Canada's drought hits farmers, Great Lakes shippers. Enough grain to fill export orders - for now
Drought and heat have combined to produce a poor grain harvest in Canada. Like much of the United States, even rain won't rescue this year's crop from a major shortfall. It did rain on the prairies several days ago, but not everywhere and not enough. In bone dry Saskatchewan, a little more than an inch of rain fell in Swift Current, and only half an inch in Moose Jaw. That wasn't enough rainfall for the grain traders in Winnipeg, who have pushed futures prices to their daily limits several times lately.
Even if it does rain, the heat has already done the damage, says Lorne Hehn, president of United Grain Growers.
``We had temperatures in excess of 100 degrees for several days on the prairies,'' he observes. ``That heat wave came when the head of the wheat was in a critical stage. So instead of the head having 22 or 23 spikelets, it has ended up with 12.''
That means lower yields. United Grain Growers estimates that the Canadian crop will be 30 million metric tons this year, down more than a third from last year's 46 million metric tons. And that will have an effect on exports and shipments through the Great Lakes.
There have already been layoffs at Thunder Bay on Lake Superior, the eastern terminal for western Canadian grain.
``We'll have enough grain to meet our export commitments,'' says Brian Stacey of the Canadian Wheat Board, which is the government-run marketing board for Canadian grain exports. ``But there's no doubt we will have a lot less available for export, and that will affect people who are not traditional [steady] customers.''
Canadian domestic consumption of grain is about 16 million metric tons; export demand is 30 million metric tons, so if the crop is 30 million tons, the Wheat Board will have to draw on stocks from previous years just to meet contractual demands.
Most of western Canada is still a near-desert, with short grass covering it. But amid the drought there are pockets of prosperity.
Farmers near Edmonton, Alberta, are looking at green fields after two weeks of rain. There has also been rain in the sparsely populated areas of northern Alberta and Saskatchewan, and in the Peace River Valley, farmers are actually complaining about flooded fields.
Because of the drought elsewhere, they will be getting top dollar for their grain. But among Canada's farmers, they are in the minority.
In the prairie provinces of Alberta, Saskatchewan, and Manitoba, cattle ranchers are moving herds north to pastures where there has been rain because artificial ponds and natural waterholes at home are dry.
The Canadian government has announced a $153 million aid package to help thirsty western cattle farmers. Each livestock producer will be eligible for up to $60 a head to maintain his breeding stock. Up to 50,000 cattle farmers are eligible. A similar federal program for grain farmers is expected later this summer in what will probably be an election year.
The drought in Canada isn't just a western problem anymore. It has also hit the center of the country. Ontario is Canada's largest agricultural province, with grain, grapes, vegetables, and livestock. But it is also hurt by a shortage of rain. The peach crop in the Niagara Peninsula is almost destroyed, and so are seedling trees planted in Windsor across the river from Detroit.
In Toronto, city dwellers have been told not to water lawns or wash cars. A telephone hot line has been set up so vigilant citizens can snitch on neighbors breaking the law.
The farm problems have also reached Bay Street in Toronto, Canada's financial center. The drought has raised the possibility of higher food prices and more inflation. But the inflation might not be alarmingly high.
``In the short term, food inflation will probably fall as farmers sell off cattle and hogs due to high grain prices,'' says Douglas Peters, an economist at the Toronto Dominion Bank. ``But next year there will be higher prices for meat and grain.''
There are other price increases that would cause more problems for consumers than drought, Mr. Peters notes. ``Show me a $5 rise in the price of oil, and you won't notice the food inflation.''