Crystal ball gazing is always wrought with dangers, but it’s easy to predict a turbulent year ahead in Western Canadian agriculture.
Lots of ink spilled over the CWB changes. Suffice to say that the marketing change ahead will require many adjustments by farmers and the entire grain industry.
Overall, we’re heading into a tougher grain market. The world economy has big challenges and grain stockpiles have been gradually rising. Although still pretty strong from a historical perspective, prices have slipped.
As we do our cropping budgets, best to assume a lower price for most commodities as compared to what we realized in 2011.
In contrast, cattle prices are expected to remain strong as the cow-calf sector enjoys a long-awaited return to profitability.
For both cattle and grain, soil moisture levels are a concern. The areas which faced flooding in the spring still have saturated soils at depth, especially on land that wasn’t seeded. For the rest of the Prairie region, the well below normal precipitation since the fall could be a harbinger of problems.
There’s lots of time for conditions to change, but most of the Prairie region will be relying on timely rainfall rather than soil moisture reserves for 2012 production.
Market access battles will continue in the year ahead. A Low Level Presence (LLP) policy is needed around the world so that minute quantities of a GM crop can’t be a barrier to trade. If a GM crop is fully registered by a couple of countries with recognized standards, it’s only reasonable to allow trace levels of that crop within other grain shipments.
With more GM crops set to come on the market in the years ahead, LLP will become increasingly important. As science has advanced, you can seemingly find trace amounts of anything anywhere. Regulatory authorities need to concentrate on genuine health and safety risks rather than GM witch hunts.
Trade authorities have had to deal with all sorts of other barriers in recent years. China had to be convinced that selenium in Canadian pulse crops was a good thing for human health. However, the Chinese continue to be concerned about blackleg in Canadian canola.
Mexican officials continue to restrict Canadian canaryseed due to inexplicably tight tolerances for weeds such as wild buckwheat. India has had some strange ideas about the fumigation of Canadian pulse crops. And Europe has had a ridiculously low tolerance for glyphosate residue on imported lentils.
If recent history is a guide, expect more of these trade concerns to surface in the year ahead. And expect environmental issues to become increasingly important in the marketplace.
Europe and the U.S. only want biodiesel from crop production that meets certain sustainability tests. Giant retailers such as Wal-Mart are moving to a sustainability index when deciding where to source their supplies. Increasingly, fast food giants such as McDonalds are dictating livestock care and handling standards.
Many consumers value labels such as “natural” and “organic” believing there are health, safety and environmental benefits. Unfortunately, perceptions often matter more than science. The consumer is always right, even if they’re misinformed.
It isn’t getting any easier to meet the needs of the marketplace and still make a dollar. It’s a rather safe prediction that we’ll see even more evidence of that in 2012.