Wild weather, roller-coaster markets and the never-ending onslaught of pests and diseases not exciting enough for you?
Steven Snider has a suggestion.
“If you think growing crops is challenging, try doing it without chemicals,” says the 44-year-old Alberta grain farmer.
Snider has spent his career doing just that, and that’s no small feat. It’s estimated that one-quarter of organic grain farmers on the Prairies have packed it in since the recession of 2008.
The survivors know a thing or two about risk management.
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Take price risk, for example.
The market for organic grain is relatively small, and small markets get stupid sometimes.
In 2008, food-grade organic wheat famously peaked at $30 per bushel. Two years later it was less than $10, although no one really knows for sure because buyers and sellers tend to keep their cards close to their chests.
“It’s really tough for us to track prices,” Snider says.
“We can’t go to the Chicago Board of Trade, and there’s no futures market you can turn to.”
Sometimes it can be tough finding buyers at all. The 2008 price surge was ill-timed and coincided with the recession.
All sorts of organic consumers decided “naturally grown” products were close enough, and that hammered demand.
When prices do jump, it’s harder for organic growers to cash in.
To build fertility and control weeds without chemicals, Snider uses a long-term rotation involving green manure followed by peas intercropped with oats or barley and then either fall rye or wheat.
So if wheat prices are great, he can’t go out and plant all of his 2,080 acres to that crop.
And, of course, organic farming leaves you defenceless when Mother Nature gets cranky.
“Once you put a crop in the ground, you can’t correct anything,” says Snider.
“If there’s a plague of insects or disease coming through, you can’t do much of anything.”
Except, maybe, to compare your situation to that of your neighbours and question why you’re in organic anyway.
“The pressure gets pretty intense,” admits Snider, who farms at New Norway, an hour’s drive southeast of Edmonton.
“When canola prices hit $10 or $12 a bushel and guys across the fence are pulling in 60 bu. an acre, you do the math in your head. So yeah, it stings a little.”
What takes the sting away, he says, is having a long-term game plan to deal with the ups and downs.
“I liken it to a camel,” he says with a laugh. “When you find water, you drink lots of it because you may have to walk a long way before you hit the next oasis.”
His risk management plan has several key elements, and managing inventory and cash flow heads the list.
He calls inventory “his crop insurance,” and is prepared to hold grain for two or three years if it takes that long to get an acceptable price.
Of course, that’s a lot easier to do when you don’t have big loans to pay off, says Snider, who runs used equipment that’s every colour of the rainbow.
Next on his risk management list is a sensible and balanced marketing plan. For example, Snider didn’t plant an acre the year organic wheat hit $30 a bu.
“Once it hits that level, everybody’s putting it in and it’s a guarantee prices will plunge,” he says.
“It’s Economics 101. I’ve done this a long time and the one thing that remains constant is the law of supply and demand.”
Snider also works hard on product quality and customer relations. His father was a pedigreed seed grower, and he ensures all of his equipment and storage is meticulously cleaned so millers know his grain will be of consistently high quality. He also travels North America to meet with buyers in person and cultivate relationships.
None of this is revolutionary, but it takes discipline. And the world is full of temptations.
“Look at interest rates right now. They are dangerously low,” he says.
“So many guys are borrowing and chasing the dollar right now. Sure you can make a lot of money, but you have to remember that markets ebb and flow.”
Snider is the first to say luck plays a big role, but it’s clear luck alone isn’t enough. Snider has hit the quarter-century mark in a sector that lost a quarter of its producers in three years.
He’s proof that if you want to be around for the long term, you need to plan accordingly.
