After attending an agricultural seminar in Yorkton recently it fortified something that I have long held as a fundamental in the decision of what to grow.
The speaker that afternoon showed a myriad of graphs which tracked the prices of various grains through the years, often comparing local prices in Saskatchewan to those of its neighbouring provinces and across the line in the United States.
As graphs often do, the amount of comparative information that could be mined was impressive.
But in the end there was one constant across all the commodities, prices go up to a point, then dive lower, reaching a bottom from which they bounce back higher.
The spikes are not always smooth as markets determine what price is too high to be sustained, or too low to be reasonable, but the overall trend is always there.
It is not something unique to grain commodities, but all commodities from oil to copper.
What access to the piles of information now available at their fingertips -- whether at work at their desk, in the combine seat, or on holidays in a warmer climate – does is help farmers determine what they see as the right time to add, or subtract acres of a particular crop.
While farmers have more immediate data to influence decisions, in the end it often will come down to the simplest of signals, the price the marketplace offers.
Farmers do all the modern technology that is out there to in aid marketing and in the end become price takers. They cannot set prices for what they sell, ultimately taking what they see as the best price they can achieve. Naturally when a price jumps, farmers take notice and start to scribble some numbers to see if they might opt for that crop in the spring.
When prices hit the skids farmers consider paring back acres.
It is often the decisions producers make to alter acres being planted that sends the message to the marketplace which can topple high prices or bolster low. That is particularly true in niche crops, which realistically on the Canadian Prairies is all crops beyond hard spring wheat, barley and canola.
The jumps in and out of a crop may be more limited today because of farmers adherence to long term cropping rotations, but the need to find a crop which can generate a positive margin over the cost of production does influence even the most stringent rotation plans, especially at times when farm incomes are pinched.
Charts and information are of course an asset but ultimately, price often is the key signal for farmers.
Calvin Daniels is Editor with Yorkton This Week.
