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Good crops, high prices make for nervous farmers

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After the busy spring seeding season, you would think July should be a time for crop farmers to pause and catch their breath.

This year, however, instead of catching their breath, many Manitoba farmers are holding it. The crops across much of the southern province are looking so good right now, it's just plain scary.

It's not so much superstition that has people on edge as it is humility, a recognition that there has been many a bin-buster go bust before harvest. Farmers can do everything right -- select the best seed, apply the right amount of fertilizer, control the weeds, disease and pests -- and still not get a crop, as farmers in the Snowflake area well know.

A hailstorm, also known as the Great White Combine, swept through border areas in the middle of last week; the only harvest they'll be seeing is an insurance cheque.

Farmers in other parts of western Manitoba received over 100 millimetres of rain from the same storm system, inundating their fields once again. That excess moisture combined with the heat suffocates the growing plants within a couple of days, so fields in those areas will be looking a bit patchy from here on in.

That said, a shot of rain was needed to help crops keep up with the heat wave that's enveloped the region this month. Things are progressing so quickly, this might be one of the earliest onsets for harvest we've seen in these parts in decades.

Once again, "might" is the operative word.

It's all made even more nerve-wracking by news reports about the searing heat wave sweeping across key corn and soybean areas of the United States. Corn prices on Chicago markets have jumped nearly 30 per cent over the past two weeks, and that's dragging wheat and soybean prices higher, too. Some reports are comparing this to the 1988 drought -- the last time prices rose this far this fast.

Wow, the prospect of a good crop and high prices -- that's almost unheard of in farming. But as one farmer friend sees it, a bumper crop puts him in a much better mood than seeing market prices rise.

In fact, he cringes when he sees commodity prices skyrocket. For one thing, it means food prices are sure to follow. Sure as the sun shines, that will be followed with news stories about farmers reaping a windfall while poor people go without their daily bread.

On the home front it also means the cost of the seed, fuel and fertilizer he uses to grow crops rises, too, not to mention the cost of acquiring land. When those costs rise, they rarely fall. But the markets have a way of dropping like a stone as soon as farmers harvest a good crop, or even when it looks like farmers might harvest a good one.

He has a point. A comparison of 2012 with 2002 in the annual crop-production guides issued by Manitoba Agriculture Food and Rural Initiatives shows total operating costs for wheat and canola in Manitoba are up around 60 per cent over where they were a decade ago. The cost of land investment is up by 84 per cent and machinery depreciation is up by 62 per cent. The per-acre cost of fungicide applications for wheat has doubled.

Meanwhile, prices for wheat (as of last spring) were up about 30 per cent over 2002 and canola up about 60 per cent.

For farmers to break even growing wheat in 2002, they had to harvest 35 bushels per acre. Today, they need to harvest 45 bushels just to break even.

Remarkably, even though the total up-front costs of canola have risen well over $100 an acre to $328 over the past decade, the production needed to break even has risen by less than half a bushel. With some of the newer hybrids achieving around 50 bushels per acre under optimum conditions, it's no wonder the Prairies are awash in yellow. Due in large part to soaring global demand for oilseeds, it has the potential to put more money in the bank.

There are all sorts of theories as to why the crops are so disparate when it comes to performance improvements. But that's a story for another day.

As for this story, all farmers can do is wait. Just like there's never been a crop lost yet in April, there's no such thing as a bumper crop -- until it's in the bin.

Laura Rance is editor of the Manitoba Co-operator. She can be reached at 792-4382 or by email: laura@fbcpublishing.com .

Republished from the Winnipeg Free Press print edition July 7, 2012 B8

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