Hursh Consulting & Communications: Kevin Hursh on Agriculture

566 Adilman Drive, Saskatoon, SK Canada, S7K 7H5
Tel: (306) 933-0138 Fax: (306) 249-4869 kevin@hursh.ca

Hursh on Agriculture

August 31, 2005

Wet harvest weather causes major losses
Heavy rainfall is causing extensive crop damage in many areas of the province. I’ve received e-mails from a number of producers who are very discouraged. A producer from the Strasbourg area says he’s had seven inches of rain in the past three weeks. Standing wheat is horizontal and wheat that was swathed has sprouted. Near Wolseley, a producer reports three inches of rain in the past couple days. From the Kelvington – Wadena area, a producer says it poured all Tuesday night with a strong wind. At least four inches of rain has been received in the past week. He says standing barley had a lot of sprouts even before this last storm. Swathes were green with sprouted kernels. Peas are sprouting and molding on the ground. Standing crops are leaning and twisted with water lying in fields. These producers think the record crop is gone and that quality will be bad like it was last year. It will take a while to sort out how severe the damage is over how large an area, but the last few weeks have certainly changed the complexion of the provincial crop. I’m Kevin Hursh.

August 30, 2005

Katrina's impact
We live in an interconnected world. The devastation caused by Hurricane Katrina in Louisiana, Mississippi and Alabama seems rather remote, but the effects are wide-ranging. The one effect that’s already been well reported is the impact on oil prices. Disruption at refineries is making a tight world oil supply even tighter, contributing to the increase in fuel prices. Harvest fuel expenses are going to be huge. One would also expect massive insurance claims in the wake of Katrina. Large reinsurance firms are likely to suffer a hit. When that happens, like it did following the 911 disaster, there can be an effect on everything from hail insurance to general farm insurance. Hopefully, the insurance industry has been profitable enough that it can absorb the losses from Katrina. With New Orleans being a major port, American grain exports out the Mississippi River have been affected. It’s hard to know what impact that may have on worldwide grain movement. There’s one other effect from Katrina. As we suffer harvest delays from recent rains, it’s pretty easy to get frustrated. When you consider the fury of Mother Nature in the southern U.S. and the loss of life and property, suddenly our harvest problems don’t seem as important. I’m Kevin Hursh.

August 29, 2005

Anti-protein premiums on malting barley
A couple more delivery locations have joined the new program that pays premiums for low protein in two-row malting barley. Unlike spring wheat and durum where there’s a premium for high protein, in the case of malting barley, lower protein is being rewarded. Malt with too high a protein is a problem. It causes chill haze in the beer. The new anti-protein premium kicks in on two-row malting barley that has a protein of 12.5 per cent or lower. The premium increases as the protein drops. The maximum premium is on barley that’s less than 11 per cent protein. That garners an extra payment of $5.40 a tonne or about 12 cents a bushel. There is a cost to producing barley with low protein. Producers forego yield by limiting the amount of nitrogen fertilizer. Barley above 13 per cent protein isn’t usually selected for malting. A maximum premium of 12 cents a bushel isn’t a lot, but it’s a start. If your malting barley buyer isn’t participating with the CWB to provide this premium, you may want to ask why. Low protein in malting barley has value and producers should be sharing the benefits. I’m Kevin Hursh.

August 28, 2005

Rain slows Saskatchewan harvest
When the latest crop report from Saskatchewan Agriculture is released later this afternoon, it’s likely to show limited harvest progress over the past week. The crop report of August 22 put harvest progress at 5 per cent – well below the five-year average of 12 per cent. With the rain last week, it’s likely that harvest progress has fallen even further behind the norm. The precipitation map published by the PFRA shows southeastern Saskatchewan had the least amount of rain last week, so that’s likely the region that has made the most harvest progress. Rainfall amounts increase as you go north and west with the northwestern grainbelt of Saskatchewan receiving the heaviest precipitation. Around Lloydminster, the PFRA map shows a huge amount of rain – three, four and even five inches last week. That’s going to cause crop losses and make harvesting very difficult. Heavy rains also hit many parts of Alberta, but Manitoba was spared this time around. I’m Kevin Hursh.

August 25, 2005

Disappointing PROs
The strengthening Canadian dollar is hurting our grain prices. The Canadian Wheat Board released its new Pool Return Outlook on Thursday, and the stronger dollar was the main factor cited for a slight decline in PROs as compared to last month. On wheat, most of the main grades are unchanged. The average price in Saskatchewan for No. 1 CWRS wheat with 12.5 per cent protein is expected to total $3.68 a bushel for the current crop year. Only at high protein levels is wheat expected to top $4. The durum PRO is down $3 a tonne or about 8 cents a bushel compared to last month on all grades except No. 5. The expected Saskatchewan price for No. 1 durum with 12.5 per cent protein is $4.09 a bushel. The future price direction for durum will depend to a large extent on how the North American durum crop comes off. Feed barley and malting barley both declined slightly and again the stronger loonie was a major factor. Pool A feed barley is expected to have a total price of $1.49 a bushel, while the top grade two-row malting barley price expectation, basis Saskatchewan, is $2.46 a bushel. All prices are below last year’s levels and all are disappointing. I’m Kevin Hursh.

August 24, 2005

Cattle look better than grain again
As compared to a year ago at this time, most grain prices are lower, but cattle prices are dramatically better. A year ago, the price of canola was around $7 a bushel. Now, it’s running around $6. At around 14 cents a pound, large green lentils are several cents below last year. While yellow peas were around $4 a bushel last year, this year they’ve been running around $3.40 or $3.30. Feed barley, mustard and canaryseed are all somewhat lower. On cattle prices, the improvement from a year ago is amazing. Feeder steers in the 500 to 600 pound range are averaging more than $1.30 a pound. That’s 40 cents a pound higher than last year. Cull cow prices still aren’t great, but at an average of 33 cents a pound, D1 and 2 cows are up by more than a dime from a year ago. The reopening of the American border has had a dramatic impact. Given the relative economics of grain versus cattle, I expect a return to the pre-BSE trend of converting land that’s marginal for grain production into pasture and forage to support a larger beef breeding herd. I’m Kevin Hursh.

August 23, 2005

Crops could take a hit from wet weather
Wet harvest weather is now arguably the biggest threat to the crop. Frost could still exact a toll, but the crop is a lot farther advanced than last year. If it keeps raining through the fall, that will exact a toll on quality. Oilseeds like flax and canola aren’t usually harmed but wet weather, but malting barley can turn to feed. Wheat and durum can drop grades from bleaching and sprouting. The crop that’s probably at most risk right now is lentils. A lot of lentils have been swathed or desiccated. That means they’re vulnerable to all sorts of downgrading factors should we hit a prolonged wet spell. According to Saskatchewan Agriculture, 17 per cent of the lentil crop was combined as of August 21. That’s way ahead of last year’s 5 per cent, but everything ran late last year. The five-year average for lentil combining progress is 29 per cent. In 2003, an amazing 78 per cent of the lentil crop was in the bin by this time. Rain is always good for next year, but right now the province needs a long spell of warm, dry weather. There’s a big crop to come off in most areas, and it will be important to preserve as much quality as possible. I’m Kevin Hursh.

Ammunition for R-CALF
R-CALF, the protectionist U.S. farm group, is pointing at a Canadian breach of BSE rules. A Wisconsin packing plant imported a cow from Canada and it was slaughtered on August 4. The animal was supposed to be under 30 months of age. However, a Canadian audit of the health certificate that accompanied the animal subsequently found it to be about 31 months of age. At that age, the vertebral column was supposed to be removed. That was not done. The Wisconsin packing plant is recalling 37 boxes of beef products that may contain portions of the backbone. This is only a minor breach in the rules. The animal was 31 months rather than 30. The health risk is almost negligible, but the rules were broken. R-CALF is jumping up and down saying, “I told you so.” The fanatical group can now claim the restrictions to protect the American public are not working as it renews efforts to close the border again. Failing a border closure, R-CALF is pushing hard for a mandatory Country-of-Origin labeling law that would pose big problems for cross border trade. We can’t afford to hand R-CALF this sort of ammunition to use against us. I’m Kevin Hursh.

August 21, 2005

Huge advances in harvesting technology
On Friday night I saw an old friend – Harold Yelland, a farmer from Porcupine Plain. Harold is a former director of Saskatchewan Wheat Pool. The occasion was a 50th birthday party for Harold’s son, Dr. Joel Yelland. Harold says he was already doing some combining at this time, 50 years ago when Joel arrived. I asked him what sort of combine he was using. He replied without hesitation that it was an Allis Chalmers with a 6 foot header. “How big was the grain tank?” I asked. “Seventeen bushels,” remembered Harold, “but we put extensions on and got it up to 20.” What a far cry from what we’re using today. Headers are 24, 30 or 36 feet or even larger. Lots of grain tanks are 200 or 300 bushels. Today we harvest in relative comfort. I don’t think I’d farm very long if I had to sit out in the open and eat threshing dust all day. Harvest is still a demanding time with long hours and lots of stress, but we’ve come a long way. Newer combines have auto steer, automatic header height controls and GPS yield mapping and a price tag to match. Previous generations couldn’t have imagined the technological advancement. I’m Kevin Hursh.

August 18, 2005

Record Saskatchewan crop still predicted
Will the Saskatchewan crop be a record or won’t it? A couple weeks ago, Saskatchewan Agriculture estimated the provincial crop at 30 million tonnes, the biggest ever. Since then, the Sask. Ag crop reports have noted a decline in yield estimates. Some people have assumed that means the record crop is gone. Well, crop reporter Terry Bedard has now plugged the lower yield estimates into the spreadsheet and recalculated. Despite provincial yield estimate reductions of one to five bushels an acre depending upon the crop, the total production works out to just over 29 million tonnes. That’s a drop of a million tonnes, but if realized, it will still be bigger than the 28.2 million tonnes produced in both 1996 and 1999. Of course, these are all just estimates. Volunteer crop reporters across the province are taking their best stabs at pegging yields. Looks can be deceiving. Can you estimate a field to the nearest 5 bushels an acre? Lots of times I can’t. Maybe as harvest proceeds, the crop will not be as good as expected. However, for now, the official estimate is still calling for the biggest crop ever. I’m Kevin Hursh.

August 17, 2005

Custom rates for harvest work
In the weeks ahead, long hours will be spent harvesting. Various deals will be struck to have custom work done to get the crop in the bin. If you do some combining for a neighbour, what should you charge? Alternatively if a neighbour does some swathing for you, what’s a fair rate? Saskatchewan Agriculture’s Custom and Rental Rate Guide is a useful publication for figuring out the costs of custom work. Those costs vary depending upon a number of assumptions including the price of fuel, the cost of labour, the size of the equipment and the annual hours of use. Here are some of the averages in the publication. The average custom rate for combining comes out to $20.80 an acre. If the combine has a flex header with a pickup reel, you can add about a dollar an acre to the cost. The average custom rate for hauling grain from the field to the yard from one combine is 14 cents a bushel for the first mile plus one cent a bushel for each additional mile. The average custom rate for swathing with a self-propelled unit is listed as $13.42 an acre. Now, these are just broad averages. A lot more specific information is available within the Custom and Rental Rate Guide. The guide is posted on the home page of the Saskatchewan Agriculture website (http://www.agr.gov.sk.ca/). I’m Kevin Hursh.

August 16, 2005

Farmers lose their investment in hog barns
Local investment has not turned out well in the pork industry. Due to financial problems, Quadra Group lost control of all the hog barns across the province that operated under the banner of Community Pork Ventures. Individual farmer investors from Rosthern to Theodore to Shaunavon poured money into their local barns. Those investors are walking away with nothing. In many cases, local investors tried to buy their barns back from the Receiver. However, the largest pork producer in the province, Big Sky Farms seems likely to buy most or all of the more than a dozen operations. If that happens, Big Sky will account for about 40 per cent of all the hogs produced in the province. This isn’t the first time local investors in the pork industry have been hurt. Saskatchewan Wheat Pool, through Heartland Pork partnered with local investors to build large hog barns back in the mid to late 90s. Heartland Pork was eventually sold for a fraction of the cost of building the big facilities. Again, local investors were left out in the cold. As farmers, we need to look for ways to take more control of our destiny. Part of the answer is investment in new farmer-owned initiatives. Unfortunately, it’s difficult to attract farmer investment when many ventures have floundered. I’m Kevin Hursh.

August 15, 2005

Ugly yields in Manitoba
Crop yields in Saskatchewan have been hurt by the heat and lack of rain in late July and early August, but we don’t have much to complain about compared to Manitoba. According to the most recent crop report from Manitoba Agriculture, there are some good crops, such as in the northwest region, but most of the news is not good. The eastern side of Manitoba has been especially hard hit by the flooding earlier in the summer. The crops not worked down or taken for green feed will produce very poorly. Winter wheat has yielded 15 to 40 bushels an acre. Manitoba Agriculture says barley yields are less than 20. Many producers anticipate straight combining canola as the thin stand won’t make a decent swath. Canola yields in eastern Manitoba are expected to be in the 10 to 15 bushel per acre range. Spring wheat has yielded 20 to 25. Those are terrible yields in a part of Manitoba that can be very productive. While some other areas will have better production, much of the wheat crop will be downgraded by fusarium. Reports of premature ripening and low bushel weights are common. The Saskatchewan crop is a long way from being in the bin, but unlike Manitoba, we have good potential. I’m Kevin Hursh.

August 14, 2005

Weedy crops
This year has been more difficult than most in the battle against weeds. It’s normal as harvest approaches to notice some weedy crops, but this year the problems seems more widespread. There are a number of reasons. When it turned wet in the spring, some producers missed their weed burn-off operation. The crop was already emerging before weeds could be controlled. Wet conditions continued into the season for post-emergent herbicide application. Producers struggled to get all their acres sprayed. Sometimes the crop was too far advanced by the time the field was dry enough to support a sprayer. The rain also caused leaching of some soil applied products rendering them less effective. Particularly on lentils and peas, there are some terrible weed infestations. In some fields, wild mustard has run rampant. In other fields, kochia weeds are thick, standing there like Christmas trees. In addition to robbing yield, in many cases the weeds will complicate harvest operations. And there’s going to be an abundance of weed seeds produced for subsequent years. I’m Kevin Hursh.

August 11, 2005

Questionable logic from Wheat Growers Association
The Western Canadian Wheat Growers Association says the possible benefits of the Canadian Wheat Board monopoly are far outweighed by the costs. The association wants the federal government to reconsider its support for the CWB. The Wheat Growers seem to assume that the American tariff on hard red spring wheat is caused by the CWB monopoly. Actually the tariff is based on the government’s borrowing guarantee and initial payment guarantee. It is not directly connected to the marketing monopoly. The Wheat Growers point at the extremely low level of initial payments as proof the board isn’t working. Initial payments are set and guaranteed by the federal government. You can’t blame them on the CWB. To counter low initial payments, the CWB has developed the Early Payment Option that’s being used by a growing number of producers. Yet another complaint is that not all of last year’s durum was accepted by the CWB. That’s true, but there’s no use having a single desk seller if it’s going to push a durum surplus onto the world market at fire sale prices. Everyone is entitled to his or her opinion. However, the Wheat Growers Association is using some questionable logic in its latest call for a dual market. I’m Kevin Hursh.

Harvest pressure on prices
Already, heavy harvest pressure is evident on many grain prices. There’s a wide variation in the yield reports coming from the first peas and lentils to be harvested, but there’s a big acreage of these two pulse crops and there’s going to be a lot of product harvested. As harvest gears up, prices are grinding lower. The plant delivered price for yellow peas was close to $4 a bushel a month ago. Now it isn’t much above $3. After paying trucking costs, a lot of producers are netting less than $3 a bushel on current sales. The farm gate bid for top grade large green lentils has dropped below 15 cents a pound. If there are lentil quality concerns as harvest proceeds, the value of No. 1 product could increase. Otherwise the price seems unlikely to rally during the harvest season. Prices for barley and canola are also weakening in anticipation of harvest. In many cases, harvest is still a few weeks away, but farmers want to move last year’s grain to free up bin space. Naturally, it’s also getting harder to book commercial truckers. They can’t keep up with the demand. All in all, it isn’t a good time to be pushing grain onto the market. I’m Kevin Hursh.

August 9, 2005

2,4-D deemed safe
It makes headlines when there are claims about herbicides being a threat to human health or the environment. It isn’t big news when over and over again, herbicides are found to be safe when used according to the label. The U.S. Environmental Protection Agency has just released a comprehensive assessment on the granddaddy of herbicides – 2,4-D. 2,4-diclorophenoxyacetic acid was discovered 60 years ago and it is still one of the most widely used herbicides in the world. It is also one of the most extensively researched pesticides. The EPA review process has been going on for 17 years. All sorts of test data were examined. The conclusion: 2,4-D does not present risks of concern to human health when users follow product instructions. EPA’s findings are consistent with decisions by other authorities including the World Health Organization, Health Canada and the U.S. National Cancer Institute. Even the Europeans consider 2,4-D to be safe. It’s interesting that despite all the research data and all the expert opinions, many cities across Canada have banned the use of products such as 2,4-D. I’m Kevin Hursh.

August 8, 2005

Battling insects with new wheat varieties
The best way to battle insect pests in crops is with genetic resistance. Public research institutions with producer support through the Western Grains Research Foundation have a number of new wheat varieties that will help in the battle against insects. Several spring wheat lines with a good level of resistance to the Hessian fly have been found. Gains have also been made against the wheat curl mite, which carries Wheat Streak Mosaic Virus – a major concern in winter wheat growing areas. A new winter wheat called Radiant, available for the first time this year, is the first Canadian variety with resistance to the virus. Genetic resistance to wheat midge is progressing. A number of experimental lines have strong potential for commercialization. This may eventually eliminate the need to spray for wheat midge. Researchers are also busy developing wheat varieties that have more solidness in the stems. This is the major tool in the battle against an old enemy called the wheat stem sawfly. The latest variety is called AC Lillian and it can reduce sawfly damage dramatically. Other sawfly resistant lines are under development. These types of research investments pay off many times over. I’m Kevin Hursh.

August 7, 2005

Aeration fans get harvest started sooner
It’s interesting to see how the philosophy has shifted in regards to aeration grain bins. Increasingly producers are using their fans first thing in the season in order to start combining sooner. Some still question this practice. Why not wait an extra few days for the grain to be dry rather than taking it with an elevated moisture content and then using fans to dry it down? Well, there are many good reasons. The quality is highest at the beginning of the season. You might as well start combining as early as possible and preserve all the quality you can. Plus, natural air grain drying works best in the longer, warmer days of August. Crops like peas and lentils can be dried to a safe moisture content and then rotated out of aeration bins in case other crops need aeration. There are years when you can harvest the whole crop dry and you wouldn’t need to spend any money to run fans. Trouble is, you never know what’s going to happen. The later the harvest, the more likely there will be rain delays, quality loss and problems with tough grain. And as it gets later in the season, aeration is less effective. For many producers, it makes sense to use their aeration bins to get a jump on harvest. I’m Kevin Hursh.

August 4, 2005

Early Payment Option will be popular
Canadian Wheat Board initial payments for this new crop year are not attractive. The government guaranteed initial payments for wheat, durum, feed barley and malting barley are even lower than where they started last crop year. After deducting freight and handling, the initial payment on No. 1 spring wheat with 12.5 per cent protein is only about $2 a bushel. Durum is only slightly better. The initial payment on two-row malting barley is about $1.30 a bushel. Feed barley is a mere 30 cents a bushel. Initial payments are typically increased as the crop year proceeds, but the current levels sure won’t do much for cash flow. Watch for more producer interest than ever in the CWB’s Early Payment Option. The EPO has a number of advantages – more of the total value near the time of delivery, protection from price drops and the ability to participate in price increases. There is a cost and producers should study the rules so they know what they’re getting into. There was a big increase last crop year in the number of producers using the Early Payment Option. With initial payment levels very low to start this crop year, the EPO looks more attractive than ever. I’m Kevin Hursh.

August 3, 2005

Containers start moving again
Some container truckers have returned to the job and the Vancouver Port Authority hopes more will follow. The port is requiring trucking companies to have interim licenses in place in order to access container terminals. Licenses are being granted to companies who agree to compensate drivers according to the rate schedule prepared by government-appointed mediator Vince Ready. The owner-operators of the trucks generally like the rate schedule. The trucking companies think it’s too generous. It’s uncertain how many companies will apply for a license sending their truckers back to work, but at this point there are containers moving again. The interim license arrangement will be in place for a period of 90 days, while a joint federal/provincial task force tries to develop a long-term solution. The work stoppage has lasted for a month and has severely disrupted special crop exports. It’ll take weeks to clear the backlog and analysts say new crop sales of special crops have been adversely affected. There will be a lot of pressure on the federal/provincial task force to provide a lasting solution. There were problems with container trucking long before the work disruption. I’m Kevin Hursh.

August 2, 2005

Transportation system will be tested
Saskatchewan Agriculture is predicting a record crop in the province – more than 30 million tonnes of grains, oilseeds and specialty crops. The ten-year average is only 23.8 million tonnes. The 30 million tonnes is only an estimate. The crop isn’t in the bin, but there’s little doubt that production will be large. Hopefully, the railways are paying attention. Not only is there a big crop shaping up, but there is also a large carryover of grain from 2004. The bins are going to be full this fall and there’s also going to be a lot of grain piled on the ground. It’s been many years since we’ve had that sort of volume to test the grain handling and transportation system. With much smaller volumes, the system has not worked particularly well. For all their talk of high tech coordination, railway performance is often spotty. Hopefully, the system can rise to the occasion and meet the transportation challenges in the year ahead. Call me a skeptic, but I think there will be problems. While Manitoba’s production will be disappointing, the crop will also be good in Alberta. Somebody should mention this to the railways. I’m Kevin Hursh.

August 1, 2005

Heat hastens harvest
Heat over the long weekend has pushed harvest a whole lot closer. Temperatures of 30 degrees plus have had a noticeable impact on crops. It’s amazing that early last week frost was a worry in a number of areas. Then, by the weekend, the weather was scorching hot. Particularly in areas where moisture is short, some bushels are going to be trimmed off the yield. The extent of the yield damage is difficult to determine, but burned spots are evident in many cereal crops. The hot weather has also shortened the amount of time to get ready for harvest. Final repairs are being made on combines and swathers. Producers are trying to move some grain and a lot of new grain bins are still being built. Harvest timing depends on the area and the crop, but in the coming week, some lentil fields will be swathed or desiccated and combines will start rolling on the first field peas. Most crops are still weeks away from harvest, but if the weather holds, the week ahead will mark the first significant harvest activity in the province. I’m Kevin Hursh.

Hursh on Agriculture

Archives