Planting decisions

“A decent amount of Canadian canola oil goes into the U.S. for biofuels, so this is the crop that could be impacted if there is a U.S. trade issue,” says Darren Bond, a crops farm management specialist for Manitoba Agriculture.

Most producers’ acres are locked in due to rotation requirements and, depending on the producer, only 10 to 20 per cent of their land could be considered swing acres, he says.

More important than U.S. trade when switching acres between crops is high fertilizer costs, which were high even before the Middle East conflict, Bond adds.

Leigh Anderson, a senior economist at Farm Credit Canada (FCC), says that farmers are talking with their agronomists and crop input suppliers to plan these decisions.

“These plans could include changing what crops they plant, adjusting fertilizer use or revising yield targets that make economic sense in the current environment,” he says.

Fertilizer

Bond says how producers manage fertilizer this year will be key to their profitability. Effectively using the 4Rs (right source, right rate, right time, right place) will ensure getting the most out of fertilizer.

“There is a difference between being cost effective and cheap,” Bond says. “Cost effective is where every decision is analyzed and only outputs that provide an adequate return receive investment. Cheap is just cutting expenses because something seems too expensive.”

Taking steps to achieve maximum yields, while cutting expenses that provide little to no return, will be the keys to success in tight margin years, says Bond.

Expanding operations

Bond adds that whether producers pursue or hold off on expanding acreage will largely depend on their management and equipment capacity.

“If there is capacity that is currently not being used to its fullest potential, then expanding acres makes sense,” he says.

High costs and tighter margins tend to result in less land sold.

“Landowners may choose to rent out acres for a few years and wait until better margins return before putting land on the market,” Bond explains. “Producers may choose to rent land over purchasing it because the cash outlay is much smaller, and land rental contracts are for much shorter durations than a mortgage from a land purchase, leading to much less risk with land rental situations.”

Anderson adds that purchasing land in 2026 will come with careful consideration of price and timing.

“Some operations will prefer to wait and see where land values will settle while others may move more quickly should adjacent land become available, or simply because it fits their strategic business plans,” he says.

Producers should be aware of the external environments that can affect their businesses when it comes to deciding whether to buy or rent more land, but that shouldn’t be at the top of the list.

“Their focus should be on things they actually control, like marketing grain, managing equipment costs and understanding their costs of production,” Anderson says.

Livestock operations

External factors will affect livestock operations as well, but more so by weather than economic news, Anderson says.

“Cattle producers are awaiting spring weather to see pasture and hay conditions which will impact their ability to expand,” he says. “Meanwhile, the hog sector has faced a challenging winter for disease pressures, which has pressured supply.”

Anderson notes that Canada’s livestock herd expanded according to the January 1 inventory estimates released by Statistics Canada. StatsCan reported the Canadian cattle herd rose on January 1, 2026, in the first year-over-year increase since 2018. During the same period, StatsCan data shows that Canadian hog inventories fell due to higher international exports and slaughter in both Eastern and Western Canada.

Bond notes that beef margins are currently decent, but there remains a two-fold challenge when it comes to expansion, especially in the cow-calf industry.

“One is that it is very expensive to expand one’s cow herd, whether it be through retention (lost revenue) or purchase,” he says. “Secondly is that cow-calf production is very labour intensive, with many looking at the time and dedication that is required for an expansion, and simply deciding it’s not worth it.”

Equipment replacement

Producers will also take a hard and long look before purchasing equipment so that they don’t overextend themselves, according to Bond.

Used equipment might be more attractive in a year like this. It comes down to a cost-benefit analysis between the two situations, Bond says.

“Used equipment comes with a lower price tag, which is the biggest attraction,” he points out. “However, new equipment comes with warranty, a longer lifespan and dealer support.”

Weighing these options, while considering risk tolerance levels, will be the largest element in how farmers choose to equip themselves. Some will decide to hold on to their iron for an extended period.

“That fear of overextending oneself will keep iron on the farm longer until the margins improve,” Bond says.

Thanks to falling commodity prices, higher operating costs and lower profits, Anderson says that farmers are cautiously approaching their equipment replacement decisions, placing greater emphasis on their price per acre equipment costs.

“Farmers are looking for cost-saving measures, including delaying purchases and planning to further reduce equipment costs,” Anderson says, adding that FCC expects overall used equipment sales to outperform new ones.

Click here to read part one in this series.

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“Both the market and policy volatility are unprecedented since at least (the) Second World War. It is not only unprecedented for Canada, but for the world,” says Larry Martin, principal of Dr. Larry Martin & Associates, an agri-food consulting firm.

Market influences

In a chart showing monthly ranges of U.S. corn futures contract prices since 1974, Martin points out larger differences from the peaks to the troughs during periods over approximately the last 15 years. Variations within a month are larger as well.

“This is a major part of the more volatile environment in which farmers operate,” he says, but notes that there remain periods of time — such as 2013 to 2020 — when they stabilize again. “We can put any commodity chart up and get a similar result.”

Martin cites increasing incomes of populations around the world as a major cause of market volatility, as well as a trend to trade commodities on a just-in-time basis.

The variation in canola prices over the last five years shows significantly greater volatility for farmers, according to Derek Brewin, professor and head of the University of Manitoba’s agribusiness and agricultural economics department.

He notes canola started in a trough around $450 per tonne ($10.23 per bushel) in the summer of 2019. It then climbed up to $1,200 per tonne ($27.27 per bushel) in May 2022. It’s moved around a lot since then, but generally on a downward trend until recently, Brewin says.

“But volatility does not always suggest an equal chance for devastating troughs and bonanza price spikes,” he says. “As a storable good, most grains and oilseeds see persistent price floors.”

If prices fall too low, buyers start to worry that producers will switch their land to other uses, Brewin says.

“But we occasionally see large crop failures on larger areas — North America in 2021 — and we get concern(ed) about supplies that identify consumers willing to pay much more than they normally do when they are just attracting supplies from the least demanding buyer that sets that floor price over time.”

Brewin says that the low prices of the summer of 2025 represented net losses to the average Manitoba farmer, and that current prices likely are a major relief. Drought concerns could send prices rising again, but a bumper crop could push them back down to last year’s lows, he says.

Crop price spikes damage livestock in the opposite direction, Brewin says.

“Every crop price spike represents a cost spike to the feed sector. I think they face a floor much lower than crops — especially if the herd is on a shrinking trend,” he explains. “When herds are shrinking, it represents a number of farmers forced out of business. We have not seen cropland abandoned the way beef herds have been dropping.”

Broken trade rules

Governments breaking trade rules they’d previously agreed to are also contributing to price volatility.

“Government actions are caused by politicians who either don’t understand or don’t care about the consequences of their actions,” Martin says.

He says countries agree to rules under the WTO and then break them, pointing to India as a notable offender “opening up trade when prices are high, then closing it when they fall. Canadian pulse growers felt that one.”

Canada is not innocent, nor is the U.S. — even before Donald Trump returned to the Oval Office.

“Biden and Trudeau broke all the rules on dumping when they shut off Chinese exports of steel, aluminum and EVs,” Martin says.

The Donald, however, takes rule breaking to another level: “Trump does it virtually every day,” he says.

War, fuel and fertilizer

Trump joining Israel to attack Iran only added rocket fuel to an out-of-control tire fire.

“The Iran war is unfolding against a global trading system already strained by Trump’s tariff,” said global financial institution ING.

S&P Global Inc., the parent company of S&P Global Ratings (previously Standard & Poor’s), said the war raised “farm-to-fork food inflation risks on fuel, freight, fertilizer disruptions.”

As Laura Rance-Unger noted in her piece, “Iran war catches Prairie farmers in the geopolitical crossfire — again”, over 40 per cent of a grain farmer’s annual operating costs go to fertilizer and fuel, and the conflict has made a war zone out of the Strait of Hormuz, where about 20 per cent of the seaborne oil and up to one-third of global trade in urea passes through.

The effects on fertilizer purchases

Through anecdotal information he’s gathered from discussions with Manitoba input retailers, provincial farm management specialist Darren Bond has found 80 to 85 per cent of Manitoba producers have either purchased their fertilizer prior to the fighting or locked in the price, thus insulating them from the price increases associated with the Mideast conflict.

“However, the impact will most likely be felt in the fall 2026 fertilizer application period, especially if the conflict drags out for a longer period of time,” warns Bond.

Another risk is that producers won’t buy fertilizer this autumn in the hope prices will decrease over the winter, and delay application until spring 2027.

“This could severely stress the supply network, potentially causing supply issues,” Bond says.

Another risk is farmers slashing fertilizer applications due to high prices.

“Broad-based cuts to fertilizer could result in disappointing crop yields. That’s why it’s very important to soil test and apply appropriate amounts of fertilizer,” Bond emphasizes. “Protecting yield will be what pulls many producers successfully through these tighter times.”

The effects on investment and growth

Global volatility and uncertainty make it much harder to undertake business forecasting and cause more volatility in production margins, which thereby make debt servicing riskier, Martin says.

“More volatility in prices, margins and incomes means people will likely invest less and growth will slow,” he says.

This can come from either internal or external capital rationing: internally when producers feel they need a higher return on capital before investing because of the extra risks; externally when lenders or equity partners go through the same analysis and decide to extend less capital, Martin explains.

“It also results in much more mental and emotional stress, which can affect decision-making,” he adds.

What else can farmers do?

Among the ways farmers can help themselves is to become ever more savvy with modern farming contracts.

“Without the CWB, grain companies are increasingly able to take more advantage of farmers by offering inferior contract terms, duration, price, blending, etc.,” says James Nolan, a professor in the department of agricultural and resource economics at the University of Saskatchewan. “What this means is that in the post-CWB era, I wonder if farmers should also be taught how to negotiate over contracts, which is a skill unto itself that can be improved through exposure and teaching — which we really don’t do.”

Another area for farmers to concenrtate on: staying well informed about world events that can affect their margins.

“The world is now so well connected that farmers can no longer rely on local or regional information to support their decisions,” Nolan says. “They need to try to stay current with global news and try to stay ahead of all business reports that can be reasonably and logically tied to future demand for foods and commodities.”

He concedes that can be a lot of information to process “pushing the farming industry even more towards larger and more complex operations in equilibrium.”

“We still don’t really know what comprises the minimum efficient scale for Prairie farming. Right now, I wonder if this level of cost minimization for commodity farming now lies well beyond 25,000 acres,” Nolan says.

Finally — if possible — build a financial portfolio that includes the stocks of so-called “opponents,” such as railroads and/or grain companies, he says. Why not hedge your risks by supporting the business entities that share the pie with you, he asks.

The post Growing your farm business in an era of economic volatility appeared first on Country Guide.

He says it’s not only the high cost of farmland that’s affecting young farmers’ ability to grow their land base, but strong competition in the rental market, which has elevated rental rates.

Lean years aren’t helping either.

“Lower grain and oilseed prices, and elevated input costs could result in negative margins on rented land or recently purchased land for most producers this year,” says Anderson.

Older farmers with strong balance sheets and sufficient cash flow might weather low profit margin years, but such margins are a far greater threat to farmers just starting out, he says.

Crop sharing option

Crop sharing could be a good option for young and beginning farmers, Manitoba Agriculture’s Darren Bond says.

Although unable to benefit from land appreciation, crop sharing does provide lowered upfront capital costs of land, while sharing the downside risks associated with below average crops with the landowner, says the provincial farm management specialist.

Of course, the producer also must share the upside potential of above average yielding crops.

“However, this is often a quite acceptable trade-off considering the other options of trying to be competitive with more established farms with acquiring cash rents and land purchases,” Bond says.

Levi Derksen, senior manager with Buckberger Baerg & Partners LLP, demonstrates how farmer and landlord split the rewards and risks with his example that compares $100/ac. straight cash rent versus a 20 per cent crop share.

During a good year, if a farmer under such an agreement grosses $650/ac., the landlord would receive $130/ac. But during a poorer year, during which the farmer is only able to gross $350/ac., the landlord would receive only $70/ac., Derksen explains.

“With rising rental rates, a form of crop share or bonus rent based on revenue targets helps the farmer pay higher rental rates to access land, without being locked into a long-term cash rental contract that is unsustainable,” Derksen says.

Hammond Realty founder Tim Hammond says that crop sharing could be an option for a young farmer, but an expensive one.

He helped an investor purchase land at $400/ac. and secure a crop share arrangement in 2007. The next three years were good ones, and the landlord’s crop share came to around $100/ac. At the end of those three years, the tenant wouldn’t do another crop share.

“It was way cheaper just to guarantee the landlord $60/ac.,” Hammond remembers. “He was thankful for the acres and opportunity, but once that arrangement served its purpose — helping a young farmer get going — he switched.”

How it works

Under a crop sharing agreement, the percentage that the landowner receives typically ranges from 20 per cent to 33 per cent, Derksen says. This also depends on the crop mix and the quality of the land, he adds.

He says crop share deals are more common on poorer land, so that the risk of a poor crop is shared. Crop sharing is also more common in southwestern Saskatchewan, where the crops are more variable due to drought.

But Derksen says crop shares are less common in the black soil zone that has more consistent crops.

The actual split of the crop produced occurs at the country elevator, which writes a cheque to the landowner.

“There are a lot of variations,” Derksen says. “Some farmers pay out their crop shares directly to the landowners without splitting grain at the elevator.”

Hammond says that the logistics of splitting grain produced on crop-shared land can be challenging.

“Does it go across a scale or do you ‘eyeball’ it in a bin?”

Hammond says tenants aren’t required to pay until either their crops are sold or harvested, and notes some landlords take actual physical delivery of the grain.

“Cash is typically tight with a young starting farmer, so this is attractive. He can use cash in spring for inputs instead of rent,” says Hammond.

Another feature of crop sharing are the contributions both tenant and landowner make toward growing a season’s crops.

Anderson explains that the landlord provides the land and a portion of the crop inputs — such as seed, fertilizer, chemicals and crop insurance —– while the producer supplies all the machinery, labour and remaining inputs.

Trust and “good, open and honest communication” are vital for a crop sharing agreement to work effectively, according to Bond.

“If superior communication and trust can’t be established, simple cash rental agreements are preferred,” he says. “Many farmers feel simple cash rents to be easier to understand and administer, making them much more popular.”

The kind of trust landowners extend to their tenants crosses some significant variables.

“If the farmer contracted some grain at a lower price and some at a higher price, which price will the landowner receive for their crop share?” asks Derksen. “Does the crop share land get less fertilizer, no fungicide application and is combined last?”

Who’s doing it

Crop sharing remains almost a niche part of farmland rentals.

Anderson notes the last Census of Agriculture pegged the percentage of rented land in Canada that was farmed under crop sharing at only 8%. He says crop sharing can be complex and boils down to an individual’s risk preferences.

“Rental agreements must be tailored to the needs of both the producer and the landlord. Explore using crop share leases as another tool to mitigate risk,” Anderson says.

Perhaps surprisingly, it’s not just young farmers getting into crop sharing arrangements.

“Historically, some retiring farmers wanted to still maintain some farm income and connection to the land after they retired from day-to-day farm work,” Anderson says.

Adds Derksen: “I see it across all age groups. Retiring farmers are more likely to want a crop share as they understand the risks and rewards of a crop share arrangement.”

The post Could crop sharing be a viable option for your farm? appeared first on Country Guide.

But for those who would farm in adulthood, it turns out that Millennials and gen Z, stereotypically maligned for not working hard enough, aren’t so different from past generations that endured and stood up to the many challenges of the sector.

Derek Brewin, the department head of the University of Manitoba’s agribusiness and agricultural economics department, saw the mindset among his agricultural students shift in 2007-08 when grain prices took off and essentially settled at new and higher levels.

“I think we see some creative changes when prices fall and margins get tight. Those that make it through those tough times can reap major windfalls, but they are normally short-lived.”

He’s also observed greater diversity among gen Z.

“Certainly, the falling farm population has meant our student body has changed with more international students and more urban students,” Brewin says. “That diversity may have been good for identifying new markets.”

Challenges

Enderle Farms in Hemmingford, Que., has been around for four generations.

Chad Enderle and his two brothers, Nicholas and Jassen, bought the farm in 2021 while in their early to mid-20s. Since then, he says the previous generation completely stepped aside, and the brothers changed their business’s focus away from the production, packaging and wholesaling of apples to simply orchard production.

He says there are fewer young farmers to pick up the torch left behind by past generations. Meanwhile, farms have grown in size and scale.

“To put it simply, millennials/gen Z have a lot more on the line when taking over a farm,” Enderle says. “Throw in the instability of markets, labour shortages, decreased margins and climate change. These have made ag businesses extremely vulnerable in terms of risk, especially for us young farmers,” Enderle says.

But despite these young farmers being aware of a rocky road ahead, and understanding the unpredictable nature of the industry, they still choose to endure.

“We just try to remember that if everything went 100 per cent according to plan, it wouldn’t be farming,” Enderle says.

Growth

Not resting on their laurels, the Enderles endeavour to keep current with new trends and how they can increase their farm’s efficiency.

As far as their general approach to farming goes, Enderle says he and his brothers have taken what they learned in ag school and tied it with their own experiences. In so doing, they’ve figured out what works best for them.

“Our younger generation does get a lot of bashing, but ultimately our knowledge on the farm is only a reflection of what has been taught to us or through experiences,” he says.

What’s been of great help on their farm is the previous generation giving them space to grow.

“(They) gave us confidence and gave us room to run with it, while stepping aside into more of a mentor role,” Enderle says. “That confidence in us is ultimately what gave us the boost and fueled our willingness to grow and be better. Kind of like taking the training wheels off when first learning how to ride a bike.”

New approach

When it comes to any newer farming practices they’ve adopted, Enderle allows that while there are differences from past generations, they aren’t trying to reinvent the wheel.

“It’s just that we have extra tools with tech, we see the industry from a different angle, and that there is room for improvement,” he says. “Our approach to minimizing our risks has been to try and run the farm like any other business, and less like the typical farm — even though that’s not the easiest thing to do in ag.”

Enderle says he and his brothers try to surround themselves as best they can with consultants and accountants to get the most comprehensive perspective on their financials. “What those numbers are telling us about the business, and how we can adapt and do better. It’s not always the most exciting thing to do, but it does put us in the best position to succeed.”

Unique planning strategies

Enderle believes that the approach millennials and gen Z farmers take to planning and decision-making often heavily revolves around using newer technologies at their disposal.

“Using tools like mapping and software to log and collect data help us so that we can track our inputs more easily,” Enderle says. “Similarly, as with our financials, we analyze those inputs, our yields and overall production costs to determine where there might be room for improvement out in the field, which will eventually reflect back to us in terms of profitability.”

He adds that benchmarking that same data is what will ultimately influence their future decisions and direction.

The post Gen Z farmers are leading the way appeared first on Country Guide.

But just because the latest whiz-bang creation can, for the sake of argument, combine, check the markets, and cook an egg, all while holding a conversation, doesn’t necessarily mean it meets your vision for your farm.

Considerations

Fortunately, producers aren’t so tempted by the latest shiny thing that they’ll bring home without running the decision to buy it or not to buy through numerous considerations that are part of their vision for their farm and its future growth.

Darren Bond, a farm management specialist with Manitoba Agriculture, says farmers should ask some questions: “Does this save them time in completing jobs on the farm? Does this allow them to do tasks more efficiently to save money? Will this purchase allow them to produce more or produce a higher quality product and increase profitability on the farm?”

Producers will also consider whether a potential buy can reduce risk on their farm.

“Generally speaking, if the new purchase doesn’t accomplish one of these goals, the purchase does not go ahead,” says Bond.

How farmers weigh these variables will vary from operation to operation.

“Depending on the farmer’s vision and risk appetite for their farm, they will usually weigh these goals differently and prioritize investments in equipment and technology differently than other farms,” says Bond.

Importance of a business vision

Bond finds most family farms have a common vision for their farm.

“While some family farms and farmers change over time, grow apart and split their operations to become independent of each other, the vast majority of family farms stick together and evolve together,” says Bond.

Equipment and technology purchasing decisions are just one part of the overall vision for success for the farm, he says.

“Considering how costly farming has become and the amount of risk involved, it’s going to become even more important that family members on a family farm have a unified vision and are on the same page from a strategic planning perspective,” says Bond.

Budget tightening in 2025

Farm Credit Canada (FCC) senior economist Justin Shepherd advises farmers to match their technology or equipment purchases to their farm’s vision where it makes sense for their budget.

“The key for farmers is to know their financial numbers and make sure that the operation can afford it today, even if the tech enhancements may support a longer-term vision,” explains Shepherd. “Producers need to always ask themselves: Do the tech improvements, whether its enhancing yield, product quality, or a reduction in labour hours, balance my return on investment?”

Bond says that with the sector heading for tighter margins in 2025, many farmers are likely to be even more careful when considering any new equipment or technology purchases.

“New purchases will have to have a positive cost-benefit outcome with respect to increased productivity or reducing overall costs for the purchase to be made,” says Bond. “Having a clear vision on needs versus wants is incredibly important for success in managing in a tight margin environment.”

FCC’s Leigh Anderson adds that with falling commodity prices, high operating costs and lower profits, farmers are placing a greater emphasis on their price per acre equipment costs. The senior economist says that farmers are seeking cost saving measures, which include delaying purchases and planning to further reduce equipment costs.

The overall effect will be weaker demand for large farm equipment, which will in turn pressure sales and prices in 2025, FCC predicted in November 2024.

But Anderson adds that as demand slows and prices adjust, there could be buying opportunities for farmers who are considering investing in new equipment.

“Lower interest rates, combined with strong revenues in select sectors, could make it a great time to invest in new equipment as it’s more affordable per acre,” she says, but cautions that a lower Canadian dollar versus the U.S. greenback could see higher imported equipment prices. 

Industry adjustments

Likely in the face of these anticipated changes, equipment makers are making adjustments,

Scott Garvey, a senior editor for machinery and equipment at Glacier FarmMedia, points out that John Deere and AGCO are starting to focus on the retrofit market, offering technology upgrades for existing machines, and thereby allowing farmers to get higher levels of digital capability and efficiency without needing to buy an entirely new machine.

Also, buyers can now get brands to unlock some high-tech features built into their equipment for a limited time, based on acreage or hours used, he says.

“That allows even smaller-scale growers to be able to afford more advanced features, such as spot spraying. We will see more of this in the future,” says Garvey.

The post The pros and cons of new technologies appeared first on Country Guide.

There are two stories here. Yes, the proportion of Canadian farm operators who are women has edged higher in recent years, but the total number of women who are farming is still on a downward trend, and is expected to keep on that trend unless and until numerous challenges are overcome.

Statistics Canada’s most recent census of agriculture showed women accounted for 28.7 per cent of all farm operators in 2016. That was up from 27.4 per cent in 2011, and from 25.3 per cent in 1996.

The number of women farming, however, actually fell.

And it may be even harder for women to farm as we get further into the 2020s.

The challenges remain

Pam Bailey, a co-founder and former chair of Ag Women Manitoba, points out high farmland prices make ownership a challenge for young farmers, and women in particular. 

Women were most prevalent among farm operators between the ages of 35 and 54 at 30.7 per cent in StatsCan’s 2016 census.

“If young farmers cannot own farmland, or even rent farmland — regardless of gender — then our rural communities and food systems will further suffer,” Bailey says.

But the hurdle can be even higher for women, Bailey says, because women face additional barriers including the gender wage gap, which also extends to the agricultural industry.

“Hence, if there is available farmland that can be accessed by a young farmer, a male young farmer will be not only more likely to have more wealth built up than his female equivalent, but have more leverage,” Bailey says.

Women also shoulder what she calls the “Mommy Tax,” meaning women face more wealth setbacks by just having children.

Additional uncertainties in the form of climatic challenges and the ongoing cost-price squeeze also make it harder for young farmers — who are more represented by women — to enter the ag industry, says Amber Fletcher, a University of Regina associate professor in the department of sociology and social studies.

“So gender and large political-economic factors intersect to create particular challenges for women in agriculture,” says Fletcher, who also co-authored a recent report prepared by Saskatchewan’s Women Entrepreneurship Knowledge Hub. 

Between 1996 and 2016, says Cally Dhaliwal, an economist with the strategic policy branch at Agriculture and Agri-Food Canada, the number of female farm operators declined by 20 per cent to 77,970, while the number of male operators declined by 33 per cent to 193,965. 

“As a result of the disproportionately smaller decline in number, the female proportion of all farm operators rose from 25 per cent to 29 per cent over that period,” she explains.

Who owns the land?

Federal statistics show, however, that farm women own less of the land they farm than male farmers. Men on average own over half the land they work. Women own just over one quarter.

In addition, few farms in Canada were solely owned by women. The 2016 census revealed 80 per cent of farms with women operators had two or more partners, and that independent women operators accounted for only 20 per cent of female operators. The proportion for independent males, however, was 50 per cent.

“As farms grow larger and require more capital, it may be even more difficult for women to become primary operators in the future,” said the Saskatchewan report, which examined the current status of women ag entrepreneurship in Saskatchewan in 2020.

The report claimed that also stymying women’s ownership is farm succession. The report and Bailey point out women don’t traditionally inherit farms.

Although some families have adapted to include all children in succession plans, the change hasn’t been universal, Bailey says. She’s personally seen capable women whose parents refused to see them as possible successors to their farm business.

“The fact that we still have that as a barrier is hard to believe, but it is a reality for far too many,” Bailey says

She predicts fewer women as primary farm operators “for the next while,” but adds this is intertwined with the fact the number of farms and farmers are in decline.

Gender roles 

The Saskatchewan report postulated men’s dominance in agriculture can at least be partly tied to gender roles on the farm. It said gender roles have positioned men as primary farm operators, with women as support labour.

The report found women most strongly involved in less visible operational tasks like farm management, marketing and accounting, whereas men’s most common jobs included seeding, spraying and combining.

But the report also found that gendered divisions of labour on the farm are weakening, and gender roles are changing.

“Men are becoming more involved in child care, while more women are performing traditionally masculine tasks, like operating equipment,” the report stated.

Julia Laforge, a post-doctoral fellow at Lakehead University, speculates the role that women play on farms “hasn’t changed that much, since women have always been involved in farm decision-making, accounting and labour.”

“What has changed are attitudes. Whereas that work would have been considered the job of the ‘farm wife’ and was considered unpaid labour in previous generations, now there is increasing recognition that this work is the same as their husbands’ and partners’, and therefore they are farmers as well,” Laforge says.

Iris Meck, founder of the Advancing Women in Agriculture Conference, and Glacier FarmMedia’s director of conferences, also believes women are receiving more recognition that they’re involved in every aspect of farming.

In the 1960s, her mother took care of the farm books, but also worked in the fields and looked after livestock. These days, technology has made it much easier to communicate what farm women are doing on the farm.

“All you have to do is go to any blog or social media platform, and you’ll see women in the combines, the tractors, looking after cattle, and livestock of all kinds,” says Meck. “We’re recognizing that they’re there, and they’ve always done everything.”

Opportunities

Ontario Federation of Agriculture president Peggy Brekveld predicts a continued decline of farmers across Canada, but a slow rise in women farmers, especially in regions that led the way with higher proportions of female operators.

British Columbia had the highest female proportion of farm operators in Canada at 38 per cent, followed by Alberta at 31 per cent, according to the 2016 census.

Women made up 29.7 per cent of Ontario farm operators in 2016, and Brekveld points out that while the number of farms in Ontario decreased by 13 per cent from 2006 to 2016, the number of farms with female operators increased by 12 per cent.

Laforge says her own research found that there is a growing number of young women farmers, especially on smaller, niche farms. They’re using direct marketing, including community-supported agriculture and farmers markets.

That aligns with the 2016 census, which reported female farm operators were more represented on farms specialized in serving niche markets, and on more diversified farms that produced a combination of products, such as fruits and vegetables, and/or poultry and eggs.

Interviews conducted for the Saskatchewan report supported the possibility that alternative forms of agriculture, such as organics and direct marketing, might provide a more inclusive environment for women in agriculture, says Fletcher.

“Due to the disproportionate financial barriers women experience getting into agriculture — which include the price of land but also the price of equipment and other inputs — less industrialized or less capital-intensive forms of agriculture might provide a more accessible route into the sector for women, or new farmers generally,” Fletcher says.

Role models

Brekveld thinks that positive examples will help bolster the number of women in farming.

“As young women see more role models who are succeeding in farming, on their own or in partnership with others, it becomes a natural career option to consider,” she says. The Saskatchewan report adds that role models and mentors can provide a crucial entry point into agriculture.

“Socialization is powerful: if young women are encouraged to enter the ag sector, they not only see it as a viable option, but learn important knowledge and skills along the way,” the report says.

Brekveld notes that support for farm women has grown, with farm magazines and social media outlets highlighting women in ag, and various groups providing networking opportunities.

Meck adds that after a couple of years of holding her conferences, she observed more articles about women in agriculture, including many more young women profiled in publications.

The report also highlighted emerging opportunities to help women in farming to access financing, mentoring, training and other support to build their businesses. Several programs offer support specifically for women entrepreneurs, such as Farm Credit Canada’s (FCC) loans for women ag entrepreneurs through its Women Entrepreneur Program.

Ongoing hurdles

Fletcher, however, says the report’s interview data revealed that sexism and stereotyping continue to exist for women in agriculture.

“There have been times where men have not wanted to deal with me because I’m a woman. ‘How could you possibly know as much as Joe about chemicals and cropping rotations and things like that?’” one interviewee said.

Others reported customers preferring to deal with the “man of the house,” and employees refusing to take direction from women.

“We need to ditch the stereotypes and include women — daughters, wives, daughters-in-law and sisters-in-law — in the conversation,” agrees Bailey.

She calls for major systemic changes that include gender pay equality in the agricultural industry, and rural child care that would allow for both partners to keep working.

“It would be nice to have a government program that supports women farmers specifically to address some of these major issues, but until these tremendously important barriers come down, it is only a band-aid solution.”

– This article was originally published in the April 2021 issue of Country Guide.

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It all sounds so very quaint, alright as a sideline for a hobby farmer or a way for the kids to pay for school. But nothing a real farmer would touch.

But that was then. It certainly isn’t now.

Statistics Canada reports that 13.6 per cent of farms across the country — or a total of 25,917 farms — had direct sales in 2020, up from 12.7 per cent, or 24,510, in 2015.

That’s roughly one farm in seven. More striking though, is the scale of some of those operations. Going direct has become serious business.

“Direct-to-consumer sales can be an attractive option,” says Connie Osborne, a media relations specialist with the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA). The farm’s costs go up because marketing is more expensive, but the payoff is that margins go up too because the output is being sold further down the value chain.

Direct deliveries

Farmers have long found ways to draw in hip urban crowds looking to source fresh food through options like farmers markets, on-farm stores, farm-gate sales, community-supported agriculture and direct deliveries.

The latter, in particular, has surged thanks to COVID-19, with farmers adapting new ways to identify and connect with customers.

In response to pandemic contact restrictions, 13,006 farms were direct delivering to consumers in 2020, compared to the 15,647 combined that had on-site farm stores, stands, kiosks, U-pick or farm-gate sales, according to Statistics Canada.

Ontario leads the pack

No province had more farms reporting direct sales that year than Ontario, with 7,697 selling some type of farm commodity directly to consumers. That was up 3 per cent from the previous census. Ontario also reported strong direct marketing relative to other provinces, following only Newfoundland/Labrador, British Columbia and Quebec with 15.9 per cent of its farms doing at least some direct sales.

Ontario topped all others in the number of vegetable and melon farms with 1,562. In fact, StatsCan says this farm category was most likely to report direct sales: in 2020, 52.2 per cent of farms in Canada that produced vegetables and/or melons also reported direct sales, up from 50.2 per cent in 2015.

“Direct-to-consumer sales is a growing opportunity for Ontario farmers,” says OMAFRA’s Osborne.

Almost all direct marketing farms in Ontario sold unprocessed products, and about 13 per cent also sold value-added processed products, she says.

“Roughly 43 per cent of these farms delivered products directly to the consumer, while about 69 per cent sold product directly to the consumer through on-farm facilities,” adds Osborne.

Citing a survey by Foodland Ontario, the province’s consumer promotion program, Osborne says Ontarians are becoming increasingly conscious of the source of the products they purchase, but they’re motivated by more than just local: 85 per cent of respondents said they were more likely to purchase locally if they knew it was benefiting local farmers.

The B.C. value question

B.C.’s high proportion of direct marketing — a third of its farms, approximately 5,300, report direct sales — can partly be explained by the province’s lead in some key demographics, including the highest proportion of farms with operating revenue under $10,000 at 33.75 per cent.

What’s key there is that direct sales make up a bigger part of revenue for smaller farms overall. In 2020, farms with less than $10,000 in sales accounted for nearly half (47.9 per cent) of farms in which direct sales represented over three-quarters of total farm operating revenues, StatsCan reported. (Farms with $2 million or more in sales accounted for only 0.8 per cent of farms in which direct sales represented more than three-quarters of total revenues.)

StatsCan’s ag census reported additional key demographics: B.C. also had the most fruit and tree nut farms at 3,036, and the third most vegetable and melon farms with 1,077.

Also important to B.C.’s direct sales sector is how consumers there view local food.

BC Agriculture Council (BCAC) research for 2021 surveyed 831 residents and found that 67 per cent cited food grown/raised in B.C. as an issue of importance that had an impact on their purchasing decisions.

Organic foods also provided a boost to B.C.’s direct sales. According to a September 2022 analysis from Organic BC, 39 per cent of organic consumers chose direct-to-consumer channels like farmers markets, community-supported agriculture, and farm stands for their grocery shopping.

Provincial government support was another contributor. The provincial government partnered with the BC Association of Farmers’ Markets to help direct farms pivot to online sales during the pandemic. Over 70 farmers markets launched an online virtual store in 2020, generating over $2.5 million in sales, with an additional $1.4 million in 2021.

Prairies

With their low population density, the Canadian Prairies lag behind the leaders in direct marketing, although Alberta might surprise a few with its number of farms reporting direct sales rising a quarter from the previous census to 2,608.

“I do know anecdotally from talking to different producers and small-scale processors here that demand during COVID really, really escalated,” says Mary Beckie, a professor at the University of Alberta’s School of Public Health. “Farmers and processors had to diversify their marketing platforms really quickly, so now we see a lot more marketing online, and I think that that’s really boosted sales.”

Manitoba led the Prairie provinces in the proportion of farms reporting direct sales with 6.9 per cent (up from 6.1 per cent), but the actual number of farms was lowest among the three at 1,013, an increase of 113.

Manitoba Agriculture reported that the province’s proportion, less than half the national one, could be attributed to its large number of oilseed and grain farms. Only 1.7 per cent of oilseed and grain farms in Manitoba reported direct sales in 2020, a lower rate than any other farm type.

Most direct sales in Manitoba were related to “unprocessed” foods, which included fruits, vegetables, meat cuts, poultry, eggs, maple syrup and honey, Manitoba Agriculture said.

The focus on grain and oilseed production explanation also applies to Saskatchewan, Canada’s breadbasket, which had a mere 4.1 per cent of farms reporting direct sales. Still, that was a rise from 3.8 per cent in the last census, with the number of farms climbing by 104 to 1,400.

Outlook for 2023

While the direct sector is growing, the outlook this summer isn’t as sunny.

Food inflation topping five per cent and worries about a global recession mean consumers are more price conscious.

“Consumers will continue to look for ways to save money on groceries, such as by purchasing in bulk, using coupons or buying store brands,” says Sylvain Charlebois, Dalhousie University’s Agri-Food Analytics Lab project lead and director.

“Food shoppers are very price sensitive,” agrees David Connell, a professor at the University of Northern British Columbia’s department of ecosystem science and management. “The average food shopper in Western society has a very strong penchant for ‘cheap food’ and for minimizing the proportion of the household budget spent on food; they are willing to compromise on food quality for a lower price.”

Some experts are more upbeat, however. The U of A’s Mary Beckie thinks the relationships that developed between farmers and their customers during the pandemic could have some lasting power.

Beckie also points to Feed BC’s success in developing partnerships to connect local food to local public buyers, like health care facilities and post-secondary institutions.

Connell does expect direct sales to increase, too, partly because the superior quality of local fresh food ties in with consumers’ health focus.

Also supporting the sector is the perception that the world is more vulnerable to disruptions of the global agri-food network.

However, disruptions in the food supply chain aren’t necessarily good news for local either, says Charlebois, since weather fears make consumers feel they need a broad-based supply to be secure.

Charlebois sees other challenges looming too. Biggest may be the consumer perception that direct-marketed food is more expensive. Sometimes, that perception is justified. Direct-market prices may reflect superior quality, choice or convenience. Often, though, direct is price-competitive.

Direct marketing also faces more competition from large retail chains and supermarkets, Charlebois says. “(They) are increasingly looking to source products from small-scale farmers,” which sounds like good news for the sector, but it makes life tougher for those outside the chain-store loop.

The post Direct farm marketing in your pocket appeared first on Country Guide.

In its nation-wide survey, the bank found 21 per cent of Canadians had started buying more local products since the start of the pandemic, and a total 74 per cent said they’d buy even more in future.

Canada’s Food Price Report for 2021 also revealed a powerful new market driver for local. “Many consumers reported they had shopped locally in their own communities during the pandemic to support small business, and also because locally sourced food supply chains — especially in-season fresh produce — are less susceptible to border closures, trade disputes, and facility closures due to labour shortages,” the report stated.

It sounded like full speed ahead for local. But it hasn’t proved to be that simple.

Going deeper, a May 2021 survey from Dalhousie University’s Agri-Food Analytics Lab (AAL) found that while 75.2 per cent of Canadians wanted grocers to carry more local products, only 47.4 per cent intended to buy more local.

[RELATED] Local heroes

In other words, Canadians like the idea of being able to buy local more than they like actually buying it.

A June 2022 AAL study then found that when it combined its numbers for Saskatchewan and Quebec, only 17 per cent of respondents prioritized local foods for most of their meals every week.

The most important reasons those 17 per cent gave were to support farmers, the local economy and environmental sustainability. Very few respondents believed local foods were higher quality, more nutritious, more affordable, or even safer, the report said.

To AAL director Sylvain Charlebois, the take-home was clear. Canadians didn’t see that local foods could deliver more value to them as consumers, which meant that if the category was going to keep growing, local’s image needed serious work.

Lack of data

Consumers overall are price sensitive, and one reason why local’s share of the food market grew during the pandemic is that some consumers had higher disposable income, says James Vercammen, economist at the University of British Columbia.

But, Vercammen also says sales of local food in supermarkets didn’t change significantly during the pandemic. Instead, he concludes the rise in local’s market share reflected more buying outside of supermarkets. And that isn’t a large market.

“So I would be surprised if the market share of local food has risen by a significant amount during the pandemic,” Vercammen says.

Inflation

Canada’s economic outlook may also be tough news for local. “If people lose their jobs over the next couple of years, it’s going to be very difficult to engage them in local foods, because it’s all going to be about survival,” says Charlebois.

That runs counter to previous AAL surveys that concluded young consumers are prepared to fork over more for locally grown produce. A 2020 study found over half of Generation Z willing to pay a premium greater than 10 per cent for locally grown produce, with only 15.9 per cent stating that they were unwilling to pay any premium at all.

[RELATED] Home field advantage

Today, those findings have to be taken with a grain of salt as inflation forces buyers of all generations to reconsider their food buying decisions.

Food inflation ran over 10 per cent in 2022, and the most recent Canada’s Food Price Report predicts a five per cent to seven per cent food price increase in 2023, with the largest rises in vegetables, dairy and meat.

“These new generations never lived with high interest rates,” Charlebois points out. “It’s a wait-and-see scenario.”

Smart shoppers

Shoppers are tightening their food budgets, says Canada’s Food Price Report 2023, which means they’ll adopt strategies like buying more frozen instead of fresh fruits and vegetables as well as less premium meat.

That’s negative for local, and UBC’s Vercammen adds that with ongoing pressure on household income due to food price inflation, plus higher debt payments because of interest rates, the trend may be persistent.

“Apparently consumers are increasingly switching away from national brands towards less expensive store brands,” Vercammen says. “This makes me think that consumers will also be switching away from relatively expensive local food over the coming year.”

Local food producers will be under pressure to keep their offerings as affordable as possible, Charlebois agrees.

And local faces other challenges too. Even in B.C., the birthplace of the local food movement, there are barriers that go well beyond current economics, such as the high cost of land, a significant hindrance to the growth of local farms.

“With only small-scale production, we have limited processing capacity, and this limited capacity prevents supply from increasing. In other words, there is the classic chicken-and-egg problem,” Vercammen says.

Are imports really so bad?

While fruits and vegetables are B.C.’s main markets for local food, most of the hort crops that its shoppers buy (excluding apples, potatoes and some hot house crops) continue to be imported.

“Local supply is highly seasonal, and this seasonal supply must increasingly compete with imported produce,” Vercammen says. “In other words, even the share of local fruits and vegetables is relatively small, especially off-season.”

And even traditional seasonal offerings are disappearing, he’s found.

As a big fan of apples, Vercammen always looked forward to late October when fresh Okanogan apples arrived and supermarkets promoted them and sold them at discounted prices for a month or so. In recent years, however, the promotion and price discounts for bulk sale of newly harvested local apples largely disappeared, he says.

“Who is to blame? I expect it is a combination,” Vercammen says, yet it suggests the mass of consumers aren’t exactly hankering for the local crop, and that the supermarkets find it more profitable to sell the same apples all year. Both suggest an uphill battle for the local sector.

The post Local food outlook appeared first on Country Guide.

Among consumers, organic demand has grown. In 2021, Canadians spent nearly $9.4 billion on organic, according to the Canada Organic Trade Association (COTA), which brands itself as the industry’s leader in compiling and communicating organic data.

Organic spending in 2021 was up from $8.1 billion in 2020, so it seems the outlook must be bright, and there are lots of other statistics to feed that appearance too. A Leger study that COTA commissioned last year found 66 per cent of consumers were purchasing organic products weekly, spending an average of $184 per week on organic.

Still, although the appetite for organic continues to grow in Canada, it’s a small part of demand. Organic’s share of the nation’s food and beverage market is only 3.3 per cent.

A large portion of demand comes from Ontario, where consumers accounted for a whopping 39.3 per cent of organic sales nationwide in 2020, according to the Organic Council of Ontario. (The OCO report also noted B.C. and Alberta had higher per capita organic consumption than Ontario, despite their lower populations.)

Although the sector has for years tried to paint itself as becoming more mainstream, Sylvain Charlebois doesn’t foresee organics ever being more than a niche market.

“There’s no indication that organics are going to become mainstream any time soon,” says the director of the Agri-Food Analytics Lab at Dalhousie University.

Charlebois adds that food inflation can only make things worse as buyers focus on costs and become a harder sell for organic premiums.

Today it’s a different marketplace in another way too. “People are realizing they can still buy environmentally friendly foods without organic certification,” says Charlebois. “Local really seems to be resonating.”

[RELATED] Manitoba Co-operator: Manitoba middle of pack in organic regulation, crop insurance

Organic producer Allison Squires, however, sees local as a positive for organic demand.

“One of the main opportunities I see ahead for Canadian agriculture is the expansion of more locally and regionally located processing and the shortening of supply chains,” says the owner/operator of Upland Organics, a 2,000-acre certified organic grain farm in Saskatchewan.

COVID-19 exposed the gaps in the food supply chain, and one way to remedy those issues is through more domestic processing, Squires says.

“Increasing the amount of domestic processing will allow producers to sell their product within Canada,” Squires says.

Squires also says consumers are demanding to know more about where their food comes from, how it is grown, and the steps it takes to get it to the store shelf.

“This is a huge opportunity for Canada to increase the amount of domestically produced food products so that Canadians are feeding Canadians as much as possible,” she says.

Shrinking production

Canadian organic production, however, isn’t keeping pace with consumer demand.

In fact, the number of organic farmers and the amount of organic acreage is actually in decline just about everywhere but Quebec.

COTA’s latest report does put the number of organic producers in Canada at 6,102 in 2021, a 3.4 per cent annual increase and equal to 3.3 per cent of Canada’s farms. COTA also reported 130 new farmers joining organic in 2021, with 37,330 new acres transitioning to certified organic.

But there’s more to the story. These gains are centred in Quebec, and total organic acreage is actually down.

Statistics Canada’s 2021 Census of Agriculture revealed Quebec significantly increased its share of total farms reporting organic production in Canada, skyrocketing to nearly 44 per cent of total farms in 2021, up from 30 per cent in 2016.

Quebec easily led all provinces in 2021 with 2,742 organic producers, a 16 per cent gain from 2020, according to COTA figures.

“The Quebec government set a target for organic and aids producers’ transition to organic with funding assistance,” explains Tia Loftsgard, COTA’s executive director.

Organic’s story differs elsewhere. Ontario has the second-highest number of organic producers, and experienced only a 2.5 per cent increase in 2021, reaching 949, about a third of Quebec’s.

Third-place Saskatchewan actually experienced a decline to 875 from 2020’s 938 — a year of no growth.

Meanwhile, total acres are declining, with COTA reporting 3.1 million organic acres in 2021, a 24 per cent decrease from 2020.

The largest loss occurred in British Columbia, where acreage plummeted 80 per cent to 252,000. Loftsgard tied that steep decline to Blue Goose Cattle Co., which pled guilty in 2021 to a CFIA charge of selling non-organic beef as “certified organic” in B.C. in March 2017.

The Prairies too have experienced declines. Following growth between 2014 and 2018, total Prairie organic acreage fell 120,000 acres in 2019, almost all of it in Saskatchewan.

Saskatchewan organic acreage recovered in 2020, but was almost unchanged in 2021 at nearly 1.2 million. Alberta acreage too was little changed in 2021 at 604,000, while Manitoba experienced 16 per cent year-over-year growth in 2021 to 116,000 acres.

Ontario also saw acreage losses in 2019, but experienced an annual 6 per cent boost in 2021 to 190,000.

Acreage in Quebec, however, has soared since 2014, from 216,000 acres to 614,000.

Opportunities and challenges

Despite the less-than-stellar producer and acreage numbers outside of Quebec, COTA is optimistic about production ramping up.

“With 96.7 per cent of farms not currently practising organic production, there is a huge potential for Canada to grow more organic products to meet the growing demand by Canadian consumers,” says Loftsgard.

She notes Canada is the fifth-largest organic-consuming nation worldwide. Although the country’s production has yet to keep up with consumption, she expects that to change.

“With the government’s new commitment to the climate change topic, organic is perfectly positioned to address many of the problematic areas of conventional agriculture and present an alternative, lucrative, and sustainable way of farming,” Loftsgard says.

More conventional farmers may be taking note. Squires has observed commonalities between organic and conventional farming practices.

But there are also challenges ahead.

Loftsgard sees the federal government’s decision about gene-edited crops as a threat to the organic sector. Ottawa recently confirmed gene-edited crops will be regulated much the same way as conventionally bred crops.

Products developed using gene editing techniques, if not novel, will be considered equivalent to thier existing counterparts, and no pre-market safety assessment will be required.

According to COTA, this will lead to increased risk of contamination, harming the sector as organic farming prohibits the use of genetic engineering, including the new gene editing techniques.

Still, the organic sector is optimistic. “With the recent evolution of regenerative farming practices, more and more farmers are looking at different farming techniques, many of which — cover crops, crop rotations, intercropping — the organic sector has been using for decades,” says Squires.

She also believes organic stands to benefit as markets and climate continue to change.

“I think that farmers are very optimistic about their future prospects, especially as generational ownership changes over the next few years.” Squires says.

“We will see many new and younger farmers making their impact on the sector, and I am very excited to see the direction the agriculture sector will take in Canada.”

The post Organic’s doubtful future appeared first on Country Guide.

“The last two years have made for complacent marketing,” says Jim Beusekom, president of Market Place Commodities in Lethbridge, Alta. “Holding on to commodities and waiting for the price to go higher worked (then), but unless the market is in an aggressive uptrend, I would expect that to be over.”

Brian Wittal of Paterson Grain says farmers will need to diversify and spread their risk by using different tools, as opposed to one strategy. He says huge daily market moves mean farmers need to make decisions more quickly or risk losing opportunities.

Beusekom emphasizes taking a profit if there’s one to be had. “Do not compare prices to the last six to 12 months alone. In fact, why bother? Instead, sell basis profitability. Think of selling crops as a grain company would do: if it’s profitable, sell it.”

How much to lock in?

But what’s profitable? Growers need to work that out, starting with estimating their cost of production for each crop, says Neil Blue, crops market analyst with Alberta Agriculture, Forestry and Rural Economic Development. He recommends using crop-budgeting software and related online resources.

Blue also urges growers to estimate yields for each crop to determine break-even prices per tonne or bushel. “Compare estimated break-evens to available prices from cash and futures/options markets, while considering historic prices and basis levels.” 

He says to consider cash-flow needs and to set target prices based on a conservative portion of your expected crop. A rule of thumb is to price no more than 50 per cent before harvest, when volume and quality are known better.

Neil Townsend, chief market analyst with FarmLink Marketing Solutions, says that despite high prices earlier this season, many farmers weren’t keen to lock in. That was partly due to lingering concerns from last year’s drought, plus spring weather challenges such as dryness in Alberta and parts of Saskatchewan and excess moisture in Manitoba.

And since crops such as durum, lentils and peas can’t be hedged on futures markets, growers were uncomfortable to go too far forward on sales, Townsend says.

Instead of selling crops in typical increments of 20 to 30 per cent, he recommends farmers consider five to 15 per cent, just because of market uncertainty and volatility.

“When you see prices go up, sell another chunk, because the price won’t stay up. If you can make money at a certain price, consider selling to free up storage.”

On its website, Alberta Agriculture says that for crops that can be hedged, futures and basis are traditionally weak right after harvest, which is a signal to store grain and wait for prices to improve. So if you can afford to be patient, and have the bin space, you can store more crop than usual to buy time.

Selling signals

Blue says a good time to price cash grain or sign a deferred delivery contract is when both futures and basis are strong.

Weak futures with a strong basis signals good local demand, which is the time to consider locking in that basis with a basis contract while leaving the futures portion open for a rally, Blue says.

Farmers can also time their cash grain sales according to seasonal highs.

ProMarket Communications president Errol Anderson says buyers tend to step into the market as early as late September and continue buying through December.

“Certainly, into November, classically, the selling pressure is over from harvest, and then buyers start covering cash sales.” 

He explains that because many growers are already deferring their deliveries into the new year — often for tax reasons — buyers will sweeten their offers with spot basis sales to ensure they get their grain bought and delivered before Christmas and New Year.

Basis levels typically weaken thereafter as buyers have covered their sales, and farmers may need to wait until buyers’ supplies are running out in spring for another period of strong basis, Anderson says.

Waiting too long

Paterson Grain’s Wittal urges farmers to stay on top of markets to get an indication of sales opportunities rather than sitting on inventory through the winter. Every month in the bin comes with potential lost opportunities and quality losses.

Wittal observed farmers delivering 2021’s grain last July, and some was tough, heated or had insects.

“It’s not always the case that once grain is in the bin that it’s as good as gold,” he says. “If you don’t think you’re going to be able to retrieve or cover those costs by waiting for the markets to go up, you’re better off getting rid of it sooner than later.”

Capture carry

Ideally, farmers who store their grain while waiting for selling signals can get paid to do so. One way to find out if that’s possible is by watching the market’s carrying charge. If there’s a positive carrying charge, deferred futures contracts trade at a premium to nearby ones. A positive carry tells you to make a forward sale and you’ll get paid to store that grain for a few months.

A negative carrying charge — or an inverted market — is the opposite: nearby futures contracts trade at a premium to deferreds. This occurs during tight supplies, and is a signal to farmers they can receive a premium for immediate deliveries.

Hedging your bets with options

Puts and calls can allow you to take advantage of price changes without committing physical grain

Combining cash strategies with futures or options is a great way to diversify risk, but some experts prefer options, especially in volatile markets when expensive margin calls may be needed to maintain your position.

“The key is to give yourself flexibility,” says ProMarket Communications president Errol Anderson. “Cash contracting is important, but at the same time, using some risk management in your trading account is also very beneficial. The markets are going to be volatile.”

Unfortunately, many crops that had once had futures markets, such as feed wheat, barley, oats and flax, no longer have them, which reduces pricing alternatives, says Alberta Agriculture’s Neil Blue.

“Some offset to that is provided by the increasing number of delivery points, resulting in improved buying competition across most areas of the Prairies.” He says farmers can still use U.S. futures for wheat, oats, corn, soybeans and soybean products. A rally in, say, corn is a hedging opportunity for Prairie feed grain growers.

Puts and calls

A good time to buy a put option is when futures are strong but basis is weak. It affords producers protection from futures price slides, while enabling them to capture higher prices for their physical stock should futures rise.

FarmLink’s Neil Townsend says an optimal time to have hedged with put options would have been when prices soared during the spring. Another opportunity to buy a put is if you’re unsure of quality but want to price without committing physical grain.

Anderson says the most useful risk management tool this year has been the put option. “That’s been the star.” He cites a particularly successful use of puts during a strong rally in Chicago soymeal futures. When the market collapsed, those options doubled in value. “There are opportunities when you see a market just take off like a rocket.”

“I’m just a real believer in using a combination of cash grain contracts and trading accounts because they’re both beneficial overall,” Anderson says. “If you feel you don’t want to commit more tonnage to a grain buyer, that’s when your commodity accounts come in, because you don’t obligate yourself to delivering.”

When futures are weak but basis strong, farmers may wish to look at purchasing call options to take advantage of potential futures rallies, Alberta Agriculture says. Growers could also sign a favourable basis contract.

If growers are unpriced this fall, they can get caught selling into doldrum markets. In that case, they can buy call options to reopen their price ceiling, Anderson says.

“There’s room for a grower that did not price to sell into the spot market for cash flow or bin space, and then reopen the ceiling for a mid-winter market rebound.”

A trading account gives farmers flexibility outside of a cash market, Anderson says. “You can either protect your downside or you can reopen your upside. Don’t focus entirely on your cash marketing.”

Anderson also encourages growers to make marketing plans up to a year ahead. 

“It’s not too early to start looking at November 2023 canola.”

Some growers already shorted that market months ago to guard prices that far out, Anderson says. 

At the very least, look six months forward on your farm marketing plan, he says. He prefers the strategies of farmers who go into fall fairly well covered, deliver and take their profit, and then concentrate on next year.

“I don’t like chasing a market,” Anderson says. “I know growers that get caught selling into depressed markets who want to reopen their ceiling so they can recover some of their money, but I like more forward-thinking rather than hindsight.”

Market Place Commodities’ Jim Beusekom also urges longer-term planning.

“Markets are forward-thinking, hence the futures market trades up to two years forward. As a producer or even an end-user, the battle for them is to get out of the current market mindset, and the best way to do that is to look at the forward markets and see what is trading. It helps provide direction.”

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