Farmers face steep harvest climb to profitability

Opinion

The rural scene on Labour Day weekend was quintessentially Manitoba, as farmers chewed away at harvest while the campers rolled by towards one last summer retreat.

Then, just like that, fall descended. Step outside this week and you could see your breath in the early-morning air, even though the calendar says it’s still summer. Cold rains through the week paused field work just as the school buses began scooping up the children huddled along the roadsides, decked out in their back-to-the-classroom duds.

The sudden change in temperatures creates yet another in-season hazard for farmers to manage. Extension advisers were warning farmers this week to keep an eye on their bins if they stored grain harvested in the hot weather. A rapid cool-down can create condensation and hot spots inside, which leads to spoilage unless the bin is equipped with aeration.

It’s hard to complain about rain in a growing season where precipitation for much of the province was 20 to 50 per cent below the 30-year average, and wildfires turned us all into pack-a-day smokers. It’s just too bad it didn’t arrive sooner.

This week’s rains might support seed development for some of the longer-season crops such as corn, soybeans and sunflowers, and it improves late-season grazing conditions for livestock producers. But it came too late to be anything but a nuisance and a potential downgrading factor for the fields of cereals and canola that are ready to harvest.

Generally, harvest is less than half done, although the cereal and pea crops are mostly in the bin. Early reports of yields and quality for these crops are good to excellent, with few instances of disease or other downgrading factors, provincial extension advisers said on their weekly update webinar.

This year’s wheat crop is in the top two grades and high in protein, which isn’t unusual in dry years but makes it more attractive to flour millers who blend it with other wheats to improve bread quality. A bonus is many farmers are reporting yields in the 80- to 90-bushel per acre range, which is remarkable given the moisture deficit. It also significantly changes the profitability equation.

When the provincial extension economists released the annual crop production budgets in January, they used a target yield for Canada Western Red Spring wheat of 65 bushels per acre. They estimated the market price at $8 per bushel.

However, even if a farmer hit those targets, their net returns could be below costs. The provincial estimates added up to gross returns of $520 per acre. Subtract operating costs estimated at $567.35, and the farmer loses around $47 per acre.

It’s important to note the production numbers used to develop these benchmark provincial budgets on a crop-by-crop basis are estimates based only on known factors at the time. Their purpose is to serve as a reference for farmers when developing their own production plan and budget.

However, every major crop in farmers’ rotations was showing a net loss in those estimates this year, which meant either prices would have to rise or farmers would have to beat average yields or find a way to cut their costs without losing yield — or all the above. Nothing like a harsh reality check to start the production year.

Prices haven’t improved. The markets have been decidedly bearish for much of the summer, weighed down by reports of bumper crops in the U.S., and China’s decision to impose punishing tariffs on Canadian canola.

However, beating the average yields by 20 per cent or more, as appears to be the case for many, could mean the difference between loss or profit.

The canola harvest isn’t far enough advanced to get a read on average yields, but it’s safe to say its climb to profitability will be just as steep given tariffs put in place by China, Canada’s second-largest customer for canola. That story is still unfolding.

Meanwhile, the season’s biological clock is ticking and there’s a lot of ground left to cover.

Laura Rance is executive editor, production content lead for Glacier FarmMedia. She can be reached at lrance@farmmedia.com.