Canadian barley research lags A veteran barley breeder from the Field Crop Development Centre in Lacombe, Alberta is expressing some strong opinions about funding for grains research in general and barley in particular. Dr. Jim Helm notes that Canada has about half the number of researchers in barley breeding as we did ten years ago. He says we currently have six barley breeders in Western Canada for nearly 11 million acres of the crop. U.S. barley production this year dropped to less than 4 million acres and Australia has about half of Canada’s acreage. Yet both those countries are spending two to three times more than we are on barley genetics and other related types of research. Part of the difference is government support. Part of it is the level of support from producer check-offs. But Helm singles out the livestock industry, especially beef producers for not paying their fair share. According to Helm, feedlot operators just seem to want cheap barley. They don’t realize that barley development research would pay dividends for both crop and livestock producers. Countless studies have shown large rates of payback for money invested in crop development. For some reason, Canada is lagging way behind competing nations in making this sort of investment. I’m Kevin Hursh.
November 29, 2005
College of Agriculture name change The College of Agriculture is going to change its name. What the new name will be and whether it will include the word “agriculture” has not yet been determined. Last night, Ernie Barber, the Dean of the College of Agriculture faced a large meeting of students and alumni to explain the reasons for the name change. According to Barber, there’s more that the college could be. It could branch into other non-renewable resource sectors such as forestry, but the name is a detriment. He said people usually think production and farming when they hear the word agriculture. They don’t think about microbiology, food science and agribusiness, which are also offered in the College. Ernie Barber faced a lot of tough questions from those who think the College is abandoning its roots. There were also many who said the College’s problems such as low enrollment are due to a lack of promotion rather than the name. Personally, I’m not convinced that a name change has much merit. The College of Agriculture has an enthusiastic alumni and it’s highly regarded across the country. The College has a big job ahead, if it’s going to change its name without alienating supporters. I’m Kevin Hursh.
November 28, 2005
Farm Tax Revolt grows Bravo for the 47 rural municipalities in Saskatchewan that are taking a stand against inequitable education taxes on farmland. These 47 RMs have decided to withhold the education tax. Previous farm tax revolts have relied on individual ratepayers. This form of revolt takes the onus off ratepayers and places it on the RM Council. Eventually, RMs can be legally forced to pay, but the legal process is likely to take a considerable length of time. As farmers, we’ve been far too polite on the education tax issue. For years, the province has promised to address the growing inequity. There have been a few band-aids, but the problem has become steadily worse. The Tax Action Group isn’t asking for the moon – only that education taxes be frozen and rolled back over a period of years. With 47 RMs joining forces, the province will have to notice. But the action will be even stronger if more RMs join the cause. Now is the time to draw a line in the sand. Now is the time to force changes. If your rural municipality hasn’t joined the tax revolt, ask the council why not. If we aren’t willing to take a stand, we should stop complaining and just accept our fate as a cash cow for funding education. I’m Kevin Hursh.
November 27, 2005
Agriculture in upcoming election It’s interesting to hear what Ontario farmers are saying about the new federal assistance package for grain and oilseed producers. The Liberals were aiming to make Ontario farmers happy going into the federal election campaign. That doesn’t seem to be the result. The total amount in the package is $755 million. Saskatchewan is supposed to get about $290 million. Ontario’s much smaller grains and oilseeds sector will get less than $120 million. The Ontario Federation of Agriculture says that does not even begin to recognize the hurt. The OFA is also upset that the assistance excludes the horticulture industry and other sectors that had been lobbying for help. Ontario wanted a much larger program and a multi-year commitment. According to the OFA, the funding announcement by the Martin Liberals “has unified and mobilized Ontario farmers to make the current income crisis on Ontario farms a fundamental federal election issue.” The Liberals don’t seem to have bought many friends with their hasty assistance package. The question is – do the Conservatives have a better plan and will they be able to articulate it during the upcoming campaign? I’m Kevin Hursh.
November 24, 2005
Good and bad in November PRO There were some interesting trends in the November Pool Return Outlook released yesterday by the Canadian Wheat Board. The expected prices for the top grades of wheat went up as much as $4 a tonne as compared to last month. High-grade, high-protein wheat is in tight supply in North America. However, the PRO on the medium and lower grades stayed the same, meaning the spread between grades continues to widen. The bad news continues in durum. Durum PROs are down another $3 a tonne on all grades except No. 5. Usually durum sells at a premium to spring wheat, but the PROs for No. 1, 2 and 3 durum are running at a significant discount this year. On feed barley, the Canadian Wheat Board has released a Pool Return Outlook for Pool B, which is the second half of the crop year. The Saskatchewan PRO for Pool B feed barley is only $1.29 a bushel, meaning the domestic market will likely be more attractive than the export market through the board. On designated barley, there was a little bit of good news. The PRO is up by $2 a tonne as compared to last month. The CWB says that although rains have boosted Australian production, quality may become an issue. I’m Kevin Hursh.
November 23, 2005
Thanks Ontario As prairie grain farmers, we should all sign a thank you card and send it to corn and soybean growers in Ontario. The $755 million in federal support announced yesterday for the grains and oilseeds sector across the country won’t solve the deep income shortfall, but it will be a welcome injection of cash. It probably wouldn’t have happened without strong lobbying in Ontario. Although on a much smaller acreage, grain production, particularly corn and soybeans, is important in Ontario. Like grain producers everywhere, Ontario producers have been feeling the squeeze from low commodity prices and rising input costs. They’ve been pushing hard for extra assistance. In political terms, buying favour in Ontario is much more important than appeasing prairie farmers. Are a lot of prairie farmers going to change their vote in the upcoming federal election because of this extra assistance? Will it result in the election of more Liberals? Probably not. The big battleground in the election will be Ontario where a lot of seats are close. Although farm votes are a tiny part of the total, the parties will be looking for every available advantage. That’s why this assistance for grain and oilseed producers wasn’t announced in a prairie location. Instead, it was announced by the federal Agriculture Minister in rural Ontario. Thanks Ontario. The money is appreciated. I’m Kevin Hursh.
November 22, 2005
Optimism in the beef industry Calves this fall have been selling for about $200 more than last year. I talked to a producer at Agribition in Regina who sold for 94 cents a pound last year. This fall for the same weight and quality of calves, the price was $1.35. The effects of BSE are still evident. Heifer calves are selling at a steep discount to steers due to the extra protocols involved with shipping heifers into the U.S. The border is still closed to animals over 30 months of age, so cull cow prices have not returned to pre-BSE levels. Still, Canadian packing plants are now allowed to process both young and old animals and still retain their export status. Thus, cull cow prices are a lot better than they’ve been the past couple of years. The U.S. Department of Agriculture wants to lift restrictions on older animals and that could happen by the middle of next year. Agribition president Herb McLane is with the Canadian Beef Breeds Council based in Calgary. McLane has been involved in high level talks on the issue. He says the USDA seems to want one rule that would apply to both culls and breeding animals, but anything could happen. As the remaining BSE issues are resolved, things should get even better in the beef industry. Compare that to the grain industry where every year the economics seem to get tougher. It seems likely that cattle numbers will continue increasing in Saskatchewan as more grain land is converted to pasture and forage. I’m Kevin Hursh.
November 21, 2005
Only 50 per cent of durum accepted As feared, delivery opportunities are going to be limited for durum this year. The Canadian Wheat Board has accepted only 50 per cent of the grades and classes of durum offered by farmers under Series A delivery contracts. On most grades and classes of wheat, the acceptance level is 80 per cent. The board says it hopes to accept some additional wheat and durum under subsequent delivery contracts, if grain movement goes well this winter. So far, grain movement has not been going very well. The board says the late harvest meant a late start in shipping this year’s large crop. Another challenge is high demand for tight rail capacity. Many other commodities are competing for railcars. This combined with the severe disruptions caused by the hurricane season in the U.S., has resulted in a backlog of rail service. In the case of durum, global supplies are ample. The board says Canada’s durum crop was about 10 per cent bigger than last year’s large crop. Like last year, it’s predominately a No. 3 grade so supplies of mid-quality durum are quite burdensome. It looks like a substantial amount of durum and possibly some wheat will not have an export market in this crop year. That certainly isn’t going to help with cash flow for producers. I’m Kevin Hursh.
November 20, 2005
Outstanding Young Farmers for 2005 The national Outstanding Young Farmers event has just concluded in Halifax. I had the pleasure of attending and seeing presentations by each of the seven honourees representing different regions of the country. The judges picked two winners. Philip and Luanne Lynn run a 5700 head cattle feedlot and a large grain crop operation just north of London, Ontario. One of the outstanding aspects of this farm is a biogas plant that’s under construction. Through anaerobic digestion, the Lynn operation hopes to eliminate the spreading of manure while producing electricity. The other OYF winner is Steve Reeves and Jessica Francis of Freetown, Prince Edward Island. Their dairy farm has greatly increased its herd size and milk yield. They’ve taken advantage of lower breeding stock prices caused by BSE to purchase cattle with improved pedigrees. Saskatchewan’s rep at OYF in Halifax was Darren Watson and his new wife Alison. Darren grows pulse crops in the Avonlea area. Although he didn’t win, Darren’s business model of renting land to specialize in lentil, marrowfat pea and chickpea production was certainly noticed. The Outstanding Young Farmers program has been running for 26 years. Next year, in late November, Saskatoon will host the national OYF program. I’m Kevin Hursh
November 17, 2005
The next step in opening the border to cattle Under the new proposal from the United States Department of Agriculture, Canadian cattle over 30 months of age could be allowed into the U.S. by the middle of next year. It’s interesting to hear the reaction from the protectionist and often irrational American farm group called R-CALF. In a news release reacting to the news, R-CALF talks about the increased BSE risk to the U.S. cattle herd and U.S. consumers from these older animals. There’s no doubt R-CALF will do whatever it can to stop the border from opening further, but they’re capacity to scare the public and the American cattle industry would seem to be diminishing. Canadian cattle under 30 months of age are flowing into the U.S. and although there’s more paperwork and hoops than before, movement is brisk. Contrary to R-CALF warnings, there has been little or no effect on American cattle prices. There hasn’t been a new case of BSE on either side of the border for quite some time. Of all the things North American consumers worry about, BSE would seem to be a long way down the list. There’s also progress on reopening the Japanese market to young animals from both the U.S. and Canada. It may never be as easy to export Canadian cattle to the U.S. as it was pre-BSE, but there’s been a lot of progress. The next big step is now in sight. I’m Kevin Hursh.
November 16, 2005
Mustard woes A major buyer of mustard is under creditor protection. G.S. Dunn, located at Hamilton, Ontario is Canada’s only dry mustard miller. According to the company’s website, their complete line of mustard flours, ground mustards, brans and deactivated mustard makes them the premium supplier of mustard products to the world. They export to over 45 countries. G.S. Dunn was established in 1867 and has been in business in Canada for over 50 years. The current owners acquired the company back in 1988. Most of the major mustard buyers that farmers in Saskatchewan deal with sell some product to G.S. Dunn. Thus the financial hurt is no doubt being shared all the way back to Saskatchewan. Saskatchewan produces the majority of the country’s mustard. Creditor protection ends for G.S. Dunn today, November 17. Creditor protection could be extended or perhaps the company has a restructuring plan or a buyer. However, the fate of G.S. Dunn has been an unknown in the marketplace. Like most commodities, the markets for all three mustard types – yellow, oriental and brown - have been lackluster. Prices are poor and movement is slow. At a time when a lot of specialty crop markets are seriously oversupplied, financial problems at a major mustard buyer are certainly not helpful. I’m Kevin Hursh.
November 15, 2005
Corn countervail moves a step closer In its preliminary ruling released yesterday, the Canadian International Trade Tribunal says there’s a reasonable indication that the dumping and subsidizing of unprocessed American corn is causing injury to Canadian producers. The reasons for the determination won’t be released for another couple weeks, but increasingly it looks like a duty will be placed on American corn coming into Canada. Livestock producer groups are lobbying hard, saying that shouldn’t happen. According to the livestock groups, U.S. subsidies do not increase corn imports. In fact, they say, corn imports have been declining. They call U.S. corn imports residual and complementary to Canadian production. That may be true, but corn producers, like other grain producers across the country, are hurting. Prices are below the cost of production. In the case of corn, there’s an opportunity to lash out against an unfair competitor. A countervail on corn will affect feed grain markets across the country. Ontario and Quebec will be hit much harder, but there will be an impact in Western Canada as well. The livestock industry is justifiably worried. Whether or not the corn countervail action is justified, it is having a major side effect. It’s focussing debate on the problems faced by the grain sector. Suddenly the livestock industry is interested in finding solutions to the woes in the grain sector – solutions that don’t involve a countervailing duty. I’m Kevin Hursh.
November 14, 2005
Alberta will recalculate CAIS reference margins Alberta is once again providing a large agricultural support package not available to producers in other provinces. Alberta is investing $224 million to recalculate CAIS reference margins for 2003, 2004 and 2005. The reference margin is allowable income minus allowable expenses. The Olympic average formula is currently used. It drops the high and the low out of a producer’s last five years and averages the remaining three years. Alberta is going to recalculate reference margins by just averaging the last three years. If producers are eligible for more money using this alternate reference margin calculation, the money will be sent to them. Alberta must have a pretty good idea that the calculation will lead to increased payments, since $224 million has been allocated. For quite some time, Alberta has been expressing displeasure over the CAIS program. This is being called a pilot program since the results will be shared with the feds and other provinces. Alberta seems to like this approach to providing extra assistance. It covers all commodities and all regions of the province and it doesn’t require the creation of some new ad hoc program. Too bad is only happening in Alberta. I’m Kevin Hursh.
November 13, 2005
China expected to become major pork importer Which country produces the most hogs? Answer – China. At last week’s Pork Industry Symposium in Saskatoon, China was a topic of discussion. It’s estimated that China accounts for an amazing 50 per cent of the world’s pork production. Despite its massive human population, China is actually a net exporter of pork. Many analysts expect that to change. About 80 per cent of Chinese pork production is coming from small backyard operations raising only a few animals a year. These kinds of operations can rely on table scraps to make up a big part of the hog ration. As rural China advances, it’s reasonable to expect a drop in the number of small farmers who want to raise a few pigs. This is the trend that has happened around the world. However, larger hog operations will need to rely on feed grain rather than table scraps and China doesn’t have enough feed grain to go around. Will China import grain to feed hogs? Probably not. It would be difficult to have a competitive pork industry using imported feed grain. Instead, analysts expect China to become a major pork importer, similar to other Asian nations such as Japan. What happens in China will affect all sorts of agricultural commodities in the years ahead. I’m Kevin Hursh.
November 9, 2005
Refreshing presentation from Wayne Easter Wayne Easter, the parliamentary secretary to the minister of agriculture, gave a powerful presentation yesterday to the SARM convention in Regina. A lot of politicians talk at great length, but don’t really say much. Easter calls it as he sees it and while not everyone agrees with his conclusions, there’s no doubt that he understand the problems faced by primary producers. The former president of the National Farmers Union seems to walk a fine line. He doesn’t pretend to have all the answers, but it’s quite clear that he thinks governments should find more resources to support agriculture. Rather than being a part of the political establishment, Easter sounds like someone on the outside pushing for change. Listening to him, you can almost forget that he’s a cabinet minister. His passion and knowledge of the industry are refreshing. At the same time, he’s blunt and honest. Asked why Canada doesn’t threaten to cut off oil and gas exports to the U.S. to get action on outstanding trade issues, Easter responded that this is a tactic the government would never employ. It’s hard to tell how much power Wayne Easter actually has in Ottawa, but there’s no doubt that he’s an ally of the farm lobby on a lot of issues. I’m Kevin Hursh.
November 8, 2005
Guaranteed Delivery Contracts for feed wheat For the first time, the Canadian Wheat Board is offering a Guaranteed Delivery Contract program for feed wheat. There will be multiple sign-up periods. CWB officials say that despite the substantial amount of wheat downgraded to feed in Western Canada this fall, producers offered only a small amount of feed wheat under the CWB’s regular Series A contract program. In many instances, the domestic market for feed wheat would appear to be offering a better price than what the CWB expects through the export market. However, the CWB also believes that producers are eager for prompt movement. A lot of wheat is in piles on the ground. Producers will be guaranteed 100 per cent acceptance on contracted tonnage. Once producers receive a letter of authorization, they have 21 days to deliver the grain to the elevator of their choice. The deadline for signing a Guaranteed Delivery Contract for feed wheat during the first sign-up period is November 30, or earlier depending on sales requirements. Producers can apply for an Early Payment Option on the tonnes committed. That provides more cash flow that just getting the initial payment. Interested producers should contact the CWB or their elevator company. I’m Kevin Hursh.
November 7, 2005
United tax revolt needed Monday’s throne speech will do nothing to diffuse the property tax revolt brewing across rural Saskatchewan. The throne speech said, “Efforts will be maintained with school divisions, municipalities and other stakeholders to develop a long-term solution to education property tax relief that is in the best interests of students and taxpayers.” In other words, there’s going to be more consultation and dithering, but nothing much is going to happen. A couple years ago, Premier Calvert told the Saskatchewan Association of Rural Municipalities that the status quo was not acceptable, making it sound like there would be action on this issue. Instead, all we have is a small 8 per cent band-aid trying to cover a gaping wound that’s getting worse each year. The rural municipalities leading the tax revolt have numbers showing the education portion of the farmland property tax bill is dramatically smaller in both Alberta and Manitoba. The mid-term SARM convention is underway in Regina and the property tax issue will be widely discussed yet again. If a majority of RMs were to join the tax revolt, the government would have no choice but to respond. It’ll be interesting to see if SARM can form that kind of united front. I’m Kevin Hursh.
November 6, 2005
Let's burn wheat If we can’t earn enough money producing grain as food, we should produce for the fibre and fuel markets instead. That was one the themes coming out of last week’s APAS Farm Income Conference in Regina. Agricultural economist Richard Grey spoke to the APAS conference and pointed out that wheat is a far cheaper source of energy than natural gas. People often snicker at the idea of burning grain for heat, but grain-burning stoves are becoming more and more popular. Per BTU of heat produced, Richard Grey has calculated that wheat is less than a quarter of the cost of natural gas. There’s obviously room for a lot of technological improvement on how to burn grain cleanly and efficiently, but maybe this should be looked at more seriously. Rather than just burning wheat in stoves to heat homes, maybe it should be examined on a large scale. There will be people who object to the idea of burning wheat that could be used for human consumption, but this is really no different than using grain for ethanol and oilseeds for biodiesel. Maybe the day will come when food is a simply a byproduct of agricultural production and one of the main products will be energy. I’m Kevin Hursh.
November 3, 2005
Sask Pool establishes Farm Leadership Co-op It’s called the Western Farm Leadership Co-operative or FLC for short. It will be a producer-led organization funded by Saskatchewan Wheat Pool. You may remember the promise to set up such an organization when the Pool went through its big financial restructuring and was no longer controlled by farmers. There are two main roles outlined for the Farm Leadership Co-operative. It’s to provide educational and training opportunities for producers to help them maximize the value of their operations. And the FLC is supposed to provide input to the Pool at the local level as the company develops programs to meet the needs of farmers. The FLC will consist of 80 delegates elected from 16 districts across Western Canada. These delegates will nominate a minimum of four candidates and two alternates to be included on the Pool’s Board of Directors slate that is approved annually by shareholders. Linda Pipke, formerly with the Saskatchewan Council for Community Development is the new executive director of FLC. There was a time when being a Saskatchewan Wheat Pool delegate was prestigious. The Pool used to be the main farm policy organization for the province. While the intentions may be good, it’s hard to imagine this new Farm Leadership Co-operative ever regaining that kind of profile. The founding meeting for the FLC will be in Regina on December 14. I’m Kevin Hursh.
November 2, 2005
Strongfield durum - an encouraging development Durum usually carries a price premium over spring wheat. Based on the last Pool Return Outlook, that won’t be the case in this crop year. Basis in store Vancouver or St. Lawrence, the expected price for durum is less than the price expected for spring wheat. For Saskatchewan, the average freight and handling deduction is somewhat lower for durum. After taking that into account, most grades of durum and spring wheat are very close to the same expected price. An Identity Preserved Contract Program for a new durum variety called Strongfield is an encouraging development in an otherwise depressed durum market. For next growing season, the CWB has awarded a total of 385,000 acres of Strongfield production to nine companies that range from the major line elevators, to farmer-owned inland terminals and even a couple of producer car loading groups. The participating companies each have their own trucking and IP incentives. In addition, the CWB will make storage payments and there’s 100 per cent delivery acceptance for Strongfield that hits the top three grades. Durum delivery opportunities have become an important consideration. Last crop year, not all the durum was accepted and that could happen again this crop year with the big crops that were produced in both Canada and the U.S. I’m Kevin Hursh.
November 1, 2005
A long way to haul pumpkins A trucker friend of mine says he picked up a load of pumpkins from the west coast of the U.S. that ended up in Saskatoon in time for Halloween. The price the American farmer received was about a third of the cost that the pumpkins sold for at retail in Saskatchewan. Pumpkins are something we can grow within the province, but obviously we aren’t growing enough to meet the local demand. You have to wonder about the future of moving products long distances. As energy costs continue to escalate, it’s going to cost a lot more to transport fruits and vegetables and every other product. We see it on all the commodities that we export and it really hurts the returns producers receive. On the flip side, high transportation costs also make domestic products more competitive with imports. Saskatchewan has the potential to supply a much larger proportion of the local market for tomatoes, lettuce, cabbage, carrots and a host of other grocery store items. The high cost of transportation is bad news for most facets of agriculture, but it may end up being a benefit on some of the commodities where we’ve been relying on imports for no good reason. I’m Kevin Hursh.
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Kevin Hursh's daily agricultural report is heard Monday through Friday on Swift Current (CKSW), Shaunavon (CJSN), Moose Jaw (CHAB), Estevan (CJSL), Weyburn (CFSL), Rosetown/Kindersley (1330/1210), Lloydminster (CKSA) and Melfort (CJVR).
