The easiest and cheapest way for the grain industry to get better rail service is to provide railways with a better idea of what’s coming, says an agricultural economist.
Richard Gray, a professor in the University of Saskatchewan’s bioresource policy, business and economics department, said Statistics Canada has a poor track record of forecasting crop size.
“I think we can all agree that the 2012 and 2013 public crop estimates were pathetic,” he told delegates attending the university’s 2014 Grain Handling and Transportation Summit. “They weren’t even close.”
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Gray believes Statistics Canada is too reliant on survey results, which can be misleading.
“We’re taking farmers’ opinions and windshield surveys and aggregating that to a public announcement of what the crop was,” he said.
Statistics Canada’s July estimate of principal field crop production was 80 million tonnes, which was bumped up by five million tonnes in the September estimate and another 10 million tonnes in November.
Gray believes there may have been more than just bad guessing behind last year’s conservative July and September estimates.
“I think perhaps there was some political worries over announcing the big crop before they’re sure it was there,” he said.
The problem with the conservative estimate is that the grain handling and transportation sectors were ill equipped to handle the extra 15 million tonnes that materialized.
Gray’s proposed solution is for Statistics Canada to hire 40 professional agrologists to spend two days every two weeks measuring yields in fields across the Prairies and publishing production estimates every second Friday during the growing season.
“We can’t rely on farmers to guess what the size of their crop is. They’re not good at it. I’ve been a producer myself and I’ve been fooled about that a few times,” he said.
“You won’t fool a professional agrologist as easily.”
Gray believes Statistics Canada could spend less than $1 million to help answer a billion dollar question.
Chuck Penner, an analyst with LeftField Commodity Research, likes the idea.
“More information is always better,” he said.
However, he wouldn’t want it to replace the surveys, which are the best available option for estimating acreage and production despite one inherent flaw.
Growers tend to under-report their yields because they don’t want the prospect of a big crop to weigh down prices.
“It has almost become a bit of a game,” he said. “I understand their motivation. I get that.”
Penner said the agronomists’ estimates could fine-tune the survey results so they better reflect reality.
He offered another suggestion based on a technique used by his former employer, United Grain Growers, which used to survey the people who work with farmers, such as elevator managers and agronomists. They have a good handle on how crops are developing in their region, Penner added.
Talking to 100 elevator agents who have each spoken to 100 farmers provides a good representation of grower views on their crops without the “noise” of farmers trying to mislead statisticians.
“It was not a bad system.”
There is also a move afoot to rely more heavily on satellite data. Statistics Canada is contemplating replacing its September survey with satellite-based production estimates.
Penner isn’t keen on that idea because satellite-based yield models don’t deal well with weather anomalies such as last year.
“What we saw last year was that they were even further out of whack than what the Statscan surveys were saying,” he said.
