When it comes to marketing farm produce Jean-Philippe Gervais, Chief Agricultural Economist, with Farm Credit Canada said farmers need to "think globally and act locally."
"You have to understand the global trends," he told producers attending Canola Day last Wednesday as part of Grain Millers Harvest Showdown in the city, "but you have to act locally.
"You have to be able to convert that to your bottom line."
Gervais said farmers have to be able to take knowledge of the global marketplace and use it to generate profit.
"It's what profit is in your pocket at the end of the day that really matters," he said.
To understand global market trends Gervais said a look at gross domestic product of countries around the world. Those which trend at less than three per cent growth in GDP per year are basically static markets.
Countries in Southeast Asia are trending higher than that showing "really strong growth." That growth is money that will be spent on commodities such as canola.
As an example Gervais said in Canada individual dollar income might go up by 10-12 cents and even if that is spent on food, much of it in restaurants.
"There's very little impact on farmers," he said.
But when incomes rise in poor and developing countries at higher levels, as is occurring in Southeast Asia much more of each new dollar earned is allocated to food. They want protein and that means more red meats and oilseeds.
China has been a leader in the growth over the last decade, although the growth had been in decline, said Gervais, adding it appears "in the last few weeks, months they've actually hit bottom."
Gervais said he was "fairly optimistic" China's growth will again be on an upswing.
Weather is always something to watch for farmers, both locally, and abroad.
The drought in the United States is bad, said Gervais, noting to get back to the 20-year average for moisture "they'd have to see weather conditions in the U.S. they haven't seen in the last 20-years."
The drought, among other factors, has led to tight stocks-to-use ratios for corn, which Gervais said is "such a huge driver of the entire grain and oilseed complex."
With lower stocks, and higher demand, in part from the fuel sector, prices for corn are higher, and wheat and barley prices have been dragged higher as a result.
Looking across the cropping spectrum; wheat, durum, barley, flax, canola, lentils, "everything is fairly positive," in terms of price looking ahead to 2013.
The higher prices have driven up net farm incomes at a rate Gervais said "is nothing short of spectacular actually."
Good prices have supported an increase in farmland values moving steadily up, said Gervais. He added that should continue "as long as interest rated do not increase too quick."
There are other things farmers need to monitor internationally too, starting with the economic situation in Europe, offered Gervais. He pointed to Greece as an example where 50 per cent of those 19-24 are unemployed.
"They're far from a solution in Europe, so it brings volatility," he said, adding that can get worse "if we have to live with this for a long time."
The United States also faces some huge challenges, said Gervais, the day after that country's presidential election.
"There was an election yesterday and nothing changed," he said, adding he gives the U.S. government "all of five days being rosy, rosy," before they need to offer up some solutions to prevent their economy from "falling off the cliff."
Gervais explained the U.S. is at the threshold of their debt being 90 per cent the size of the economy.
"Anything above that (90 per cent) that really starts to reduce the size of your economy," he said.
Gervais said if the U.S. fails to find solutions, it would be "bad for the entire world economy."
The Canadian situation is better than that of the United States, but there are concerns here too, said Gervais.
"We have an issue and that's consumer debt," he said, adding the only thing that has buffered the situation is that net income has grown "in step with growing debt."
Still consumer debt levels in Canada are basically "dead even with the U.S.," said Gervais.
One interesting factor in Canada is the way business has reacted in terms of their earnings.
"Businesses in Canada are sitting on a record amount of cash," said Gervais. "That says a lot about what business feel about the world economy. He added that is not good for an economy. " We have to have these businesses spend."
The money retention is unusual given low interest rate returns. Gervais said the mandate of the Bank of Canada is to hold the inflation rate at "around two per cent."
As a result "we're not likely to see interest rates go up much, at least until late next year," he said.
The Canadian dollar is also a factor in farm commodity trade.
Gervais said at present the value of the Canadian dollar "is in lockstep" with oil prices. He said he expects "the Canadian dollar to come down a little bit," but only likely to the par range with its American counterpart.
