Bob Harrison doesn’t need charts, graphs or overhead projectors to describe the current outlook for western Canadian grain farmers. He can sum it up in two blunt words.
“It sucks,” said Harrison,46, who farms more than 2,000 acres near Dauphin, Man.
Faced with low grain prices and rising input costs, Harrison wonders whether he’ll still be farming in a couple of years. He may quit, he said, if the farming economy doesn’t improve.
“We’ll see how things go,” he said last week. “If I’m not going to make any money, I might as well not take the risk.”
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Harrison had good cause for his comments. Analysts were using words like grim, ugly and bleak last week as the new crop year got under way. No one was predicting a rapid turnaround in the world grain market.
Initial payments announced by the Canadian Wheat Board are at par or below those of last August. The initial price for No. 1 Canadian Western red spring wheat is $130 per tonne, the same as it was a year ago. The initial payment for No. 1 CW barley is $85 a tonne, down from $95 a year ago.
“It’s just an ugly picture,” said Allan Johnston of Bid Ask Trade, a grain marketing company in Welwyn, Sask.
“I never dreamt it was going to be this bad.”
World wheat prices are the lowest they’ve been in over four years, said Canadian Wheat Board chief commissioner Lorne Hehn. He blamed European subsidies for driving the market down. Backed by direct support payments, European farmers are growing more wheat even though the world market is saturated.
Without similar support, Canadian farmers feel the “full brunt” through lower returns for the crops, Hehn said.
World wheat production in 1998 is estimated at 591 million tonnes, the second largest crop on record. That’s despite the fact Canadian farmers cut their wheat acreage by 18 percent this year.
Meanwhile, global durum production is expected to hit 32 million tonnes, also the second largest crop on record. That spells a drop in expected returns for durum wheat farmers.
With depressed values for wheat and barley and higher input costs, Hehn predicted tough times for Canadian farmers.
“For many of them, they’re going to be operating at a loss this year,” he said during a board news conference last week.
That grim scenario supports the argument for better safety nets, said Nettie Wiebe of the National Farmers Union. This spring saw a rash of farm auctions, Wiebe said, noting that many of those sales were for younger farm families.
“They penciled it out and it was losing them money. They jumped while they still had other options to go to.”
This will be the first year Canadian farmers feel the full effect of
losing the Crow Benefit subsidy, Wiebe said. With grain prices down, the cost of rail transportation will hit farmers hard.
“This year, we’re going to swallow the whole bitter pill without any water to go with it,” she concluded.
