Ontario
corn farmers make their living in a world dominated by foreign grain subsidy programs,
and in the near term, there is no reason to expect change. The U.S. Congress (both
Senate and House of Representatives) has approved new farm bills that will extend
- and probably enhance - grain subsidy programs beginning in 2002. EU subsidies
will probably persist at least until 2006, the scheduled duration of ‘Agenda
2000’ reforms to the EU Common Agricultural Policy. Canadian grain and oilseed
groups have no choice but to seek substantial support from Canadian governments
in an attempt to remain viable.
Change will come slowly, but it will come. The European public wants changes in
EU farm subsidy programs. The WTO negotiations launched recently in Doha should
provide slow but meaningful reductions. Even in the U.S., there are signs of weakening
in both public and political support for continuing requests for ever-increasing
farm subsidies.
Ontario corn farmers must think about the long term: what will the marketplace
be like in five or ten years’ time, and what will they, or the next generation
of farmers, need to do to survive and proper?
Market demand for feed grains, indeed, all grains, is a key issue. Grain farmers
have been told repeatedly that a growing world population means stronger future
export demand for Canadian-grown grains. But is this true? China, the most populous
country, has been the world’s second largest corn exporter in most recent
years. Occasional grain imports to China are tiny compared to annual consumption.
India, second most populous, has not been a significant grain importer for years.
And the Ukraine is again a grain exporter after an absence of almost a century.
Some third-world countries need food, but these needs are generally small in terms
of global grain supply, and the long-term solutions are more likely to involve
political stability and domestic production than large grain imports. That leaves
traditional grain importers like Japan and Korea, but their stable populations
hardly represent large growth potential for grain imports.
What about meat, which is effectively grain processed on the farm? Increasing
standards of living in the developing world mean increased meat consumption -
opportunity for Canadian grain and livestock producers to the extent that the
meat is imported rather than homegrown. But this must be balanced against a static
or declining demand for meat in the developed world.
Future growth in demand for food quantity - especially grain quantity - is limited.
But it’s different for service and quality. Increased food convenience will
continue to sell at a premium. Aging, affluent consumers will demand higher assurances
of safety for their foods and the farm commodities from which they are derived.
This means ever-declining tolerances for pesticide residues and other natural
or synthetic toxins, and more niche products with real or perceived nutritional
benefits. It means good opportunities for those prepared to offer ‘superior
quality’ guarantees and supply such products in commercially significant
quantities at competitive prices. It means less opportunity for those whose only
goal is to meet traditional minimum grade standards.
Environmental demands can be expected to increase as well. A public unconcerned
about food supply will focus increasingly on side effects of food production.
There are two choices for farmers: be forced into compliance with ever-increasing
environmental regulations and buyer demands; or be proactive in setting on-farm
standards above what is required by legislation. Environmental integrity will
sell.
There will also be growing opportunity for agri-tourism or agri-entertainment.
A growing number of Ontario farms combine food marketing with other activities
that urban people enjoy: pick-your-own farms with activities for kids, corn mazes,
farm tourism. In Holland, city folk pay farmers for the right to ‘work on
a farm’ for a day. Rural Ontario has the advantage that it is unusually beautiful,
with a wide diversity of scenery within short geographic distances. And there
are plenty of urban people nearby.
While growth in demand for food quantity is limited, it is offset by new growth
potential for non-food products. Fuel ethanol is one. Existing ethanol plant capacity
in Canada is only a small fraction of what will be required if/when ethanol becomes
a major ingredient in Canadian gasolines - because of the Kyoto agreement, government
policy and public demand for cleaner fuels. Equal opportunity exists for biodiesel.
And these needs are dwarfed by expected demand for other renewable consumer and
industrial products - such as plastic, lubricants and solvents now made from petroleum.
DuPont has stated a goal of making 20% of its products bio-based within 10 years.
Others companies will likely follow. These opportunities may be linked to the
purchase of grains with special traits, market opportunities for those prepared
to meet the needs.
All of this means change - new ways of doing things and new investments. Depressed
income levels can make such investments difficult, but can also be the trigger
to encourage change.
For the near-term, corn farmers must be assured of continued - indeed, enhanced
- public support in the attempt to better match practices in the U.S. and EU.
But farmers and farm organizations with vision also need to plan for the longer
term.
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