It looks like 2007 might be the year Ontario farmers finally start making money on their corn and soybeans, the two biggest cash crops grown in this province. But society, which has become accustomed to cheap food, isn’t ready for it. And it could be a shock.
As 2006 wound down, economic analysts were tripping over themselves to tell reporters agriculture is the new buy. Forecasts were brimming with speculation about agriculture’s potential. Take a position in corn and soybeans, said the big traders. After all, in the U.S., corn jumped by more than 80 per cent this year. Even though soybeans were up a more modest 14 per cent, compared to most years when any gain was a distant dream, agriculture was suddenly looking rosy.
That optimism was not the result of consumers waking up to the fact that farmers have been struggling with price for ages, and that a fair return is finally in order. Rather, it’s an outlook sparked by the movement toward alternative fuels, mainly corn-based ethanol.
Predictions are raging about the potential for corn-based ethanol production to double in the next two years in the U.S., and soybean-based biodiesel increasing in demand, too. That means a lot of the corn and soybeans traditionally used for animal feed or food production will go toward making energy instead. Although Canada is an appreciably smaller market, it’s likely to experience a similar situation.
The competition between food and energy will keep commodity prices rising. They already have, and there’s no reason to think they’ll stop.
Food is bound to get more expensive. Corn and soybeans are everywhere, and processors, retailers and everyone else involved in getting food from the farm to the public will pass on increasing corn and soybean prices to consumers. Meat prices are likely to rise too, because the cost of feeding animals corn and soybeans will jump. Finally, the price of farmland will increase as well, which could likewise be passed on to consumers through food costs.
I used to think an active farm-based ethanol production system might make energy prices drop. After all, Big Oil just won’t pay OPEC-like prices to farmers for ethanol feedstocks.
But I’ve abandoned that hope. The spike in prices at the gas pump right before the holidays proved once again oil companies are heartless, as if we needed yet another reminder. Why would they ever give consumers a break — just because their input costs drop? Fat chance.
As well, tax wise, Ottawa and the provinces have become addicted to their potion of the sky-high energy dollar. Governments can hardly tell oil companies to back off if they’re raking in big bucks from the same litre of gas.
I don’t think North America is ready for this scenario. Rising food prices scare people more than high energy costs, which we’ve grown permanently disgusted with, but overall, begrudgingly accept. At least we can pretend we’re beating the system when we walk, or bike, or take public transit, or experience a warm spell and don’t get nailed so hard for heating costs. But food’s another matter, and predictions about higher costs have either been ignored, missed or underestimated.
Understandably, as prices rise, farmers will be trying to make up for lost time by squeezing maximum production out of their crops. This fact hasn’t been lost on seed companies. They’ve always had an eye on increasing yield, but now they’re stepping up the race to outfit crops with various traits to boost performance, such as insect and herbicide resistance.
Many of these traits are introduced through genetic means. Last year, more than 90 per cent of the U.S. soybean crop and 65 per cent of its corn crop contained at least one genetically introduced trait. In Ontario, those figures were similar. As farmers can afford to pay more, additional traits will be added.
Farmers deserve to finally be paid a reasonable sum for their harvests. Will they be vilified for doing so? Unless they communicate their story clearly, once again they’ll find themselves misunderstood by the public, especially if consumers think a year or two of profit can suddenly make up for decades of woefully inadequate prices.
Owen Roberts teaches agricultural communications at the University of Guelph.