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Generating positive cash flow

Agricultural diversification has long been an interest of mine, as regular readers will recognize.

Agricultural diversification has long been an interest of mine, as regular readers will recognize.

The idea of creating more options in terms of generating a positive cash flow has always seemed like a very common sense approach for a sector where traditional core production products; wheat, barley, cattle and hogs are given to some pretty large and relatively long-lasting price dips.

The farming founders of Canada had diversification at the heart of their operations, with mixed farms the norm.

It was a built-in insurance plan of sorts. If a barley crop came off in bad condition it could be fed through hopefully higher valued hogs.

If bad prices hit the cattle sector, they were still a fertilizer source for cereal crop land.

And intertwined within the mixed farm philosophy was a full larder with your own meat in the freezer, veggies in the cellar, and eggs and milk in the cooler.

The concept of mixed farming has all but disappeared today, at least in terms of major farms.

Specialization has taken over, and one can argue that is good in terms of management expertise in terms of production.

Making the farm profitable is not necessarily made easier in terms of being so specialized. We have seen the effect of extended low prices basically gutting the hog sector in Western Canada, yet it was not so many years ago the region was considered nearly perfect in terms of producing pigs.

The combination of seemingly long term low grain prices, abundant room in terms of isolating barn units, and the need for local job creation all seemed to make Saskatchewan ideal for pig barns.

But the big barns struggled as grain prices climbed, as did wages, and pork prices stayed low.

Of course diversification, even as it was basically sanctioned by the province's agricultural departments proved to be hit or miss - actually more miss than hit.

The list of failures is long, ostrich, emu, fallow deer, seabuckthorn, and to lesser extents borage and fibre hemp and the list goes on.

The problems are largely a lack of processing facilities, which never got off the ground because production levels, or market potential never made a facility viable.

One shining example of a new sector which arrived, and has managed to grow albeit a slow growth curve over many years, is the bison sector.

The big animals have found a niche in a world where consumers want lean, low fat meat, and bison provides that.

Bison also do well on fringe land, that which is not suited for regular cultivation, and crop production, meaning the animals fit with the idea of sustainable farming without impacting land use in terms of producing grain for human consumption. That will be increasingly important to consumers as well.

While not a major agricultural commodity compared to beef or pork, bison are an example of diversification which has worked, and that sets the sector apart from most.

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