Flax acreage defies logic It’s natural for producers to cut back the acreage of a particular crop when carryover stocks are rising and price prospects are poor. That’s the situation this year with durum, green lentils, canaryseed and mustard. However, producers in Western Canada have defied logic with flaxseed. For the second year in a row, flaxseed acreage has increased despite a price outlook that is poor. In 2005, flax acreage increased about 16 per cent. The increase this year isn’t large – about 2 per cent, but any increase is surprising given the price outlook. Across Canada, there’s an estimated 2.1 million acres of flax. Most of that, 1.65 million acres, is in Saskatchewan. Back in 2004, the frost hit flax hard. Production was low and prices skyrocketed. Last year, production nearly doubled and prices tumbled. Given this year’s seeded acreage and assuming average yields, carryover stocks are going to become even more burdensome. The Market Analysis Division of Agriculture and Agri-Food Canada says carryover stocks could hit 750,000 tonnes. The ten-year average is 200,000. As a result of the big supply, the price of flax for the upcoming crop year is expected to be down by $20 to $50 a tonne as compared to the price in the current crop year. I’m Kevin Hursh.
June 29, 2006
Farm debt continues to rise Is farm debt a ticking time bomb? Some people think so. Interest rates have been low in recent years. If interest rates were to continue rising, it would certainly take a lot more money to service the growing farm debt. The total farm debt in Canada at the end of last year was nearly $51 billion, up 5 percent for the year. The total farm debt in Saskatchewan at the end of 2005 was $6.79 billion, an increase of just one per cent. However, in the past ten years, Saskatchewan’s farm debt has increased by nearly $2.3 billion – a rise of 50 per cent. So which lenders are carrying the debt? The statistics show chartered banks have 32 per cent of Saskatchewan’s farm debt. Federal agencies, notably Farm Credit Canada, have 30 per cent. The provincial government has exited as a farm lender over the years. Provincial agencies have less than one per cent of the debt. Credit unions have 26 per cent, while other sources such as supply companies and private individuals hold 12 per cent of the total farm debt in the province. I’m Kevin Hursh.
June 27, 2006
Son of CAIS If you thought the CAIS program was going to be axed, think again. That is what the Conservatives promised in the election campaign and it is what the Prime Minister has since reiterated, but it isn’t going to happen. Federal and provincial agriculture ministers meeting in St. John’s have decided that while the name will likely be different, the premise of the next program is going to be the same. Son of CAIS will be another margin-based system. There will be improvements to inventory valuation and better coverage for negative margins. They’ve also promised to make the program more producer-friendly. However, it will still provide support based on a producer’s historical returns. The trouble with that, particularly in the grains and oilseeds industry, is that margins have steadily declined. Critics argue that you’re just stabilizing producers into poverty. There will be a new component to business risk management. The feds have proposed and the provinces have agreed to the concept of a “new, more responsive catastrophic disaster assistance program that is separate from income stabilization programming.” While that sounds good, the devil will be in the details. Just what qualifies as a disaster and on what basis will support be provided? Officials are supposed to return in the fall with more details. I’m Kevin Hursh.
June 26, 2006
Good Saskatchewan crops, except in the northeast If you look at the overall ratings, Saskatchewan crops are doing very well. Provincially, the new crop report rates nearly 80 per cent of spring cereal crops in good to excellent condition. Flax and canola are also about 80 per cent good to excellent. And over 75 per cent of pulse crops in the province are rated as good to excellent. However, the overall numbers are hiding much poorer conditions in one region. Crops in southeastern and southwestern Saskatchewan are looking good. Crops are strong in west central and east central regions. In the northwest, crop ratings are stellar. The situation is considerably different in the northeast. While winter wheat and fall rye are rated highly, spring seeded crops have suffered from the excess moisture. Only 50 per cent of the spring wheat is rated as good to excellent. Oats is 53 per cent good to excellent, barley is 56, with flax and canola at only 52 percent good to excellent. Hopefully crop conditions in the northeast will improve as the land dries out, but right now that area of the province has far poorer crops than other regions. I’m Kevin Hursh.
June 25, 2006
Big money to fund ethanol in Ontario Logic would seem to indicate that Saskatchewan should be the national leader in ethanol production. After all, Saskatchewan is the only province with a surplus of feed grains. That isn’t stopping Ontario from forging ahead. The Ontario government is investing $32 million in the construction of new ethanol plants. Twelve applications were received. Three have been approved. These aren’t small plants – 150 million litres a year, 65 million litres a year and 190 million litres a year. In addition to the $32 million in capital grants to offset a portion of the construction costs, operating grants worth up to $60 million annually will be provided to these plants as well as two existing plants. The operating grants are to be available from 2007 to 2017 to help manage the risks associated with fluctuating corn, crude oil and ethanol prices. It’s a sweet deal. There’s money to help build and money to give investors confidence in the profitability. Ontario’s Renewable Fuels Standard requires that all gasoline sold in the province contain an average of 5 per cent ethanol by 2007. The Ontario Ethanol Growth Fund totals $520 million. All in a province that is a net importer of corn. I’m Kevin Hursh.
June 23, 2006
Special crop acreages Yesterday’s seeded acreage report from Statistics Canada shows some interesting trends on pulse and special crops. According to Stats Can, Canadian field pea acreage is at an all time high of 3.5 million acres, slightly higher than the previous record set in 2004. The breakdown of the numbers shows green pea acreage declined, but an increase in yellow peas more than made up the difference. Total lentil acreage is down, but not by as much as previously indicated. The overall drop is 33 per cent, with big differences from one class of lentils to another. Large green lentils are down a massive 63 per cent, while small green lentils are down about 24 percent. However, as expected, there’s been a big bounce in red lentil acreage. Reds are up by 76 per cent and for the first time the red lentil class is bigger than the large green. Saskatchewan mustard acreage declined even more than expected dropping by 37 per cent as compared to last year. The drop in canaryseed acreage stayed the same as expected at 33 per cent. On desi, kabuli and other types of chickpeas, the percentage increase in acreage is dramatic. Overall chickpea acreage is up by 88 per cent. However, with 310,000 acres in Saskatchewan and 45,000 acres in Alberta, the chickpea acreage is still small compared to where it was a half dozen years ago. I’m Kevin Hursh.
June 21, 2006
Excess rain causing crop losses Wet weather was great for attendance at the first day of the Western Canada Farm Progress Show in Regina. With fields wet and the weather showery, no fields are being sprayed and no haying is underway so farmers flocked to the show. Rain in June is usually great news, but excess rain is causing problems in more and more areas. In the Sask Ag and Food crop report for the week ending Sunday, 51 per cent of crop reporters across the province rated cropland soil moisture as adequate, with 48 per cent listing moisture as surplus. Since Sunday, many areas have had a lot more rain. Around Naicam, Lake Lenore and Birch Hills, there are reports of rainfall amounts as high as 8 inches. So much for the long range Environment Canada forecast that called for below normal precipitation. The forecast has been true in much of Manitoba, but certainly not in Saskatchewan and Alberta. There has been so much rain that crops are flooding and turning yellow. Nitrogen has been leached from the soil and the crop disease risk has been elevated. In-crop weed control is being delayed and in some cases it just won’t happen. The crop will be too advanced by the time a sprayer can roll. The old adage is that rain makes grain, but right now many regions are seeing their production potential cut by too much wet weather. I’m Kevin Hursh.
Natural Valley slaughter operation officially opened During the BSE crisis, it seemed that every second community was talking about its own beef slaughter plant. Very few had a real marketing plan. Even fewer actually proceeded with anything. That makes Natural Valley Farms unique. Its beef processing facility at Wolseley opened a year ago. Now, there’s finally been an official opening of the state-of-the-art slaughter facility in the scenic Qu’Appelle Valley near Neudorf. Even though it has taken much longer than expected, these producers have so far beaten the odds and there’s an incredible pride among those involved. You can go almost anywhere in Saskatchewan and meet beef producers who are shareholders of Natural Valley Farms or who have hook space to get their animals processed there. There are 120 investors and more than 200 producers have signed on to raise cattle “naturally” for the branded beef program. Scraping together $20 million is no easy task but Natural Valley has had determination. Most of all, it’s had a marketing plan. There was never any intention to compete head to head with the really big beef processors. Natural Valley’s national and international markets are taking shape and a capacity of 1250 head per week is significant. There’s a real need for operations like Natural Valley to thrive in order to build confidence that producers really can take more of their destiny into their own hands. I’m Kevin Hursh.
June 19, 2006
Rust alert In the Holdfast area northwest of Regina, a number of winter wheat crops have been hit so hard with rust that fungicide spraying has been necessary. Penny Pearse, the Provincial Plant Disease Specialist for Saskatchewan Agriculture says reports of rust symptoms do not normally occur until late June. The disease typically arrives on wind currents from the southern U.S. where it has over wintered. Pearse says the mild winter must have allowed for the survival of rust spores on green material here and that’s why the disease is showing up earlier than normal. Many of the current wheat cultivars have resistance to rust and the disease usually arrives too late for control measures to be necessary. However, she notes that the common spring wheat variety AC Barrie is no longer resistant to all the rust races and Manitoba has already reported seeing rust on AC Barrie this spring. Pearse says that for producers seeing rust pustules on spring wheat now, an application of fungicide before the flag leaf may be necessary. Producers should contact the Ag Knowledge Centre in Moose Jaw if they have questions. That number is 1-866-457-2377. I’m Kevin Hursh.
June 18, 2006
CWB Series C acceptance levels There’s going to be some No. 3 CW Red Spring wheat and quite a bit of durum carried over into the new crop year. The Canadian Wheat Board has announced its acceptance levels under the Series C contract. Acceptance levels on other classes and grades of wheat were 100 per cent, but no No. 3 CWRS is being accepted under the Series C contract. Earlier in the crop year, No. 3 faired better. In the Series A contract, 80 per cent was accepted and 50 per cent was accepted under Series B. The carryover is much more serious on durum, even though the acceptance level is higher in the final contract. In the Series C, on all grades of durum offered by farmers, the acceptance level is 25 per cent. This comes on top of a Series B in which no durum was accepted. The acceptance level in the Series A was 50 per cent. On No. 4 and 5 durum, there has been opportunity to move product under Guaranteed Delivery Contracts. There have also been Identity Preserved programs on Navigator durum, so No. 1 and No. 2 Navigator has moved. However, there will be a significant carryover of No. 1, 2 and 3 durum given that only 25 per cent is being accepted in the Series C. I’m Kevin Hursh.
June 15, 2006
Farm labour shortages The pull of the oil industry is drawing labour from Saskatchewan. This has an impact on agriculture, but it sounds like the impact is even more serious within Alberta. An Alberta agrologist tells me that a number of Alberta dairy operations are selling their cows and quota because they can’t keep a herdsman. Apparently an annual wage of $60,000 or more isn’t enough to keep a qualified herdsman anymore. The problem is also evident in agri-businesses that serve farmers. Some have scaled back hours or even closed. It’s not surprising that the energy sector is attracting so many people. High school students are earning $25 an hour or more with no experience. With overtime, some young people are earning $100,000 a year. How can agriculture compete with that? People in Alberta are wrestling with that question, but there doesn’t seem to be any easy answers. Agriculture relies on a great deal of family labour. People that have a stake in the farm often forego full time jobs in the oil patch. But how do you keep someone who is simply an employee from pursuing big money opportunities? I’m Kevin Hursh.
June 14, 2006
No status quo for supply management In less than three weeks, government representatives from 149 countries will meet in Geneva in an attempt to finalize a trade deal on agriculture at the World Trade Organization. The supply managed groups in Canada – dairy, poultry and eggs – continue to cling to the hope that they can emerge from a trade deal unscathed. However, it has become painfully clear that Canada can’t gain improved access in other countries for commodities like red meat and oilseeds without giving up some of the protection afforded to supply management here at home. Trade deals involve give and take. Canada has found itself isolated as it seeks liberalized trade with one hand and continued protectionism with the other. Canada’s western Premiers and Agriculture Ministers have come to the realization that supply management will have to give a little. This even includes Saskatchewan’s NDP government. Meanwhile, in Ontario and Quebec where the supply managed industries are much more important, it remains heresy to suggest anything except the status quo. It’s far from clear whether any meaningful agreement will actually be reached at the WTO, but if there is a deal Canada will have no choice but to participate even though the dairy and poultry sectors will see reduced protection. I’m Kevin Hursh.
June 13, 2006
No over 30 month rule this year Don’t expect the American border to open to cattle over thirty months of age until 2007. That was the consensus from officials attending the Saskatchewan Stock Growers convention in Estevan. Greg Doude of the National Cattlemen’s Beef Association in Washington DC was blunt in his assessment that the border opening has been delayed by the two Canadian BSE cases where the animals were born after the 1997 feed ban. The Canadian Food Inspection Agency has yet to provide its report to the U.S. on those two cases. If they can be traced to the same problematic feed source that would be helpful. However, Doude says the border is unlikely to be opened to Canadian cull cows this fall when a lot of American culls are hitting the market. A big flow of Canadian culls at that time could produce a backlash. American elections in November will further delay any action. No one likes to make potentially controversial decisions around election time. So Gregg Doude believes January of 2007 is the soonest that OTM cattle and beef from those cattle might finally cross the border. I’m Kevin Hursh.
U.S. pasture and hay in trouble Pasture production and hay yields will be good in most parts of Western Canada this year, but that’s not the situation south of the border. The Saskatchewan Stock Growers Association’s annual convention is underway in Estevan and one of the people in attendance is Gregg Doud, the chief economist of the National Cattlemen’s Beef Association, the main cattle organization in the U.S. In addition to his work in Washington D.C., Doud is involved in cattle production in north central Kansas. He was amazed by how green and lush Saskatchewan looks. Up here in Canada, we’ve heard a lot about the drought problems in the American winter wheat crop. A lot of winter wheat fields aren’t even worth harvesting. The winter wheat area is also cattle country. Doud says pasture is drying up and hay crops will be meager in large areas of Kansas, Texas, Oklahoma and Colorado. While rain could still turn the situation around, he says a lot of American producers are starting to wonder about feed supplies. The American cattle industry is in expansion mode, but that expansion might be curtailed by forage that’s in short supply and expensive. Of course, what happens with the American beef industry has ramifications for Canadian producers. I’m Kevin Hursh.
June 11, 2006
Large unseeded acreage looms Rain over the past number of days has been just what the doctor ordered in some parts of the southern grainbelt. However, in many other areas, producers wish the rain would stay away for a while to let saturated fields dry. Early this spring, Saskatchewan Agriculture estimated seeded acreage would be 34.6 million acres. Summerfallow was estimated at 6.9 million acres. If seeding progress eventually reaches 95 per cent, the 5 per cent that isn’t seeded will mean about 1.7 million acres that goes from the seeded category into the summerfallow category. That would be a big acreage shift. Beyond this, a lot of acres that have been seeded have since been flooded. Goodness knows how many acres have been mudded in and may not grow properly. Plus late seeded crops tend to yield less and be much more prone to frost damage in the fall. The latest that Crop Insurance will allow seeding is June 20. Anything seeded that late doesn’t usually make a great crop. Over the years, there have been many crops seriously hurt by a lack of rain in May and June. This year, crops in much of the province have excellent potential, but the wet weather has caused irreversible production losses in many parts of east central and northeastern Saskatchewan. I’m Kevin Hursh.
Heavy glyphosate use Spot shortages of glyphosate herbicide have been reported in Western Canada this spring. That’s surprising. With ClearOut 41 Plus being imported by producers from the U.S. under the Own Use Importation program and with all the different choices for glyphosate product in Canada, you’d think there would always be enough of the herbicide to go around. In addition to the various brands of Roundup, there’s Credit, Factor, Glyfos, Maverick, Renegade, Touchdown iQ, Vantage and Vantage Plus. People familiar with the industry say there are a couple of reasons for the spot shortages. There’s been a big move to the lower priced generic glyphosates. Not everyone is using imported ClearOut, but most producers are looking for a product at a low cost. That has increased the demand in that segment of the market. Another major factor has been the weather. Good spring growing conditions have meant heavy weed growth. There has been no question about the need for a pre-seeding or post-seeding burnoff. Skipping the burnoff has not been an option. And in many cases, the weeds have been more advanced than normal, meaning higher application rates in order to ensure good control. The industry has been surprised by how much glyphosate producers have used this spring. I’m Kevin Hursh.
June 7, 2006
Be careful with carbon contracts Hopes are fading that farmers will get significant money from carbon sequestration. The Saskatchewan Soil Conservation Association has been a leading advocate of agricultural land as a carbon sink. Practices such as direct seeding mean a buildup of organic matter and therefore carbon in the soil. Speaking yesterday at the direct seeding field day near Rosthern, Laura Reiter, a director on the board of the Saskatchewan Soil Conservation Association told growers that the new Conservative government doesn’t want to be directly involved in carbon trading. While the government may oversee carbon trading between farmers and Large Final Emitters, no rules are currently established. That hasn’t stopped a couple of companies from signing contracts with farmers. Laura Reiter is advising producers to read all the fine print and know what they’re signing. She says some agreements may require no use of a cultivator for twenty or thirty years. The agreement may also disallow deep banding of fertilizer, specify the maximum width of seed opener and put restrictions on chaff removal and the baling of straw. Meanwhile, the money being paid to producers is not large. The value of carbon on the Chicago Climate Exchange is about $4.40 Canadian per tonne. The deals being signed assume only a fraction of a tonne of carbon per acre each year. There would seem to be a lot of liability for very small returns. I’m Kevin Hursh.
June 6, 2006
Decide when to pull the trigger The Fixed Price Contract on wheat has been an attractive option from time to time. However, it’s been hot and cold and right now it’s cold. Back on March 10, the Fixed Price Contract based on No. 1 CWRS wheat with 13.5 per cent protein hit about $4.27 a bushel. That’s with average Saskatchewan freight and handling deducted. At the time, $4.27 looked pretty good. It was well above the Pool Return Outlook. After early March, the Fixed Price Contract declined. Towards the end of May, it rallied again. On May 22, the Fixed Price Contract hit $4.57 a bushel. A few days later on May 25, the Canadian Wheat Board came out with a Pool Return Outlook that increased the projected price of new crop wheat to $4.13 a bushel. That was a 27-cent a bushel increase, but it was still well under the $4.57 that was briefly available. Unfortunately, the Fixed Price Contract has been declining. As of yesterday, it was only $4.19 a bushel – not much better than the PRO. Will there be other rallies? How do you decide when to lock in some contracts? There are no easy answers, but it is important to know your costs, develop a plan and set a target price. Without a firm target in mind, it can be tough to pull the trigger. I’m Kevin Hursh.
June 5, 2006
Too wet and too dry While many areas of northeastern and east central Saskatchewan continue to battle surplus moisture, the lack of rain is a growing problem in some parts of the southern grainbelt. In southeastern Saskatchewan, 16 per cent of Saskatchewan Agriculture’s crop reporters list topsoil moisture on cropland as short. Nearly 25 per cent rate topsoil moisture as short or very short on hay and pasture land. In southwestern Saskatchewan, crop damage from dry conditions is being reported in a number of crop districts. On hay and pasture land in the southwest, topsoil moisture is rated as short or very short by 55 per cent of crop reporters. It should be noted that province wide, over 75 per cent of all crops are rated in good to excellent condition. However, that’s little consolation for producers in the wet areas unable to complete seeding and it’s little consolation for producers in parts of the south where dry conditions are taking a toll. In both the wet and dry areas, the next two weeks will be very important. The Crop Insurance seeding deadline is two weeks away. Meanwhile, in the dry areas, rain is going to be needed in the next couple weeks to avert serious crop damage. I’m Kevin Hursh.
Strong Canadian dollars is hurting Saskatchewan Agriculture and Food publishes a weekly Market Trends report that compares current grain and livestock prices with price levels a year ago. Hog prices are not doing very well. Last year at this time, index 100 market hogs were worth about $157 per ckg. The current price is about $127. When you look at cattle prices, whether it’s slaughter steers, cull cows or feeders, current prices are all substantially higher than a year ago, when we were still waiting for the U.S. border to open to live animals. On grain, despite all the hype about rising prices, values were better a year ago on most commodities. The feed barley price is similar to a year ago. Canola prices are down 30 to 40 cents a bushel as compared to last year and flax is down dramatically as compared to the lofty levels of a year ago. Mustard prices are a bit lower, lentil prices are a lot lower, and canaryseed is softer than a year ago. Prices are quite a bit stronger than last year on feed wheat, while oats and field peas are moderately higher. Over the past year, all grain and livestock prices have taken a hit from the strong Canadian dollar. A year ago, the loonie was worth about 79 cents U.S. Currently we’re above 90. That major shift has been costly. I’m Kevin Hursh.
June 1, 2006
Bloat control product unavailable Here’s a great example of regulatory authority run amuck. A product called Alfasure used for bloat control in cattle when grazing alfalfa has been pulled from the market. Alfasure is manufactured by Rafter 8, a Canadian pharmaceutical company based in Calgary. The product has been registered under the Feeds Act, but federal officials now want it registered as a drug. Rafter 8 was planning to do that anyway, but not all of the necessary tests have been completed. So even though Alfasure has been available through veterinarians for the past several years, cattle producers are going to be without it this year. Officials are refusing to allow it on the market while additional testing and registration is completed. Alfasure is added to the water supply and has proven to be very effective in eliminating bloat problems. There are no alternative products. When applied at the recommended rate, Alfasure costs 15 to 25 cents per day depending on the weight of the animal. Producers typically use it only when the bloat potential of the alfalfa is high. A number of producers have switched to grazing pure or nearly pure alfalfa stands based on the availability of Alfasure. Alfalfa is a legume that can fix its own nitrogen while producing high quality forage. Its drawback has been the bloat issue. Not having Alfasure this year is going to cause problems for some cattle producers 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).
