Road Warrior

Perspective on Canadian agriculture

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I had my fill of winter weather on a recent visit to Western Canada to speak to various producer groups and consult with 20 individual producers and agribusiness groups. Yes, the Alberta Clipper combined with U.S. moisture caused blizzard conditions during my stay. My good friends at RBC Royal Bank of Canada, with whom I have worked for almost a quarter of a century, were fine hosts and conducted outstanding educational events. The following are a few points I learned from our good neighbors to the North.

  • First, a major snowstorm did not hold attendees back. In many cases, while it was -40°F in blowing snow, a record attendance was the outcome. I have a great deal of respect for Canadian producers and their quest for education and learning.
  • It was interesting that a record amount of soybeans was grown in the Prairie Provinces this year, where just 10 years ago it was only a dream. The advances in seed technology have had a major impact in this area.
  • One producer averaged 173 bushels of corn per acre on over 5,000 acres. Some of the acreage was irrigated. That land would sell for approximately $4,000 per acre and cash rents are $200-250 per acre. Compare this to the high cost of land and rent here in United States!
  • The pipeline is full of corn, soybeans and wheat in Canada. Many are looking south to the United States to market their grain. Many producers had less than 25% of this year’s crop forward priced. Storm clouds are on the horizon, particularly for those carrying a considerable amount of debt and those who do not have a forward pricing program.
  • While visiting with the Canadian producers, I found that many feel their agriculture economy lags the U.S. agriculture economy by one or two years. They are maintaining a close watch on land values and cash rents in the Upper Midwest, as well as the U.S. general economy as a signal for times that may come to Canada.
  • To my surprise, quite a few foreign producers who have immigrated to Canada from China, Europe, and South Africa were well represented in my audiences. Many feel that Canada has given them a new start.
  • Supply management in dairy and poultry is a big issue in Canada given global trade agreements. Milk marketing cost is $30,000 per cow and similar costs are experienced in the poultry industry. This has created a barrier to entry in these industries, but others state it provides a stable supply of products to consumers.

These are just a few points from my journey above the 49th parallel. I strongly recommend a trip to Canada because there is much to be learned from our neighbors to the North.

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Dave Kohl is an ag economist specializing in business management and ag finance. He can be reached at sullylab@vt.edu.

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