Still a record crop The Saskatchewan crop of 2005 is still likely to be a record. The quality has been seriously affected by the wet harvest weather and crop prices are ugly, but for shear volume, 2005 still appears to be the biggest ever. Terry Bedard of Saskatchewan Agriculture last questioned her network of volunteer crop reporters about yield estimates on October 23. Rather than dropping, many of the yield estimates have continued to rise through the harvest period. One that stands out is canola. In mid-August, the provincial average yield was estimated at 27.6 bushels an acre. By October 23, that estimate had grown to 30.3 bushels an acre. Flax and barley yield estimates have also continued to increase. Flax is now pegged at 22.4 bushels an acre with barley at 59.6. There was a lot of criticism this summer over the predictions of a record crop. Not everyone had a big crop. And some people believe we just depress prices when we talk about record yields. Well, you can bet that grain buyers have their own ways of estimating production. We aren’t telling them anything they don’t know. Even with grain prices seriously depressed, some producers are going to do all right just from the volume of grain they have to sell. I’m Kevin Hursh.
October 30, 2005
Piles of tough grain Tough and damp grain is going to be a big issue this winter. In many parts of the central and northern grainbelt, there was never any chance for grain to dry. A huge volume of cereal crops has been combined at high moisture levels. A lot of that grain is in piles on the ground. Drying is expensive – 20, 30 or 40 cents a bushel. So many producers are in the same situation that there isn’t enough drying capacity. The big commercial driers at high throughput elevators will do a big business, but they can’t service everyone at once. Grain that sits too long at high moisture will start to heat. Producers will have to constantly monitor and move grain if problems develop. Grain on the ground is not unusual following harvest, but producers typically like to get it cleaned up sometime in the fall. This year, with so much grain on the ground, and a lot of it in need of drying, the piles will not be cleaned up quickly. The grain handling system is congested and grain movement is slow. It seems likely that producers will be plowing snow to get access to grain piles this winter. Insect infestations could become an issue and there will no doubt be losses from grain spoilage. I’m Kevin Hursh.
October 27, 2005
Education tax relief in Manitoba A property tax revolt is gaining steam in rural Saskatchewan. Meanwhile, it’s interesting to see what’s happening in neighbouring Manitoba where education tax on farmland has also been a contentious issue. This year, Manitoba implemented a 50 per cent rebate. In the Manitoba budget released on Thursday, that rebate was increased to 60 per cent for 2006. Now that’s significant tax relief. Keystone Agricultural Producers praised the tax rebate, but says it will continue to lobby to get the education tax burden removed altogether. In Saskatchewan, there’s an eight per cent education tax credit this year. In many areas, the education tax levied by local school boards has increased more than 8 per cent, so producers are paying more than they were last year. As governments look for ways to address the continuing farm income crisis, a great first step would be a substantial and permanent reduction in the education tax. Such a reduction could provide equitable and ongoing assistance to producers. A tax on farmland is simply the wrong way to provide such a major portion of education funding. Without action, this is an issue that will eventually boil over in rural Saskatchewan. If civil disobedience becomes the norm, the province will be forced to act. I’m Kevin Hursh.
October 26, 2005
Farm income is top issue There’s no doubt that farm income and the lack thereof is going to be the major topic at farm meetings across the province and across the country this winter. The difficulties are particularly acute in the grain sector. Canola is barely above $5 a bushel, No. 3 wheat is likely to be worth $3 a bushel and No. 2 large green lentils are only 9 cents a pound. Meanwhile, fuel and fertilizer costs are nothing less than scary. Farm income complaints are nothing new, but the concern and soul searching is more widespread than I can remember. While it’s easy to identify the problems, solutions are not simple. Government support is already at record high levels. APAS, the Agricultural Producers Association of Saskatchewan is hosting a two-day symposium next Thursday and Friday in Regina to address the farm income crisis. The purpose is to discuss effective ag policy reform. As farmers we like to complain about low returns and about the lack of government help, but we aren’t always anxious to do the hard slogging to understand the opportunities and constraints for making things better. This year, momentum seems to be growing for a major shift in the country’s agricultural policies. I’m Kevin Hursh.
October 25, 2005
Manure application research PAMI, the Prairie Agricultural Machinery Institute at Humboldt has been doing work on manure application for many years. Most of the work has been on liquid hog manure. Now PAMI has a project underway on solid cattle waste. Conventional manure spreaders are highly variable. Some spots get a lot and some spots get very little. A prototype built by PAMI uses a system of augers and an adjustable discharge tube to drop an even covering of manure on the soil. They’ve also gone one step further. PAMI is trying to develop a system whereby solid manure is placed into the soil. After trying a number of different systems, they’ve settled on a flexible auger that delivers the product into a trench made by a coulter disc. It’s believed this system will mean fewer greenhouse gas emissions while retaining more nitrogen in the soil. The next step is to marry the two systems, so that an even flow of solid manure can be metered out to a number of soil openers. A decade ago, liquid manure was typically spread on the soil surface. That has changed dramatically with most liquid manure now injected into the soil. PAMI is examining the same approach for solid manure because many observers believe there will be environmental and agronomic advantages. I’m Kevin Hursh.
October 24, 2005
Strong calf prices on heavy volumes The fall calf run has started with a vengeance. Beef economist Sandy Russell of Saskatchewan Agriculture says nearly 55,000 head of feeder calves went through auction markets across the province last week. That was more than double the volume from the previous week and it’s the largest one-week volume anyone can remember. Despite the heavy run, prices were steady to slightly stronger on most weight ranges. Steer calves in the 500 to 600 pound weight range sold from $1.21 to $1.55 a pound. It appears there will be large volumes again this week. Sandy Russell says producers will be watching to see if there’s enough buyer depth to maintain price levels. So far, feeder prices are better than they were in 2004, 2003 and 2002. Fed steer and heifer prices have been holding relatively steady despite the strike at Lakeside Packers at Brooks. However, cull cow prices have been slipping as a result of the strike. Lakeside had been processing older animals in competition to XL Foods. Unlike the younger animals, there’s no option to ship animals over 30 months of age to the U.S. market. Other than the cull cows, things are looking good for cow-calf producers this fall. I’m Kevin Hursh.
October 23, 2005
New APAS president in December Terry Hildebrandt will not be standing for reelection at the APAS annual meeting in December. A new president of the Agricultural Producers Association of Saskatchewan will be chosen. APAS is five years old and Hildebrandt, a farmer from the Langenburg area, has been the president since the beginning. Against the odds, APAS has become the most influential farm organization in the province. Although there are other organizations that do an effective job of representing particular commodities, APAS has become the general farm organization for Saskatchewan and a lot of the credit has to go to the efforts of Terry Hildebrandt. However, APAS has a lot of work to do in the years ahead. Membership has grown to 124 rural municipalities, but more RMs need to join so that the organization truly represents a majority of producers. And the consensus building started by APAS has to continue. As much as possible, agriculture has to speak with one voice. For too long, the voice has been fractured on many issues, letting senior levels of government off the hook. The next APAS president will have a strong base to build upon, but there will be no end to the work that needs to be done. I’m Kevin Hursh.
October 20, 2005
Immigrants to Saskatchewan needed On Thursday in Saskatoon, Saskatchewan Agrivision held a meeting on the topic of immigration. From the information presented, it’s clear that Manitoba is doing a far better job than Saskatchewan in attracting immigrants to rural areas. Most immigrants to Canada end up going to the big cities – Montreal, Toronto and Vancouver. Manitoba has pioneered the use of a provincial nominee program, where the province identifies immigrants with skills that are needed and those people can more quickly move through the immigrations system. In 2004, more than 4,000 immigrants came to Manitoba under the provincial nominee program. By comparison, only a few hundred came to Saskatchewan under the program. Rural manufacturing businesses need welders and machinists. Intensive livestock operations often need more workers than they can find locally. The same is true in meat packing plants. With a lot of effort and by working with the business community, Manitoba has found an effective way to attract people with the skills that are required to grow the economy. Alberta has announced a strategy to do the same. There’s evidence the provincial nominee program is becoming a bigger priority for the Saskatchewan government, but it needs far more attention. I’m Kevin Hursh.
October 19, 2005
Historical land prices Back in 1971, the average value of farmland and buildings in Saskatchewan was only $59 an acre. Grain prices spiked in the 70s and land prices followed. By 1980, the average value of farmland in Saskatchewan was $332 an acre. The peak price for farmland in the province came in 1982 at $413 an acre. That’s the highest it’s ever been. The price steadily declined through the 80s and into the early 90s. High interest rates, droughts and land foreclosures all played a role. By 1993, the average price was down to only $253 an acre. Since that time, there has been a gradual, but steady increase. Even in the last few years when farm income levels have been poor, land prices, on average, have edged upwards. The Statistics Canada value for 2004 is pegged at $350 an acre. Saskatchewan has the lowest farmland prices in the country. The next lowest is Manitoba at $554 an acre, followed by Alberta at $811. The province with the highest prices is Ontario where the average value of farmland and buildings is estimated at more than $3,300 an acre. I’m Kevin Hursh.
October 18, 2005
Big variation in malting barley returns There’s a big difference in what producers are netting for their malting barley. Producers are often so happy to have their barley selected for malting that they don’t ask enough questions. First of all there are three grades of malting barley – special select, select and standard select. The price difference is about ten cents a bushel. Plus, when you go through some buyers, there’s a premium for low protein. Producers shop around for the best grades on spring wheat and durum, but far less attention is paid to malting barley. There’s an even bigger discrepancy in what deductions are applied to malting barley. In many cases, barley is moved directly by truck to domestic malting plants. Check to see if the elevator company involved is still deducing elevation and weighing and inspection. Trucking premiums are nice, but they don’t tell the full story. What really matters is the price net to the producer on the farm. Observers say there is sometimes a difference of more than 25 cents in the net return on a bushel of barley depending upon the company you go through. That’s more than 10 per cent of the value of the crop, so it’s worth checking out. I’m Kevin Hursh.
October 17, 2005
Alberta harvest even slower than in Saskatchewan It’s been a slow harvest in Saskatchewan, but it’s been even worse in Alberta. The latest crop report from Saskatchewan Agriculture puts harvest progress at 90 per cent. The areas furthest behind are the north east at 73 per cent combined and the north west at 78 per cent. Alberta Agriculture doesn’t issue reports every week, so it’s been tough to follow Alberta’s progress as closely. However, Alberta’s latest crop report was just issued and it pegs progress as of October 13 at about 55 per cent. The southern region of Alberta is listed at 75 per cent complete, followed by the Peace River region at 70 per cent. Elsewhere, according to Alberta Agriculture, combining is only about 40 per cent complete. Similar to Saskatchewan, a lot of cereal crops have been taken off tough or damp and will need to be dried. As well, sprouting is occurring in both standing and swathed cereals. Based on the crop reports, most of Alberta has more combining left to do than anywhere in Saskatchewan. Alberta’s crop quality will probably be worse than Saskatchewan’s and there would appear to be a greater risk in Alberta of crop staying out over the winter. I’m Kevin Hursh.
October 16, 2005
Pleasant wheat quality surprises There’s been considerable harvest progress over the past week. While some areas continue to struggle with wet fields and getting combines stuck over and over, many producers are finished or nearly finished. And not all the news on quality is bad. As expected, canola and flax quality is generally very good. The surprise is on some of the wheat quality. On Sunday night, I talked to a producer from the central part of the province who had just finished harvest. He had a large acreage of wheat that went through all the wet weather. However, the wheat was still curing and ripening through most of the rain. It also helped that the wheat was all standing, rather than being swathed. All of the wheat yielded over 60 bushels an acre. Most of it is a number two, but some is going to hold a number one grade. The return on his wheat crop is going to be very good. In contrast, I talked to another producer who swathed his wheat to avoid sawfly losses. That wheat is badly sprouted and is grading feed. Wheat quality is going to be all over the map, but it’s heartening to hear that at least some of the later harvested fields are still going to have a decent grade. I’m Kevin Hursh.
October 14, 2005
Nitrogen economics We all know what’s been happening with natural gas prices and natural gas is the main component for manufacturing nitrogen fertilizer. The price of urea fertilizer, 46-0-0, has spiked to the $500 per tonne range this fall and many fear that it could be considerably higher by the spring. North America has become a net importer of nitrogen fertilizer. Our natural gas prices are dramatically higher than across the pond. Nitrogen fertilizer manufacturers in North America are having a tough time competing. Unfortunately, shipping fertilizer into North America is also costly. While the cost of producing nitrogen is dependent upon the price of natural gas, fertilizer is a separate market. Shortages and surpluses are created by the amount that’s produced and how much farmers are willing to buy. As prices go steadily higher, you have to believe fertilizer demand is going to decrease. By the same token, some of the production facilities faced with ever-higher natural gas prices are likely to close down, thereby reducing the supply. A pound of actual N in the form of urea is worth about 50 cents a pound. A pound of canola is worth 11 cents and a pound of No. 3 wheat is worth 5 cents. Producers will be trying to get the biggest bang for their fertilizer buck. I’m Kevin Hursh.
October 12, 2005
Strike at Lakeside Packers The strike by workers at Lakeside Packers in Brooks, Alberta is bad news for the beef industry, but so far there hasn’t been a major impact on cattle prices. Market analysts say fed cattle prices dipped a bit last week when the strike deadline was set and Lakeside pulled back from buying cattle, but the price drop was relatively small. Lakeside is the number two packing plant company in Canada. It’s owned by Arkansas-based Tyson Foods. The facility at Brooks has a capacity of 3800 head per day, about 40 per cent of the Canadian slaughter. More than 2400 people are employed at the facility. The labour problem has been brewing for a long time and there were some confrontations Wednesday on the picket line as replacement workers tried to enter the plant. At this point, it isn’t known whether Lakeside will be able to operate at a reduced level or whether the plant will be idle. Access to the American market for animals under 30 months of age will help mitigate the impact of the work stoppage. However, there are many protocols and costs to shipping across the line and there’s also the issue of truck availability. Unfortunately, it looks like the strike could continue for quite some time. I’m Kevin Hursh.
October 11, 2005
CAIS uses the wrong prices A number of things about the CAIS program make little sense. One of those is the valuation of Canadian Wheat Board grains. I’ve had accountants point this out to me and now the CWB is also raising the issue. Under the CAIS program, grain is valued according to the initial payment. As everyone knows, initial payment levels are way below the true value of the grain for most of the year. If, for instance, your wheat inventory drops from one year to another, the drop in value is diminished because initial payment levels are used rather than an approximation of the total value for the grain. There can also be problems when producers use the Early Payment Option to obtain more of the total value for their wheat, durum and malting barley near the time of delivery. When you use an EPO, that’s the value CAIS places on your grain. This is much higher than the initial payment. So you could be reducing your CAIS claim by using the EPO. The solution seems rather obvious. Grain should be pegged at its true value. In the case of Canadian Wheat Board grains, Pool Return Outlooks are issued every month providing an estimate of the full price. Using that would make a lot more sense than using initial payments. I’m Kevin Hursh.
October 10, 2005
WTO negotiations intensify World Trade Organization discussions were held over the weekend in Zurich, Switzerland. The big news out of the WTO meeting is a U.S. proposal to cut agricultural export subsidies. It’s now up to the European Union to respond to the American proposal. Quantifying agricultural subsidies is complicated. There’s amber box, blue box and green box subsidies with amber being the most trade distorting and green the least. While Canada supports the elimination of export subsidies, our negotiators are defending the ability of producers to choose how to market their products. In other words, they are rejecting restrictions that other countries want to put on the Canadian Wheat Board. Canadian negotiators are also trying to retain protection for so-called sensitive products. For Canada, these are the supply managed industries of dairy, poultry and eggs that are protected by high tariffs. Farm groups in Canada are deeply divided on what should happen at the WTO. We’ll hear a lot more WTO news in the weeks ahead. A pivotal ministerial meeting will be held in Hong Kong in December. If there’s going to be progress towards a successful WTO agreement, a lot has to happen leading up to that meeting. I’m Kevin Hursh.
October 6, 2005
Catch up year for Sask Crop Insurance It looks like Saskatchewan Crop Insurance is going to have a year with relatively low payouts. A significant amount has been paid for unseeded acreage claims – about $14 million. Another $3 million was paid in establishment claims, but the big categories of pre-harvest and post-harvest yield claims should be light. Only a couple thousand pre-harvest claims were registered for the whole province . In dry years, there have sometimes been thousands of claims in a region. Post-harvest claim numbers will no doubt rise in the weeks ahead, but at this point there are fewer than a thousand. Crop quality has taken a beating with the wet harvest weather, but in most cases the yields will more than compensate for the poor quality. The number of claims and the amount paid out should be significantly less than last year when an August frost caused severe damage. The Crop Insurance program is still recovering from the billion dollars in payouts made for the drought year of 2002. A year like this one where payouts appear to be less than premiums should bode well for paying down the program’s accumulated deficit. That in turn should help producer premiums in the years ahead. I’m Kevin Hursh.
October 5, 2005
Manitoba - bad; Saskatchewan - good; Alberta - very good Going through the just released production estimates from Statistics Canada, it’s striking how bad the crops are in Manitoba and how big the crops are in Alberta this year. The yields in Saskatchewan are way above average, but well below those of Alberta. Take barley. The average yield in Manitoba on land that was seeded this spring is estimated at 47 bushels per acre. Saskatchewan’s average barley yield is pegged at just over 54 bushels an acre. The barley yield in Alberta is a whopping 65. Here are the numbers on pea yields: Manitoba - a dismal 21 bushels an acre, Saskatchewan – 33.6, Alberta – 41.3. Canola is also interesting. Stats Can says canola in Manitoba will have an average yield of 23.8. Saskatchewan is an impressive 28.5, while Alberta is expected to average 33.2 on canola. We’ve heard a lot about the production woes in Manitoba. I was surprised to see just how big the crops are in neighboring Alberta. I’m Kevin Hursh.
October 4, 2005
Returns are no match for costs At current prices, you need very good yields to have any hope of making a profit. Using the cost estimates developed this spring by Saskatchewan Agriculture, the total variable and fixed expenses for growing field peas comes to about $158 an acre. If you can sell yellow peas for $3.20 a bushel, you need a yield of 49 bushels an acre just to pay all the costs. On spring wheat, the estimated cost of production on stubble varies from $125 to $156 an acre depending upon the soil zone. If you produce number 3 wheat that will be worth $3 a bushel, a yield of 42 to 52 bushels an acre is needed to pay the expenses. Number 2 large green lentils have dropped to a price of around 9 cents a pound. Saskatchewan Agriculture estimates the cost to grow lentils is around $176 an acre. That means you need a yield of 32 bushels an acre before you start making any money. On canola, the cost of production is estimated at around $186 an acre in the black soil zone. With the current price of canola at around $5.20 a bushel, the breakeven yield is 35 bushels an acre. Everyone will have somewhat different costs, but these estimates show just how difficult the grain economy is right now. I’m Kevin Hursh.
October 3, 2005
CAIS interim increased in Manitoba A change to CAIS, the Canadian Agricultural Income Stabilization program for Manitoba producers is something that should be considered in other provinces. The federal government has increased the interim payment rate for the 2005 CAIS program from 50 per cent to 75 per cent, but only in Manitoba. In other words, Manitoba producers are now eligible to receive 75 per cent of their estimated 2005 CAIS payment in advance. Manitoba’s agriculture minister requested the change at the meeting of agriculture ministers back in July. At that time, it was clear that Manitoba was facing some extraordinary problems with unseeded acreage and flooding. Since July, many farmers in Saskatchewan have been hit with flooding, crop quality loss and dropping grain prices. The financial problems aren’t limited to Manitoba. Increasing the CAIS interim payment to 75 per cent would be helpful for any producer facing an income shortfall. The overall CAIS payment doesn’t change. Increasing the interim simply triggers more of the money in a timely manner. When a program can be improved at no additional cost that would seem to be good policy. I’m Kevin Hursh.
October 2, 2005
Plight of elk producers ignored In December of 2000, Korea closed its border to elk antler velvet from Canada. The reason was CWD, chronic wasting disease. Thousands of animals were destroyed in an effort to stamp out the disease. Stringent surveillance and record keeping was implemented. Even though the threat of CWD has all but been eradicated, the Korean border is still closed. This is a classic case of protectionism, but it’s not a high profile issue. It has been overshadowed by the many other problems in the farm sector. Glenda Elkow is president of the Alberta Elk Association. She remembers when the industry was riding high and producers were receiving $100 a pound for their velvet. This year, she says the price was around $11 a pound. There’s little doubt that Canadian velvet is finding its way into Korea, but Canadian producers aren’t seeing the benefits. Elkow believes the Canadian price would immediately double to match the world price if the Korean market reopened. Unfortunately, the issue doesn’t seem to be on the radar screen for political leaders anymore. There are hundreds of elk farms in both Alberta and Saskatchewan, but they don’t receive much attention. I’m Kevin Hursh.
Archives
Kevin Hursh's daily agricultural report is heard Monday through Friday on Swift Current (CKSW), Shaunavon (CJSN), Moose Jaw (CHAB), Estevan (CJSL), Weyburn (CFSL), Rosetown/Kindersley (1330/1210), Lloydminster (CKSA) and Melfort (CJVR).
