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Tuesday, July 08, 2008
Will the rural renaissance bring a new liberty?
The Globe and Mail reported in February that Canadian farm incomes are expected to rise by 40% this year as part of a global agriculture boom. If this boom is like the last one, farmland values could increase by as much as 550%, according to research released today by the Agcapita Farmland Investment Partnership.
“Farmland investors should know that during the last commodity bull market, roughly the period from 1970 to 1980, gold and oil both rose over 1,000%. The average price of Canadian farmland rose over 550% during the same period – from around $100 per acre to around $550 per acre,” said investment director Stephen Johnston.
Increasing farm incomes and agriculture investments bring with it the exciting promise of a rural renaissance and the restoration of Canada’s culture of liberty.
Ontario Progressive Conservative MPP, Randy Hillier, made this observation in Le Québécois Libre about rural culture:
Without question, the road to Canada's high standard of living and democracy was originally paved by the rural economy. Our forefathers cultivated a lifestyle of individual liberty, independence, and self-reliance through sustainable fishing, farming, and forestry. The harvest was prosperity, mutual respect, and good government. However, Canada's prosperous rural economy is crumbling and under attack from urban socialism and the weight of government deception.
With the rural economy strengthening, perhaps common sense rural values like those held by Hillier will find prominence again in Canadian public life.
Posted by Matthew Johnston
Posted by westernstandard on July 8, 2008 in Current Affairs | Permalink
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Comments
Keep wishin' there Matty. It's about the number of voters and the number are in the big cities.
Bummer eh?
Posted by: John V | 2008-07-08 7:56:02 PM
Rural Canada doesn't need more liberty, it needs more order.
Canada is the only industrialized country that has a higher rural crime rate than urban crime rate. I live in Ottawa and contemplate moving to the country all the time; the crime rate is a major factor in my staying in the city.
We strive for the perfect balance of freedom and order, yin and yang, rather than maximizing freedom, for reasons that I should not have to explain to adults.
Humans are not randomly scattered economic inputs, but highly social animals.
Canadian governments force Canadians to live in the city; most provinces don't sell crown land at all anymore, and in the case of my province 83% of land is crown land, deliberately hoarded by the state to more or less force Canadians to live in cities, where it is easier to deliver social services, etc. Land is cheaper in America as a result; that really shouldn't be the case.
Posted by: Ottawan | 2008-07-09 3:59:32 AM
John V: "Keep wishin' there Matty. It's about the number of voters and the number are in the big cities."
Actually, that's only half true. The vote that politicians have to court most aggressively is the undecideds, the "swing voters." Most parties can count on a core of popular support, but if the race is close--as it often is in Canada--it doesn't take much to tilt things the other way.
Posted by: Shane Matthews | 2008-07-09 7:36:31 AM
Actually, John, the reason the rural crime rate in Canada is higher is that's where the First Nations people live. There, I said it--but just look at the percentage of First Nations in largely rural provinces like Saskatchewan and Manitoba. That the reserves need more order is beyond dispute.
Posted by: Shane Matthews | 2008-07-09 7:38:33 AM
P.S. What I meant to say was, "Look at the percentage of THE INMATE POPULATIONS of largely rural provinces that First Nations." Although it's true that in the prairies First Nations make up a higher percentage of the total population, that in itself is not proof of their contributing to crime statistics out of proportion to their numbers.
The high percentage of inmates who are First Nations, however, especially in light of their low overall numbers, is very compelling proof of this. It seems like Canada, like America, has a perpetual underclass. And if the Americans are smart, they'll learn from our example and realize that it will take more to help that group than simply throwing money at them.
Posted by: Shane Matthews | 2008-07-09 7:48:37 AM
In reference to Ottawans comment anout the cost of rural land.... of course rural land outside of your city costs more..because it is close to your city...therefore land value is higher. Start looking a little more north ...their giving it away up here! As far as the crime rate there has been 1 murder in Timmins in 4 years. Your government does not force you to do anything, the choice is yours..If you are willing to give up 24 hour convenience of stores, garbage & recycling pickup and 911...come on up the fishing is great!
Posted by: maya | 2008-07-09 8:18:35 AM
Sorry ottawan I guess I should finish my tea...you didn't mention the cost of land except to references the cost in America (by which I assume you mean the US?
Posted by: maya | 2008-07-09 8:28:37 AM
Once the Urban voters realize that the high cost of agricultural products are significantly an artificial construct from PC brain dead government energy tinkering, they will vote accordingly (and politicians will swing accordingly).
I understand that petroleum derived from coal (South Africa during sanctions and Germany during the War) is as economical as much of the potential oil sands production. It won't be too long (pending the "mother-may-I" permitting from government agencies) before that revival begins and Western Canada has coal in great abundance. Good riddance to ethanol!
Posted by: John Chittick | 2008-07-09 10:25:04 AM
A little off topic, but why is it that when the price of oil rises, the oil companies are greedy. But when the price of grain rises, we are happy for the farmers?
Posted by: TM | 2008-07-09 10:45:29 AM
A little off topic, but why is it that when the price of oil rises, the oil companies are greedy. But when the price of grain rises, we are happy for the farmers?
Posted by: TM | 9-Jul-08 10:45:29 AM
Maybe it has something to do with when the price of oil drops $10 a barrel, as it has over the last couple of days, Petro-Canada increases prices by 8 cents a liter. Or when the price of oil stays steady the price of gas always seems to rise on Thursday and start coming down on Monday.
Posted by: The Stig | 2008-07-09 11:11:20 AM
Stig, the price is based on supply and demand of refined products and refinery capacity as well as the price of their feed stock (crude). This is no different than the grain and grain processing industries. However, the oil companies are demonized even though do the same thing. That is, gladly accept the maximum price for their product they possibly can, and gladly sell any assets for the maximum they possibly can.
Posted by: TM | 2008-07-09 11:22:35 AM
The Stig,
When wheat futures fall, you don't expect an overnight discount on bread do you?
TM is exactly right.
Posted by: Matthew Johnston | 2008-07-09 11:25:59 AM
Stig, the price is based on supply and demand of refined products and refinery capacity as well as the price of their feed stock.
Posted by: TM | 9-Jul-08 11:22:35 AM
That's what they want you to believe. Explain why when Hurricane Katrina hit prices jumped 25 cents a liter in one day. Does that price rise fit your model?
Posted by: The Stig | 2008-07-09 11:37:28 AM
Well, you have to remember than on an inflation basis agricultural products were in the depths during the 1990s. So while 40% seems like a large number, it really has only brought food products back to snuff on an inflation basis. What I hope results from this as well is an end to the subsidy system fougth over so relentlessly in Canada, the US and Europe.
Crime higher in rural areas? LOL. You guys in Toronto having fun ducking from driveby fire from Jamaicans?
Posted by: Faramir | 2008-07-09 11:45:35 AM
When wheat futures fall, you don't expect an overnight discount on bread do you?
Posted by: Matthew Johnston | 9-Jul-08 11:25:59 AM
No I wouldn't. Nor would I expect an immediate rise in bread prices if wheat futures prices went up. Do gas prices go up almost immediately in Canada when oil futures rise?
Posted by: The Stig | 2008-07-09 11:49:26 AM
Crime higher in rural areas? LOL. You guys in Toronto having fun ducking from driveby fire from Jamaicans?
Posted by: Faramir | 9-Jul-08 11:45:35 AM
That's only happens in Zebulon Punk's home turf of Jane - Finch
Posted by: The Stig | 2008-07-09 12:10:43 PM
Fair point. There are many variables that influence price. The best consumers can hope for is competitive markets, which we have in the gas station business. In fact, the big debate recently was below cost selling of fuel at gas stations.
Posted by: Matthew Johnston | 2008-07-09 12:21:02 PM
In the gas price debate, the supply / demand argument does not stand up. When the price for a barrel of crude goes up, the market price for gas at the pump immediately follows. When the price of crude goes down, oil companies tell us they can't reduce retail prices at the pump until the expensive oil flows through the system.
It seems to me that if this is truly the case, there should also be a delay in increasing retail prices until the cheap crude reaches the gas pumps. But of course, that never happens.
Posted by: Old Guy | 2008-07-09 1:04:44 PM
The Stig,
It is understandable to be suspicious of oil comapnies. But is it possible, no matter how remote the chance may be, that it is market forces affecting the price?
If it is at all possible, then you might ask what are those forces and you might seek to understand why they have the effect they do.
The position you may be coming from is that the oil companies fix prices. It is possible that this is true as well, since anecdotally it seems to most drivers to be that way. However, the evidence so strongly supports the view that it is market forces, you can't ignore it.
Posted by: TM | 2008-07-09 1:26:15 PM
Does this renaissance mean we will see the end of the endless government subsidies to agriculture and resource industries, marketing boards, tax credits for just living somewhere remote, and on and on? Somehow I doubt it. Rural socialism is no less pervasive than urban socialism, and is protected by some pretty skilled and frankly vile lobbies.
Posted by: GDH | 2008-07-09 1:57:42 PM
Ottawan,
You recognize that "most provinces don't sell crown land at all anymore, and in the case of my province 83% of land is crown land, deliberately hoarded by the state to more or less force Canadians to live in cities." I'm assuming that you think the remedy is that the land is should be privately owned, not 'owned in common by society', in my view that's a perfect example of rural Canada needing more liberty, economic freedom, and private property.
If I'm understanding you correctly, you view liberty and order as incompatible or largely at odds with each other. Have you considered that the state may be the source of much of the disorder? When a small group of individuals get to make up the rules about what everybody else can do, and then has the privilege of enforcing them through extortion, you end up with a complete perversion of the natural system of ordered liberty.
If rural Canada has a high crime rate, why aren't you considering the failures of the agency that is tasked with preventing crime? The truth is in decentralized areas like rural Canada, the police just can't provide order and security unless we expect them to lock everyone down.
Posted by: Kalim Kassam | 2008-07-09 3:01:39 PM
However, the evidence so strongly supports the view that it is market forces, you can't ignore it.
Posted by: TM | 9-Jul-08 1:26:15 PM
TM. You've convinced me. When I drove home tonight I made a special effort to check out the gas prices in the town I live in. There are 7 stations they all owned by the majors. I checked and all the stations are directly owned by each oil company There are no independents. Would you believe it all the prices were exactly the same. Even diesel was the same. This got me thinking how efficient the downstream operations of Petro-Canada, Esso and Shell are when all three company's price their gas it miraculously is exactly the same as their competitors.
A little bit more research and I found and article about Petro-Canada. The CEO of Petro-Canada, Ron Brenneman, stated on April 28th, 2008, "We actually had negative refinery margins for a period of time in the first quarter, so that's how volatile these margins can become. In other words we were losing money on every barrel that we were refining into gasoline," he said.
Petro-Canada also claims that some of its stations sell gas at a lose.
So Petro-Canada loses money refining gas, loses money selling gas. The silver lining in all this is they do make a healthy profit selling chocolate bars,lotto tickets and Tim Horton's coffee at their stations. Wouldn't you agree that that is a business plan that makes sense.
So as I mentioned at the beginning you have convinced me that the oil company's would never, ever try and manipulate the pump price, except when there is a hurricane, or it rains in Oklahoma, there's a long week-end coming, summer driving season is coming, winter heating season is coming...........
Posted by: The Stig | 2008-07-09 5:53:04 PM
However, the evidence so strongly supports the view that it is market forces, you can't ignore it.
Posted by: TM | 9-Jul-08 1:26:15 PM
TM. You've convinced me. When I drove home tonight I made a special effort to check out the gas prices in the town I live in. There are 7 stations they all owned by the majors. I checked and all the stations are directly owned by each oil company There are no independents. Would you believe it all the prices were exactly the same. Even diesel was the same. This got me thinking how efficient the downstream operations of Petro-Canada, Esso and Shell are when all three company's price their gas it miraculously is exactly the same as their competitors.
A little bit more research and I found and article about Petro-Canada. The CEO of Petro-Canada, Ron Brenneman, stated on April 28th, 2008, "We actually had negative refinery margins for a period of time in the first quarter, so that's how volatile these margins can become. In other words we were losing money on every barrel that we were refining into gasoline," he said.
Petro-Canada also claims that some of its stations sell gas at a lose.
So Petro-Canada loses money refining gas, loses money selling gas. The silver lining in all this is they do make a healthy profit selling chocolate bars,lotto tickets and Tim Horton's coffee at their stations. Wouldn't you agree that that is a business plan that makes sense.
So as I mentioned at the beginning you have convinced me that the oil company's would never, ever try and manipulate the pump price, except when there is a hurricane, or it rains in Oklahoma, there's a long week-end coming, summer driving season is coming, winter heating season is coming...........
Posted by: The Stig | 2008-07-09 5:53:11 PM
Stig,
I don't think I said they would never try. I don't think I even said they never have or never would. Most companies are only quasi in support of free markets in practice, when they can gain an advantage. But I think making them out to be the villain when the evidence is only anecdotal (our observations, mine included), yet there are real villain is the government who take in huge taxes (more than the profits of the oil companies) without adding a penny of value to the product.
In addition, my message was that it is easy to view the oil companies as doing wrong when the do business the way they do, but are happy when farmers do the same thing. That is use every lever they can to make as much money as they can, while they can.
By the way, we should thank all the companies who charge the absolute maximum they can get for their water or gasoline after hurricanes and other natural disasters. No, I am serious. Think about it. Prices reflect existing conditions of supply and demand. If people are willing to pay $10 per gallon of water, then the serious shortfall and need is communicated very well that the demand is very high. The greedy profit motive will make sure the demand is met faster and more efficiently than anything else we could do. All without legislation.
Posted by: TM | 2008-07-09 6:39:49 PM
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