Livestock prices looking better than grain Most grain prices are a lot lower than they were a year ago at this time. Field peas are down by more than a dollar a bushel, canola is down by more than two dollars a bushel and feed wheat is worth less than half of what it was a year ago. There are a few exceptions. Flax is riding high this year. It’s about $4 a bushel higher than a year ago for anyone lucky enough to have some. Kabuli chickpeas, small green lentils and red lentils are some other examples of where the price is better now than last year. The picture is rosier on livestock. Cull cow prices are still poor, but slaughter steer and heifer prices are up considerably. There has been an even bigger jump on feeder cattle. Feeder steers in the 700 to 800 pound weight range are averaging about $1.05 a pound these days. That’s about 30 cents a pound better than a year ago. Hog prices are into profitable territory – up about $20 per hundred kilograms as compared to this time last year. The livestock sector is also benefiting from low feed grain prices. I’m Kevin Hursh.
January 30, 2005
No "wall of cattle" waiting to cross the line Barring unforeseen developments, the American border should open to live Canadian cattle on March 7 as proposed. That was the view expressed by most of the presenters and a number of the participants at the Saskatchewan Cattle Feeders Association annual convention that concluded over the weekend. This week’s meeting of the National Cattlemen’s Beef Association in the U.S. will be important, but there appears to be enough political will to re-open the border. Saskatchewan cattle feeders also heard that even with an open border, there won’t be a “wall of cattle” moving south. Canadian feedlots are quite current with sales. Plus everyone knows there will be rules associated with crossing the border, and it could take some time to understand those restrictions. Another factor will be trucking capacity. When cattle movement to the U.S. stopped in May of 2003, trucks and truckers were deployed elsewhere. Will they go back to moving cattle? Crossing the line could be a hassle. And Canadian trucks filled with cattle may run into trouble after they make it across the line. Hopefully the border will open on March 7, but cattle movement will start out as a trickle, rather than a flood. I’m Kevin Hursh.
January 27, 2005
Money from Environmental Farm Planning There’s going to be some government support available to help producers implement beneficial environmental practices. To be eligible, a producer will have to complete an Environmental Farm Plan. Over the past couple years, producers have been hearing about the benefits of Environmental Farm Plans. Developing a plan involves attending a couple of workshops and taking time to fill out a workbook. The process helps identify priorities for improvements around the farm. The plan itself remains confidential. Details are still being worked out, but government cost sharing is going to be available for a long list of projects ranging from remote livestock watering to shelterbelts. Funding was recently announced in Alberta and the Saskatchewan program will be similar. Depending upon the nature of the approved project, the government funding will pay either 30 or 50 per cent of the cost to a maximum of $30,000 per farm. In the weeks ahead, there should be information on the delivery of Environmental Farm Planning workshops and an announcement of the government cost sharing. I’m Kevin Hursh.
January 26, 2005
Who represents farmers? A new survey conducted by Ipsos Reid shows APAS, the Agricultural Producers Association of Saskatchewan, as the top farm group in the province. The survey asked, “Of all the organizations and associations representing farmers, which one do you feel best represents your own farm’s needs most effectively?” In Saskatchewan, 20 per cent said APAS. Next on the list were the Canadian Cattlemen’s Association at 8 per cent and commodity associations at 5 per cent. The numbers are encouraging for APAS, but the survey also shows there’s more work the relatively new farm group needs to do. More than 40 per cent of Saskatchewan respondents were either unsure or said no organization represented the needs of their farm. In other provinces, general farm organizations had much stronger showings. The Ontario Federation of Agriculture was picked by 40 per cent of Ontario producers. Keystone Agricultural Producers in Manitoba polled 52 per cent. And in Quebec, the UPA, L’union des producteurs agricole was chosen by a whopping 70 per cent of that province’s farmers. Now that’s lobbying power. I’m Kevin Hursh.
January 25, 2005
Farm consolidation seems unrelated to profitability Most people believe that low returns in agriculture are one of the main causes of farm consolidation. The theory is that if profits were better, there would be less pressure for farms to get larger. Statistics don’t support that theory. Census numbers show 67,000 farms in Saskatchewan in 1981. The 2001 census shows 50,500. That’s a drop of about 25 per cent over a period of 20 years. In supply managed sectors of agriculture such as dairy, returns are relatively stable. Good operators can consistently make money. Back in the early 80s, there were about 800 dairy farms in Saskatchewan. Despite more reliable returns, there has also been a massive consolidation in that sector of agriculture. Milk production has been stable, capped by the provincial quota allocation, but the number of dairy farms has dropped to about 300 – a decrease of more than 60 per cent in the past twenty years. The rate of farm consolidation seems more related to advances in technology than profitability. I’m Kevin Hursh.
January 24, 2005
Aussie comparisons There are some amazing similarities and some interesting differences between farmers on the Canadian prairies and those in Australia. Peter Treloar, a grain producer from southern Australia will be speaking to the FarmTec conference in Edmonton later in the week. I ran into him Monday at Delia, Alberta. Treloar and his brothers grow wheat, barley, canola and lupins, which are a pulse crop. They seed with a ConservaPak air drill developed and manufactured in Saskatchewan. Treloar just finished harvest on New Year’s Eve. One of the big differences between the two regions is the lack of on-farm storage in Australia. Crops are stored in elevators or moved to port at harvest. Hardly any is stored on the farm. In fact, Peter Treloar says he only has enough storage to hold over his seed for the following year. In contrast, Western Canada has extensive on-farm grain storage. It’s expensive, adding to our cost of production. However, it sometimes enables us to hold grain until prices improve and it facilitates the identity preservation of crops. That may provide some advantages over competitors such as Australia. I’m Kevin Hursh.
January 23, 2005
Higher input costs than last year It’s going to cost more money to grow a crop this year. Saskatchewan Agriculture has produced Crop Planning Guides for 2005. The guides are an excellent resource for estimating the potential returns from growing a wide array of crops in the various soil zones. Producers should plug in their own yield and price expectations and their own costs, but the guides are a good starting point. Crop yields and grain prices are big wild cards, but it’s possible to make pretty accurate estimates on the cost side of the equation. Compared to a year ago, nitrogen and phosphate fertilizer are going to cost more. Herbicide costs are also up a bit. One of the biggest increases is in fuel. For 2004, the Sask Ag Crop Planning Guides assumed diesel fuel at 45 cents a litre. This year, it’s 59 cents. When everything is added up, the increase year over year is sizable. For direct seeded canola in the black soil zone, the total expenses to grow a crop were estimated at $176 an acre in 2004. Using all the same assumptions for 2005, total expenses have risen to $186 an acre. I’m Kevin Hursh.
January 20, 2005
Wayne Easter is doing a good job I haven’t always been a big fan of Wayne Easter. Back in the 80s and early 90s when he was president of the National Farmers Union, his views were often extreme. But you couldn’t doubt his work ethic or his commitment to farmers. Now, the former dairy farmer from Prince Edward Island is Parliamentary Secretary to the Minister of Agriculture with special emphasis on rural development. He’s currently in the middle of a cross-country tour to investigate the causes and possible solutions for declining farm income levels. This isn’t a discussion on farm safety nets. Instead Easter wants to hear suggestions for cutting farm input costs and getting farmers a larger share of what consumers pay for food. There are no quick fix solutions, but the Liberal government should be given some credit for admitting there’s a huge problem and looking for answers. Usually, the Parliamentary Secretary to the Agriculture Minister is rather obscure. That’s not the case with Wayne Easter. He’s been given some high profile tasks and he’s working hard to make a difference. He’s still on the left side of the political spectrum but his views have been moderated by the reality of being in government. I’m Kevin Hursh.
January 19, 2005
Price predictions for the new crop year Predicting grain prices for the new crop year this far in advance is a tough game. However, using the information currently available, the market analysis division of Agriculture and Agri-Food Canada has released a world and Canadian outlook for grains and oilseeds for 2005-06. World wheat prices are expected to slip and the price of Canadian spring wheat in the new crop year is expected to decline by about 10 per cent. The news is better on durum. That price is expected to decline by only a couple dollars per tonne. Both feed barley and malting barley are expected to have somewhat higher prices in the new crop year. The off-board feed barley price is expected to average about $10 a tonne higher. Malting barley is expected to increase by a similar amount. It’s not a big surprise, but flax prices are expected to fall dramatically based on the assumption of more seeded acres and a return to normal yields. Meanwhile, the prices for field peas, oats and canola are expected to be similar in the new crop year to the prices in the current crop year. All in all, not a rosy outlook, but a lot of things could change. I’m Kevin Hursh.
January 18, 2005
American cattle producers scrutinize Canada There has been an interesting exchange of letters between R-CALF and the National Cattlemen’s Beef Association, two groups representing American cattle producers. On January 18, R-CALF sent a letter to the NCBA urging a unified opposition to the rule that will open the American border to live Canadian cattle in March. R-CALF has filed a lawsuit against the U.S. Department of Agriculture in an attempt to derail the border opening. The protectionist farm group wants the NCBA to support the lawsuit and help lobby Congress. A return letter from the NCBA was issued the same day saying, “We do not support litigation as the preferred means to reach a solution.” The National Cattlemen’s Beef Association, the largest group representing cattle producers, does admit to having concerns about reopening the border, but the letter flatly turns down the request to align with R-CALF. Nine members of the NCBA have arrived in Alberta to examine issues such as feed ban compliance and ongoing BSE surveillance. They will present their findings at the NCBA annual convention in February. What they recommend could be very important for the Canadian livestock industry. I’m Kevin Hursh.
January 17, 2005
Good news for Canadian durum producers A change in European farm policy should be beneficial for Canadian durum wheat producers in the years ahead. Peter Watts of the Canadian Wheat Board says Europe is switching to a single subsidy payment to farmers – a payment that is decoupled from production. The payment to individual producers will be based on their historical level of support and they’ll get this money no matter what they grow. There’s still going to be a pile of money going to EU producers and it’s expected that they will continue to grow big crops, but the crop mix is expected to change. Peter Watts says under the previous policy, there was a supplemental payment of more than $100 an acre for durum. This was meant to encourage durum production since durum has low yields relative to soft wheat in the EU. Italy, the top durum producer in the EU, has switched to the single payment this year and durum acreage is down 15 to 20 per cent. Other major durum producers including Spain, France and Greece will switch to the single payment next year. The durum price outlook is not very good right now, but the policy change in Europe should bode well for the future. I’m Kevin Hursh.
January 16, 2005
Comparing beef slaughter proposals There’s fear that a March 7 opening to the American border for live cattle may become another disappointment. There’s a general recognition that beef slaughter and processing capacity needs to be increased in Western Canada. There’s a strong sentiment among producers that they should have more ownership and control. Today in Moose Jaw, producers have an opportunity to compare four different beef slaughter and processing proposals – proposals that are vying for support. The Saskatchewan Stock Growers Association has organized a public meeting for 1:00 p.m. at Moose Jaw’s Temple Gardens Mineral Spa. Representatives from Canada Farm Direct, Beef Initiative Group, Natural Valley Farms and Great West Beef will all have time to explain their plans and take questions. Each is a producer owned packing plant proposal, but that’s where the similarity ends. The groups have different financing and marketing approaches and the proposals vary greatly in size and scope. This is a rare opportunity to hear from each of these groups, ask questions and make direct comparisons. It promises to be an interesting meeting. That’s 1:00 today, Monday, January 17 in Moose Jaw. I’m Kevin Hursh.
January 13, 2005
Blue Sun Biodiesel is looking at Canada Blue Sun Biodiesel created quite a stir at Crop Production Week on Thursday. Jeff Probst of Blue Sun spoke to a meeting organized by the Saskatchewan Canola Growers Association. The company is based in Colorado. It’s buying canola and brown mustard from local farmer-shareholders to produce biodiesel. The company is retailing a B20 blend - 20 per cent biodiesel and 80 per cent diesel. Probst says sales are growing rapidly even though B20 is 10 to 20 cents per gallon more expensive than regular diesel. He says enhanced fuel economy and reduced engine wear from B20 can more than compensate for the extra cost. Farmers in attendance were interested in this biodiesel success story, but they were even more interested when Probst said Blue Sun wants to establish in Western Canada. He talked of finding clumps of farmers interested in growing oilseed crops for biodiesel production and then building a processing plant in the middle of the production area. He claims farmers can benefit from crop sales, profit sharing with the company and appreciation of their share values. While there doesn’t seem to be anything concrete for Canada at this point, it is an exciting concept. I’m Kevin Hursh.
January 12, 2005
How to evaluate canola seed There are definite factors farmers should look for when buying their canola seed. Dr. Bob Elliott of Agriculture and Agri-Food Canada has been studying seed and seedling vigour in canola for years and his research has led to well founded conclusions. Elliott told producers attending Canola Days at Crop Production Week that the standard germination test is often a poor indicator of seed performance under stressful conditions like cold or dry soil. He says a pre-chill germination test provides better information. His research also shows that as green seed count increases, canola establishment drops. As well, canola with a high green count tends to deteriorate much more rapidly in storage. There’s no limit on the green seed count allowed in certified canola seed, so it’s a case of buyer beware. Another huge factor with canola seed is size. The greater the size measured as thousand seed weight, the better the establishment and the greater the resulting yield. By using a recent pre-chill germination test and large seed with a low green count, Bob Elliott says canola producers have a much better chance of attaining good yields. I’m Kevin Hursh.
January 11, 2005
Don't bet on a March 7 opening Canadian officials are putting on brave faces. Publicly, officials are saying the U.S. border should still open to live cattle on March 7 as planned. In reality, this latest confirmed case of BSE may give the Americans an excuse to renege on that commitment. Canada has now had three confirmed cases of BSE, plus the one American case that was traced back to Canadian origin. The last two positives have come in rapid succession and at an awkward time. They are fueling a rising chorus of American opposition. Polls show a majority of American cattle producers think the border should remain closed. The latest cow was less than 7 years old and was born a few months after the ruminant-to-ruminant feed ban that came into effect in 1997. The Canadian Food Inspection Agency says contaminated feed remains the likely cause, but having the disease show up in a younger animal provides more ammunition to the opposition. The U.S. Department of Agriculture is sending a technical team to Canada to evaluate the situation. I wouldn’t bet on a March 7 opening anymore. I’m Kevin Hursh.
January 10, 2005
Flax prices likely to drop rapidly One of the few crops enjoying buoyant prices is flaxseed. Flax prices of $12 and even $13 a bushel are being reported. Prices are approaching historical highs because the supply of flax is extremely tight. Speaking to flax growers Monday at Crop Production Week in Saskatoon, market analyst Mike Jubinville had some advice for producers lucky enough to still have flax in their bins. Don’t get too greedy. Jubinville believes there could yet be another move upwards in flax prices, but he also warns thatwhen flax prices start coming down, they are likely to drop quickly. So what about the upcoming growing season? Planting seed for flax may be in tight supply, but Jubinville is expecting a large acreage in Western Canada. Prices of around $7.75 a bushel can be locked in for fall delivery. Jubinville is advising producers to start considering new crop prices if opportunities above $8 become available. That’s a far cry from current price levels, but by next fall $8 a bushel could look pretty good if flax production rebounds this year. I’m Kevin Hursh.
January 9, 2005
Growing American opposition to reopening border The plan to reopen the border to live Canadian cattle and more cuts of beef is not receiving a warm welcome south of the line. Opposition by groups such as R-CALF was expected, but support for the reopening appears to be wavering among some of the groups we’ve considered allies. Just a few days ago, the NCBA, the National Cattlemen’s Beef Association, was echoing the comments of the United States Department of Agriculture – that Canadian beef is safe despite the discovery of another case of BSE. Now, the NCBA, the largest organization representing America’s cattle industry, is not sounding as definitive. It’s facing concerted opposition from many of its members. In the American media, there have been hard-hitting editorials claiming a reopening the border would be a big mistake. Some say Canadian beef isn’t safe, that it’s a threat to American consumers and the American cattle industry. Others say the border shouldn’t open to Canada until the Japanese open their border to the U.S. Opposition appears to be growing. A March 7 opening of the border no longer looks as certain. I’m Kevin Hursh.
January 6, 2005
Property tax band-aid So what will the provincial government’s education property tax relief amount to? Let’s use the numbers provided by the province and let’s assume a grain farm with 3200 acres. That’s 20 quarters of land, quite typical for a grain farm these days. Assuming a land value of $55,000 per quarter, a farm of that size is currently paying an average school tax of about $11,000 a year. It’s a big bill given the low returns in agriculture. In this example, the just announced tax relief for 2005 and 2006 will amount to about $900 per year – about 8 per cent. Unfortunately, there’s nothing stopping education taxes from continuing to increase, eroding the tax relief. Furthermore, the tax relief does not address the root of the problem. There doesn’t seem to be any plan or any political will to design a lasting solution. The province should be using the one time equalization money from the federal government to start making a transition to permanent tax reform. I’m Kevin Hursh.
January 5, 2005
CP exceeds its grain revenue cap Agricultural research has received a boost from an unexpected source. The Canadian Transportation Agency has determined that Canadian Pacific Railway revenues from grain transportation exceeded the revenue cap in the last crop year. CN’s grain revenue was about $1.2 million under its mandated revenue cap, but CP’s revenue was over by nearly $322,000. So what happens to that excess revenue? The Canadian Transportation Agency says the regulations require the excess, as well as a five per cent penalty, be paid within 30 days to the Western Grains Research Foundation. The foundation is farmer-funded and farmer-controlled. It’s the organization that collects a check-off levy on wheat and barley from final payments and then uses this money to fund plant breeding and other research. The railway revenue cap has been in place for four years. This is the first time a railway has exceeded its maximum revenue entitlement. With total grain revenue of nearly $310 million for CP, the $322,000 excess is a tiny fraction. However, it will be a welcome contribution to the Western Grains Research Foundation. I’m Kevin Hursh.
Crop Production Week in Saskatoon Thousands of producers will soon be traveling to Crop Production Week and the Western Canadian Crop Production Show. Both start Monday in Saskatoon. Pre-registration has ended for Pulse Days and for the Sask. Herb and Spice meeting. However, there is walk-up registration for all the meetings and space is expected to be ample. As usual, the Pulse meeting will be live at the Saskatoon Inn with a video feed to Prairieland Park. Producers can register at either location. For the first time, canaryseed growers will be part of Crop Production Week. At that meeting, producer interest will be gauged for starting a refundable check-off on canaryseed to facilitate research and market development. Market analysis is a big part of the meetings. Flax, pulse crops, canaryseed, mustard, canola, Canadian Wheat Board grains - all will feature price projections for the upcoming crop year. Canola Days will feature a panel discussion on biodiesel and the Wednesday evening Special Session will try to make sense of changing consumer food preferences. There’s a great line-up of presentations. Full details are available at www.cropweek.com. I’m Kevin Hursh.
January 3, 2005
New BSE case not alarming The latest confirmed case of BSE in Canada is far different than the first. Back in May of 2003 when the first positive test was confirmed, the Canadian Food Inspection Agency and the beef industry were in crisis mode. News reports followed the trace-back and the liquidation of cattle herds in great detail. In December of 2003, when BSE was discovered in the U.S. and then traced back to Canada, there was also a tremendous amount of anxiety. The latest case of BSE in an eight year old Alberta dairy cow is not receiving nearly as much attention. For one thing, the tsunami disaster in Asia is dominating news coverage. But there’s also awareness that BSE poses virtually no health risk. The infected animal did not enter the food or feed system. Even if it had gone to slaughter, Specified Risk Materials are removed from all beef animals, reducing risk to near negligible levels. With the U.S. Congress about to review plans to reopen the American border, the timing of this new case is unfortunate. But even the U.S. Department of Agriculture says Canadian safeguards provide the utmost protection. Perhaps science is finally triumphing over emotion. I’m Kevin Hursh.
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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).
