A Christmas Story – What Happened in Agriculture in 2024

 

‘‘Twas the night before Christmas, and all through the house”. As the 2024 fiscal year comes to a close we look back and truly review what a year it was. For some, a year filled with presents and garner, and for others, coal.

So to close out the year, I chose to reflect on the key aspects that occurred in Western Canadian agriculture. Sit back, light a fire, turn on the Christmas Tree, and drink an egg nog. Here we go.

The Year That Wasn’t

I remember August 1 like it was yesterday. 

Clients were the most optimistic I had seen in years because, for the first time, a large portion of the province looked to be in good shape. Early rains, great stands, tipping heads, and all those other signs that for once we were going to see an above-average crop come out of the fields. The only downfall was that the entire industry saw this as well and the prices reflected it.

Now, four months later, oh, what could have been!

One thing is certain: combines worked harder this year to produce less. It was a perfect storm—producers saw “potential” early on, which drove investments in inputs, purchases of new capital, and set high expectations for the season. But as combines began rolling through the southern half of the province, the rumors started. Within just two weeks of harvest, the calls from banks began, asking if it was true: was the 2024 crop another bust?

Chalk it up to another bad year in a string of droughts. But this one was different, this one was a true kick in the pants. There was optimism, there was 100% of fungicides and other manipulators sprayed to hit the grand slam that it looked like. Then, with a high-speed curve ball – a swing and a miss. 

We once again were back to the crop that wasn’t.

What Else Could Happen

Two wars, many elections, and a carbon tax that was going to save our planet for the next generations to come. You could honestly not make up this many things in the plot of an action film. Every time a farmer opened social media they were inundated with another story that threatened their livelihood.

Only in Canada could we believe a tax would solve environmental issues. But remember, we will get back more than we put in. As we are told how to farm “sustainably”, we once again had to school our leaders on the fact that we are not taxed just at the farm level. 

We pay a tax on our logistics, our inputs, and every other area that companies can pass down the food chain. We are price takers and buy at retail, sell at wholesale, and pay the freight both ways. Oh, and by the way Western Canada grows some of the most sustainable crops in the world, we have the data to show it.

Geopolitics is becoming another buzzword. Whether an EV fight to destroy a canola price, or a war across the world to affect wheat and fertilizer prices, we are at the mercy of what happens everywhere other than in our own country. 

With the amount of unrest in the world 2024 will be remembered in probably one word more than any other – volatile.

Lastly, we have now become a political punching bag in North America. I now hear that we should be the 51st US state and I fathom whether this is a joke or actually has some merit. We have yet to see the damage that the US election will have on Canadian agriculture, maybe nominal maybe egregious, only time will tell in 2025 what the outcome is, hold on as the “MAGA-train” makes its way north of the border.

No Indication of Slowing Down

“Land is overpriced”; this has now become a running joke.

Guess what, land was overpriced 20 years ago, overpriced 10 years ago, and overpriced today, and all of us would have bought more if we had only known. Hindsight is 20/20 so let’s just stop saying the phrase and then we can all sleep easier at night.

The 2024 season once again proved that we were all wrong and land would not follow commodity prices down the mountain. The new train of thought is that land is valued at whatever someone will pay, and many will pay a lot. 

Another 15% increase in Saskatchewan over twelve months and smaller but still increases in the other prairie provinces. Only in the US does it look like a possible softening has occurred, and when you are already at $15K per acre or more, it scares me how far we may still have to go. The fundamentals are not at play anymore, land has never been pencilled, but today it is a true speculation play in most areas. 

Never before have producers had to identify that real estate is not a farm asset. I can buy land and not be a farmer, and I can farm and not buy land. Is it easier and more convenient to do both? Yes, but they are not the same business model. 

So next time you tell me on social media that people are “crazy” for buying land at these values, remember that as a real estate appreciation play it still out-yields the interest rates at this time. For how long, is unknown. The next generation better just learn how to farm, because land accumulation may not be part of their diversified business model.

As the year comes to a close I do want to be thankful. We often get caught up in the pessimism in agriculture and I believe the industry has become considerably too negative. 

As the Christmas lights get lit and the presents go under the tree, we should be thankful that we are in an industry that survived the pandemic, continues to show equity returns higher than the S&P, and gives our kids, families, and small communities, that are much more close-knit than the urban centres I often play in these days. So quit looking over the fence, be thankful for what you have, and always remember that you are the reason households around the world get to have Christmas supper. 

You feed the world, and you should be damn proud of it.