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Market gluts can break farmers or producers of any manufactured products.  Because a safe, constant supply of good quality food is in the national interest some governments have elected to institute “supply management” on some products.  This is how it works; if a farmer wants to produce eggs, chickens, turkeys or dairy products she/he has to have a government license.  The farmer has to pay a competitive price for a license that allows for the production of a specific amount of farm product in a given length of time.  Now the government can adjust the supply to meet the demand at a given price.  This provides stability for the farm producer and the consumer, it works quite well.

Since President Trump made his erroneous remarks about the Canadian Dairy Industry and supply management, supply management has become a subject of discussion.  Here are some interesting data.  The problem with supply management is that there are always more farmers wanting licenses than there are licenses.  In some provinces some farmers who are not licensed can only produce a certain amount of product that they can sell legally every month.  The State of Wisconsin does not espouse supply management but encourages farmers increase in numbers and produce ever more dairy products with government subsidies.   In the opinion of some Wisconsin dairy farmers there are simply too many dairy farms in the State.  In 2017 Wisconsin dairy statistics show that Wisconsin has 9,520 dairy farms by comparison the whole of Canada only has 11,683*.  Ninety six percent of the dairy farms in Wisconsin are family farms which is a good thing.  The lack of better regulation may make life difficult for the family farm which is a bad thing.

There has been much discussion in Canada, at least about supply management and the cost of dairy products.  Commentators comparing the difference in dairy prices between Canada and the US, US prices are much lower.  There is a tremendous fixation on prices, it seems like a race to the bottom.  But think about it , lower prices on everything means that companies can pay their workers less. Instead of low prices it may be better to pay higher labour rates across the board.  I know critics will say that increasing wages without increasing production is inflationary but somehow it seems that higher profits are not.  In Canada low farm wages seem to be acceptable to both the federal and provincial governments. The idea is that food should be cheap for everybody.  A better idea is to have higher wage scales so that people can afford to pay a realistic price for food.  I, like many others are focused on how so much of the money in circulation ends up at the top.  Better wage scales are a part of the solution.  Quite some time ago Sonia and I were representing an industry group who wanted concessions from the government because they thought their labour costs were so high, they wanted to be government subsidized.  The Director of the government department who we were petitioning remarked “if they can’t afford to pay decent wages they really don’t have a business , do they?”.   From a business point of view when the public have more money they spend more, they buy houses, educate their children and in general make the economy go around.  One big concession is this; wage increase has to be universal otherwise there is an uneven playing field and some businesses can be left out in the cold and unable to compete.

Supply management is not only an instrument used by some governments to regulate farm industry which is often seen as being somewhat socialistic, there are others.  DeBeers, the original folks in the diamond business for years and years regulated the world supply of diamonds not for conservation but for profit.  For that matter any person or corporation that acquires a patent can, to a certain extent, use supply management to enhance the return on investment.  In countries like Canada who have a national universal health care system supply management may be practiced in this manner; the health care budget allocation has a limit each year and a certain amount of money is allocated.  There is always more demand for health care than there is money to pay for it.  But time can be the government’s friend, people wait longer to have their non critical health care needs met, this is in fact  supply management of the money supply.  On the other hand all residents of Canada enjoy the same level of health care.  No doubt people living in remote areas are at greater risk than city dwellers because of the distance from specialists and sophisticated  medical procedures.  Nevertheless rural areas of Canada from our experience enjoy a high level of health care.

*Wikipedia

 

 

 

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Do you think the world would be a better place if we all knew a little more and believed a little less?

Crop rotation has been around for hundreds of years and if we turn out attention to forestry we will see that in the Boreal Forest  Mother Nature provides her own kind of  crop rotation.  It is a circular system so we will enter the system where a mature conifer forest is on fire and burning.  After the fire there are almost always a large number of scorched trees still standing, but dead.  In the next several years the standing trees will start to fall over, concurrently leafed plants and shrubs will begin to grow; some will produce berries and others will produce tender shoots for the ungulates, moose, deer, and elk to feed upon.  As time goes by the standing trees start to fall over providing  great  protection for the ungulates, moose, deer, and elk.  The fallen trees with their dead little stiff branches make life very difficult for predator wolves who are in pursuit of an ungulate.

As time goes by a mixed hardwood forest will emerge, not always,  but most often. Later as the hardwoods start to mature the conifers, pine, spruce, fir and others start to grow until finally  a young conifer forest emerges.  It thrives upon the rich soil that the broad leaf trees provided with  their some 80 years more or less of shedding leaves that composted into rich soil.  Eventually the circle is back to where a mature conifer forest is on fire or being harvested for logs.  This is the natural process, it takes approximately 200 years or more.

Modern forestry has a problem.  After completing a clear cut harvest, meaning that virtually nothing has been left standing almost immediately conifer seedlings are planted. For the uninformed this is considered to be good forestry practice; good for the seedlings, for the wildlife for the land, really?

In the 1960s and 70s a study called the Canada Land Inventory was carried out. It was really quite an exercise where teams of scientists examined the land; all that was on it, a bit under it and all of the mammals, birds and fishes.  In the British Columbia section there was a footnote cautioning the scientists about the good quality of top soil beneath hardwood vegetation and the poor acidic quality   of  the topsoil beneath the mature conifer stands.  Today’s “best forestry practice” in British Columbia ignores natures crop rotation as described above and simply indulges in continuous cropping without the benefit of fertilization.  A better way may be to log off mature aspen and plant conifers and allow the clear cuts to regenerate into a hardwood forest naturally.

The forestry leadership are lucky because the conifer trees in central BC take about 100  to 150 years to reach a good quality commercial size. These planning mistakes will show in the second and third successive crops with slower growing poorer quality trees, by that time all of the planners will have joined “the dearly departed”.

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Recently Senator Lynn Beyak a member of the Canadian Senate made a favourable statement about First Nation Residential Schools.  She was castigated by her fellow Senators and the Media. The Residential Schools have been a point of criticism for a long time and by many people and not without good reason.

Indeed the Federal Government had deep social problems on its hands. In order to take a calm look at Residential Schools then we need to take a look at Canada in the early 1960s.  The last execution in Canada took place in Dec. 11th 1962.,  the man was hung and there were big protests. Homosexuality was not decriminalized until 1969 and women in Quebec did not get to vote until 1961. Children in all schools were subject to corporal punishment and in some cases excessively; residential schools were not the exception.  Since the end of the second world war the western world has travelled through considerable social change, some more than others.

One problem was that it took Canadian political leadership a long time to recognize that aboriginal people have special and legitimate rights to culture, traditional lands, education, development assistance to name a few.  The second serious mistake was that the government shoveled off a lot of its responsibilities to the First Nations people to the Christian Churches, predominately the Church of Rome. The churches received large grants to run the schools that educated the First Nations children. Unfortunately it really seemed that the churches saw it as an opportunity to shape minds with their religious brand  and to make money. Some others however had a more pejorative view of matters.  One Cree/English dictionary published by the Jesuits put it the way; “Oh Lord Give Us The Strength to Christianize These Poor Savages”.

Sounds really grim, it was. But let’s go back to the title “Then and Now”.  Much of the northern parts of the Prairie Provinces were tree covered sprinkled generously with lakes, rivers and marshes.  The area was almost pristine except for a few mining operations and towns like Flin Flon.  On the Indian Reserves the only people who had electricity, sewer and water were the Nursing Station, the Hudson Bay Store and the Church and its school.  Housing, electricity, sewer  and water were almost nonresistant  for First Nations people.  Most of the people lived in log cabins and the logs were jointed with moss which was not very durable.  The most common stove for heating a cabin was what is still referred to as a “Tin Space Heater”.  They are a stove for burning wood and it is made of thin sheet steel and often they will get red hot in places, hardly a safe device for home heating.

The First Nations people were in transition they were moving from the hunter gathers where the whole family used to go out on the land and make a living by hunting, fishing and trapping. In 1931 the Manitoba Government legislated that the Aboriginal People had the right to hunt, fish and trap on all unalienated lands.  John Diefenbaker Prime Minister of Canada from June 1957 to April 1963 made some land mark decisions for Aboriginal people.  One was that Aboriginal children had to attend school, two that Aboriginal people had the right to vote and three the Aboriginal men could drink in Beer Parlors.  Prior to this time the First Nations People did not have those rights.

Ruling that children had to go to school changed matters considerably.  It virtually destroyed a traditional way of life.  Going out hunting, trapping and living off the land was a family tradition. When the children had to go to school it was not the same.  Going out all by one’s self was not attractive. There was nobody to cook, to skin and deflesh the animals and put the pelts on stretch boards and there was no one to cuddle with on the cold, cold nights.  Transition was awful and the people suffered through the change.  People whose children were sent to residential schools suffered very serious emotional stress.  The schools now seem to be something like a criminal mistake.  At the time and the way things were the schools seemed to be a way to hasten transition from hunter gather to modern living.  Some of the people in the school system were criminal but some were good people trying to help. It could not happen now, we are much more educated, the First Nations understand more, they too are more educated and the rest of the Canadian population understand more.

Life in the fifties and sixties was very different than it is now.  We all should be very cautious about putting contemporary judgements on things that happened in the past.  The past had very different values, it’s not like you may think it was.

 

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Pipelines are very common and often known for the problems they have caused in terms of damage to the environment, drinking water, and private property.  Nevertheless they are an indispensable tool. With most transportation equipment the commodity is loaded on or in the ship, train, truck or aeroplane, a vehicle that moves.  In the case of pipelines the commodity moves and the vehicle is stationary.  Having a transporter that does not move increases safety but if that is the case why do pipelines get so much publicity when they leak or worse yet rupture? Pipelines move so much liquid, slurry or gas so quickly that when they break it is often one hell of a mess. Most often pipelines are buried in the ground and they are not visible – out of sight out of mind.  My uninformed view: they should be on the surface and on bridges not under water bodies.

The big problem with pipelines is that owners are absentee owners they don’t feel the pain when things go wrong; their homes are far away in nicely manicured estates.  People often soften or change when they get a little benefit.  In Canada we have a business model known as a crown corporation. Crown Corporations are like a corporation but instead of having shareholders like a company they are owned by the public.  They may be provincial or federal. In the United States Fannie May and Freddie Mac may be the same sort of animal, they seem to be publicly owned.  In Canada some hydro generating utilities are crown corporations; BC Hydro, Sask Power, Manitoba Hydro and Quebec Hydro are crown corporations. These organizations work very well and only seem to get in trouble when political ideology drives politicians to meddle.

Pipe lines could be held by a different kind of corporation one where the owners are the residents of the lands through which the pipeline pass.  It could be first nations traditional lands, a regional district, a shire, county or similar jurisdiction.  The idea would be that the jurisdiction could own the pipeline and charge an established toll for the commodity that is being moved.  Oil and Gas pipeline interests are making agreements with first nations people when their pipelines pass through traditional lands.  So now they need to recognize other people like the farmers in Nebraska.  An interesting point with this approach is that it may mitigate the problem of pipeline financing. It is often cited how we need to bring in foreign money to finance a pipeline. With this approach there would be a large number of financial contributors all of whom will be able to pay their debt from the revenue derived from the commodity flowing through their pipeline traversing their property.  There are a lot of new pipelines on the drawing board so this is a good time to break the mold.  It would not be difficult to design an opt out plan if a jurisdiction did not want to participate.  A lot of people should be focused on stopping the money from all going to the top.  If pipelines were reorganized to be inclusive having shared ownership and shared financial rewards this would be a good start.  Tell your federal, provincial or state politicians that you want a better deal.

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Wildfire is common in most parts of the world except for the far north and far south where there is no vegetation.  Wildfire can be supported by any vegetation that will burn.  Television often shows clips of notable fires and it does a good job of demonstrating that wildfire may take place anywhere there is vegetation that will burn.

The vegetation could be volunteer meaning that humans did not plant it; it simply grew by itself.   Or it could be cultivated vegetation as in a park or a farm.  The vegetation can be in the form of mature or maturing forests that sometimes have very high economic value.  Mixed forests (broad leaf trees and trees with needles) support wildlife and domestic animals, they can stop erosion, act as a windbreak or simply be pleasing visually.  Nevertheless the potential is there to present a risk to communities in terms of wildfire during hot dry weather.  Conifer trees, those trees that grow seed cones are much more flammable than broadleaf trees and shrubs.

It is generally recognized that the removal of the conifers is a major mitigation step in terms of community wildfire. Sometimes trees around communities are not commercially valuable but community members treasure them for their esthetic values.  The result is that quite a few communities are threatened not by valuable mature trees but instead by young immature trees that may have little or no commercial value.  So for these communities if wildfire mitigation takes place, the removal of conifers and planting of broadleaf trees could be at considerable financial cost. The cost is a very serious impediment to wildfire mitigation.  Nevertheless, the cost to mitigate could be turned into an economic benefit with a little massaging of the BC Forestry Act and a bit of entrepreneurial innovation.

This can be a problem; the same people who assess risk are the same who pay the bill for mitigation. Therefore it is not unreasonable to suppose that there could be a proclivity to underestimate risk in order to live within a limited budget. On any given winter day there is not wildfire risk.  On a hot dry sunny day, particularly if there has been no precipitation for some time chances are that the risk will be very high.  So risk is an element in motion, it can change quite quickly in intensity.  When evaluators who designate wildfire risk as a static value, like high risk or low risk it can only be for a specific time period.  Risk of wildfire is a component in motion.  Temperature, humidity, dew point, last precipitation and ground moisture among others comprise the influential factors governing risk.  To illustrate; if we say that an aircraft has only a 1% risk of crashing that would mean that one hour out of a hundred hours could be potentially fatal.  This kind of risk in not acceptable.  So if there is a hot dry spell with cumulonimbus activity (thunder storms) for 6 weeks that would mean that the community would be at risk for 11% of the time in one year.  Is this an acceptable wildfire risk and if it is not how do we innovate to reduce the risk?

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WHERE DO YOU FIT IN THE MARKET PLACE?

You need to consider where in the market place your product will fit. Also what people would likely be willing to pay for it. From the retail selling price you should develop a wholesale price. That is the price retail stores would pay. Quite often a big buyer will tell you how much they would pay for your product and the percentage they would add on for their mark up. The reality of the market place may come as a real shock but don’t give up. You must have a minimum that you will take no matter how large the order. Unfortunately in some cases you may find that the thing you are making is costing more than anyone is willing to pay. On the other hand you may be surprised how much your efficiency will improve after getting a little experience. If you do a time study of direct selling you may find the individual packaging and handling is not cost effective. Think in terms that 6 seconds is .1 of a minute or 1/10 of a minute. Time can be your enemy or your friend but in business you need to be very time aware. If you sell Direct it does not take long before thoughts about a better way to market comes to mind. This is important. Direct selling to a consumer you must collect your money on every sale every time. So Direct selling gives you the retail price but for that you have to package the product, ship to the customer and collect your money. You have to do it every time, it is very time consuming. For my money selling at wholesale to retailers is the way to go!

Let me give you an example of what we did when we had collected carving bark from cottonwood trees. An ad was placed in the classified of a taxidermy magazine. It said “carving bark for sale, minimum order 200 lbs” and an e mail address was given for a response. This limited our offer to carving supply businesses. It greatly reduced packaging problems and 30 day credit was given to established accounts. The ad was successful. The bark was shipped in 50 lb boxes and we used to get defective boxes from a commercial tree planting nursery. At the time good carving bark was retailing for US $10.00 per pound and we were wholesaling it for $4.00 per pound. I think the shipping cost $2.00 per pound. Sometimes if you are selling from one country to another you may benefit from a currency differential. When you are on the right side it is the great happiness. Good luck in your marketing efforts.

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