There's a renewed hope in rural Ontario this year. In fact, it's much like the promise of Easter itself.
Despite gloomy predictions issued by Statistics Canada a few weeks ago about the overall dwindling rural population and the sagging influence of farm communities, farmers are upbeat about their chances of finally making a profit. The sunny outlook is driven mainly by the push toward a corn-based renewable fuel — ethanol — industry, which has sent corn prices shooting up. That's prompting fears of rising food prices. But from farmers' perspective, it's high time they earned more than simply enough to cover production costs, in the hopes that government payouts would help them actually make a living.
This year, they should actually be able to put money in the bank, like other people who work for a living.
You'd think there'd be industry-wide glee over this turn of events. But a big concern is emerging about the sector's direction — ironically, from some farm leaders.
Sure, they're happy farmers are poised to make some money. However, they worry too much emphasis is being placed on one conventional crop — corn, for ethanol. They're concerned this tight focus could be detrimental to some significant gains that have been made, or that are on the horizon, for farming.
They were hard-fought advances. While commodity prices were tanking, the agri-food sector was looking for opportunities to diversify and develop some lucrative niches.
In several cases, it hit pay dirt. With research support from governments, universities and industry, new varieties of edible beans were developed, along with soybeans for the export market to Japan for tofu.
Buyers in Japan want non-genetically modified soybeans whose lineage can be proven and traced. They're willing to pay a premium for the extra trouble it takes farmers to grow, harvest and separate these soybeans from the rest of the harvest.
These are called value-added markets, and they're still in their infancy as the agri-food sector learns to work together to tap into them. Such markets diversify the sector and make it stronger, giving farmers more options. If prices are limp in one area, farmers can delve into another — providing markets have been developed.
New markets aren't easy to win. Competition exists everywhere. As a result, the magic in the product is often related to the entrepreneurial skills of the farmers or marketer, not just factors such as climate or location.
For example, the vast Midwest U.S. could bury Ontario when it comes to soybean production volume. So farmers here have concentrated at finding niches — such as the Japanese market — and competing with a top-quality product, rather than volume. U.S. producers routinely come to Ontario to see how it's done right.
And those markets are what some say are threatened by the ethanol movement. They fear farmers will revert to growing relatively simple commodities, such as conventional corn and soybeans, rather than dig deeper to find niches and develop new value chains. For the most part, basic crops are easier to produce and sell, and require no separation in production or distribution.
Normally, they're also not worth as much as value-added varieties. But the ethanol-sparked demand for conventional corn is pushing its price up, and as farmers start making planting decisions, they're having a hard time resisting corn's allure.
The move toward value-added production is just one of the many changes in the sector outlined in a new research study from the Guelph-based Institute for Agri-Food Policy. The study, entitled "Challenging Past — Incredible Future: A Look at Past Income and Future Prospects for Ontario's Oilseed and Grain Industry," applauds how the sector has addressed energy and the environment, going beyond food and feed to help society in new ways.
The study says that farmers score points with consumers when they address such problems. That's prompting governments to look in investing in agriculturally driven solutions, at levels never before seen in the industry.
The study's authors, David Sparling and Kristine Jack, urge the farm sector to maintain the high-value specialty markets that it's built up. Inevitably, they say, corn will lose favour as the preferred feedstock for ethanol when the industry figures out how to make renewable fuel cheaper from cellulose — trees, switchgrass. If farmers have given up the markets they've spent years developing, they'll have to start from scratch.
"Producers may need those higher value markets," says Sparling. "It would be short-sighted to lose them at this point."
A key is to find ways to take advantage of the short-term gains from the ethanol-driven corn-price spike, while continuing to develop new markets and value chains. It's an approach that will lead to greater prosperity. Farmers still face a mountain of debt after so many years of depressed prices, but at least now there's more than a glimmer of hope for a sustainable future.
Owen Roberts teaches agricultural communications at the University of Guelph.