OECD-FAO Outlook points to Turbulent Years ahead for Farmers in Ontario

The Organization for Economic Cooperation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations recently released their 2014-2023 Outlook for Agriculture. While the baseline projection is not a forecast, and there are many things that could shift the projections over time, it does highlight where the world appears to be headed. The major trends in the outlook present opportunities and challenges that Ontario farmers need to keep in mind as they plan ahead for 2015 and beyond.

As we are all aware, grains and oilseeds are down from historic highs while meat prices are at all-time highs. The expectation is that crop prices will be low for another one or two years, before stabilizing below recent peak levels, while the expectation is that prices for livestock will stabilize at a lower level. The report projects that expansion of demand for agriculture products will be slower than in the last decade. The expectation is that there will be more demand for coarse grains and oilseeds to meet demand for meat, feed and bio-fuels for growing economies. The opportunity for growth will be in regions that are not constrained by land and water availability and the policy environment.

There are both opportunities and challenges that this outlook presents to Ontario farmers. As for opportunities, there are millions of acres available in Northern Ontario that are well suited for cow-calf operations on pasture. Land is far more affordable, but the overall climate is more challenging. Furthermore, there will be challenges to make sure there is adequate infrastructure in place to make it financially viable. Livestock-oriented entrepreneurs may be able to build operations in the North.

On the other hand, the expectation of low prices for grains and oilseeds will be a significant challenge for Ontario’s cash croppers. While there is a considerable amount of government support available, we hope that many cash-croppers have prepared for lean times during the recent years of plenty. The CFFO will continue to argue for responsible government spending that will help keep interest rates low, as a shift in this key area at this time would expose many farm operations to severe financial pressure.

The OECD-FAO baseline projection points to turbulent times ahead for farmers in Ontario. There are opportunities that good farm managers will be able to use to expand their operations. There will be challenges that other farm managers will need all their skill to see their way through. Today is the day for farmers to start considering their moves in the years ahead.

Source: CFFO