Hursh Consulting & Communications: Kevin Hursh on Agriculture

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Hursh on Agriculture

April 28, 2005

Some producers still waiting for CAIS 2003
According to the CAIS administration, over 1800 Saskatchewan applications for 2003 were still being processed as of April 24. The folks at CAIS point out that most of the 36,000 applications from Saskatchewan have been processed, but that’s little consolation for the farmers still waiting for money from the income stabilization program. I received an email from an accountant who filed a 2003 CAIS application for a client last September. Despite repeated calls, the application still hasn’t been processed. This producer has become very depressed because he’s counting on this CAIS payment to help pay the bills. The program is so complicated that you’re never sure about receiving a payment until the money actually arrives. A national committee has been established to review and suggest changes to the CAIS program. Timeliness of payments is one of the many things the committee should examine. At the end of April, 2005, there shouldn’t be 1800 producers in the province still waiting for their 2003 CAIS application to be processed. I’m Kevin Hursh.

April 27, 2005

Frosty canola
A weekly report called Canola Watch is an excellent source of information. It’s emailed to anyone who wants it. Organized by the Canola Council of Canada, information is supplied for the report from industry and provincial governments from across the prairies. The first Canola Watch report of the year has just been issued and it includes tips for harvesting over-wintered crops, as well as information on flea beetles, cutworms and weed growth. The report notes that up until now soil temperatures for this time of year have been very good. Some emergence of early seeded canola has been noticed in southern Alberta. The current cold snap could present challenges to emerged crop. Canola can withstand quite a bit of frost if it has been acclimatized, but current temperatures will be a test. The Canola Watch report points out that a proper assessment of frost damage can not be made for several days – until it is determined whether new growth is appearing from damaged plants. If you’d like to receive the weekly Canola Watch reports, just go to the Canola Council Web site at www.canola-council.org and click on the Growing Canola link. I’m Kevin Hursh.

April 26, 2005

Cutting Extension Agrologists a mistake
The change occurred a year ago, but I still miss the network of Extension Agrologists across the province. When Saskatchewan Agriculture cut Rural Service Centres and terminated Extension Agrologists, the Agriculture Knowledge Centre in Moose Jaw was established. There are good people working at the Ag Knowledge Centre and they do their best to answer your questions, but it’s not the same as having Extension Agrologists in communities throughout the grainbelt. They knew most of their clientele personally and had visited lots of the farms. They were on top of local issues. There are often agrologists working for farm input suppliers, but they represent a company that wants to sell you something. The Canola Council of Canada has a network of agrologists. That’s useful, but their mandate is specifically canola production. The Extension Agrologists of Saskatchewan Agriculture were highly regarded and you knew where to find them. Their termination has been a loss for communities, for rural economic development and for farmers. I’m Kevin Hursh.

Rising carryout stocks forecast
It remains hard to find much good news in the grain price outlook. The market analysis division of Agriculture Canada has just released its latest grains and oilseeds outlook that takes into account the seeding intentions report released last week by Statistics Canada. Here’s a sampling of the information. On oats, carryout stocks are forecast to reach the highest level since the late 70s. Therefore oat prices are expected to decline. On canola, carryout stocks are projected to drop, but remain burdensome. Ag Canada is predicting a marginal decline in canola prices due to lower world soybean prices. On flax, production is expected to double and be at the highest level since 1998-99. Carryout stocks are expected to triple to near-record levels. Flax prices will be pressured, but the Ag Canada price outlook is actually more optimistic than some. On Thursday, the Canadian Wheat Board will release its new Pool Return Outlook for wheat, durum and barley. We should be due for some good news, shouldn’t we? I’m Kevin Hursh.

April 24, 2005

A glorious spring
Conditions may not be quite the same in other regions of the province, but in the area of southwestern Saskatchewan where my farm is located, there’s a lot of plant growth for this time of year. Fields are still quite wet, but seeding outfits are starting to roll. This is about the normal start-up time for seeding, but the soil is considerably warmer than it usually is at this time. A lot of weeds have germinated and it isn’t just the winter annuals like flixweed and stinkweed that you normally see early in the spring. You can find lots of little kochia in places and even wild oats are starting to poke through the ground. Everything seems early. Grass has greened up nicely and the trees are starting to leaf. All too often, the ground is still cold in late April. And all too often lack of soil moisture is a big concern. This year, moisture is very good and there should be a good kill of weeds with the burn-off operation. You never know what the days and weeks ahead will bring, but right now this is a good-looking spring in my part of the world. I’m Kevin Hursh.

April 21, 2005

Observations on seeding intentions
There was some interesting information in Thursday’s seeding intentions report from Statistics Canada. StatsCan pegged the increase in flax acreage for Saskatchewan at exactly the same level as the estimate made by Sask Ag and Food – an increase of 11 per cent. However, it’s interesting to note that Manitoba’s flax acreage is expected to go up a whopping 43 percent. Across Western Canada, the increase comes to 19 percent. At 2.1 million acres, flax will be the highest in seven years. The StatsCan numbers do not jibe with Sask Ag and Food when is comes to canaryseed and mustard. StatsCan is predicting a much sharper acreage drop in these crops. Mustard acreage is expected to drop 27 per cent. On canaryseed, StatsCan is calling for a 50 per cent reduction. If the projections are correct, both mustard and canaryseed will be below their ten-year averages, meaning perhaps there will be a start to correcting the oversupply of these crops. Meanwhile, lentils are expected to edge upwards setting a new record at around 2 million acres. That may not be as burdensome as it looks, since a big part of the growth may be in red lentils. I’m Kevin Hursh.

April 20, 2005

Mixed messages from Canada at WTO
WTO negotiations in agriculture are reaching a critical stage. There’s a World Trade Organization Symposium underway this week in Geneva. This is a precursor to a Ministerial meeting in Hong Kong planned for December. The Canadian Agri-Food Trade Alliance is in Geneva representing groups that want liberalized trade. CAFTA supports last year’s framework for negotiations as a foundation for an agreement that will eliminate export subsidies, make substantial reductions in trade distorting support, and provide meaningful increases in market access. Directors of the Canadian Wheat Board are also attending the Geneva Symposium, but are pushing a different message. They’re worried western Canadian producers will lose their government guarantees on CWB payments and borrowings. The monopoly powers of the CWB may also be challenged. The interests of the supply managed dairy and poultry sectors are also well represented in Geneva. They want continued protection through tariff barriers and import restrictions. As usual, Canadian farm groups have very different philosophies when it comes to world trade rules. I’m Kevin Hursh.

April 19, 2005

Saskatchewan leads in ethanol
According to Lionel LaBelle, Saskatchewan is leading the nation in ethanol development. LaBelle is president of the newly formed Ethanol Development Council, which grew out of Saskatchewan Agrivision. He points to a long list of serious proposals in the province. Husky has received federal start-up money for its big ethanol development at Lloydminster that is being built in conjunction with its heavy oil upgrader. A group at Weyburn has qualified for help in converting the old distillery to ethanol production. North West Terminal at Unity has announced its intention to pursue ethanol development, as have groups in Shaunavon and Tisdale. A company called Iogen is considering an ethanol plant based on straw for around Birch Hills. And Nipawin continues to work on its plan to manufacture ethanol from wood chips and flax straw using an entirely different form of technology. Lionel LaBelle says the science of ethanol production is improving, new crops are being developed as feedstock, petroleum prices are rising and there’s a desire to build the Saskatchewan economy. He says there’s more happening with ethanol in Saskatchewan than in any other part of the country. I’m Kevin Hursh.

April 18, 2005

Too much mustard and canaryseed
There were several surprises in Sask Ag and Food’s seeding estimates released Monday as part of the first crop report of the season. It’s surprising the flax intentions aren’t higher. Flax is running at about $15 a bushel and yet the seeded acreage estimate is up only 11 per cent from last year. Perhaps seed availability and / or the high price of seed has kept farmers from jumping on the flax bandwagon. Either that or producers are worried about overproduction and a price crash. While flax intentions are surprisingly low, mustard and canaryseed intentions are surprisingly high. Mustard acreage is expected to drop, but only by 16 per cent. Mustard acreage will be near the ten year average even though there’s a huge carryover. On canaryseed, the acreage is expected to drop by 23 per cent as compared to last year, but it will still be way above the ten year average. If there’s a decent crop, it will just add to the huge supply overhanging the market. Statistics Canada will release its seeding intentions report on Thursday. It’ll be interesting to see whether the Stats Can numbers line up with the Sask Ag and Food predictions. I’m Kevin Hursh.

April 17, 2005

Verify the age of your cattle
Canadian cattle producers are being encouraged to submit birth dates on their animals. The information is tied to the identification numbers on approved ear tags. All submissions are done on the Canadian Cattle Identification Agency’s Age Verification Web site. The industry is hoping this system will replace dentition, which is age verification by examining teeth. Producers can provide the actual birth date or just the first date of their calving season. To ensure accuracy of the data, the birth dates entered will be subject to a third party audit process. The industry believes beef exports to Japan could begin as early as this summer and age verification could be important. The Japanese have indicated they may be willing to take beef from animals under 20 months of age and they seem to like Canada’s age verification system. While there’s no guarantee age verification will be useful, the only cost is a bit of time. The Web site is www.canadaid.ca. I’m Kevin Hursh.

April 14, 2005

Saskatchewan's 2003 CAIS payments nearing completion
The federal CAIS administration says it will be able to complete the processing of a majority of 2003 applications before the end of April. Yesterday, I talked about how Alberta was fast-tracking the outstanding applications in that province. Well, it appears that payments are further advanced in Saskatchewan, where the program is federally administered. As of April 10, about 93 per cent of the more than 33,000 Saskatchewan applications had been processed. The CAIS administration expects the 2600 remaining applications will be completed by the end of April. Producers should have their money before seeding. While you don’t find a lot of people with good things to say about the income stabilization program, $345 million has been delivered so far to Saskatchewan producers for 2003. For the 2004 CAIS program, Saskatchewan producers have received over $90 million through the interim payment and special advance. Final applications for the 2004 program are now available and processing has started on 2004 forms. If you’re one of the 2600 producers still awaiting payments for 2003, hang in there. It’s supposed to be coming soon. I’m Kevin Hursh.

April 13, 2005

2003 CAIS payments fast-tracked in Alberta
One of the many complaints about the Canadian Agricultural Income Stabilization program is that it’s slow. Lots of producers haven’t received CAIS payments they’re entitled to for income shortfalls suffered back in 2003. Here it is nearly seeding time in 2005 and producers could sure use that money. Alberta is fast-tracking 2003 CAIS payments to its producers. Alberta is one of several provinces that do their own administration of CAIS. In Saskatchewan, the program is administered federally. Alberta plans to pay some 9,000 outstanding claims by the end of the month, putting about $232 million into the hands of producers. How is this possible? Well, Alberta is going to provide preliminary payments based on the current file information of producers. Data will be verified at a later date and claims adjusted if necessary. There are certain dangers in that. There could be overpayments that have to be repaid. But at least Alberta producers will get their money in time for seeding expenses. It would be nice if the feds would do the same thing with outstanding 2003 CAIS payments in Saskatchewan. I’m Kevin Hursh.

April 12, 2005

Level the playing field for startup businesses
The province is missing an opportunity to spur economic development. Currently, the province offers an Investment Tax Credit to offset the seven per cent Provincial Sales Tax on manufacturing and processing equipment. That sounds good, but startup businesses, particularly ones that are capital intensive, are not usually taxable in their first years of operation. As new firms struggle to scrape together enough startup capital, the PST is a barrier. The seven per cent increases the price of the equipment, but it doesn’t increase how much a lending institution will provide in financing. Whether it’s the new pet food manufacturing company starting up in Rosthern or the Natural Valley Farms beef processing operation setting up at Wolseley and Neudorf, the PST is a barrier. Changing the policy wouldn’t cost the province any money. Rather than giving small startup firms an Investment Tax Credit that has no immediate value, simply exempt these firms from the seven per cent PST on manufacturing and processing equipment. That would put Saskatchewan on a level playing field with British Columbia, Alberta and Ontario. I’m Kevin Hursh.

April 11, 2005

BSE class action
Lawyers representing a number of cattle producers across the country think they may have started what will become the largest class action lawsuit in Canadian history. They claim the federal government was guilty of gross incompetence and negligence by implementing the ruminant-to-ruminant feed ban too late and by losing track of a number of cattle from the United Kingdom that had been imported into Canada. They say BSE in Canada is the government’s fault. They are claiming billions of dollars in losses. Will such a lawsuit be successful? Should it be successful? People will have to make up their own minds, but I note that hindsight is always 20:20. It’s easy to know now what should have been done, but prior to 1997, I don’t recall producers or scientists clamoring for a feed ban. It’s anyone’s guess how this class action will turn out. While a lot of producers will relish the idea of making Ottawa pay, big lawsuits are expensive and the wheels of justice do not turn swiftly. There is a Web site if you want more information. It’s www.bseclassaction.ca. I’m Kevin Hursh.

April 10, 2005

Management Plus Program should be reassessed
The Saskatchewan Crop Insurance Corporation seems to keep very good records. It’s amazing how they manage to keep seeding and production statistics for all their clients extending back years. That said, the Saskatchewan Management Plus Program of Saskatchewan Crop Insurance is a waste of time and resources. I went through all the graphs and numbers provided for my crop district and learned absolutely nothing. It’s meaningless to graph crop yields against fertilizer use when you have no data on nutrient levels in the soil and no way of accounting for differing rainfall levels. It’s also meaningless to graph yields against seeding methods and tillage systems. In the information for my crop district, a yield is provided for seeding with a discer under a zero tillage system. How the heck can you be using a discer and consider it zero tillage? The information on seeding date versus yield is mildly interesting, but a crop district is a big area. Producers who seed first could easily be in a drier area or on lighter land. The Management Plus information is covered with disclaimers. Little wonder. This use of Crop Insurance statistics should be reassessed. I’m Kevin Hursh.

April 8, 2005

Progress on CAIS deposit removal
Efforts are underway to allow farmers to remove money tied up in CAIS deposits. A few weeks ago, it was announced that the deposit deadline for the income stabilization plan had been extended from March 31 of 2005 to March 31 of 2006. That was good news for producers who hadn’t made their deposits yet, but those who dutifully deposited money before the deadline extension are now stuck. Money in excess of the one-third deposit requirement can be removed by contacting the CAIS program, but there’s no mechanism for removing the main part of the deposits. The Manitoba government has announced that it is signing a federal-provincial agreement to allow that province’s producers to withdraw all of their funds. Agreement from seven provinces is necessary before the change will take effect. Hopefully, other provinces will follow suit with Manitoba and hopefully this change can be made quickly. Hundreds of millions of dollars are tied up in CAIS deposits. A lot of producers could use this money to help cover seeding expenses. I’m Kevin Hursh.

April 6, 2005

At last, a trade victory
Wednesday’s decision by the U.S. International Trade Commission restores a bit of faith in trade rules. The commission ruled unanimously that Canadian exports of live hogs are not harming U.S. producers. The duty will be removed and money collected to date will be refunded. With the border unjustly closed to Canadian live cattle and with a 14 per cent duty still in place on hard red spring wheat from Canada, the hog decision is a welcome victory. Canada and a number of other nations have also won a victory by being allowed to retaliate against the Byrd Amendment which encourages American interest groups to initiate trade actions. Canada has slapped a 15 per cent duty on a number of American products including live swine. Only a small number of live pigs move north from the U.S., but it is ironic that the American duty on hogs is being removed, while a Canadian hog duty is allowed. Despite the well-publicized trade problems, it should be noted that most trade between the two countries occurs with no problem and we enjoy a huge trade surplus in agricultural products. I’m Kevin Hursh.

April 5, 2005

Canada's newest flour mill
It’s a rare event when a new flour mill opens in Canada. On Tuesday, I had the opportunity to attend the official opening of the country’s newest mill located in Chilliwack, British Columbia. Rogers Foods has long had a flour mill in nearby Armstrong, B.C. To keep up with growing demand, Nisshin, the Japanese parent company, decided to build a new state-of-the-art mill in Chilliwack. Its primary market is the lower mainland of B.C., but there’s also some export business. Twenty-five railcars of Western Canadian wheat at a time are dropped at Rogers Foods, Chilliwack division. Capacity is 250 tonnes a day. The flour is sold in bags as well as in bulk. As farmers, we sometimes forget that one of our biggest customers for wheat every year is the domestic market. Canadian per capita flour consumption has been slipping in recent years. Despite that, in 2004 more than 3 million tonnes of wheat were ground into flour in this country. The biggest flour mills in Canada belong to companies like ADM Milling and Robin Hood, but smaller mills such as Rogers Foods are still great customers for Western Canadian farmers. I’m Kevin Hursh.

April 4, 2005

Sask farmland values increase
Despite all the challenges facing agriculture, Saskatchewan farmland values continued to increase in the last six months of 2004. Based on its ongoing analysis of benchmark properties, Farm Credit Canada says land values increased by 0.8 per cent. According to the FCC, the small increase is the result of a few areas of the province with increasing values, while many areas saw no change. From late 1999 until the first half of 2002, Saskatchewan farmland prices dropped. For the past three years, land prices have been rising in the FCC reports, although the rate of increase has been slipping. In many other parts of the country, urban pressure and alternate uses for land exert upward price pressure on farmland. In Saskatchewan, those are not big factors. It’s interesting that prices continued to rise in the last half of 2004 despite the early frost, poor grain quality and depressed grain prices. There are obviously farmers looking to expand who have the resources to do so. We won’t know about land price trends for the first half of this year until sometime in the fall. I’m Kevin Hursh.

April 3, 2005

Beef challenges go beyond BSE
Canadian beef producers should be looking beyond the short-term challenges of BSE. That’s the view of Ted Schroeder, an agricultural economist with Kansas State University. Schroeder spoke on Saturday to a meeting organized by Alberta Beef Producers in Edmonton. Schroeder has studied the Canadian beef industry extensively and he notes that we are not the lowest cost producers on the world stage. As it is doing with soybeans, Brazil is dramatically ramping up its beef production and exports. And amazingly, India has become one of the world’s top beef exporters. Meanwhile, beef faces daunting competition from both pork and chicken. Both alternatives are seeing a rapid rise in world consumption. While all this may sound ominous, Ted Schroeder says it just means that the Canadian beef industry needs to do things differently. Rather than commodity beef, we need to produce branded products with assured quality to target the growing legion of wealthy consumers in the world who are willing and able to pay more. For branded products to work, there must be coordination and cooperation all the way along the beef value chain. Some of the new producer owned packing plant initiatives should have an advantage in that regard. I’m Kevin Hursh.

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