As a consultant / journalist / farmer, I’ve offered lots of opinions over the years. Looking back, some have been spectacularly wrong.
Farmers naturally want analysis of the current trends in the industry. But they also want to hear extrapolations in an attempt to understand how the future might unfold.
In the late 90’s, before PowerPoint presentations were reliable, I trucked an overhead projector to scores of farm meetings. One of my favorite pages listed the top ten uses for abandoned grain terminals.
You could use the side of a terminal for a drive-in theatre screen. You could use them for bungee jumping. You could grind them up into aggregate for use on gravel roads.
Those were the years of Saskatchewan Wheat Pool’s Project Horizon. New concrete elevators were going up everywhere. Other companies were also in the game and there were also lots of farmer-owned terminals being built.
I bought shares in a farmer-owned terminal, but when competitors built six new concrete terminals in the area, I didn’t think there would be enough export grain to see them all thrive.
As the big concrete and steel terminals went up, the old wooden elevators came down, but it appeared that the grain handling system was being dramatically overbuilt. After all, the big terminals need a lot of throughput to make them viable.
At the time, it seemed plausible that Western Canada was going to see reduced grain exports. Being land-locked, our freight bill to port position puts us at a disadvantage compared to most competitors. Farmland was being converted to hay and pasture because cattle were profitable and grain was not.
Besides, I reasoned, our crop mix was going to be more heavily weighted to specialty grains that wouldn’t go through large concrete terminals. And more of our grain would be fed to livestock or receive secondary processing on the prairies. That seemed logical given the end of the Crow Rate grain transportation subsidy.
The trouble with predictions is that you don’t know what you don’t know. Who could have predicted BSE in 2003 and the years of resulting turmoil in the beef industry? Even though profitability has finally returned to the cow-calf industry, the beef breeding herd has continued to decline.
Who could have predicted so many tough years for the hog industry? Rather than a top ten list for abandoned grain terminals, it should have been a list of uses for abandoned hog barns.
Western Canada’s largest success in adding value has been canola crushing. About half of the canola crop goes to domestic crushers. Still, there’s ample grain volume through the big terminals. Field peas used to be reserved for specialty crop operations, but many terminals now handle peas. Some even export red lentils.
Crop yields continue to trend upwards and we’re using more crop inputs than ever. The grain industry is enjoying its greatest profitability since the 70s.
There aren’t any abandoned concrete terminals. Anyone wanting to sell a terminal would have lots of suitors.
These days, farm audiences want to know the future of land prices. Are the increases sustainable? What will happen with interest rates? Will the growing world population and the increased purchasing power of emerging economies propel grain prices to new heights?
Definitely older and possibly more humble, my opinions are more subdued these days. There are lots of factors to analyze and pontificate over, but the future is often fraught with surprises that you can’t anticipate.