The oilseeds market seems to be doing alright. Helped by Argentina’s decision to keep a tax on soya bean exports while it was busy getting rid of all the other export taxes, prices on crops such as sunflower seed and, more to the point, rapeseed have a slight air of the perky about them and supply and demand balance sheets aren’t awash with product.
That’s the exception. The rest of the world’s agricultural commodities market looks dire and farmers go on producing. Falling world prices don’t look bad at all if you’re getting paid in devalued pesos or roubles. The Chinese have realised (very roughly) how big their stocks of grain are, at a time when their economy is slowing. They aren’t going to save the day.
We can’t eat our way out of it. The world’s population may be growing, but the extra people are in places where they can’t afford much of what we produce. In the Western world the population is largely shrinking and all aging. Old people don’t eat as much.
The roads and railways needed to open up vast new areas of agricultural land are being built. Sea transport is so cheap your only worry is the chance of the shipping company going out of business because of how little you’re paying.
Things can get worse. Paddy Ashdown came up with the following highly abbreviated tweet this morning. “Note to farmers. Av. EU tariff on imported ag. goods = 22.3% (WTO). With BREXIT yr produce will be a 1/4 more expensive in yr major market.” Quite.
Challenging isn’t the word. Of course things can and will change. That’s why you put crops in the ground, if you’re that sort of farmer. Hopefully, the Brexit threat will go away. The markets can and will improve, especially if there’s some weather, although there has been precious little of it in recent months.
Calls are starting to be heard for governments to do something. That won’t be the British Government. British governments don’t do things. They just respond to that morning’s tabloid-manufactured scandal with some half-baked announcement that’ll probably never be put into practice. But the American government and the EU could take action. I’ve always been a believer in keeping official interference to the bare minimum. We’ve rightly spent years winding down the CAP’s market management mechanisms. However, now might be the time to do something. Seriously.
Editor, Farm Business