GRAIN and oilseed producers, and those who make their living from those sectors, have good reason to be optimistic. Commodity prices have reached highs not seen in a long while and farmers likely stand to do reasonably well this year relative to the past couple of decades.
However, the growing season has barely begun and in many areas the crop is not even in the ground yet.
The same threats that always haunt agriculture – pests, weather, market fluctuations, high input costs – are there this year as well.
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The coming crop exists only as potential at this point. The need to maintain focus on agriculture’s long-term health remains as important as ever.
Part of that is the need to ensure the truth about farmers’ incomes reaches consumers. Higher prices for wheat, corn, canola, rice and just about every other crop have become the stuff of mainstream news coverage.
However, there have been few reports on the expense side. The break-even prices farmers must earn to cover expenses have been rising in lock step with commodities.
There are several reasons:
- Rail freight costs are scheduled to increase by eight percent Aug. 1.
- Fertilizer prices have soared. Since Saskatchewan Agriculture’s 2008 crop planning guide was produced in December 2007, nitrogen has risen 16 percent, sulfur 26 percent and phosphorus 100 percent. Numbers calculated by Manitoba’s Keystone Agricultural Producers are similar.
- Gasoline and diesel prices are at all-time highs.
- According to statistics released last June, the farm debt-to-asset ratio increased for the 11th consecutive year to 19.7 percent in 2006, a record of indebtedness compared to assets. Those debts must eventually be paid.
These numbers have prompted words of caution from farm groups and governments that farmers may not make out as well as some think.
It is vital that the public be kept informed on this, lest the misperception that all farmers will be rolling in piles of money becomes commonplace.
If agriculture loses public support, it loses funding for research and farm stability programs, as well as its place on the government agenda.
Support could become important down the road, because when commodity prices fall, input prices will likely not quickly follow, if at all, and margins will be squeezed.
A strong agricultural sector continues to require strong support from governments. In optimistic times, farm stability issues are easily relegated to the back burner.
However, safety nets, emergency aid plans, crop insurance and research funding remain as important to the long-term health of Canada’s food supply and farmers’ economic well-being as ever.
The breathing room provided by today’s higher commodity prices makes this the perfect time to build a war chest that will help agriculture in the future.
Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Ken Zacharias collaborate in the writing of Western Producer editorials.
