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Editorial: An uncertain future

Watching the financial markets these days can be as hard on the stomach as an early morning fishing trip with my dad.

Watching the financial markets these days can be as hard on the stomach as an early morning fishing trip with my dad.

It’s up; no, it’s down. It’s up; no, it’s down. It’s up; no, it’s PLUMMETED.

While I’m currently using denial and avoidance as a coping tool for dealing with my personal financial investments, in the real world – also known as reality – that just doesn’t fly. Especially when in a few short months, there’s another crop season to prepare for.

What exactly will the 2009 season bring? It’s bad enough that farmers are faced with the uncertainty of Mother Nature and the growing season; now they are also faced with an uncertain economic climate and credit crunch, fluctuating fuel prices and high fertilizer bills.

According to freelance writer Peter Mitham, who has penned an article or two in the past for Fruit and Vegetable Magazine, Canadian farmers should be preparing for a credit crunch.
“The best action plan farmers can take in such cases is to have prudent financial plan that acknowledges the impact deteriorating economic conditions may have on their businesses,”
he stated in a recent CBC Commentary for the Canadian Farm Business Management Council (CFBMC).

He spoke with Reg Ens, a farm business management consultant with Meyers Norris Penny in British Columbia, who suggests farmers monitor their operation’s cash flow and regularly review the outlook for future revenue and expenses. “It not only helps keep your farm business on track but it can also encourage your lender to view you in a better light,” Mitham wrote.

Another way producers can plan for the future is to revisit their nutrient management plans and re-evaluate crop rotations. This is the advice of a recent report on fertilizer price volatility by the George Morris Centre. The 19-page report, prepared by James Oehmke, Beth Sparling and Larry Martin, concludes that farmers are facing two major fertilizer risks: rising and volatile fertilizer prices, and growing demand for limited supplies. A recent report by The Canadian Press reflects this with Potash Corp. forecasting demand for product to “meet or exceed the availability of new supply” in the next five to seven years.

The George Morris Centre report suggests farmers consider different risk management strategies for managing fertilizer prices, including “pre-purchasing fertilizer, forward contracting, volume purchases either individually or in a group, and maintaining relationships with dealers based on price, service, and consistency of product.”

It may also be time for farmers to begin pooling their assets as they used to in the not-too-distant past. There’s an important crop resource coming out of the hind end of the neighbouring farm’s dairy or beef cows or pooling in the lagoon behind your cousin’s farrow-to-finish operation. Manure can be a challenge to manage safely and responsibly in fruit and vegetable production but, given the forecasted costs of chemical fertilizers, it may be an alternative route to take.