Maybe I’ve been writing about the field of agriculture too long.
At least it seems that way when I begin reading stories in the farm press suggesting the sector is slipping toward what some are suggesting are the worst of times.
Excuse me, but this is hardly a new lament.
I have been pounding out this weekly look at agriculture for three decades now. I have seen the days of farmgate blockades to thwart the auction hammer coming down on foreclosure sales. There have been tractor parades on highways to slow traffic to draw attention to the plight of farmers. There have been mass rallies in Regina and Ottawa to grab the ear of politicians in tough times of the not so distant past.
So when we talk of current concerns, they are no doubt worrisome, the sector has been here before.
The problem is an old one. Agricultural commodities by nature work on a supply-and-demand system. When supplies are tight and demand high, farmers do well.
Look back just a few years to China in the midst of an unprecedented economic boom and hungry for all commodities, farm products included, and prices jumped, many to record highs.
But everyone associated with farming has to realize what goes up, will inevitably come down.
The reasons are twofold.
The first is because farmers are very good at producing whether it’s beef, cabbages or canola. When prices rise farmers react by increasing production to capture the good returns.
But, in so doing, they can often glut a market, which has buyers lowering prices because they know they can find product.
And then there is the demand side.
China carried the commodity world on its back for a number of years, but the expectation they could maintain their growth numbers year-after-year moving forward was never reasonable.
So we now have over supply, a much more sluggish world economy, and farmers feel the pinch.
Certainly one difference today is the sheer size of farms in terms of putting in and taking off a crop. Add in the investment for land or new equipment and we are talking millions for the average farm.
But dollar amounts aside the situation is still one based on the old rules of supply and demand.
Of course the current clouds over the sector are tempered by those who look down the road to the potential of farming; the growing world population so more mouths to feed, which should ensure a bright future for producers. This too is hardly a new suggestion. Better times that will last have always been just a few decades away.
Yes, China’s growth hinted at the possibilities, and India, Africa, even South America, could certainly emerge economically, but would that override the basics of supply and demand?
It seems unlikely, so what lies ahead in the short-term will happen again, just as it has in the past.
Calvin Daniels is Editor with Yorkton This Week.
