Through the mill: 150 years of wheat price data

Graph of wheat price, western Canada (Sask. or Man.), farmgate, dollars per bushel, 1867–2017
Wheat price, western Canada (Sask. or Man.), farmgate, dollars per bushel, 1867–2017

The price of wheat is declining, and it has been for many years.  The same is true for the prices of other grains and oilseeds.  The graph above shows wheat prices in Canada since Confederation—over the past 150 years.  The units are dollars per bushel.  A bushel is 60 pounds (27 kilograms).  The brown line suggests a trendline.

These prices are adjusted for inflation.  The downward trend reflects the fact that wheat prices fell relative to prices for nearly all other goods and services; as time went on it took more and more bushels of wheat or other grains to buy a pair of shoes, lunch, or a movie ticket.  For example, my father bought a new, top-of-the-line pickup truck in 1976 for $6,000, equivalent to about 1,200 bushels of wheat at the time.  Today, a comparable pickup (base model) might cost the equivalent of about 4,000 bushels of wheat.  As a second example, a house in 1980 might have cost the equivalent of 20,000 bushels of wheat; today, that very same house would cost the equivalent of 60,000 bushels.

The graph below adds shaded boxes to highlight three distinct periods in Canadian wheat prices.  The period from Confederation to the end of the First World War saw prices roughly in the range of $20 to $30 per bushel (adjusted to today’s dollars).  From 1920 to the mid-’80s, prices entered a new phase, and oscillated between about $8 and $18 per bushel.  And in 1985, wheat prices entered a third phase, oscillating between $5 and $10 per bushel, more often closer to $5 than $10.  In each phase, the top of the range in a given period is roughly equal to the bottom of the range in the previous period.

Graph of wheat price, western Canada (Sask. or Man.), farmgate, dollars per bushel, 1867–2017
Wheat price, western Canada, farmgate, dollars per bushel

1985 is often cited as the beginning of the farm crisis period.  The graph above shows why the crisis began in that year.  Grain prices since the mid-’80s have been especially damaging to Canadian agriculture.  The post-1985 collapse in grain prices has had several effects:

– The expulsion of one-third of Canadian farm families in just one generation;
– The expulsion of two-thirds of young farmers (under 35 years of age) over the same period;
– A tripling of farm debt, to a record $102 billion;
– A chronic need to transfer taxpayer dollars to farmers through farm-support programs (with transfers totaling $110 billion since 1985); and
– A push toward farm giantism, with the majority of land in western Canada now operated by farms larger than 3,000 acres, and with many farms covering tens-of-thousands of acres.

As per-bushel and per-acre margins fall, the solution is to cover more acres.  The inescapable result is fewer farms and farmers.

It is impossible to delve into all the causes of the grain price decline in one blog post.  Briefly, farmers are getting less and less because others are taking more and more.  A previous blog post highlighted the widening gap between what Canadians pay for bread in the grocery store and what farmers receive for wheat at the elevator.  This widening gap is created because grain companies, railways, milling companies, other processors, and retailers are taking more and more, chocking off the flow of dollars to farmers.  This is manifest in declining prices.  Agribusiness giants are profiting by charging consumers more per loaf and paying farmers less per bushel.

Of course, grain prices are a function of domestic and international markets.  The current free trade and globalization era began in the mid-1980s.  (The Canada-US Free Trade Agreement was concluded in 1987, the North American Free Trade Agreement in 1994, and the World Trade Organization Agreement on Agriculture in 1995.)  The effect of free trade and globalization has been to plunge all the world’s farmers into a single, borderless, hyper-competitive market.  At the same time, agribusiness corporations entered a period of accelerating mergers in order to reduce the competition they faced.  As competition levels increase for farmers and decrease for agribusiness corporations it is easy to predict shifts in relative profitability.  Increased competition for farmers meant lower prices while decreased competition for agribusiness transnationals translated into higher prices and profits.

Graph sources:
– 1867–1974: Historical Statistics of Canada, eds. Leacy, Urquhart, and Buckley, 2nd ed. (Ottawa: Statistics Canada, 1983);
– 1890–1909: Wholesale Prices in Canada, 189O–19O9, ed. R. H. Coats (Ottawa: Government Printing Bureau, 1910);
– 1908–1984: Statistics Canada, Table: 32-10-0359-01 Estimated areas, yield, production, average farm price and total farm value of principal field crops (formerly CANSIM 001-0017);
– 1969–2009: Saskatchewan Agriculture and Food: Statfact, Canadian Wheat Board Final Price for Wheat, basis in store Saskatoon;
– 2012–2018: Statistics Canada, Table: 32-10-0077-01 Farm product prices, crops and livestock (formerly CANSIM 002-0043).

Methane and climate: 10 things you should know

Graph of global atmospheric methane concentrations
Global atmospheric methane concentrations, past 10,000+ years (8000 BCE to 2018 CE)

The graph above shows methane concentrations in Earth’s atmosphere over the past 10,000+ years: 8000 BCE to 2018 CE.  The units are parts per billion (ppb).  The year 1800 is marked with a circle.

Note the ominous spike.  As a result of increasing human-caused emissions, atmospheric methane levels today are two-and-a-half times higher than in 1800.  After thousands of years of relatively stable concentrations, we have driven the trendline to near-vertical.

Here are 10 things you should know about methane and the climate:

1. Methane (CH4) is one of the three main greenhouse gases, along with carbon dioxide (CO2) and nitrous oxide (N2O).

2. Methane is responsible for roughly 20% of warming, while carbon dioxide is responsible for roughly 70%, and nitrous oxide the remaining 10%.

3. Methane is a powerful greenhouse gas (GHG).  Pound for pound, it is 28 times more effective at trapping heat than is carbon dioxide (when compared over a 100-year time horizon, and 84 times as effective at trapping heat when compared over 20 years).  Though humans emit more carbon dioxide than methane, each tonne of the latter traps more heat.

4. Fossil-fuel production is the largest single source.  Natural gas is largely made up of methane (about 90%).  When energy companies drill wells, “frac” wells, and pump natural gas through vast distribution networks some of that methane escapes.  (In the US alone, there are 500,000 natural gas wells, more than 3 million kilometers of pipes, and millions of valves, fittings, and compressors; see reports here and here.)  Oil and coal production also release methane—often vented into the atmosphere from coal mines and oil wells.  Fossil-fuel production is responsible for about 19% of total (human-caused and natural) methane emissions.  (An excellent article by Saunois et al. is the source for this percentage and many other facts in this blog post.)  In Canada, policies to reduce energy-sector methane emissions by 40 percent will be phased in over the next seven years, but implementation of those policies has been repeatedly delayed.

5. Too much leakage makes electricity produced using natural gas as climate-damaging as electricity from coal.  One report found that for natural gas to have lower overall emissions than coal the leakage rate would have to be below 3.2%.  A recent study estimates leakage in the US at 2.3%.  Rates in Russia, which supplies much of the gas for the EU, are even higher.  Until we reduce leakage rates, the advantage of shutting down coal-fired power plants and replacing them with natural gas generation will remain much more modest than often claimed.

6. Domestic livestock are the next largest source of methane.  Cattle, sheep,  and other livestock that graze on grass emit methane from their stomachs through their mouths.  This methane is produced by the symbiotic bacteria that live in the guts of these “ruminants” and enable them to digest grass and hay.  In addition, manure stored in liquid form also emits methane.  Livestock and manure are responsible for roughly 18% of total methane emissions.

7. Rice paddy agriculture, decomposing organic matter in landfills, and biomass burning also contribute to methane emissions.  Overall, human-caused emissions make up about 60% of the total.  And natural sources (wetlands, swamps, wild ruminants, etc.) contribute the remaining 40%.

8. There is lots of uncertainty about emissions.  Fossil fuel production and livestock may be responsible for larger quantities than is generally acknowledged.  The rise in atmospheric concentrations is precisely documented, but the relative balance between sources and sinks and the relative contribution of each source is not precisely known.

9. There is a lot of potential methane out there, and we risk releasing it.  Most of the increase in emissions in recent centuries has come from human systems (fossil fuel, livestock, and rice production; and landfills).  Emissions from natural systems (swamps and wetlands, etc.) have not increased by nearly as much.  But that can change.  If human actions continue to cause the planet to warm, natural methane emissions will rise as permafrost thaws.  (Permafrost contains huge quantities of organic material, and when that material thaws and decomposes in wet conditions micro-organisms can turn it into methane.)  Any such release of methane will cause more warming which can thaw more permafrost and release more methane which will cause more warming—a positive feedback.

Moreover, oceans, or more specifically their continental shelves, contain vast quantities of methane in the form of “methane hydrates” or “clathrates”—ice structures that hold methane stable so long as the temperature remains cold enough.  But heat up the coastal oceans and some of that methane could begin to bubble up to the surface.  And there are huge amounts of methane contained in those hydrates—the equivalent of more than 1,000 years of human-caused emissions.  We risk setting off the “methane bomb“—a runaway warming scenario that could raise global temperatures many degrees and catastrophically damage the biosphere and human civilization.

Admittedly, the methane bomb scenario is unlikely to come to pass.  While some scientists are extremely concerned, a larger number downplay or dismiss it.  Nonetheless a runaway positive feedback involving methane represents a low-probability but massive-impact risk; our day-to-day actions are creating a small risk of destroying all of civilization and most life on Earth.

10. We can easily reduce atmospheric methane concentrations and  attendant warming; this is the good news.  Methane is not like CO2, which stays in the atmosphere for centuries.  No, methane is a “short-lived” gas.  On average, it stays in the atmosphere for less than ten years.  Many natural processes work to strip it out of the air.  Currently, human and natural sources emit about 558 million tonnes of methane per year, and natural processes in the atmosphere and soils remove all but 10 million tonnes.  (again, see Saunois et al.)  Despite our huge increase in methane production, sources and sinks are not that far out of balance.  Therefore, if we stop increasing our emissions then atmospheric concentrations could begin to fall.  We might see significant declines in just decades.  This isn’t the case for CO2, which will stay in the atmosphere for centuries.  But with methane, we have a real chance of reducing atmospheric levels and, as we do so, moderating warming and slowing climate change.

A series of policies focused on minimizing emissions from the fossil-fuel sector (banning venting and minimizing leaks from drilling and fracking and from pipes) could bring the rate of methane creation below the rate of removal and cause atmospheric levels to fall.  A more rational approach to meat production (including curbing over-consumption in North America and elsewhere) could further reduce emissions.  This is very promising news.  Methane reduction represents a “low-hanging fruit” when it comes to moderating climate change.

The methane problem is the climate problem in microcosm.  There are some relatively simple, affordable steps we can take now that will make a positive difference.  But, if we don’t act fast, aggressively, and effectively, we risk unleashing a whole range of effects that will swiftly move our climate into chaos and deprive humans of the possibility of limiting warming to manageable levels.  We can act to create some good news today, or we can suffer a world of bad news tomorrow.

Graph sources:
– United States Environmental Protection Agency (US EPA), “Climate Change Indicators: Atmospheric Concentrations of Greenhouse Gases.
– Commonwealth Scientific and Industrial Research Organisation (CSIRO), “Latest Cape Grim Greenhouse Gas Data.
– National Oceanic and Atmospheric Administration (NOAA), Earth System Research Laboratory, Global Monitoring Division, “Trends in Atmospheric Methane.

$100 billion and rising: Canadian farm debt

Graph of Canadian farm debt, 1971-2017
Canadian farm debt, 1971-2017

Canadian farm debt has risen past the $100 billion mark.  According to recently released Statistics Canada data, farm debt in 2017 was $102.3 billion—nearly double the level in 2000.  (All figures and comparisons adjusted for inflation.)

Some analysts and government officials characterize the period since 2007 as “better times” for farmers.  But during that period (2007-2017, inclusive) total farm debt increased by $37 billion—rising by more than $3 billion per year.

Here’s how Canadian agriculture has functioned during the first 18 years of the twenty-first century (2000 to 2017, inclusive):

1. Overall, farmers earned, on average, $47 billion per year in gross revenues from the markets (these are gross receipts from selling crops, livestock, vegetables, honey, maple syrup, and other products).

2. After paying expenses, on average, farmers were left with $1.6 billion per year in realized net farm income from the markets (excluding farm-support program payments).  If that amount was divided equally among Canada’s 193,492 farms, each would get about $8,300.

3. To help make ends meet, Canadian taxpayers transferred to farmers $3.1 billion per year via farm-support-program payments.

4. On top of this, farmers borrowed $2.7 billion per year in additional debt.

5. Farm family members worked at off-farm jobs to earn most of the household income needed to support their families (for data see here and here).

The numbers above give rise to several observations:

A. The amount of money that farmers pay each year in interest to banks and other lenders ($3 billion, on average) is approximately equal to the amount that Canadian citizens each year pay to farmers ($3.1 billion).  Thus, one could say that, in effect, taxpayers are paying farmers’ interest bills.  Governments are facilitating the transfer of tax dollars from Canadian families to farmers and on to banks and their shareholders.

B. Canadian farmers probably could not service their $100 billion dollar debt without government/taxpayer funding.

C. To take a different perspective: each year farmers take on additional debt ($2.7 billion, on average) approximately equal to the amount they are required to pay in interest to banks ($3 billion on average). One could say that for two decades banks have been loaning farmers the money needed to pay the interest on farmers’ tens-of-billions of dollars in farm debt.

Over and above the difficulty in paying the interest, is the difficulty in repaying the principle.  Farm debt now—$102 billion—is equal to approximately 64 years of farmers’ realized net farm income from the markets.  To repay the current debt, Canadian farm families would have to hand over to banks and other lenders every dime of net farm income from the markets from now until 2082.

The Canadian farm sector has many strengths.  By many measures, the sector is extremely successful and productive.  Over the past generation, farmers have managed to nearly double the value of their output and triple the value of agri-food exports.  Output per year, per farmer, and per acre are all up dramatically.  And Canadian farmers lead the world in adopting high-tech production systems.  The problem is not that our farms are backward, inefficient, or unproductive.  Rather, the problems detailed above are the result of voracious wealth extraction by the dominant agribusiness transnationals and banks. (To examine the extent of that wealth extraction, see my blog post here).

Although our farm sector has many strengths and is setting production records, the sector remains in a crisis that began in the mid-1980s.  And what began as a farm income crisis has metastasized into a farm debt crisis.  Further, the sector also faces a generational crisis (the number of farmers under the age of 35 has been cut by half since 2001) and a looming climate crisis.  Policy makers must work with farmers to rapidly restructure and transform Canadian agriculture.  A failure to do so will mean further costs to taxpayers, the destruction of the family farm, and irreparable damage to Canada’s food-production system.

We’re in year 30 of the current climate crisis

An excerpt from the Conference Statement of the 1988 World Conference on the Changing Atmosphere held in Toronto
An excerpt from the Conference Statement of the 1988 World Conference on the Changing Atmosphere held in Toronto

In late-June, 1988, Canada hosted the world’s first large-scale climate conference that brought together scientists, experts, policymakers, elected officials, and the media.  The “World Conference on the Changing Atmosphere: Implications for Global Security” was held in Toronto, hosted by Canada’s Conservative government, and attended by hundreds of scientists and officials.

In their final conference statement, attendees wrote that “Humanity is conducting an unintended, uncontrolled, globally pervasive experiment whose ultimate consequences could be second only to a global nuclear war.”  (See excerpt pictured above.)  The 30-year-old conference statement contains a detailed catalogue of causes and effects of climate change.

Elizabeth May—who in 1988 was employed by Canada’s Department of Environment—attended the conference.   In a 2006 article she reflected on Canada’s leadership in the 1980s on climate and atmospheric issues:

“The conference … was a landmark event.  It was opened by Prime Minister Mulroney, who spoke then of the need for an international law of the atmosphere, citing our work on acid rain and ozone as the first planks in this growing area of international environmental governance…. 

Canada was acknowledged as the leader in hosting the first-ever international scientific conference on climate change, designed to give the issue a public face.  No nation would be surprised to see Canada in the lead.  After all, we had just successfully wrestled to the ground a huge regional problem, acid rain, and we had been champions of the Montreal Protocol to protect the ozone layer.”

The Toronto conference’s final statement also called on governments and industry to work together to “reduce CO2 emissions by approximately 20% … by the year 2005…. ”  This became known as the Toronto Target.  Ignoring that target and many others, Canada has increased its CO2 emissions by 29 percent since 1988.

Other events mark 1988 as the beginning of the modern climate-change era.  In 1988, governments and scientists came together to form the United Nations Intergovernmental Panel on Climate Change (IPCC). Since its formation, IPCC teams of thousands of scientists have worked to create five Assessment Reports which together total thousands of pages.

Also in 1988, NASA scientist Dr. James Hansen told a US congressional committee that climate change and global warming were already underway and that he was 99 percent certain that the cause was a buildup of carbon dioxide and other gases released by human activities.  Thirty years ago, Hansen told the committee that “It is time to stop waffling so much and say that the evidence is pretty strong that the greenhouse effect is here.” The New York Times and other papers gave prominent coverage to Hansen’s 1988 testimony.

Fast-forward to recent weeks.  Ironically, in Toronto, the site of the 1988 conference, and 30 years later, almost to the day, newly elected Ontario Premier Doug Ford announced he was scrapping Ontario’s carbon cap-and-trade emission-reduction plan, he vowed to push back against any federal-government moves to price or tax carbon, and he said he would join a legal challenge against the federal legislation.  In effect, Ford and premiers such as Saskatchewan’s Scott Moe have pledged to fight and stop Canada’s flagship climate change and emission-reduction initiative.  To do so, 30 years into the modern climate change era, is foolhardy, destructive, and unpardonable.

Citizens need to understand that when they vote for leaders such as Doug Ford (Ontario), Scott Moe (Saskatchewan), Jason Kenney (Alberta), or Andrew Scheer (federal Conservative leader) they are voting against climate action.  They are voting for higher emissions; runaway climate change; melting glaciers and permafrost; submerged seaports and cities worldwide; hundreds of millions of additional deaths from heat, floods, storms, and famines; and crop failures in this country and around the world.  A vote for a leader who promises inaction, slow action, or retrograde action is a vote to damage Canada and the Earth; it is a vote for economic devastation in the medium and long term, for dried-up rivers and scorched fields.  A vote for Moe, Ford, Kenney, Scheer, Trump, and a range of similar leaders is a vote to unleash biosphere-damaging and civilization-cracking forces upon our grandchildren, upon the natural environment, and upon the air, water, soil, and climate systems that support, provision, nourish, and enfold us.

In the 1990s, in decade one of the current climate crisis, inaction was excusable.  We didn’t know.  We weren’t sure.  We didn’t have the data.

As we enter decade four, inaction is tantamount to reckless endangerment—criminal negligence.  And retrograde action, such as that from Ford, Moe, Trump, and others, is tantamount to vandalism, arson, ecocide, and homicide.  How we vote and who we elect will affect how many forests burn, how many reefs disappear, and how many animals and people die.

In the aftermath of every crime against humanity (or against the planet or against the future) there are individuals who try to claim “I didn’t know.”  In year 30 of the current climate-change era, none can make that claim.  We’ve known for 30 years that the ultimate consequences of ongoing emissions and climate change “could be second only to a global nuclear war.”

Home grown: 67 years of US and Canadian house size data

Graph of the average size of new single-family homes, Canada and the US, 1950-2017
Average size of new single-family homes, Canada and the US, 1950-2017

I was an impressionable young boy back in 1971 when my parents were considering building a new home.  I remember discussions about house size.  1,200 square feet was normal back then.  1,600 square feet, the size of the house they eventually built, was considered extravagant—especially in rural Saskatchewan.  And only doctors and lawyers built houses as large as 2,000 square feet.

So much has changed.

New homes in Canada and the US are big and getting bigger.  The average size of a newly constructed single-family detached home is now 2,600 square feet in the US and probably 2,200 in Canada.  The average size of a new house in the US has doubled since 1960.  Though data is sparse for Canada, it appears that the average size of a new house has doubled since the 1970s.

We like our personal space.  A lot.  Indeed, space per person has been growing even faster than house size.  Because as our houses have been growing, our families have been shrinking, and this means that per-capita space has increased dramatically.  The graph below, from shrinkthatfootprint.com, shows that, along with Australia, Canadians and Americans enjoy the greatest per-capita floorspace in the world.  The average Canadian or American each has double the residential space of the average UK, Spanish, or Italian resident.

Those of us fortunate enough to have houses are living in the biggest houses in the world and the biggest in history.  And our houses continue to get bigger.  This is bad for the environment, and our finances.

Big houses require more energy and materials to construct.  Big houses hold more furniture and stuff—they are integral parts of high-consumption lifestyles.  Big houses contribute to lower population densities and, thus, more sprawl and driving.  And, all things being equal, big houses require more energy to heat and cool.  In Canada and the US we are compounding our errors: making our houses bigger, and making them energy-inefficient.  A 2,600 square foot home with leading edge ‘passiv haus’ construction and net-zero energy requirements is one thing, but a house that size that runs its furnace half the year and its air conditioner the other half is something else.  And multiply that kind of house times millions and we create a ‘built in’ greenhouse gas emissions problem.

Then there are the issues of cost and debt.  We continually hear that houses are unaffordable.  Not surprising if we’re making them twice as large.  What if, over the past decade, we would have made our new houses half as big, but made twice as many?  Might that have reduced prices?

And how are large houses connected to large debt-loads?  Canadian debt now stands at a record $1.8 trillion.  Much of that is mortgage debt.  Even at low interest rates of 3.5 percent, the interest on that debt is $7,000 per year for a hypothetical family of four.  And that’s just the average.  Many families are paying a multiple of that amount, just in interest.  Then on top of that there are principle payments.  It’s not hard to see why so many families struggle to save for retirement or pay off debt.

Our ever-larger houses are filling the air with emissions; emptying our pockets of saving; filling up with consumer-economy clutter; and creating car-mandatory unwalkable, unbikable, unlovely neighborhoods.

The solutions are several fold.  First, new houses must stop getting bigger.  And they must start getting smaller.  There is no reason that Canadian and US residential spaces must be twice as large, per person, as European homes.  Second, building standards must get a lot better, fast.  Greenhouse gas emissions must fall by 50 to 80 percent by mid-century.  It is critical that the houses we build in 2020 are designed with energy efficient walls, solar-heat harvesting glass, and engineered summer shading such that they require 50 to 80 percent less energy to heat and cool.  Third, we need to take advantage of smaller, more rational houses to build more compact, walkable, bikable, enjoyable neighborhoods.  Preventing sprawl starts at home.

Finally, we need to consider questions of equity, justice, and compassion.  What is our ethical position if we are, on the one hand, doubling the size of our houses and tripling our per-capita living space and, on the other hand, claiming that we “can’t afford” housing for the homeless.  Income inequality is not just a matter of abstract dollars.  This inequality is manifest when some of us have rooms in our homes we seldom visit while others sleep outside in the cold.

We often hear about the “triple bottom line”: making our societies ecologically, economically, and socially sustainable.  Building oversized homes moves us away from sustainability, on all three fronts.

Graph sources:
US Department of Commerce/US Census Bureau, “2016 Characteristics of New Housing”
US Department of Commerce/US Census Bureau, “Characteristics of New Housing: Construction Reports”
US Department of Commerce/US Census Bureau, “Construction Reports: Characteristics of New One-Family Homes: 1969”
US Department of Labour, Bureau of Labour Statistics, “New Housing and its Materials:1940-56”
Preet Bannerjee, “Our Love Affair with Home Ownership Might Be Doomed,” Globe and Mail, January 18, 2012 (updated February 20, 2018) 

The cattle crisis: 100 years of Canadian cattle prices

Graph of Canadian cattle prices, historic, 1918-2018
Canadian cattle prices at slaughter, Alberta and Ontario, 1918-2018

Earlier this month, Brazilian beef packer Marfrig Global Foods announced it is acquiring 51 percent ownership of US-based National Beef Packing for just under $1 billion (USD).  The merged entity will slaughter about 5.5 million cattle per year, making Marfrig/National the world’s fourth-largest beef packer.  (The top-three are JBS, 17.4 million per year; Tyson, 7.7 million; and Cargill, 7.6.)  To put these numbers into perspective, with the Marfrig/National merger, the largest four packing companies will together slaughter about 15 times more cattle worldwide than Canada produces in a given year.  In light of continuing consolidation in the beef sector it is worth taking a look at how cattle farmers and ranchers are fairing.

This week’s graph shows Canadian cattle prices from 1918 to 2018.  The heavy blue line shows Ontario slaughter steer prices, and is representative of Eastern Canadian cattle prices.  The narrower tan-coloured line shows Alberta slaughter steer prices, and is representative for Western Canada.  The prices are in dollars per pound and they are adjusted for inflation.

The two red lines at the centre of the graph delineate the price range from 1942 to 1989.  The red lines on the right-hand side of the graph delineate prices since 1989.  The difference between the two periods is stark.  In the 47 years before 1989, Canadian slaughter steer prices never fell below $1.50 per pound (adjusted for inflation).  In the 28 years since 1989, prices have rarely risen that high.  Price levels that used to mark the bottom of the market now mark the top.

What changed in 1989?  Several things:

1.       The arrival of US-based Cargill in Canada in that year marked the beginning of integration and consolidation of the North American continental market.  This was later followed by global integration as packers such as Brazil-based JBS set up plants in Canada and elsewhere.

2.       Packing companies became much larger but packing plants became much less numerous.  Gone were the days when two or three packing plants in a given city would compete to purchase cattle.

3.       Packer consolidation and giantism was faciliated by trade agreements and global economic integration.  It was in 1989 that Canada signed the Canada-US Free Trade Agreement (CUSTA).  A few years later Canada would sign the NAFTA, the World Trade Organization (WTO) Agreement on Agriculture, and other bilateral and multilateral “free trade” deals.

4.       Packing companies created captive supplies—feedlots full of packer-owned cattle that the company could draw from if open-market prices rose, curtailing demand for farmers’ cattle and disciplining prices.

Prices and profits are only partly determined by supply and demand.  A larger factor is market power.  It is this power that determines the allocation of profits within a supply chain.  In the late ’80s and continuing today, the power balance between packers and farmers shifted as packers merged to become giant, global corporations.  The balance shifted as packing plants became less numerous, reducing competition for farmers’ cattle.  The balance shifted still further as packers began to utilize captive supplies.  And it shifted further still as trade agreements thrust farmers in every nation into a single, hyper-competitive global market.  Because market power determines profit allocation, these shifts increased the profit share for packers and decreased the share for farmers.   The effects on cattle farmers have been devastating.  Since the latter-1980s, Canada has lost half of its cattle farmers and ranchers.

For more background and analysis, please see the 2008 report by the National Farmers Union: The Farm Crisis and the Cattle Sector: Toward a New Analysis and New Solutions.

Graph sources: numerous, including Statistics Canada CANSIM Tables 002-0043, 003-0068, 003-0084; and  Statistics Canada “Livestock and Animal Products”, Cat. No. 23-203

 

 

Rail lines, not pipelines: the past, present, and future of Canadian passenger rail

Graph of Canadian railway network, kilometres, historic, 1836 to 2016
Canadian railway network, kilometres of track, 1836 to 2016

One kilometre of oil pipeline contains the same amount of steel as two kilometres of railway track.*  The proposed Trans Mountain pipeline expansion will, if it goes ahead, consume enough steel to build nearly 2,000 kms of new passenger rail track.  The Keystone XL project would consume enough steel to build nearly 4,000 kms of track.  And the now-cancelled Energy East pipeline would have required as much steel as 10,000 kms of track.  (For an overview of proposed pipelines, see this CAPP publication.)

With these facts in mind, Canadians (and Americans) should consider our options and priorities.  There’s tremendous pressure to build new pipelines.  Building them, proponents claim, will result in jobs and economic development.  But if we’re going to spend billions of dollars, lay down millions of tonnes of steel, and consume millions of person-hours of labour, should we be building soon-to-be-obsolete infrastructure to transport climate-destabilizing fossil fuels?  Or should we take the opportunity to create even more jobs building a zero-emission twenty-first century transportation network for Canada and North America?  Admittedly, the economics of passenger rail are different than those of pipelines; building a passenger rail system is not simply a matter of laying down steel rails.  But for reasons detailed below, limiting global warming probably makes significant investments in passenger rail inevitable.

The graph above shows the total length of the Canadian railway network.  The time-frame is the past 180 years: 1836 to 2016.  Between 1880 and 1918, Canada built nearly 70,000 kms of railway track—nearly 2,000 kms per year, using tools and machinery that were crude by modern standards, and at a time when the nation and its citizens were poor, compared to today.  In the middle and latter decades of the twentieth century, tens of thousands of kms of track were upgraded to accommodate heavier loads.

The length of track in the Canadian railway system peaked in the 1980s.  Recent decades have seen the network contract.  About a third of Canadian rail lines have been torn up and melted down over the past three-and-a-half decades.  Passenger rail utilization in recent years has fallen to levels not seen since the 1800s—down almost 90 percent from its 1940s peak, despite a doubling of the Canadian population.  Indeed, ridership on Via Rail is half of what it was as recently as 1989.

Contrast China.  In just one decade, that nation has built 25,000 miles of high-speed passenger rail lines.  Trains routinely operate at speeds in excess of 300 km/h.  Many of those trains were designed and built by Canada’s Bombardier.  China plans to build an additional 13,000 kms of high-speed passenger lines in the next seven years.

Japan’s “bullet trains” began running more than 50 years ago.  The Japanese high-speed rail network now exceeds 2,700 kms, with trains reaching speeds of 320 km/h.

Saudi Arabia, Poland, Turkey, and Morocco all have high-speed lines, as do more than a dozen nations in Europe.  Uzbekistan—with a GDP one-twentieth that of Canada’s—has built 600 kms of high-speed rail line and has trains operating at 250 km/h.

The construction of Canadian and North American passenger rail networks is probably inevitable.  As part of an international effort to hold global temperature increases below 2 degrees C, Canada has committed to reduce greenhouse gas (GHG) emissions emission by 30 percent by 2030—now less than 12 years away.  Emissions reductions must continue after 2030, reaching 50 to 60 percent in little more than a generation.  Emission reductions of this magnitude require an end to routine air travel.  Aircraft may still be needed for trans-oceanic travel, but within continents long-distance travel will have to take place using zero-emission vehicles: electric cars or buses for shorter journeys, and electrified passenger trains for longer ones.

This isn’t bad news.  Trains can transport passengers from city-centre to city-centre, eliminating long drives to and from airports.  Trains do not require time-consuming airport security screenings.  These factors, combined with high speeds, mean that for many trips, the total travel time is less for trains than for planes.  And because trains have more leg-room and often include observation cars, restaurants, and lounges, they are much more comfortable, enjoyable, and social.  For some long journeys where it is not cost-effective to build high-speed rail lines, European-style sleeper trains can provide comfortable, convenient overnight transport.  In other cases, medium-speed trains (traveling 150 to 200 km/h) may be the most cost-effective option.

Canada must embrace the inevitable: air travel must be cut by 90 percent; and fast, comfortable, zero-emission trains must take the place of the planes.  Maybe we can build thousands of kms of passenger rail lines and thousands of kms of pipelines.  But given the gravity and menace of the climate crisis and given the rapidly approaching deadlines to meet our emission-reduction commitments, it isn’t hard to see which should be our priority.


*For example, Kinder Morgan’s Trans Mountain pipeline would be made up primarily of 36” pipe (914mm) with a 0.465 wall thickness (11.8 mm).  This pipe weighs 262 kgs/m.  Rails for high-speed trains and other demanding applications often weigh 60 kgs/m.  As two rails are needed, this means 120 kgs/m—half the weight of a comparable length of pipeline.

Graph sources:
Urquhart and Buckley, 1965, Historical Statistics of Canada.
Leacy, Urquhart, and Buckley, 1983, Historical Statistics of Canada, 2nd Ed.
Stats. Can., Various years, Railway Transport in Canada: General Statistics.
Stats. Can., CANSIM Table 404-0010

 

If you’re for pipelines, what are you against?

Graph of Canadian greenhouse gas emissions, by sector, 2005 to 2039
Canadian greenhouse gas emissions, by sector, 2005 to 2030

As Alberta Premier Notley and BC Premier Horgan square off over the Kinder Morgan / Trans Mountain pipeline, as Alberta and then Saskatchewan move toward elections in which energy and pipelines may be important issues, and as Ottawa pushes forward with its climate plan, it’s worth taking a look at the pipeline debate.  Here are some facts that clarify this issue:

1.  Canada has committed to reduce its greenhouse gas (GHG) emissions by 30 percent (to 30 percent below 2005 levels by 2030).

2.  Oil production from the tar sands is projected to increase by almost 70 percent by 2030 (From 2.5 million barrels per day in 2015 to 4.2 million in 2030).

3.  Pipelines are needed in order to enable increased production, according to the Canadian Association of Petroleum Producers (CAPP) and many others.

4.  Planned expansion in the tar sands will significantly increase emissions from oil and gas production.  (see graph above and this government report)

5.  Because there’s an absolute limit on our 2030 emissions (515 million tonnes), if the oil and gas sector is to emit more, other sectors must emit less.  To put that another way, since we’re committed to a 30 percent reduction, if the tar sands sector reduces emissions by less than 30 percent—indeed if that sector instead increases emissions—other sectors must make cuts deeper than 30 percent.

The graph below uses the same data as the graph above—data from a recent report from the government of Canada.  This graph shows how planned increases in emissions from the Alberta tar sands will force very large reductions elsewhere in the Canadian economy.

Graph of emissions from the Canadian oil & gas sector vs. the rest of the economy, 2015 & 2030
Emissions from the Canadian oil & gas sector vs. the rest of the economy, 2015 & 2030

Let’s look at the logic one more time: new pipelines are needed to facilitate tarsands expansion; tarsands expansion will increase emissions; and an increase in emissions from the tarsands (rather than a 30 percent decrease) will force other sectors to cut emissions by much more than 30 percent.

But what sector or region or province will pick up the slack?  Has Alberta, for instance, checked with Ontario?  If Alberta (and Saskatchewan) cut emissions by less than 30 percent, or if they increase emissions, is Ontario prepared to make cuts larger than 30 percent?  Is Manitoba or Quebec?  If the oil and gas sector cuts by less, is the manufacturing sector prepared to cut by more?

To escape this dilemma, many will want to point to the large emission reductions possible from the electricity sector.  Sure, with very aggressive polices to move to near-zero-emission electrical generation (policies we’ve yet to see) we can dramatically cut emissions from that sector.  But on the other hand, cutting emission from agriculture will be very difficult.  So potential deep cuts from the electricity sector will be partly offset by more modest cuts, or increases, from agriculture, for example.

The graph at the top shows that even as we make deep cuts to emissions from electricity—a projected 60 percent reduction—increases in emissions from the oil and gas sector (i.e. the tar sands) will negate 100 percent of the progress in the electricity sector.  The end result is, according to these projections from the government of Canada, that we miss our 2030 target.  To restate: according to the government’s most recent projections we will fail to meet our Paris commitment, and the primary reason will be rising emissions resulting from tarsands expansion.  This is the big-picture context for the pipeline debate.

We’re entering a new era, one of limits, one of hard choices, one that politicians and voters have not yet learned to navigate.   We are exiting the cornucopian era, the age of petro-industrial exuberance when we could have everything; do it all; have our cake, eat it, and plan on having two cakes in the near future.  In this new era of biophysical limits on fossil fuel combustion and emissions, on water use, on forest cutting, etc. if we want to do one thing, we may be forced to forego something else.  Thus, it is reasonable to ask: If pipeline proponents would have us expand the tar sands, what would they have us contract?

Graph sources: Canada’s 7th National Communication and 3rd Biennial Report, December 2017

Earth’s dominant bird: a look at 100 years of chicken production

Graph of Chicken production, 1950-2050
Chicken meat production, global, actual and projected, 1950 to 2050

There are approximately 23 billion chickens on the planet right now.   But because the life of a meat chicken is short—less than 50 days—annual production far exceeds the number of chickens alive at any one time.  In 2016, worldwide, chicken production topped 66 billion birds.  Humans are slaughtering, processing, and consuming about 2,100 chickens per second.

We’re producing a lot of chicken meat: about 110 million tonnes per year.  And we’re producing more and more.  In 1966, global production was 10 million tonnes.  In just twelve years, by 1978, we’d managed to double production.  Fourteen years after that, 1992, we managed to double it again, to 40 million tonnes.  We doubled it again to 80 million tonnes by 2008.  And we’re on track for another doubling—a projected 160 million tonnes per year before 2040.  By mid-century, production should exceed 200 million tonnes—20 times the levels in the mid-’60s.  This week’s graph shows the steady increase in production.  Data sources are listed below.

The capacity of our petro-industrial civilization to double and redouble output is astonishing.  And there appears to be no acknowledged limit.  Most would predict that as population and income levels rise in the second half of the century—as another one or two billion people join the “global middle class”—that consumption of chicken and other meats will double again between 2050 and 2100.  Before this century ends, consumption of meat (chicken, pork, beef, lamb, farmed fish, and other meats) may approach a trillion kilograms per year.

Currently in Canada the average chicken farm produces about 325,000 birds annually.  Because these are averages, we can assume that the output of the largest operations is several times this figure.  In the US, chicken production is dominated by contracting.  Large transnationals such as Tyson Foods contract with individual growers to feed birds.  It is not unusual for a contract grower to have 6 to 12 barns on his or her farm and raise more than a million broiler chickens per year.

We’re probably making too many McNuggets.  We’re probably catching too many fish.  We’re probably feeding too many pigs.  And it is probably not a good idea to double the number of domesticated livestock on the planet—double it to 60 billion animals.  It’s probably time to rethink our food system.  

Graph sources:
FAOSTAT database
OECD-FAO, Agricultural Outlook 2017-2026
Brian Revell: One Man’s Meat … 2050?
Lester Brown: Full Planet, Empty Plates
FAO: World Agriculture Towards 2030/2050, the 2012 revision

The 100th Anniversary of high-input agriculture

Graph of tractor and horse numbers, Canada, historic, 1910 to 1980
Tractors and horses on farms in Canada, 1910 to 1980

2018 marks the 100th anniversary of the beginning of input-dependent farming—the birth of what would become modern high-input agriculture.  It was in 1918 that farmers in Canada and the US began to purchase large numbers of farm tractors.  These tractors required petroleum fuels.  Those fuels became the first major farm inputs.  In the early decades of the 20th century, farmers became increasingly dependent on fossil fuels, in the middle decades most also became dependent on fertilizers, and in the latter decades they also became dependent on agricultural chemicals and high-tech, patented seeds.

This week’s graph shows tractor and horse numbers in Canada from 1910 to 1980.  On both lines, the year 1918 is highlighted in red.  Before 1918, there were few tractors in Canada.  The tractors that did exist—mostly large steam engines—were too big and expensive for most farms.  But in 1918 three developments spurred tractor proliferation: the introduction of smaller, gasoline-engine tractors (The Fordson, for example); a wartime farm-labour shortage; and a large increase in industrial production capacity.  In the final year of WWI and in the years after, tractor sales took off.  Shortly after, the number of horses on farms plateaued and began to fall.  Economists Olmstead and Rhode have produced a similar graph for the US.

It’s important to understand the long-term significance of what has unfolded since 1918.  Humans have practiced agriculture for about 10,000 years—about 100 centuries.  For 99 centuries, there were almost no farm inputs—no industrial products that farmers had to buy each spring in order to grow their crops.  Sure, before 1918, farmers bought farm implements—hoes, rakes, and sickles in the distant past, and plows and binders more recently.  And there were some fertilizer products available, such as those derived from seabird guano (manure) in the eighteenth and nineteenth centuries.  And farmers occasionally bought and sold seeds.  But for most farmers in most years before about 1918, the production of a crop did not require purchasing an array of farm inputs.  Farm chemicals did not exist, very little fertilizer was available anywhere in the world until after WWII, and farmers had little use for gasoline or diesel fuel.  Before 1918, farms were largely self-sufficient, deriving seeds from the previous years’ crop, fertility from manure and nitrogen-fixing crops, and pulling-power from horses energized by the hay and grain that grew on the farm itself.  For 99 of the 100 centuries that agriculture has existed, farms produced the animal- and crop-production inputs they needed.  Nearly everything that went into farming came out of farming.

For 99 percent of the time that agriculture has existed there were few farm inputs, no farm-input industries, and little talk of “high input costs.”  Agricultural production was low-input, low-cost, solar-powered, and low-emission.  In the most recent 100 years, however, we’ve created a new kind of agricultural system: one that is high-input, high-cost, fossil-fuelled, and high-emission.

Modern agriculture is also, admittedly, high-output.  But this last fact must be understood in context: the incredible food-output tonnage of modern agriculture is largely a reflection of the megatonnes of fertilizers, fuels, and chemicals we push into the system.  Nitrogen fertilizer illustrates this process.  To produce, transport, and apply one tonne of synthetic nitrogen fertilizer requires an amount of energy equal to almost two tonnes of gasoline.  Modern agriculture is increasingly a system for turning fossil fuel Calories into food Calories.  Food is increasingly a petroleum product.

The high-input era has not been kind to farmers.  Two-thirds of Canadian farmers have been ushered out of agriculture over the past two generations.  More troubling and more recent: the number of young farmers—those under 35—has been reduced by two-thirds since 1991.  Farm debt is at a record high: nearly $100 billion.  And about the same amount, $100 billion, has had to be transferred from taxpayers to farmers since the mid-1980s to keep the Canadian farm sector afloat.  Farmers are struggling with high costs and low margins.

This is not a simplistic indictment of “industrial agriculture.”  We’re not going back to horses.  But on the 100th anniversary of the creation of fossil-fuelled, high-input agriculture we need to think clearly and deeply about our food production future.  As our fossil-fuel supplies dwindle, as greenhouse gas levels rise, as we struggle to feed and employ billions more people, and as we struggle with many other environmental and economic problems, we will need to rethink and radically transform our food production systems.  Our current food system isn’t “normal”: it’s an anomaly—a break with the way that agriculture has operated for 99 percent of its history.  It’s time to ask hard questions and make big changes.  It’s time to question the input-maximizing production systems agribusiness corporations have created, and to explore new methods of low-input, low-energy-use, low-emission production.

Rather than maximizing input use, we need to maximize net farm incomes, maximize the number of farm families on the land, and maximize the resilience and sustainability of our food systems.