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The Cost of Rome burning - Canola Basis

By Murray Fulton and Richard Gray on June 19, 2008 9:32 AM | | Comments (2)

Blog entries from early May ("Just Fiddlin...?" and "Just Fiddlin...? (Part 2)") painted a picture of the extent of unresolved policy issues in Canadian agriculture. As we indicated in those earlier entries we would post follow-up blog entries to estimate the costs of having improperly aligned policy. This entry is the second follow-up entry. In this entry we provide a rough cost estimate of the widened canola basis in the commodity market. The estimates that we provide are by no means a complete costing of the issues; in fact we encourage comments on our assumptions and alternative ways to valuate the policy issues.


Preliminary estimates show that the costs of an erratic canola basis could be in the range of $100 in a one-time loss to an annual $400 million loss (see Table 1). This cost is one that is borne entirely by farmers (as the entry from two weeks ago indicated (link), the costs associated with transportation problems are split between farmers and other system players).

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The cost of Rome burning - Transportation

By Murray Fulton and Richard Gray on May 29, 2008 9:29 AM | | Comments (0)
Blog entries from early May ("Just Fiddlin...?" and "Just Fiddlin...? (Part 2)") painted a picture of the extent of unresolved policy issues in Canadian agriculture. As we indicated in those earlier entries we would post follow-up blog entries that estimated the costs of having improperly aligned policy. This entry is the first follow-up entry; in it we will provide a rough cost estimate for one of the issues - namely transportation. The estimates that we provide are by no means a complete costing of the issues; in fact we encourage comments on our assumptions and alternative ways to valuate the policy issues. This preliminary evaluation shows that the costs of a poorly functioning rail transportation system could be in the range of $400 million to approximately one billion dollars. At the same time, only a very small amount of analysis is being undertaken to resolve this policy issue.
Continue reading The cost of Rome burning - Transportation.

Just Fiddlin...? (Part 2)

By Murray Fulton and Richard Gray on May 8, 2008 9:43 AM | | Comments (0)

Last week's Illative Blog entry (see link) highlighted three issues that we think are critically in need of examination and analysis. This week we examine three additional issues, followed by a discussion of why the capacity to analyse these issues is limited.

Continue reading Just Fiddlin...? (Part 2).

Just Fiddlin...?

By Murray Fulton and Richard Gray on May 1, 2008 9:50 AM | | Comments (3)
Agriculture has been making headlines over the last few weeks and months, as higher food prices and soaring fertilizer stock prices have focused the country and the world's attention on the production of food. The issues are important - rapidly rising commodity prices, for instance, are making it extremely difficult for the world's poor and very poor to get enough to eat. While attention has to be paid to these global issues, attention also needs to be paid to what are clearly domestic issues - issues that not only threaten the competitiveness of the Canadian agricultural sector but also affect our ability to be a reliable and secure food supplier.
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Will the boom last?....Maybe.

By Richard Gray on February 7, 2008 9:59 AM | | Comments (0)
Whenever crop prices rise analysts are often asked to predict how long the rise will last. Making price forecasts involves looking at past trends, current drivers and commodity price cycles. Commodity price cycles typically follow the pattern of long periods of low prices with short price peaks in between the price troughs. Strong prices are short-lived because high prices encourage investment, which increases production, resulting in an oversupply and subsequent price decline. Is this current price peak just another blip in the commodity cycle or has something changed? I would argue these high prices might last longer because of three factors in particular: (1) growing economies in China and India; (2) Hubbert's Peak, and; (3) U.S. biofuel policy.
Continue reading Will the boom last?....Maybe..
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