New layers of challenge keep being thrown over farmers trying to run their businesses in Ontario this spring.
Wait, it actually started last fall, with a late and burdensome harvest, marked by unprecedented corn quality issues.
High levels of DON in corn across the province, but concentrated in unlucky pockets, meant some farmers had to sell most of their corn at a discount. Luckily we’ve cleared out most of that corn and the industry effort to do that was good to see, but it created a new layer of learning for many farmers and those in agribusiness.
You’d think that was enough for a year, but we’re into another whole new bunch of layers of complexity for farmers to figure out.
Farming has always been challenging and at the mercy of changes in weather, policy and the whims of consumers. The past decade, however, has been relatively predictable and decent. Crop yields have continued to climb thanks to continual improvement in genetics, equipment and expertise. Warm summers have pulled crops to record yields. We’ve been lucky enough to avoid any trade-disrupting livestock diseases. Global trade has operated under predictable rules that have mostly been favourable for Canadian farmers. I expect we’ll look back on the past decade with some envy.
Rarely have so many factors converged as they have in the past two years to disrupt the natural and trade environment for farmers.
It’s difficult to keep track of them all, and maybe most people won’t and can’t.
Generalizing is risky, and I constantly weigh what we print in our daily newsletter and in the newspaper against whether or not we have enough data to say what we do. Circumstances can change the next day.
Take the hog market for example. We almost need to have two paragraphs in any pork story to make sure all the disruptions to the markets and their complexities are explained. There’s trade issues with China, with effects both from U.S. and Canadian actions and reactions from China. There’s the spread of African swine fever and the market risks that come with it. Then there’s the newly proposed tariffs that American President Trump is threatening against Mexico due to illegal immigration arriving across the Mexican border. That’s taken a new kick to hog prices. And I won’t even go down the route of the impact of corn market turmoil on hog profitability.
The question is how to manage through the turmoil. There’s no doubt stress is increased significantly when there’s so much uncertainty around a business environment. The sad part in all this is that much of the turmoil is artificially created – an impact of billions of dollars based on the decision of the American government to use tariffs as a weapon, after the world moved beyond that mentality a few decades ago.
I still don’t understand why Trump would want to so disrupt his base of support among the farmers who have done so well with stable trading arrangements around the world. It’s likely that he doesn’t care, as long as he can follow the anti-globalization agenda that’s driving his government.
Yes, there’s a need to push China into better adherence to global standards, but has the disruption been worth it? Not in farm country.
How do businesses manage in such an environment where there are so many variables that can’t be controlled? Focus on what can be managed, on where you can exert control. Manage market risk as much as can be done. Consider diversification. And hope that the political environment and the physical environment both trend toward greater stability.