Is diversification back to the future again?

For those of us long in the tooth seeing old issues and schemes coming back is part of the march of time.

For those of us long in the tooth seeing old issues and schemes coming back is part of the march of time. One is bemused at seeing how younger folk become filled with enthusiasm as they reveal to us newly re-discovered schemes to save the world. Well that approach is always positive even if it means plowing over old ground – being that this time such eager young people may well succeed where many of us have failed in the past. I refer to the latest political mantra being expressed – that being the Alberta economy needs to be diversified. No problem with the concept but haven’t we been there before – say about 30 years ago.

Back in those ancient times oil prices had skyrocketed to $35 dollars and the province and government seemed to be awash in cash. The government had money to buy an airline, build a magnesium plant and much else all in the name of investment in the future. Agriculture was no exception to that government investment. It came in various initiatives – the most significant was the quadrupling of the size of the Ag department bureaucracy. It came in the form of a massive increase in the extension program that saw district agriculturists and home economists located in almost every town and village in Alberta. The idea was that if we could just educate rural folks – ag production, efficiency and diversification would increase ten-fold with the wisdom and guidance of all those government advisors.

The other approach was direct investment in ag infrastructure like processing and transportation. That saw investments in building a grain terminal in Prince Rupert, a lamb processing plant in Innisfail, the purchase of hundreds of hopper cars to haul grain and myriad other schemes. They probably all helped but it’s hard to determine the long term benefits. The government also went into direct subsidy schemes for producers and guaranteed many shaky farm loans that other lending agencies refused. The government also took an activist role in opposing the crow rate and undermining the Canadian Wheat Board. So what has all that got to do with today’s diversification hopes?

Firstly most of those schemes have faded into history and the Agriculture department has shrunk to a ghost of its former size. One of the reasons was that the government of the day discovered that farmers and ranchers were not as dumb as they assumed and didn’t need a lot of advice from government agents to succeed. I guess it was a learning experience – hopefully the new enthusiasm for diversification will learn from that history. It’s unlikely that new diversification schemes will involve direct investment in agriculture or subsidization – except for some natural disaster or market calamity. One hopes that indirect programs like tax relief or interest forgiveness will be used. Such schemes (and some lucrative stabilization programs) were used to establish and expand the cattle feedlot industry to the size that it is today. On the other hand much support was given to increase hog production but it faltered in the long run.

Curiously, agricultural diversification always seems to come to mind both when oil prices are up and when they collapse. I don’t know whether that’s because of perceived opportunities or desperation as a last resort when all else fails. There is hope not so much for diversification but expansion in the ag sector. The irrigation industry could be expanded, increased hemp production both legal and future legal should be seriously considered, more bison production seems quite feasible, greenhouse production could increase, more sheep production is possible, there is even hope for poppy production for morphine . Cereal production could significantly increase if the government had the courage to push for GM wheat and barley. Even the supply-managed commodities’ production could be expanded if Alberta was allowed to satisfy its own provincial demand and not be subject to traditional market shares by other provinces.  Cattle and hog production are the challenge – numbers continue to decline even with good markets. Diversification/expansion seem possible but times have also changed – environmental perspectives and politically correct trends are impacting agriculture and its direction and expansion.

One reality is that all commodities face similar issues – aging and declining number of producers, high land prices, consolidation and the lure of a better life elsewhere. None of that bodes well for increasing employment and economic activity through diversification. In the end agriculture will survive and thrive, but what it will look like may not be due to any diversification schemes.