Hursh Consulting & Communications: Kevin Hursh on Agriculture

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Hursh on Agriculture

July 28, 2005

Grain prices disappoint
The Canadian Wheat Board’s new crop Pool Return Outlook for feed barley has increased by $11 a tonne. While that’s a nice increase over last month’s PRO, it’s still nothing to write home about. After deducting average Saskatchewan freight and handling, the expected price is only slightly higher than $1.50 a bushel. It remains to be seen whether or not that export price through the board will be competitive with domestic prices. Usually, the domestic price is higher and very little feed barley hits the export market. While the feed barley PRO increased, wheat was unchanged from last month and the durum and malting barley PROs dropped by a dollar a tonne. On No. 1 CWRS wheat with 12.5 per cent protein, the PRO works out to a farmgate price of $3.69 a bushel. On No. 1 durum with 12.5 per cent protein, it’s $4.19 a bushel. Two-row malting barley is $2.50 a bushel once average Saskatchewan freight and handling is deducted. It’s a good thing we’re looking at good crop yields in most areas, because price expectations continue to be disappointing. I’m Kevin Hursh.

July 27, 2005

Avadex and Fortress available again
Some old herbicides are making a comeback. Starting in the fall, Avadex BW, Avadex MicroActiv and Fortress herbicides will again be available. The new marketer of the herbicides is Gowan Canada. Gowan purchased rights to the herbicides from Monsanto. Gowan has struck a distribution deal with Agricore United and with UAP Canada. UAP markets to national and regional dealers. Avadex is for the control of wild oats in a broad range of crops. Fortress controls wild oats and green foxtail. These are old soil applied herbicides. The companies involved say the products will offer a way to control wild oats before they compete for soil moisture and nutrients. Multiple weed flushes are controlled. As well, it’s a way to manage herbicide resistance. Avadex is a Group 8 product. The continued availability of Avadex is particularly good news for canaryseed growers. While there are numerous wild oat control options for crops like wheat and barley, there are limited options for canaryseed. Although grower pricing has yet to be finalized, a rep for UAP Canada told me that pricing should be very similar to when Monsanto had the products. I’m Kevin Hursh.

July 26, 2005

Cattle prices improve with open border
The movement of Canadian cattle across the U.S. border is only a trickle, but it’s having a big effect on prices and attitudes. Market analysts say the basis has narrowed between American cattle and Canadian cattle on both fed animals and feeders. On fed animals, the basis was about $35 a hundredweight just a few weeks ago. Now, it’s $10 to $14 a hundredweight, which is nearly as low as the pre-BSE levels. Feeder cattle prices have improved dramatically. The open border has even helped the prices of cattle over 30 months of age. These animals can’t cross the border. Neither can beef from these animals. However, with the new USDA rule in place, Canadian slaughter plants can now process both young animals and older animals and still retain their export status. More plants will be doing some cull cows. That has helped prices for older animals that have good quality. Prices for cull animals suitable only for ground beef, have remain depressed and are unlikely to improve much any time soon. Other than the cull cow problem, the good times are returning for the cattle industry. There may still be bumps in the road, but there’s now a lot more optimism. I’m Kevin Hursh.

Frost scare
Early Monday morning, temperatures dropped below three degrees in a number of Saskatchewan locations. That’s scary. Last year’s frost on August 20 is still fresh in the minds of producers. That frost was devastating over a broad region of the province. This year, unlike 2004, crop development is running close to normal. Fall rye and winter wheat are getting ripe. Some field pea crops are turning. However, the majority of crops still need many weeks of frost-free weather. The low temperatures of Monday morning remind us just how vulnerable we are. Frost is arguably the biggest threat we face. A lot of crops could use another rain to properly fill and reach full yield potential, but even without rain there will still be decent production. There will likely be more hailstorms, but they tend to cause scattered damage. Wet harvest weather is always a threat to crop quality, but the biggest threat for catastrophic crop damage is an early frost. If frost holds off until September like it should, there’s going to be a big crop in Saskatchewan. I predict there will be a lot of grain piled on the ground because we won’t have enough bin space to hold it all. I’m Kevin Hursh.

July 24, 2005

Yield Protection Technology
A company called Performance Plants claims to have developed a novel technology that enhances crop yield while protecting against drought stress. The company says three years of data from extensive field trials in multiple sites show transgenic canola plants grown with its Yield Protection Technology consistently out-yielded the controls by up to 26 per cent. Usually drought tolerance comes with a penalty. In this case, crop yield is apparently maintained or enhanced under well watered as well as drought conditions. Performance Plants continues to test its Yield Protection Technology for the fourth year in canola while developing the technology in other important crops such as corn, soybeans and cotton. The company has established global product development agreements with strategic partners. Performance Plants was founded in 1995. Its head office as well as its Gene and Trait Discovery Centre are located in Kingston. Its Crop Development Centre is in Saskatoon. Up until now, Performance Plants has not been a high profile company. That seems destined to change if its Yield Protection Technology lives up the claims. I’m Kevin Hursh

July 21, 2005

Partnership to advance Saskatchewan bean industry
The University of Saskatchewan’s Crop Development Centre has developed a pinto bean variety that stays fresh looking longer. It can maintain colour for more than a year, while most other varieties show noticeable signs of darkening in six months or less. The variety is currently in its first year of pedigreed seed production. Other pinto bean varieties with the same attribute are expected to follow. Researchers and marketers traveled to Mexico to find out what buyers really want in their pinto beans and then they came back to Saskatchewan to design a variety to meet the need. Under NAFTA, the Mexican tariff on beans is dropping, creating an opportunity for Canadian product. Slow darkening pinto beans will be kept separate from other pinto beans in an identity preserved system. Walker Seeds, a major specialty crop processor and exporter based in Tisdale, will contract the production of the beans and will be responsible for promotion and marketing to customers. Keg Agro Ltd. of Outlook will process the beans. Farmers, through Saskatchewan Pulse Growers are funding the development of the new varieties, which are expected to put Saskatchewan on the map as a pinto bean exporter. I’m Kevin Hursh.

July 20, 2005

July 27 court case is vacated
Wouldn’t it be great if this was actually the end of American legal challenges against Canadian live cattle. Everyone was geared towards the court case next Wednesday in Billings, Montana. Now, Judge Richard Cebull has pulled the pin on the case indefinitely. It makes sense for Cebull to want to see the written judgment from the appeal court before deciding if another hearing is warranted. In the meantime, cattle will continue to flow into the U.S. R-CALF is hoping for another day in court with Judge Cebull. Canadian producers hope the case is closed. If the Canadian victory holds, work will need to continue on opening the border even further. The export rules are onerous, costing time and money. They hamper the flow of animals. And the border is still slammed shut to cattle over 30 months of age as well as beef from older animals. That continues to depress cull cow prices hurting cow-calf producers. Exports of breeding stock are not allowed either and that affect purebred producers. There have been a lot of disappointments over the past 26 months. The last two weeks have seen some big strides forward, but there’s a lot left to do in order to actually normalize livestock trade with the U.S. I’m Kevin Hursh.

Pulse Tour on July 21
It’s the time of year for crop tours. Saskatchewan Pulse Growers has what looks like an excellent tour lined up for the University of Saskatchewan’s Kernen Crop Research Farm this Thursday. The day will start with an announcement regarding the development of Saskatchewan’s bean industry. The tours and demonstrations include a lot of interesting topics – weed control research in pulses; upcoming varieties of lentils and peas; the new herbicide tolerant lentil; chickpea varieties; new evaluation and selection criteria for finding superior feed peas; and disease management in pulse crops including ascochyta blight and anthracnose in lentils, mycosphaerella blight in peas and ascochyta blight in lentils. There will also be information of the potential for soybeans and fababeans in Saskatchewan. Peas and lentils have become an integral part of cropping plans for most producers. Other pulse crops have a great deal of potential. Thursday’s Pulse Tour just east of Saskatoon is a great way to stay abreast of cutting edge research. For further information, go to www.saskpulse.com. I’m Kevin Hursh.

July 18, 2005

Strike looms at Lakeside Packers
News from the cattle industry in recent days has focused on the appeal court victory in Seattle and the first exports of Canadian cattle into the U.S. in more than two years. Those are events worthy of celebration. However, there’s a domestic problem brewing. Canadian slaughter capacity could soon be disrupted at Canada’s largest plant – Lakeside Packers in Brooks, Alberta. Members of the United Food and Commercial Workers Union have told management they are prepared to walk off the job as early as this Wednesday. The union local was formed last year and workers are seeking their first contract under the UFCW. A large percentage of the workers are recent immigrants to Canada. Some factions support strike action. Others don’t. But strike action was favoured by 70 per cent of those who voted. The union is seeking better wages and working conditions. Lakeside Packers, owned by Tyson Foods, has a daily capacity of 3,800 head and represents 40 per cent of Canadian kill capacity. This fall, capacity is slated to increase to 4,700 head per day. Any disruption of slaughter and processing at Lakeside will have a ripple effect through the industry. I’m Kevin Hursh.

One win is not a streak
While the appeal court win in Seattle late last week felt great, the fight may be a long way from over. Technically, the American border is now open to live Canadian cattle under 30 months of age. In practice, very few exporters will jump through all the hoops to send animals south until they see what happens on July 27 in a courtroom in Minot. It should be tougher for Judge Richard Cebull to swallow the nonsense from R-CALF now that there’s been a homegrown American case of BSE. And it should be tougher for R-CALF to get a permanent injunction rather than the temporary one that was just overturned. However, the case on the 27th is far from a slam-dunk for Canada. Cebull has defied logic and sided with R-CALF in the past and it could happen again. We should also remember that Cebull could slam the border closed to boxed beef taking us back to the dark days the beef industry suffered through in the early months of the BSE crisis. Hopefully that won’t happen. Hopefully science and rational thought will prevail. But while we hope for the best, we should be prepared for the worst. I’m Kevin Hursh.

July 15, 2005

Record Saskatchewan crop predicted
We’re one rain away from a record crop in Saskatchewan. For a number of years, I’ve been making production predictions for the province – predictions in advance of the official estimates. Often the predictions have not been good news. The crop failure of 2002 was due to drought. Last year, the cool spring and summer led to a very late crop that was decimated by frost. Well, the prediction for 2005 is much happier. I haven’t traveled the entire province, but based on what I’ve seen and the people I’ve talked to, we have the potential to produce one of the biggest, if not the biggest crop ever. We’ve had a few years when we’ve hit the 28 million tonne range. That should be possible again this year, particularly if there’s one more general rain. There is land that has been flooded out and there are some spindly crops here and there, but overall crop potential is excellent. To reach full potential, a lot of crops will require at least one more drink. If we get that, Saskatchewan might produce its largest crop in history. That would be a nice way to celebrate the 100th anniversary. I’m Kevin Hursh.

July 13, 2005

WTO talks flounder
World Trade Organization negotiations are in trouble. That comes directly from the WTO Director General. According to CAFTA, the Canadian Agri-Food Trade Alliance, the Director General told ambassadors from WTO member countries last Friday in Geneva that “progress is nowhere near sufficient in terms of our critical path to Hong Kong…” A WTO ministerial meeting is planned in Hong Kong for December. That meeting is seen as a critical stepping stone towards a successful conclusion to this round of WTO negotiations. While the Americans and Europeans have recently made high level statements about their willingness to end agricultural export subsidies, very little is being accomplished at the negotiating table. The Director General says the talks need to move from generalities to specifics. Rather than pointing fingers and assigning blame, he says more energy needs to go into finding solutions that everyone can share in. With so many countries involved and with so many divergent interests, it’s not surprising that WTO agricultural negotiations are struggling. I’m Kevin Hursh.

July 12, 2005

Ethanol questions
Lionel La Belle, president of the Saskatchewan Ethanol Council is asking some interesting questions about the federal government’s Ethanol Expansion Program. Last week, $46 million in funding from Round 2 of the program was announced. Five plants received money. Three producer-owned proposals from Saskatchewan were unsuccessful. In Round 1 of the program, Husky Oil at Lloydminster and Noramera at Weyburn received funding. The Saskatchewan Ethanol Council notes that producer owned facilities account for less than 13 per cent of national capacity. With this most recent funding, over 70 per cent of national capacity will be controlled by Husky Oil, Sunoco and Commercial Alcohol. In the U.S. farmers currently own 50 per cent of the facilities and 40 per cent of the national capacity. By comparison, farmers in Canada are being shut out of the ethanol business. Lionel La Belle also points out that Saskatchewan is the only province that exports feed grains. Everyone else is a net importer. La Belle wonders where the 80 million bushels of corn will come from to feed the Ontario ethanol industry. I’m Kevin Hursh.

July 11, 2005

CAIS fee could be 0.45 per cent
A lot of alterations are being discussed for CAIS, the Canadian Agricultural Income Stabilization program. One of the proposed changes will meet mixed reviews. As expected, Agriculture ministers at their annual meeting last week talked about the possibility of moving to an annual fee rather than requiring a deposit. The fee they talked about was 0.45 per cent of a producer’s reference margin. On a hundred thousand dollar reference margin, the fee would be $450. A number of the major farm groups have reluctantly supported the idea of a fee rather than a deposit, but they have been talking about a much lower fee. Other CAIS changes were also discussed. These include: program modifications in support of producers experiencing back-to-back disasters, the coverage criteria for negative margins, the linkage between CAIS and Crop Insurance, inventory valuation and administrative improvements. No one is very happy with CAIS, but Agriculture Ministers seem committed, as least for now, to improving the program rather than throwing it out. While changes are being discussed, nothing is final. The ministers will seek to execute an amending agreement. I’m Kevin Hursh.

July 10, 2005

Critical time for the beef industry
Agriculture ministers are playing their cards close to their vests regarding BSE contingency plans. At the conclusion of the ag minister meeting last Friday at Kananaskis, federal agriculture minister Andy Mitchell and Alberta agriculture minister Doug Horner were asked repeatedly about the contingency plan if the American border closes to boxed Canadian beef. Horner handled the questions well pointing out there were a range of things that could happen in the upcoming American court cases. Those cases are this Wednesday, July 13 in Seattle and then Wednesday, July 27 in Billings, Montana. The border might, at long last, open to live Canadian cattle or it might stay closed. There’s an outside chance that boxed beef will be blocked, but a short closure would be far different than a prolonged trade disruption. The ag ministers made it clear that a wide range of options are being discussed with the cattle industry. Preparations are being made. Doug Horner also pointed out that there is no strategic advantage in Canada laying all its cards on the table. The next few weeks are going to be critical for the beef industry. We’ll have to watch what unfolds south of the line and the response from Canadian policy makers. I’m Kevin Hursh.

July 7, 2005

Maple Leaf invests in Saskatchewan
The new $110 million Maple Leaf pork processing facility to be built in Saskatoon will have a different emphasis than the company’s massive Brandon facility. Brandon is still operating with a single shift so Maple Leaf could double capacity there without building new in Saskatchewan. The new Saskatoon plant, which will continue operating as Mitchell’s Gourmet Foods, will focus on higher value markets that require different specifications. These are things that can’t be done at the throughput oriented Brandon facility. The Saskatoon plant will still be big, built on 35 acres in the north end of the city. It will start at 20,000 animals a week and increase to 40,000 once a double shift is required. The aging Mitchell’s facility on 11th avenue will be shut down as the new plant comes on stream. Maple Leaf will invest a further $50 million in value-added activities. That will mean enhancements at its wiener and sausage plant in Saskatoon as well as its North Battleford bacon plant. The Saskatchewan government is providing grants of up to $35 million to Maple Leaf. There are some who say that big businesses shouldn’t get taxpayer money, but Saskatchewan has to compete with other jurisdictions who would love to have this sort of job creation and economic spin-offs. I’m Kevin Hursh.

Movement of special crops stalled
Special crop movement is backing up onto the prairies. The problem is a withdrawal of services by container truckers in Vancouver. Special crops like edible peas and lentils are stuffed into ocean containers at facilities in Vancouver. Then the containers are trucked to the container port to go on ships. The truckers withdrew their services on June 27 and efforts by mediator Vince Ready have been unsuccessful. This isn’t like strikes by unionized grain handlers or longshoremen. There are about a thousand truckers and they’re owner operators of their rigs. There’s no union, only an association. They work for about 40 or 50 brokers or trucking companies. Unlike grain handlers and longshoremen who earn good money, the truckers have been working for rates that are very low, particularly given the rising cost of fuel. As farmers, we don’t need any increase in grain transportation costs, but you can’t expect someone to truck containers for continually reducing returns. A huge backlog of special crops is building. There’s a big carryover from last year and another big crop coming. This dispute is not getting the attention it deserves. I’m Kevin Hursh.

July 5, 2005

CAIS deposit likely to be replaced with a fee
Federal and provincial agriculture ministers are gathered at Kananaskis, Alberta for their annual meeting. One of the main topics of discussion will be the CAIS program. The ag ministers seem committed to eliminating the producer deposit requirement for the income stabilization program, but they also seem intent on replacing the deposit with a small fee. Farm groups across the country have expressed opposition to a fee, saying it’s a barrier to participation. However, a number of farm groups are saying producers might be willing to pay a very small CAIS fee as long as governments promise to fully fund the program and not prorate payments if money gets tight. Having a bunch of money tied up in a producer deposit just to participate in the program never made any sense. For some reason, the government bureaucracy is adamant that farmers need to make some sort of monetary commitment to participate in income stabilization. Apparently all the money producers spend for accountants to do the applications isn’t enough. Depending upon the size of the fee, it may be more palatable than the deposit. But it’s still a stupid requirement. I’m Kevin Hursh.

July 4, 2005

Paying farmers for their environmental contributions
Farm groups from across the country are pushing federal and provincial governments to support a concept known as Alternate Land Use Services or ALUS. The idea originated with Keystone Agricultural Producers in Manitoba and has been adopted by groups such as APAS in Saskatchewan, Wild Rose in Alberta and the Ontario Federation of Agriculture. It’s also the official policy of the Canadian Federation of Agriculture. ALUS would provide incentives to farmers to protect wetlands, improve wildlife habitat, conserve riverbank areas and enhance water quality. Incentives are preferred rather than more environmental regulations. Regulations typically cost producers money. ALUS is seen as a way to provide another income flow to farmers, similar to what happens in Europe and the U.S. Federal, provincial and territorial agriculture ministers are meeting this week in Kananaskis, Alberta. Farm group leaders hope the Alternate Land Use Services concept will be favourably received. They claim Canada is the only industrialized country without major agricultural conservation programs. I’m Kevin Hursh.

July 3, 2005

Manitoba wash out
The flooding in Manitoba is taking a heavy toll on crops. Over the past few days I’ve heard from a couple of Winnipeg-area producers on just how bad the crop damage is. A producer from east of Winnipeg says up to 75 per cent of the land in his area was not seeded this spring. On what was seeded, losses from flooding are 50 per cent or more. Another producer from south of Winnipeg says there has been 325 mm of rain so far this year, most of it after the beginning of the growing season. That’s 13 inches with the most recent inch coming on Saturday. He doesn’t expect to see some of his lower level fields until late July and that’s if it stops raining. He only managed to get half of his farm seeded and he expects his wheat will yield only 20 to 40 per cent of normal due to flooding, disease and weed pressure. Excessive moisture is also a problem in many areas of Saskatchewan. There was more rain and some hailstorms over the weekend. But the scope of the problem is much worse in Manitoba. For a lot of Manitoba producers, the year is a wash out. I’m Kevin Hursh.

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