By John DePutter & Dave Mine – July 17, 2017
“The farmland between Chatham and Dresden is some of the most fertile land in all of Ontario, but despite this, hordes of new farmers aren’t descending onto us.”
– Chatham Daily News. July 12, 2017
What it Means:
No big surprise, really.
Although there was good money to be made in cash crop farming in the approximate 2008-2013 time frame, the farming business largely remains the domain of older operators, who likely grew up on a farm themselves and have been doing it all their lives.
The 2016 Census of Agriculture paints a picture of a fewer, but bigger, farms nationwide, along with fewer – and older – actual farm operators.
Indeed, according to Statistics Canada, there were 193,492 agricultural operations in Canada in 2016, down 5.9% from 2011, and 271,935 farm operators, a decline of 7.5%. Meanwhile, the average age of a Canadian farmer increased from 54 to 55 years from 2011 to 2016, with farmers aged 55 to 59 accounting for the largest share of farm operators.
But regardless of the aging farm population, this isn’t your granddaddy’s farm anymore. Production agriculture has become highly specialized with massive leaps in technology and equipment that make farming larger areas of land not just possible, but more efficient as well. Fact is, fewer farmers can put out more food and energy commodities for world buyers than ever before.
Of course, all that shiny new tech also makes it much more expensive for new farmers to enter the business and prohibitive cost of land is another major barrier as well. To start from ground zero for a new operator would require a massive investment.
Want to be a farmer? You almost have to be born into it. But luckily, there remains plenty of interest among the younger generation to follow in the family’s footsteps.
As also noted by StatsCan, the number of farm operators under the age of 35 increased by 3% from 2011 to 2016, despite the total number of operators decreasing. It marked the first time that there has been an increase in this age category since 1991.
It’s not uncommon for the kids to want to come back to the farm after a stretch of better times. It was natural that years of tight margins and low profits during most of the years from about approximately 1985 to 2005 left young people with less interest in chasing the farming dream. Better times more recently have coaxed more in.
“Wheat investors are feasting on a double-digit rally… Prices for wheat futures have been soaring…So why are prices rising? For anyone who thinks farming is a simple business, the answers will give them another think.”
– Financial Post, July 13 (article by Joe Chidley)
What it Means:
What’s really interesting isn’t the news wheat prices are up; it’s that the story is making it into the non-ag media
At DePutter Publishing, we keep an eye on non-farm news services for their ag commodity coverage, because quite often when they feature stories about a big bull move, they are actually signaling to us the move is over or nearly over.
That’s partly because when the news of bullish action is widely circulated and understood, anybody who was going to buy into the market has already done so.
The same can work in reverse during bear markets. When the media carries lots of news about extremely low prices, making the bear market widely known about, usually the downtrend has run its full course or most of it.
Of course, in the world of markets, no one signal is accurate all the time. In the case of wheat, it’s possible there’s another upsurge. It will depend on the weather and other factors.
But it’s worth a reminder the recent media coverage has been pretty typical of what you might expect during a peaking process.
Wheat prices moved down heavily Wednesday and Thursday, after the DePutter services issued advisories to do some selling – advisories that were based on a variety of forces, factors and indicators, including widespread media coverage.
Want to see what was said and what the strategies are for the future? Western Canada farmers can try a free trial of The DePutter Market Advisory service by clicking the button below. Ontario and Eastern Canada farmers, check out Ag-Alert.
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