The Rural Voice, 1982-01, Page 9to keep the crop, in the hope of a price
increase in the spring, or to sell now so as
to minimize interest charges on their
loans.
Surprisingly, the number of farmers
hanging onto their crop is higher than
anticipated and some elevators had to
force farmers to sell at least some of their
crop instead of buying storage in order to
keep grain moving.
On the futures market the speculators
are buying slightly higher for the period of
June/July.
DAIRY, EGGS, POULTRY
These commodities don't need pre-
dictions on price, as that is governed by
formula pricing.
The future of the chicken agency is
somewhat in jeopardy at the moment
because of a quarrel about provincial
quota allocation, but it's unlikely Ontario
and B.C. producers will throw away the
baby with the bathwater.
SHEEP
The future of sheep production is still
uncertain. If Canadian lamb producers
take advantage of the present suspension
of imports of fresh and chilled lamb from
New Zealand, to set up an ordered
marketing system, sheep production
could return to a some semblance of
profitability.
WHEAT
The harvest in the USSR was much
lower than the government had predicted.
But up to now, sales to that country have
been relatively modest, partly perhaps
because large buys would have an
immediate effect on price.
But supplies are tightening and prices
are expected to stengthen as the year
progresses. Just the same, the USDA
expects prices to be below last year's
level.
U.S. farmers will receive US $0.15 a
bushel deficiency payment because of
this.
Winter wheat plantings are up this
year.
We have discussed the expectations of
the USDA because the USA, as the largest
wheat producer, effectively sets world
prices.
Futures prices at the Chicago market
are slightly higher lately.
However, there are reports that the
Russians are selling gold. This could mean
they are accumulating funds for buying
later in the year.
COSTS
The most bothersome problem facing
farmers today is the high rate of interest.
Because of the large investment and
cashflow of farms, Murray Gaunt said
recently that a one per cent rise in interest
rates created ten per cent more hardship
for farmers than for other small business-
men. It is a problem facing all farmers,
including those operating under supply
management. Most farms have more than
one enterprise and the surplus cow/calf
production from a dairy farmer is as much
affected by the cost of money than is the
pure beef farmer.
Input cost is greatly affected by interest
rates. If the Canadian government sticks
to its support for a high interest policy,
farm costs will remain high. That policy,
aimed at protecting the value of investor's
money, makes it more difficult to sell
abroad, but it keeps the price of imports
lower. It would be to the advantage of the
Canadian farmer if the dollar was allowed
to find it's true value. But that is not likely
to happen.
BEEF
The outlook for beef both from dairy
herds and from specialized producers,
isn't good. The Canadian Cattlemen's
Association says that while numbers of
cattle on feed are down, demand by
consumers is down too. The only reason
the price hasn't plummeted further is that
the decreased demand almost exactly fits
the decreased supplies. It appears that
there won't be any profit in the coming
year, unless this is provided by govern-
ment subsidies.
This is unlikely. Any subsidy paid in the
past has been a stop -loss measure.
An economic miracle is needed to put
money in the hands of the consumer. If
there is money they may resume buying
beef again.
The futures markets are steadily
dropping for all of next year. US numbers
are up slightly.
PORK
Number of hogs on the farm is only
down slightly in Canada. This. however,
doesn't affect price too much as the total
production is only about ten per cent of the
total market on which we operate.
Still, the high numbers coming to
market at the beginning of December are
puzzling. If the StatCan surveys are
correct, we should see a reduction of 3 per
cent coming to market in Ontario, or 2,500
less than the 80,000 we were getting used
to. However, we still see 85,000 every
week. So, either the survey was incorrect
or producers are selling their gilts instead
of keeping them for breeding animals. The
same puzzling game is played in the USA
where our prices are made. If indeed the
glut is caused by elimination of breeding
herds, we can look forward to considerably
stronger prices in 1982. The outlook
conference in Ottawa predicts 10 per cent
higher, but this will be largely off -set by
higher input costs.
The speculators at the Chicago futures
market have bid lower for pork futures for
some time.
The gloom and doom predictions seem
to have an effect on the speculators.
Gloom and doom predictions are always
better than sunny ones. They may have
triggered breeding stock disposal, which
would be good news indeed.
As you may have noted, I speak a little like an economist. On the one hand this and on the other hand that. One gets that way from
reading so many of their reports.
But whatever hand you take, a sharp pencil is the most essential tool the farmer has today.
He MUST know all his costs and where they are in his operation. The losing parts must be cut away or improved.
If crop yields are low, he must get a soil test. He must test the value of his manure to save on granular fertilizer, He must identify
problem weeds so as to use the proper herbicide.
Loyalty to a seed dealer who is a friend must take a backseat to buying the seed variety best suitable for his fields.
He must get advice from OMAF extension specialists if in doubt.
A cow/calf man expects 85 per cent of his cows to produce a calf. Some get 95 per cent. This can mean the difference between survival or
bankruptcy.
Some pigmen average 13 pigs per sow per year. Others have 21. Any hogman must strive for that 21, but most don't get beyond 18. The
difference between 13 and 18 can be the difference between survival and bankruptcy.
No one can know everything about all things. Just like the giant multinationals are not beyond admitting they need to hire knowledge
they don't have, so the farmer must go for help from OMAF specialists and accountants.
Good luck for 1982, and may only the good predictions come true.
THE RURAL VOICE/JANUARY 1982 PG. 7