Market outlook favours Canadian farmers
Wednesday, January 19, 2011
by KRISTIAN PARTINGTON
High commodity prices and a growing global demand for quality beef are some of the factors driving a sense of hopeful optimism in Canada’s farm community, which has struggled for years with red bottom-lines. But Larry Martin, senior research fellow at the George Morris Centre, a Guelph-based independent agri-food think tank, warns the good news of today may well be a prelude to the serious challenges of tomorrow.
Global meat consumption has tripled in the last 15 years as incomes rise in developing nations, he said, and this trend shows no signs of reversal. While Canadian livestock producers stand to benefit from this surging demand, sustainability of meat production for the global market is a real concern.
“I think we have no idea how important and how fundamental this shift in demand is going to be,” said Martin. As resources continue to dwindle in other regions, Canadian producers, with an ample supply of water and land, can fill a void. To do this, continued research and innovation and a more sensible regulatory framework to help boost lagging Canadian productivity, he said.
“Government organizations have never been blessed with huge amounts of wisdom and foresight,” Martin said, noting the recent decision by Canada's Natural Sciences and Engineering Research Council's recent decision to eliminate food production from its list of priorities. He also suggested decisions by governments across the globe to subsidize and support bio-fuel production have helped to boost commodity prices, which could result in a food crisis worse than what the world experienced in 2008.
“We've got this increase in food demand happening at the same time as we've got the policy-made markets for ethanol and bio-diesel increasingly eating up corn supply,” said Martin. “We're perilously close to disaster and until we tip over that edge to disaster, it could be good times for farmers.”
While the global supply challenges for commodities and livestock will continue to mount, forward-thinking producers stand to benefit, and from a Canadian perspective, “it's all positive,” he added. “There'll be bad times and lower prices and there will be more price volatility . . . but in general, this is a really good time to be investing in agriculture.”
Jack Holland, president of the Peterborough County Cattlemen's Association, said the picture isn't quite as rosy for beef farmers as recent reports might suggest. The same influences Martin cites as driving the rising price of corn cut into any gains made by beef farmers, he said.
Holland owns a cow-calf operation just outside of Peterborough. “The situation is improving,” he said, “but it’s got a piece to go yet because our costs have gone up so much.
Despite recent claims by Ted Haney, president of the Canadian Beef Export Federation that beef farmers returned to profit in 2009 and 2010, “I don't think there's a whole lot of enthusiasm around here in the beef business as of yet,” Holland added. “I'd like to see where he gets those numbers from.”
Kevin Suurd, who grows corn, soybean and wheat near Cavan, Ontario, about 20 minutes outside of Peterborough, sees an opportunity to experience positive returns in rising commodity prices for him and his colleagues.
But, “as the prices go up, so do our input costs,” added Suurd, who is also president of the Peterborough County Federation of Agriculture.
“I'm sure we won't see these prices forever but I hope we can see them around for a little while,” he said. “I'm sure there's a bit of a bubble caused by speculation . . . and we might see this for maybe a year or so but then we'll be back down to the $4.00 (per bushel/corn) range.” BF