Hear that? The silence, I mean. That’s the sound of contented Prairie farmers not clamouring for crop insurance or government relief. Abundant yields and record high prices for some crops have left them with granaries full of money this winter.
Their silence might also be tactful, given that Canadian farmers’ bounty has come in large part from the misery of their counterparts south of the 49th parallel. The American heartland suffered one of the worst droughts since the Dust Bowl of the 1930s, sending prices for many crops soaring. According to the United States Department of Agriculture, 61% of the country is in moderate drought, and 42% in severe drought. With poor snow cover and little rain even now, there is little hope the dessication will end soon.
By contrast, the heart of the Canadian Prairies, an area straddling the Alberta–Saskatchewan border, actually got more rain than usual in 2012. These good growing conditions generated the highest total crop tonnage in three years.
Normally, a big harvest would cause prices to drop, but instead the price of canola, to use just one example, rose roughly 50% over previous years’ levels. As a result, many farmers have some extra cash for winter holidays in the sun or a shiny new $250,000 combine. “It helped a lot to have that money,” says Smoky Lake, Alta., farmer Angela Semeniuk, who used some of her surplus to buy another 160 acres of land.
Even farmers outside the meteorological sweet spot had a good year. For Jody Klassen of Mayerthorpe, Alta., northwest of Edmonton, high grain prices helped off set an average crop. “The drought helped keep prices pretty high. It helped us turn a very mediocre year, yield-wise, into a decent year,” says Klassen, chair of the Alberta Canola Producers Commission. He plans to use the extra cash to pay bills after a tough 2011. “For us, it was a catch-up year,” he says.
“Overall, western Canadian agriculture is doing pretty well out of this price increase,” says Lynn Jacobson, a farmer in Enchant, Alta., and president of the Wildrose Agricultural Producers. The biggest contributor to this year’s high margins was canola, the bright-yellow flowering oilseed crop used to make oil, margarine, animal feed and biofuels. In 2012, western Canadian farmers seeded 21 million of acres of canola, surpassing the acreage for wheat (at 17 million) for the first time.
Klassen believes canola acres may begin to level off now that the federal government has eliminated the Canadian Wheat Board’s monopoly on the export of wheat and barley. The changes made last August mean farmers are paid cash for wheat and barley when they haul it to the elevator instead of receiving a series of payments over roughly 18 months. “It makes wheat a more competitive crop,” he says.
With no sign of grain and oilseed prices falling, farmers have an embarrassment of choices to make in the coming years over what crops to grow. Whether they will continue profiting as they did in 2012 remains to be seen.