Viterra jumps into the pasta business Viterra is making another big acquisition. It’s taking over Dakota Growers Pasta Company. The company has an integrated durum mill and pasta production plant in Carrington, North Dakota and a pasta production plant in New Hope, Minnesota. Dakota Growers is one of the largest durum milling companies in North American with a capacity of 1,000 tonnes a day. It is the third largest producer and marketer of pasta products. The acquisition price tag is $240 million U.S. – nearly a quarter of a billion dollars. Observers have always lamented the lack of durum milling and pasta production in Western Canada. There have long been debates over whether or not the Canadian Wheat Board has been a deterrent to that sort of value-added processing. Regardless of your view on this, it is not easy for a new player to get established in the pasta industry. It requires a very large investment and you’re trying to break into a mature market. Viterra is acquiring an existing major player. Viterra does a huge business in durum and has rights to the popular variety Navigator. Although it would be great to have the jobs and economic activity here in Western Canada, this Viterra acquisition would appear to be a logical investment. I’m Kevin Hursh.
March 9, 2010
AgriStability Plus Two farmers from Manitoba have come up with a proposed companion or top-up program for the farm safety net known as AgriStability. They’re calling their plan AgriStability Plus. It’s based on a cost of production model for farms as compared to the margin-based system used for AgriStability. Under the proposal, farmers would cover the cost of the top-up through premiums, while the program would be underwritten by the federal government. Murray Downing, a grain producer from Reston, Manitoba and Bryan Ferriss, a pork producer from Bowsman, Manitoba say their program would address many of the concerns with the current stabilization program where several years of poor returns erodes any support. Manitoba Pork Council has endorsed a discussion paper on AgriStability Plus that was prepared by Downing and Ferriss, with assistance from a farm management consultant. Personally, I have difficulty believing a cost of production program like this one could ever be actuarially sound. However, the discussion paper is an interesting read, with a number of farm examples. That discussion paper is posted at www.manitobapork.com. I’m Kevin Hursh.
March 8, 2010
Crop insurance and seeding decisions Grain producers now have their individual specifics for the 2010 Saskatchewan Crop Insurance program. This information is one of the factors to be considered when making spring seeding decisions, especially in regions where moisture is a concern. This year’s program is much kinder to some crops than others. Everyone’s numbers will be different, but here are a couple examples from my crop insurance contract. Even though I’m not in a traditional canola growing region, my crop insurance guarantee for canola grown on stubble is approximately $150 an acre. This is nearly $40 an acre higher than my guarantee for oriental mustard, another oilseed cropping option. For field peas, my guarantee is less than $100 an acre. For both lentils and kabuli chickpeas, two other pulse crops, the guarantee is well over $200 an acre. Hopefully, there will be substantial precipitation and everyone will grow a crop that yields well above their crop insurance guarantees. But if a production problem does materialize, there are some obvious winners and losers when you look at crop insurance coverage. I’m Kevin Hursh.
March 7, 2010
More Triffid contamination The Flax Council of Canada is reporting that it has found extremely low levels of Triffid, the unregistered GM flax, in more breeder seed samples. Triffid has now been discovered in the flax varieties CDC Bethune, CDC Sorrel and CDC Sanctuary. As a result, there is now a shift in the issue of producers using farm-saved seed. The Flax Council says farm-saved seed will be allowed, but under rigorous sampling and testing procedures. Those protocols should be announced this week and it’ll be interesting to see the requirements. It appears that if you test enough samples and sub-samples and if the tests are sensitive enough, Triffid contamination is widespread. In many of these tests, Triffid is only present at one or two seeds per million. That’s way below European requirements, but it isn’t zero. It will be very difficult if not impossible to completely eliminate Triffid from the seed supply. For that reason, liability is going to be an issue for anyone selling flax seed. Expect to be presented with a liability waiver if you’re buying flax seed this spring. I’m Kevin Hursh.
March 4, 2010
Don't cut crop insurance because of AgriStability Many grain producers have been able to build up good AgriStability reference margins. With that kind of protection in place, there may be a temptation to cut back on crop insurance coverage and save money on premiums. There are a number of good reasons to resist this temptation. The two programs are designed to work together so that producers are not disadvantaged by participating in both. This includes automatic adjustments to crop insurance premiums if necessary. On the other hand, if you cut back coverage under crop insurance, payments you would have received due to a very poor crop are imputed for AgriStability. In other words, your AgriStability payment may be cut back based on what you could have received under crop insurance. It’s also important to note that crop insurance payments add to your AgriStability margins for subsequent years. As well, you can receive crop insurance for the failure of one type of crop, even though your other crops may not be in a claim position. Cash flow is another consideration. Crop Insurance money flows a lot faster than AgriStability payments. At $5 to $20 an acre, crop insurance premiums add up, but cutting coverage could be even more costly than you think. I’m Kevin Hursh.
Archives
Kevin Hursh's daily agricultural report is heard Monday through Friday on Swift Current (CKSW), Shaunavon (CJSN), Moose Jaw (CHAB), Estevan (CJSL), Weyburn (CFSL), Rosetown/Kindersley (1330/1210), Lloydminster (CKSA) and Melfort (CJVR).
