Under the Agridome

This past week I traveled to Nestleton Station, Ontario where I was part of the Durham Region Agricultural Leadership series. My presentation centered around the Canadian economy and, of course, the vagaries of our grain markets and what we might expect going into the spring of 2025. I must say that January has certainly been full of news; there was lots to talk about. I shared the stage with Canadian Senator Rob Black and Paul Hoekstra from the Grain Farmers of Ontario.

We had quite the discussion especially with the specter of tariffs coming this weekend from the United States. It was a diverse group with livestock and horticulture farmers mixed with people who grow grain. Everybody was looking for something that they could take back to their farm. In these uneven times I hope I gave them a few more morsels of optimism.

Interestingly, we had a bit of good news right off the top. The chairman of the Grain Farmers of Ontario was supposed to be with me that day, but he had to be at a hurried-up announcement from the Ontario provincial government. Last Tuesday, we had a provincial election call in Ontario and because of that many of the government ministers were making announcements. It just so happened the provincial government of Ontario announced an additional $100 million added to the $150 million Risk Management program in Ontario. For those of you who have read this column over the last 38 years, you will know I'm always being a big supporter of that policy.

The Risk Management program in Ontario goes back a long way but was only a theory for many years. For instance, it was the Liberal government of former Ontario Premier Kathleen Wynne that first brought in a Risk Management program into Ontario. The policy is meant to stabilize farm revenues. Farmers pay into the program through premiums. The program has since been continued by the Ontario Conservative government. The program has always needed federal participation to become truly a good farm revenue stabilization policy. However, successive Conservative and Liberal governments have said no to that. You might remember, I led a 10,000-farmer protest in Ottawa 2006 partly asking for federal participation in such a farm revenue stabilization plan.

Unfortunately, through the years it lost a bit of traction at the federal level. I have written before that it is a difficult mountain to climb over, especially when the federal government needs participation from every province in Canada to make it work. It's also a problem because the timeline has been so lengthy that now most people don't even understand what that policy has meant to Canadian farmers. Time can do that. After a while, with no policy success, the narrative loses steam. That's exactly what has happened on the federal level over a period of 20 years.

In spite of that, you have to give credit to the Grain Farmers of Ontario, as well as the provincial government for stepping up. Stabilizing farm revenues is a needed thing. Quebec farmers have something similar, Western Canadian farmers do not. In our current political climate, I don't see that changing.

Amid all of this we got an announcement from the Bank of Canada that they were lowering the overnight lending rate for the sixth straight time last Wednesday. The Bank of Canada cut the bank's policy rate 25 basis points down to 3% down and the lowest since September of 2022. I was surprised by this move especially with the headwinds currently facing the Canadian economy. I thought the Bank of Canada would simply keep the status quo especially when the U.S. Federal Reserve did the same last week. However, I suppose that's why I farm for a living and Tiff Macklem is the Bank of Canada governor.

The bank did, however, provide a caveat. It said that the Trump tariffs could cause significant economic harm to Canada. It went on to say that this could test the resilience of the Canadian economy and by default was saying it might have to jack interest rates back up. Needless to say, a 3% bank rate is pretty low in my books. Farmers will take it.

Part of the good news I told Durham farmers was that corn prices were up $0.75 a bushel since harvest and soybean prices were up a dollar. We also discussed South American weather. In fact, there were 100-degree Fahrenheit temperatures in Argentina in the last few days, but also a little bit too much rain in Brazilian soybean country. This had the effect of a possible delay of safrinha (second-crop) corn planting.

Of course, who really knows from here? It's just part of the risk that we take being farmers in Eastern Canada and why risk management is so important. A world away in South America, weather vagaries are helping our prices. Back at home we get a better policy to stabilize farm revenues. Next week, who knows, we might have a trade war to deal with.

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Philip Shaw can be reached at philip@philipshaw.ca

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