AgWired

A Professor from Saskatchewan, Canada shook the farming world a little when he said ship up or shape up, or the family will go the way of the dodo bird.

Professor Hartley Furtan has defined the problem of the grains and oilseeds sector and thrown out a challenge to the public what they want to do about it. The problem is not over production, nor inefficiency, nor even gross farm income. The issue is low grain prices and high input costs leaving a small or even negative profit margin, says C.M. (Red) Williams, President, Saskatchewan Agrivision Corporation in his Monday Memo.
“Furtan suggests that one solution is to do nothing. With predictions for a number of years of low grain prices the result will be a decrease in production and a growing social problem for those farmers that were depending upon the sale of land for their retirement,” says Williams. “On the other hand, if some method of providing an assured income is developed, then the Canadian taxpayer needs to understand and support the approach.”

Out of all the industries that struggle from time to time, the reason why the grains and oilseeds industry should be singled out for special attention is quite direct. There is about $85B of GDP that depends directly on a supply of grains and oilseeds. The industries stretch from cattle feeding to flour milling. These industries have already suffered from the variability in grains supplies but would shrink or move to the U.S. where supply and price are predictable.

Now, there is the issue of how to support the grains and oilseeds industry without unnecessarily inflating production, or bringing down the wrath of the WTO. CAIS allows for support of income up to 70% of some base, but it is the remaining 30% that needs attention. The cost is about $3 billion, says Williams.

Siemens Says

A day doesn’t pass by where someone isn’t reporting on trade agreements and trade negotiations. A farmer commentator sent me this piece on what he thinks trade should be. Rolf Penner raises hogs, grain and special crops at Morris, MB.

“While any kind of a trade deal is a good deal, some are better than others. Everyone seems to be getting on the Bi-lateral bandwagon lately thinking that we can do better with them,” said Penner. “Those people are wrong. The Canadian marketplace is only 30 million people, peanuts in Global terms. Moreover, we are the number three exporting country in the world with almost half of our GDP coming from exports: That means we are highly competitive on those products. The U.S. has 300 million people and heavily import dependant, there is a reason people want to get into that marketplace.”

Admitting trade is a two way street, one has to get something, but also offer something in return. The Canadian marketplace does not have that much to offer. “That is one reason why multi-lateral agreements like the WTO ones are far more promising because we can team up with other countries to work on market access into those big global markets,” he said. “Bi-laterals are good, but they are no substitute for multi-lateral agreements.”

There’s one other case in point. When relying so heavily on a single bilateral trade agreement, for instance like lumber, and the giant doesn’t adhere to it, we have a giant problem: Economic withdrawal.
In my opinion, let’s shoot for the big one, the WTO and see if we can’t be a small fish in a big pond.

Siemens Says