Life-changing decisions being made on Sask. farms
Kevin Hursh, The StarPhoenix
Published: Wednesday, April 02, 2008
It’s a time of life-changing decisions for a lot of farm families. The economic assumptions in agriculture have been dramatically altered during the past year and producers are reacting accordingly.
More than the usual numbers of young people are coming back to the farm. This isn’t based on any official statistics — just anecdotal evidence from talking to a lot of producers.
“Our son is coming back to farm with us. He’s bought a bit of land and we’re renting some more land this year.” This kind of story is much more common this spring.
The economics of grain farming haven’t looked this positive in decades and it is convincing some to take the plunge and return to the family operation.
That often means buying or renting more land to make it viable for Dad and Mom as well as the next generation. With more land comes the need for larger equipment. There are long waiting lists for many types of new equipment, so there are all sorts of deals happening for good, used farm machinery.
Lending institutions are doing a brisk farm business for farm land, machinery and operating capital. It helps that interest rates are low and have been dropping.
There’s no guarantee how long good grain prices will last. Futures markets have seen unprecedented volatility, but there continue to be opportunities to lock in attractive prices for the crop year ahead.
There’s also no guarantee input costs won’t continue to increase and could dramatically squeeze net returns in the years ahead. While there’s no certainty, there is optimism the next few years could be good ones to be growing grain.
There are also more farmers than usual exiting the grain business. Despite the bright outlook, there are a massive number of auction sales this spring. If you were looking to end your farming career, now is a great time to get good value for your equipment and land.
For many farm operations, there isn’t a next generation interested in continuing the tradition and there is now an opportunity to leave with more cash than seemed possible just a couple of years ago.
While these are optimistic times for grain, livestock producers are looking down a long dark tunnel searching for some rays of hope. For those in the cattle business, these are tough times with even worse returns than during the years of the BSE crisis. Many mixed farms with both grain and cattle are letting the cattle side go.
In addition to the dismal economic outlook for beef production, labour availability is an issue. Producers in their 60s are often deciding to reduce their workload by getting rid of the cows while keeping the grain side of the business.
There are also producers who have determined off-farm income makes more sense for them than staying close to the farm to look after a relatively small herd of cows through the winter.
The number of family farm hog operations has dwindled rapidly over the years and with the terrible losses currently facing that industry, smaller family run operations are an endangered species.
Producers who leave the hog business now are unlikely to return when profitability finally returns to the sector.
As time proceeds, statistics will eventually become available to confirm all these trends. Farm debt will be up from all the new loans. Land prices will be stronger. Beef and hog numbers are going to decline.
Behind the statistics are the lives of farm families. A dramatically altered economic outlook is encouraging major changes in who will be operating farms in the years ahead as well as how they will be run.
Kevin Hursh is a consulting agrologist and farmer based in Saskatoon. He can be reach at kevin@hursh.ca.
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