•
I’m still on holidays, but it’s customary at this time of year to present one’s prognostications on the coming calendar year, so here goes:
ED WHITE’S TOP SIX PREDICTIONS FOR 2012
1) Crop markets continue to be volatile: There’s no reason to believe that the long term commodity bull market is dead or ending yet. The last few months have been ones of declining crop values, after a first half surge. That’s the kind of thing we’re likely to see until 2018-19, give or take a couple of years. So perhaps in 2012 we’ll see prices decline into summer, then rise in the second half, being a mirror image of 2011. But little reason to expect $4 canola, or $2 wheat. (That is, of course, what my favourite apocalyptists at Elliott Wave International are predicting – brutally low prices on everything very soon – so if I’m wrong, they told me so.)
2) The Canadian Wheat Board somehow stumbles onwards and does better than many expect: Monopoly supporters long argued that there was really no point to a non-monopoly board, and many truly believed that. I have trouble seeing the point of another grain middleman in the industry. But there’s no question that the CWB is chock-a-block with top quality staff and expert world grain marketers, and if they put their minds and hearts to it, they may surprise everybody with how well they can find a role and do a good job at it. (I’m one of those who think that people and their skills and commitment create results, rather than circumstances and impersonal forces, so just like the way the Mennonites and Hutterites have repeatedly made the arid prairies bloom in unlikely locations and in unlikely ways, perhaps the CWB will create something no one would expect, and make a success of something no one would expect to succeed.) If they do find a way to be viable and serve farmers’ marketing needs, the people having the toughest time accepting their success might be the pro-monopolists, who have been deeply committed to the notion that there’s no point to a board without a monopoly. Will they support the new board, or turn their backs upon something they see as a Ritzian monstrosity? That’s one of the most interesting questions of 2012.
3) Era of the New Lira, New Drachma? New Deutschemark? So, which part of the Eurozone contraption gets thrown off the carousel by the currency’s extreme centrifugal forces? Will the Italians leave because the Euro’s condemning them to stagnation and endless crisis? Will the Greeks get booted? Will the Germans jump ship before it hits the rocks? I’m guessing the least-German countries bail on the Euro at some point in 2012. The Germans aren’t likely to leave, because they’re getting all the advantages of a currency that in German terms is undervalued (boosting exports), plus they’ve finally managed to conquer the rest of Europe, after those two previous failed attempts. What Panzers and the Blitzkrieg couldn’t do for them, over-reaching EU bureaucrats have given them. Who’d a thunk? That probably means the Greenback will soar at some time in 2012 as everyone on earth rushes for supposed safety, but the Loonie will also likely be strong in world terms.
4) BRICs continue to underwhelm: The BRICs – Brazil, Russia, India, China – have seen their growth rates slump greatly in the past year and that’s likely to get more intense if the Eurozone flies apart or something disastrous occurs in the U.S., such as Newt Gingrich becoming U.S. president. The BRICs are just suppliers to the advanced world, so without we big, fat, greedy first world economies gobbling up all their commodities and cheaply manufactured goods, what can they do to keep growing?
5) We find a new Bad Guy. The world was relieved in 2011 when Osama Bin Laden inhaled a couple of bullets, and we had one last chance to mock Kim Jong Il when he recently passed on to that eternal 1950s-style Soviet military parade in the sky, but the world is now running perilously short on well-known baddies. True, there’s still Ahmadinejad and assorted Iranian Mullahs, and they seem to be spoiling for a brawl with the West, and lots of squalid little dictators, and a motley crew of Somali pirates, and about three Nazi war criminals still alive somewhere in the world, but in terms of someone we can all hate, there’s a bit of a lack. But don’t worry: I predict the Zeitgeist will throw up a new bad man very quickly, and we can all get back to hating someone together. With any luck, it’ll be someone funny-looking that’s easy to mock, and with a silly name. That’ll make the comics’ lives much easier.
6) All of Ed White’s predictions for 2012 will fail to come true, or in any way approximate reality. (This is the prediction I’m most comfortable with.)
I have spoken.
•
Every Christmas I set out an audacious reading list for myself, and every New Year I look back upon it and rue the fact that I only read a couple of the tomes listed.
Ah, well, what do you do? It would be pathetic to put together a one-book list. So right now here’s what I’m fooling myself I’m going to read this Christmas, all of which are downloadable by Kobo, iBooks or Kindle, because that’s how I read now:
Sylvia Nasar is best known for her book, A Beautiful Mind, which is about a brilliant philosopher who developed “game theory” and won a Nobel prize. What was remarkable about that book, and the movie that came out of it, was that Nasar was brilliantly able to make the exceedingly complex seem simple – and to tell a fascinating, engaging story at the same time. This book is about the development of economic theory as far as it relates to attempting to make human society better for the humans in it, and again is stunningly successful at making very complex and usually dreary-seeming stuff seem vital and engaging. Nasar begins at the mid-19th century, with both left-wing and right-wing economists of the time having pessimistic and depressing outlooks on the ability of human society to eliminate poverty and create prosperity, but then shows how a long line of economists and thinkers challenged those dreary assumptions and created the capitalistic welfare state that we all now, in some form or other in the developed world, live with. I’m halfway through the book, and it’s getting more engaging. Which is not something you can normally say about economics.
Keynes Hayek: The Clash That Defined Modern Economics. That accurately describes Nicholas Wapshott’s book, as far as I can tell from forging just one chapter inside. John Maynard Keynes and Friedrich Hayek spent a decade bashing away at each other’s theories, and there was no resolution to the dispute in the 1930s and isn’t now. Keynes seemed to have won decades ago, but many reanalyses of the period challenge the idea that Keynsianism actually worked, and Hayek – who was treated by most economists for decades like a fart in an elevator – has begun to come back into fashion. I’m interested in this, because their contrasting views truly do seem to sum up the economic debate of the past century, and all the investors and analysts that I tend to agree with seem to be Hayekian in some degree. I have described myself in this space before as a “wimpy Austrian,” but we’ll see where I’m at after reading this book and Nasar’s. I’ve read some of both Hayek’s and Keynes’ works, but it’s also useful, methinks, to read commentary by others.
Canada’s greatest living philosopher, William Shatner, provides some of his views, insights, life story. And a guidebook to being super-successful. Who isn’t going to read this one?
I’m getting myself ready to be profoundly patriotic in 2012, for the bicentenary of the War of 1812, and I’m going to work myself into a fervor by reading trusty tomes like this Bertonian classic.
I have three daughters, the eldest being four years old. Needless to say, I’m going to be reading a lot of Olivia over the Xmas break. These will probably be the only books I actually manage to finish.
•
The Canadian Wheat Board is dead. Long live the Canadian Wheat Board!
That seems to be the situation with the CWB now that the courts have refused to stop the new wheat board act from coming into force. That leaves the old (remaining) farmer-directors in their new role as ex-directors, and by January 17 – when their court applications are next considered – they’ll probably seem very much the ancien regime and the revolutionary new order firmly in place.
Getting this done by Christmas was a smart if ruthless way of getting this through in a way that will probably make the issue drop off 90 percent of Canadians’ radar within a few days. Christmas craziness is here, New Year’s boozy bashes are in store, 2012 dawns, and if the government is lucky, this whole CWB thing, which drew a lot of attention for the past few months, will seem sooooooooo 2011. Last week here in Winnipeg Liberal Leader Bob Rae and NDP leadership candidate Niki Ashton were swearing to keep this issue alive as a symbol of government arrogance and contempt for democratic process, but they might move on if they find something that works better to illustrate that point for them. Who knows? More court stuff is likely coming, and that’s really the only thing that could concretely keep this issue alive, but Friday it sounded like the grain trade – which has kept farmers hanging – was beginning to move forwards, with Viterra offering contracts on (former) board grains. If those contracts are good and reasonable, that’ll clear up the main concern of most farmers right now. It’ll be interesting to get a good look at the ICE Winnipeg futures contracts for durum, barley and spring wheat, whenever they’re unleashed. (They might have already done that. I’m now officially on holiday, using up the holidays I didn’t take this summer, so I’m not really paying attention.)
So to see how the evolution of the new CWB begins working itself out, look to the Western Producer’s website: www.producer.com to see all the developments over the holiday period. Because of the various holiday days and Canada Post deadlines and printing press schedules, the last paper version of the Western Producer until January went to press Friday, so the new news will be all-electronic until the world gets back from the Festivus period.
Allow me before wrapping up today (tomorrow I’ll give a little Christmas book list that will be silly, irrelevant, weird, and everything else that you expect from me) to note the passing of two prominent atheists and communists in the past couple of days.
Political satirists and comedians everywhere are mourning the death of Kim Jong Il, the North Korean commie dictator.
It’s also possibly sad for the rest of humanity, because there’s political instability now in the hermit kingdom and the one thing worse than a crazy Korean commie dictator with a nuclear arsenal is a free-for-all between crazy Korean commie hopeful-dictators who might think nuking South Korea, Japan or the U.S. might be a good leadership campaign tactic.
I’ll bid Jong Il adieu with one last playing of I’m So Ronery. (WARNING: A rude word is said at the beginning of that clip.)
There is also great mourning amongst the world’s cigarette manufacturers and the searchers for a new messiah over the death of Christopher Hitchens. Hitchens was a chain-smoking, hard-drinking Trotskyite supporter of the American invasion of Iraq and a relisher of the prospect of a Western crusade against the Islamic world. He hated religion and worshipped rationality and science, although he apparently never could get his head around the bit in the science books that explained what scientific affect carcinogens and chronic alcoholism tend to have upon human health. Apparently rationality didn’t help him much with addiction. God rest his soul.
•
On one hand, it’s quite exciting to be covering the politics and drama of the endlessly morphing Canadian Wheat Board issue. This is one for the history books, and it’s nice to be writing part of the rough draft of this history.
On the other hand, I find it sometimes dispiriting to be covering something in which there are such raw feelings, violent passions, resentment, triumphalism, rage, despair, fear and arrogance. There has been some pretty ugly politics and a lot of nasty words said back and forth about everything CWB-related recently, and it gets a little wearing. “Can’t we all just get along?” as Rodney King said.
So, to lighten the mood, especially right before Christmas, let me show you a few pix from visit I did two days ago at the Canadian International Grains Institute. These show how CIGI is helping to win new markets for Canadian farmers by helping buyers use our crops, and by convincing people of new ways to use our crops.
Here’s a selection of what I saw:
Making Asian noodles with prairie grain
Bread being test baked from wheat being shipped to Warburton's in England
Testing pea flour in milling lab
Pasta made from beans
Arabic on the chalkboard shows the kind of foreign customers who visit CIGI to learn about how to best use Canadian crops
Here’s how prairie farmers get an edge in world markets and regardless of the outcome of the CWB issue – and it could go either way depending on court action and we might not know for weeks or months – I’m delighted to report that CIGI is convinced and confident that it will be able to continue on regardless of the CWB outcome.
So while the oxygen in the room is being consumed by little other than CWB politics these days, ponder for a moment this wonderful work being done daily by CIGI, and be happy.
•
Boy, who would have thought three months ago that the apparently on-the-ropes pro-monopoly and ag-lefty folks would be so reinvigorated at this point, and the government so (possibly) hapless?
I was surprised all summer when the pro-boardians seemed so listless and unorganized and unenergetic, but these days they have a lot of energy, confidence and focus. It’s the government now that seems flatfooted in comparison.
I can see why the government tried to rush this thing through, because when these folks on the pro-monopoly side get organized, they get pretty organized and can get things going. There was a lot of media at the Bob Rae/CWB directors event today announcing the request for a “stay of implementation.” The issue seems to be well-entrenched in the public’s eye now, with all the Parliamentry antics actually drawing attention to an agricultural issue for once.
Bob Rae today (Hey, that rhymes!)
And Bob Rae didn’t seem to be forcing anything when he spoke of this issue as one of historical relevance, democratic Parliamentary procedure and rule of law. I’m not saying he’s right – that’s for you to decide – but he didn’t seem to be making an unreasonable or absurd argument. To him, this issue goes far beyond farming and agriculture and says a lot about how Canadian society wants to be governed.
And just now in front of the CWB office NDP leadership contender Niki Ashton just spoke about the issue quite passionately, and to her this is the proof of the left wing view that the Harper government is beginning to roll back many things held sacred by folks on the left, including the CBC, supply management in farming, and many other institutions in Canada. Again, it sounded to me like a reasonable argument – for one of her perspective – that goes well beyond an agricultural-only issue. It’s the kind of thing that could become a cause celebre on the left, something it hasn’t quite become yet. If the public becomes familiar enough with this issue, if it drags out for months more, then it could become the emblem of their fears and a rallying point.
Niki Ashton this afternoon. She's wearing a great coat. Mine became covered in grime when I lay on the pavement to take the pic.
This whole thing could well fade away after Friday, if the government gets its way. Who outside ag is going to care about this in January if it’s settled? The Christmas break could wash this all away and the fickle public will get on to other issues. But if the pro-monopoly folks manage to keep the monopoly board alive for a few more weeks or months, then this could become the kind of issue that both the Liberals and NDP need to reinvigorate their bases after the Conservative’s big win this year.
A few conservative people I have spoken to this week have been bewildered by the federal court decision, because they had been led to believe the government had an airtight case. Now a lot of people on the right are rattled, and they haven’t been reassured by government reassurances that the wheat board change is really going to happen and that these are not significant matters. There’s a bit of a credibility gap now between many conservatives and the government, because this was supposed to be a fait accompli. They were told not to worry. Now they’re worried.
So it seems to me at least, as a guy who covers this stuff quite often as a reporter, that the pro-monopoly and lefty people have definitely rediscovered their mojo, and a lot of the folks on the right are wondering where they dropped theirs.
•
So here’s what I think I heard at the CWB press conf:
The board will be at the Manitoba Court of Queen’s Bench Friday to ask for both a “stay of implementation” and a challenge to the legality of the law.
Even if C-18 gets Royal Assent, the action can’t be shut down by the government ordering the lawyers to quit, because they also personally represent the directors.
How long will this drag on? No idea.
Just an attempt to slow this thing down, or actually believe possible to stop for a long time? Board Chair Allen Oberg thinks they have to fight for important principles and a farmer vote. So not a clear answer, I thought.
•
There hasn’t necessarily been that much damage to farmer’s future returns because of the CWB imbroglio – YET.
Here’s a chart of December Minneapolis spring wheat futures:
Futures prices – upon which next year’s prairie grain elevator prices will likely be based upon, are trickling down, but the huge slump on that chart was in early September to late September, and very few farmers would have been hedging new-crop 2012 in that month. Lots, however, would have started some 2012-13 hedging in October and certainly November, but haven’t been able to.
PPOs aren’t being offered. That’s entirely reasonable. The wheat board doesn’t know if it’s going to even exist next crop year, let alone be able to offer forward prices. Grain company contracts aren’t being offered yet. That’s entirely reasonable. The grain cos don’t know if they’re going to be working in a free market or a board market. How can they buy grain while this whole thing up in the air?
And the position of right-wingers and left-wingers are also relatively reasonable, from their opposing perspectives. The pro-boarders want a monopoly unless a majority of farmers vote it out. The righties want the board gone because it’s an imposition on individuals who don’t want to use it. (The government rush to jam this through Parliament is pretty far from reasonable almost everyone would say – and as I blogged yesterday, that will haunt the government if this confusion lasts months more and crop prices fall).
The people left in the most unreasonable situation are non-politicized farmers, who have billions of dollars of crop to price in the coming months and have so far been prevented from pricing any of it in a safe way.
So what are there chances of farmers being able to safely price grains in the coming months, if the government gets the new board legislation passed, the opponents apply to the courts to prevent it being implemented, the federal court of appeal splits, the whole thing gets kicked upstairs to the Supreme Court . . .
Just when in the world is anyone going to feel confident about what the future is going to be?
So for now, farmers get to look at price charts like the one above, see nearly-$8 wheat floating before their eyes, and yet not be able to snatch the money. If prices go up, no one’s going to care. If they drop, they’ll be baying for blood.
•
So the wheat board situation is hanging in the air like the bad smells that sometimes come from the mushroom plant here in town.
With this court ruling unclarifying everything, farmers are going to be driven to distraction by this situation, and they would probably like to blame someone.
But who do you blame? It’s pretty hard to tell CWB supporters that they should just fold up their tents and go home just because the Conservatives won a majority. They rather reasonably think this situation should at least have been given time in Parliament to be seriously debated, and generally think a farmer vote should have been required. You can’t really blame them for fighting back against the government’s unprecedented legislative heavy-handedness. I mean, how can you really argue with people defending something they care deeply about when they’re getting railroaded?
On the other hand, you can’t necessarily blame the government for pushing ahead with something that’s deeply felt amongst the core supporters of the Conservative government in the West. No one’s surprised that the government is doing this, now that they have a majority.
If things go bad and this situation doesn’t get worked out fast, and if prices for crops keep dropping with farmers having no real way to lock them in for 2012-13, people will probably begin looking back at the government’s decision to ram this legislation through the House of Commons so fast, without the normal process, and the government won’t come off well. I doubt that blaming board supporters for defending the existence of the monopoly-based board will work with most farmers. This kind of strongarm tactic seems brilliant in retrospect – if it all works out. If it doesn’t, it’ll seem like a newbie error from a government that didn’t really know what a majority allowed it to do.
But if the government wins its appeal, the legislation becomes operative in the next few weeks, and farmers can begin pricing 2012-13 crops, and prices go up, then Gerry Ritz and Stephen Harper will appear to be brilliant, if ruthless, political operators.
Farmers, more than anything, just want to get rid of the uncertainty. One way or the other.
•
I was just chatting with a farm group manager, and we laughed ruefully about “meeting season,” which is the time between mid-November and mid-March in which farm groups and agricultural organizations launch an unending campaign of meetings, conferences and conventions at scribblers like me and managers like him.
How the heck do you get to everything, get a grasp of what’s truly going on, and then have time to write up what you saw and heard? It gets a little bewildering sometimes, I say in a blatant attempt to earn your sympathy.
That’s how I’m feeling this early Monday morning, as I try to get a handle on the CWB court case/injunction situation, develop an understanding of the Canada/U.S. non-aggression pact on border trade and security, and to remember what I heard at the Prairie Oat Growers Convention and Grow Canada conference the week before. (I had last week off on holiday and the Friday after POGA I was sick, so I’ve been completely disconnected for 10 days.) Crickey, a lot happens in this industry in a week.
As I ran around my house last week trying to keep up with my three pre-school kids (they can create messes faster than a 45-year-old like me can clean up) I occasionally popped in to my Twitter feed, and I saw snippets and chunklets of stuff about the CWB court case and the border statement, as well as all the daily flotsam and jetsam that washes up upon our agricultural consciousness. So I know stuff happened, but not exactly what or why. Which, I suppose, is how most people live their lives anyway. My problem is that I have to actually get to understand this stuff so I can interview people about it, then write it up in some form of pastiche.
My assumption about the CWB thingy is that the point of getting Ritz’s actions declared illegal is to then have the ability to demand an injunction against the new act going into force. So we still have no clue about what the actual state of grain marketing will be in a week, a month or for the new year.
My guess about the cross-border thingy is that it’s a non-binding type of non-aggression pact that says that politicians on both sides of the border will back away from picking fights with the other guy, to hold back the dogs of political opportunism, and make sensible things like harmonization and streamlining happen more sensibly. Nice-sounding sentiments, no doubt, but does anyone actually think it will change the unpleasant situation of the past 10 years?
Well, I suppose I’d better get on to developing some sort of understanding of these things.
Need another coffee . . .
•
I’m on holidays this week, soaking up the tropical Winnipeg weather, but couldn’t resist from popping-up my suntan-lotioned head to say two things:
Remember what I said about the oats industry having a uniquely integrated community, where the biggest guns of the top manufacturers like General Mills and Quaker, and the biggest millers and buyers of the crop, the leading plant breeders in North Ameirca and any farmers who are interested can mingle, chat, discuss and debate the industry and crop at the Prairie Oat Growers Association’s annual meeting each year? It always seems to me to be a uniquely cooperative industry, at least in terms of communication and cooperation. I wrote a story for this week’s paper (out Thursday) about how that is leading to major advances in variety development.
It also strikes visitors to the industry who pop by, like Gordon Bacon of Pulse Canada, who unveiled a sustainability study to POGA on Thursday.
“In going to farm meetings for quite a few years, there’s not a lot of meetings where you get General Mills and Pepsico (Quaker’s owner) and others in the room,” he noted.
Absolutely golldurned right, I say. And it’s a shame that only 100 or 200 farmers go to the convention. You should all be there.
Anyhoo, here’s the other thing I wanted to blurt out:
Have we hit the bottom of the crop markets for this crop year? The equity markets are back in rally mode (thank Santa Claus) and crops have stopped generally falling. But they’ve had only week rebounds, or gone flat.
That’s OK if we’re bottoming and beginning to recover. So let’s hope. That used to be a seasonal pattern, but because of non-ag factors dominating crop prices these days, you certainly can’t count on those patterns any longer.
Here’s how crops have looked recently:
May corn
May Oats
March canola
May spring wheat
CRB commodities index
