Taking the big view
“He can’t see the forest for all the trees.” It’s an old saying, but it often applies to agriculture. We sometimes make this mistake when we try to access grain markets. We focus on one factor rather than the big picture. That’s happening with the debate over canola acres. Some observers are predicting a big increase in Prairie canola acres next year, while others say that there is again going to be so much unseeded land that canola acreage won’t rise as much as expected. This is an important factor for canola prices, but it’s only one piece in a much larger puzzle. What will canola yields be on the land that is seeded? Look at all the increased domestic demand from new crush plants. What will happen to the soybean crop in the U.S. and in South America? What about the value of the Canadian dollar and what about the health of the world economy given the economic difficulties in Europe? Predicting the future of canola prices involves far more than just next year’s Canadian acreage. Another example is fertilizer use. Some producers are planning to cut back due to rising fertilizer prices. While fertilizer is more costly than a year ago, most grain prices have increased proportionately. Rather than focusing on the cost, a cost-benefit analysis would be a better tool for decision making. I’m Kevin Hursh.