
Since farmers are likely to maintain most of their input purchases unless they find them impossible to finance, Kroeder said the challenge for dealers this year may be as much about finding a way to finance input costs as about making sales.
“It’ll probably demand some extra planning and communication between farmer and dealer about what will be bought and when it will be bought and when it will be paid for and how it will be paid for,” said Kroeder.
“That will probably be the biggest challenge to our thinking this year.”
Kroeder said dealers aren’t scrambling to supply inputs for suddenly popular crop choices, which they have to do some years. This year, no crop appears to offer an easy buck.
“There is a higher percentage of farmers this year that aren’t sure what to grow,” said Kroeder.
“Even farmers that are usually very predetermined in their activities and planning are having a hard time making up their minds. Everyone’s looking for a light at the end of the tunnel and it doesn’t appear to be very evident.”
A day after the IDEA meeting ended, the United States Department of Agriculture released supply and demand numbers that confirmed high stocks in all major grains.
But, for prairie farmers, something good might happen that could cheer spirits. If the U.S. border opens to Canadian cattle imports March 7, farmers will probably feel more hope about the next year, and that optimism could flow beyond the cattle industry to lift all producers’ spirits.
“It’ll be a positive signal for the whole industry if it happens, and sometimes psychology is what we need to get through the tough times,” said Kroeder.
“Tough times come and go. It’s how we handle them, how we act and think and hold ourselves that will tell a lot about how we’ll come out of it.”
