Mixed bag for farmers in 2016; some optimism for 2017
By Tim Kalinowski, Staff Writer
Farmers certainly had a mixed bag of circumstances to deal with in 2016, and Craig Klemmer, Senior Ag. Economist with Farm Credit Canada, says while there were certainly several dark clouds, there were also some silver linings too.
“In terms of where we have come from and where we are going, in 2016 a number of challenges came into the industry,” states Klemmer. “We have seen livestock prices come down, and we have seen some commodity prices, in terms of grains and oilseeds, come down. That has created some challenges for people, but, on the other side, the Canadian dollar has continued to be supportive of our export markets. It has continued to be supportive of our commodity markets in western Canada, and allowed us to remain competitive.”
In terms of farm production “weird” might be the best word to describe 2016, says Klemmer.
“On the production side of things, we have seen some pretty odd weather in October that caused a number of challenges. And it really looked like we would have 20 per cent of the crop still sitting in the field, but, surprisingly, November had extremely mild weather and allowed for a number of those acres to dry up, and allowed harvest to progress.
“There are definitely some quality issues we are dealing with as a result of that, and that’s going to negatively impact profitability for a number of producers, but we did get a canola crop off. And we did get a fairly large pulse crop off. So things are quite mixed.”
Klemmer says now that most of the crop is in farmers are beginning to look ahead a little bit to what 2017 might offer.
“People have built up some good balance sheets the past few years, and people are overall financially in a pretty good position,” he says. “The challenges this year will, though, cause some adjustments to the way we make our decisions going into 2017. People are going to have to make some good decisions in terms of adjusting their rotations and considerations. Expenditures, for example— people may be watching a little more closely.”
According to Klemmer, while it is too soon to predict any dominant trends for 2017, there are some points of interest worth keeping an eye on.
“The U.S. Reserve is expected to raise interest rates in January 2017, and that’s going to have some upward pressure on prices on bond yields…
“We’re still sizing up the crop year in both Canada and the United States, and we are starting to see where those markets are coming into. On the livestock side of things we are seeing very high slaughter numbers in terms of hogs and cattle, and we are starting to see movements in prices.”
Staying informed, and creating a well-researched and sturdy marketing plan, will also be essential this year.
“Listen to see what is happening in the United States and around the world,” urges Klemmer. “Because it’s not just about Canadian agriculture. We are impacted by trends that happen in the States, and trends that happen outside of the North American borders.
“But chasing the market isn’t always the best thing to be doing. Having a long term strategy, when it comes marketing and crop rotations, has generally proved itself to be a good strategy. At the same time, no one can tell a person how to run their farm; every local situation, crop mix and solution makes for its own challenges that have to be solved.”
Klemmer says, overall, there is room for cautious optimism heading into 2017.
“When we compare this year to the long term historical side of things, things still remain fairly favourable; and that makes me cautiously optimistic. Good management skills are going to be important going forward here. We are working in a little bit tighter margins situation than we have been over the last few years where commodity prices have been extremely strong. But that is part of the cyclical nature of agriculture.”