Sask Pool ups the anti When James Richardson International struck a takeover deal with Agricore United, the Saskatchewan Wheat Pool’s hostile takeover bid seemed improbable. However, Sask Pool continues to forge ahead. Earlier this week, the Pool announced that it has reached an agreement with Cargill that will address issues identified by the Canadian Competition Bureau. If its Agricore takeover goes ahead, the Pool will sell nine Agricore country elevators to Cargill, including facilities at Davidson, Kindersley and Congress, Saskatchewan. There’s also an agreement on exchanging ownership in Vancouver port facilities. Yesterday, the Pool made another announcement. It has sweetened its offer for Agricore and has launched a public offering to provide the additional funding. The Pool says its offer is now worth about $4 more per limited voting common share than what JRI is promising. Agricore United says it’s reviewing the Pool’s newest bid but in the meantime it is urging shareholders not to tender their securities. It’s hard to tell how this drama will unfold, but Sask Pool doesn’t seem content to take “no” for an answer. I’m Kevin Hursh.
March 29, 2007
Barley marketing confusion The barley plebiscite result has been released and Chuck Strahl has announced his intention to have marketing choice by August 1. Despite Strahl’s proclamation, the future is still uncertain. The plebiscite was handled so badly that many single desk supporters do not accept the result. A total of 82,000 ballots were sent out, but only 29,000 were returned. That’s a poor participation rate. When Manitoba held its own vote with only two questions on the ballot, it got a 65 per cent voter turnout and a different result. The federal government says it intends to create marketing choice through regulatory changes. The Canadian Wheat Board says change requires legislation, meaning a vote in the House of Commons. Back in 1993, there was a short-lived continental barley market created by regulation. That was ended by a court challenge. Then there are the practical implications. The CWB is already making sales of new crop malting barley. From a practical business point of view, what is that going to mean if there’s an open market starting in August? The whole thing is a mess. Unfortunately, this long-running debate is a long way from over. I’m Kevin Hursh.
March 28, 2007
Field peas move south Saskatchewan Agriculture has compiled 2006 seeded acreages and production for each crop district in the province. The crop district with the most durum production is around Swift Current with the next biggest area being around Moose Jaw and Regina. For oats, the eastern edge of the province is where most of the production occurs. For flax, the southeastern corner of the province is the biggest production zone and there’s also quite a bit of flax in Crop District 6A which is the Watrous – Nokomis area. The biggest crop district by far for mustard is 6A. The biggest crop districts for lentils are around Kindersley and around Moose Jaw and Regina. Those same areas were the biggest canaryseed production zones in 2006. The data shows that field peas are moving south. Once a crop for the northern and central grain belt, peas are now a huge crop in the south. The crop districts with the biggest pea acreage last year were north and south of Swift Current and in the Assiniboia area. All the 2006 stats are posted in a report on the Sask. Ag and Food website (http://www.agr.gov.sk.ca/docs/statistics/SkCrpDistrict.asp). I’m Kevin Hursh.
March 27, 2007
Best year ever for Prairie Centre Credit Union Here’s an indication of what the turnaround in the grain industry means to Saskatchewan’s rural economy. Prairie Centre Credit Union held its annual meeting last night. Prairie Centre operates eleven branches serving members in Beechy, Kyle, Elrose, Elbow, Eston, Rosetown, Harris, Eatonia, Loreburn, Outlook and Dinsmore. Agriculture, specifically grain production, is the economic driver in that region of west central Saskatchewan. For Prairie Centre Credit Union, 2006 is being described as a turnaround year. There was a strong growth in assets, member deposits and loans. Loan interest grew from $10.5 million in 2005 to $12.7 million in 2006. The provision for credit losses, in other words bad debts, dropped from over a million dollars in 2005 to just $63,000 in 2006. The patronage allocation went from 2 per cent to 4 per cent, which means a payout for 2006 of $592,000. The net income after patronage allocation and after taxes grew from only $144,000 in 2005 to $1.4 million in ’06. It was the best year ever for the credit union. The board of directors and staff are looking forward to 2007, hoping the grain economy can continue to propel growth. I’m Kevin Hursh.
March 26, 2007
Malting barley outshines durum and spring wheat Based on the most recent Pool Return Outlook from the Canadian Wheat Board, spring wheat does not appear to be a strong cropping alternative. The new crop PRO for No. 1 CWRS wheat with 12.5 per cent protein is only $4.28 a bushel once you deduct average Saskatchewan freight and handling. Last year’s average spring wheat yield in the province was 31.8 bushels an acre. At $4.28 a bushel, that’s a gross return of $136 an acre. The new crop PRO on No. 1 durum with 12.5 per cent protein is $4.90 a bushel – a significant improvement over the price in this crop year. Using last year’s average durum yield of 31.1 bushels per acre and the projected price of $4.90 gives a gross return of $152 an acre. The PRO on malting barley is projected to be dramatically higher in the new crop year. Special Select two-row designated barley has a Saskatchewan based PRO of $3.94 a bushel. To be fair, let’s not use the top grade. Let’s use Standard Select two-row, which has a Pool Return Outlook of $3.83 a bushel. Last year’s average barley yield in the province was 48.7 bushels an acre. Using that yield and a price of $3.83 a bushel results in a gross return of $186 an acre, significantly better than durum at $152 and far better than spring wheat at $136. I’m Kevin Hursh.
March 23, 2007
Alberta sweetens 2006 CAIS Producers in Alberta are getting another cash injection not available to producers in other provinces. Alberta is allocating $70 million to supplement the support provided by the CAIS program in 2006. The program will work the same way as the Alberta Reference Margin Pilot Program used for the 2003 to 2005 program years. About half of Alberta producers saw an increased reference margin and the initiative injected an additional $200 million into that province’s agriculture industry. Normally under the CAIS program, the high and the low from a producer’s last five production years are dropped when calculating reference margin. This is known as the Olympic average. Under the Alberta Reference Margin Initiative, only the last three years are averaged to determine a reference margin. If this provides a better reference margin, Alberta utilizes the higher number and makes up the difference in the CAIS payment. The calculation is done automatically so a producer doesn’t need to submit any additional information. Alberta expects $70 million will be provided for 2006 CAIS. It is yet another Alberta-only initiative. I’m Kevin Hursh.
March 22, 2007
Own Use Import (OUI) replaced by GROU OUI, the Own Use Importation Program that brought lower priced glyphosate herbicide to Canada is being replaced with a program called GROU, Grower Requested Own Use. The Pest Management Regulatory Agency says with this decision, it will not consider applications for new products under OUI. The glyphosate brought into Canada from the U.S. through the efforts of Farmers of North America is ClearOut 41 Plus. Its equivalency certificate expires on June 28. Producers need to submit applications by May 4 in order to have them processed in time. It’s possible that ClearOut will get a one-year renewal, but this isn’t assured. Pulse Canada and Saskatchewan Pulse Growers support the move to GROU saying this initiative plus several other new initiatives should make many new products available to Canadian farmers at competitive prices. However, they acknowledge the success of GROU will hinge upon the willingness of manufacturers to accept North American pricing for their products. The Pest Management Regulatory Agency warns that it will reopen the OUI program if pesticide manufacturers are not willing to provide the information necessary to process GROU applications. The issue is complicated, but farmers and farmer groups are going to be watching carefully. I’m Kevin Hursh.
March 21, 2007
Biofuel groups disagree on federal budget A difference of opinion has emerged on the value of the federal government’s biofuels initiative. As mentioned in this report yesterday, the Canadian Renewable Fuels Association is praising the commitment of up to 10 cents a litre for ethanol and up to 20 cents a litre for biodiesel. Ensask Biofuels, the proposed ethanol development on the former site of the Tisdale Alfalfa dehy plant, is also welcoming the federal budget announcement. A more cautious approach is coming from APAS, the Agricultural Producers Association of Saskatchewan. APAS points to the elimination of the excise tax exemption for biofuels, saying this will be a problem for the development and success of a biofuels industry, even in light of the support that was announced. The Saskatchewan Ethanol Development Council is even more critical saying the budget details are a disappointment. According to the council, the proposed operating incentives will not provide the investor confidence necessary to get rural projects into production. The incentives are only applicable to facilities once they are in production and last only three years before being phased out. With so much disagreement, it’s hard to know what or who to believe. I’m Kevin Hursh.
March 20, 2007
Budget support for biofuels It didn’t get much attention compared to the many other aspects of the federal budget, but it appears the budget contains the basis for the development of a Canadian biofuels industry. Although there were worries that federal support would fall short of what’s required to be competitive with ethanol and biodiesel production in the U.S., the necessary incentives appear to be in place. A new renewable fuels producer payment will provide $1.5 billion over seven years for domestic ethanol and biodiesel producers. Incentive rates will be up to 10 cents a litre for renewable alternatives to gasoline and up to 20 cents a litre for renewable alternatives to diesel for the first three years, and then will decline. In order to ensure that companies do not earn excessive profits, government support will not be provided when rates of return exceed 20 per cent on an annual basis. The government says support to individual companies will be capped so the benefits aren’t concentrated in the hands of a few large companies. There’s also a $500 million fund for the commercialization of next generation renewable fuels technologies such as cellulose ethanol. The Canadian Renewable Fuels Association is welcoming the budget initiatives saying that if properly implemented, the incentive program will lead to over 20 new world-class biofuels facilities in Canada, create over 14,000 new jobs in rural communities, and provide a new market for over 200 million bushels of Canadian grains and oilseeds. I’m Kevin Hursh.
March 19, 2007
Canada sits on WTO sidelines It’s not often that I find myself applauding a position taken by the Western Barley Growers Association, but the right wing, Alberta-based farm organization makes a lot of sense on the issue of World Trade Talks. There seems to be some momentum building again in the stalled Doha round of the WTO. Unfortunately, Canada is sitting on the sidelines. To satisfy the politically powerful supply managed industries in Ontario and Quebec, Canada isn’t actively participating in the trade talks. Dairy, poultry and egg producers don’t want the Canadian government to take part in any negotiations that could undermine supply management. Ironically, the federal government admits that if a world trade deal is negotiated, it will have no choice but to sign the deal. The Western Barley Growers say the trade aspirations of grain, oilseed, cattle and hog producers are being sacrificed to appease the supply managed groups. However, the supply managed groups stand to lose some of their protection anyway if there is a WTO deal. Wouldn’t it be better for Canadian negotiators to be sitting at the bargaining table working in the best interests of all of Canadian agriculture? I’m Kevin Hursh.
March 16, 2007
More producers taking fumigation courses The past couple of years have seen more problems with grain insects than most people can remember. One of the methods of controlling bugs in grain is a fumigant called phostoxin. Some producers purchased phostoxin last fall even though they didn’t have an on-farm fumigation license. That isn’t supposed to happen. If you don’t have a license, don’t expect to purchase and use your own phostoxin in the future. To get an on-farm fumigation license, producers have to take a course offered through SIAST. More courses than usual have been held this winter at many regional colleges. Producers can also take it as a home study course and then go to the regional college to write the exam. Some producers are taking the training because phostoxin can also be used to control gophers, which have been a major problem in southwestern regions of the province. You put three or four tablets down a hole and then fill in the hole. This is a registered use for phostoxin, but research continues on how effective it is compare to other options. Although phostoxin use sounds simple – pellets down a gopher hole or placed within grain - phostoxin is a nasty product. Especially when used in grain, it has to be used properly or more than the bugs can get sick. For those who want to custom apply phostoxin for producers, a custom application license is necessary and that requires a full five-day fumigation course. I’m Kevin Hursh.
March 15, 2007
Predicting the barley plebiscite results There was a great debate yesterday in Kindersley featuring Ken Ritter, the chair of the Canadian Wheat Board versus Cherilyn Jolly-Nagel, the president of the Western Canadian Wheat Growers Association. While market choice versus the single desk is a well-worn debate, there were many excellent and insightful questions by the producers in attendance. It was interesting that neither Ritter nor Jolly-Nagel would hazard a guess on what the results are going to be in the barley plebiscite. With so much polling on the issue over the years, you’d think predictions would be easy. It makes a lot of difference how you ask the question. The government’s wording which makes it sound like producers can have the best of both worlds – market choice with a viable Canadian Wheat – was designed to favour that answer. However, there are several factors, which make the plebiscite result difficult to anticipate. The three-question format may skew the results, plus Chuck Strahl’s handling of the CWB issue has been so ham-handed that he may have precipitated a backlash among producers. Like Ritter and Jolly-Nagel, I’m hesitant to predict what the plebiscite percentages will be. But I will make one prediction. Whatever the result, both sides in the debate will interpret it very differently and claim at least a moral victory. I’m Kevin Hursh.
March 14, 2007
Not so much canola and more peas There may be some surprises in this year’s seeded acreages. Recent events may be changing the minds of some producers. Nitrogen fertilizer continues to escalate in price and there are increasing fears about nitrogen availability. Agriculture and Agri-Food Canada is predicting a 14 per cent increase in canola acreage. That would put us over 15 million acres. With canola being a heavy nitrogen user, some observers believe the canola acreage increase will be tempered by the fertilizer situation. There are also worries about land again going unseeded in parts of the central and northern grainbelt due to flooded fields and that too could cut into canola acres. Agriculture Canada is still predicting a slight decline in field pea acres, but many other analysts are now calling for an increase. Peas fix their own nitrogen so it’s a natural crop when there are issues with fertilizer price and availability. Plus, pea prices have shown amazing strength. Old crop yellow peas are selling for $6.50 a bushel and new crop contracts are available at $5.50. Supplies of pea seed are tight and expensive so that’s an indicator of increased interest. I’m Kevin Hursh.
Not so much canola and more peas There may be some surprises in this year’s seeded acreages. Recent events may be changing the minds of some producers. Nitrogen fertilizer continues to escalate in price and there are increasing fears about nitrogen availability. Agriculture and Agri-Food Canada is predicting a 14 per cent increase in canola acreage. That would put us over 15 million acres. With canola being a heavy nitrogen user, some observers believe the canola acreage increase will be tempered by the fertilizer situation. There are also worries about land again going unseeded in parts of the central and northern grainbelt due to flooded fields and that too could cut into canola acres. Agriculture Canada is still predicting a slight decline in field pea acres, but many other analysts are now calling for an increase. Peas fix their own nitrogen so it’s a natural crop when there are issues with fertilizer price and availability. Plus, pea prices have shown amazing strength. Old crop yellow peas are selling for $6.50 a bushel and new crop contracts are available at $5.50. Supplies of pea seed are tight and expensive so that’s an indicator of increased interest. I’m Kevin Hursh.
March 13, 2007
Preliminary injunction against Roundup Ready alfalfa Monsanto’s Roundup Ready alfalfa has suffered a setback south of the border. On Monday a U.S. federal judge in California placed a preliminary injunction against purchasing and planting the seed until further hearings are held. Growers who have already purchased seed can only plant it up until March 30. Any further seed sales are prohibited. The preliminary injunction was issued in a lawsuit currently pending against the U.S. Department of Agriculture by the Center for Food Safety. According to the Centre, the USDA approved the genetically engineered alfalfa in 2005 without conducting the required Environmental Impact Statement. For its part Monsanto claims, “The extensive regulatory dossier for Roundup Ready alfalfa, combined with farmer stewardship agreements, provides a robust and responsible approach to managing the environmental questions raised by the plaintiffs...” However, so far the judge has sided with the plaintiffs who say Roundup Ready alfalfa poses a threat to export markets and the environment. The judge will continue with the case and is expected to decide whether to impose a permanent injunction in late April. Roundup Ready alfalfa has not been approved in Canada. Interested parties on this side of the border are no doubt watching the American situation very carefully. I’m Kevin Hursh.
March 12, 2007
NISA-like program coming The best news in Prime Minister Stephen Harper’s billion-dollar announcement for farmers was the $600 million to kick-start new “contributory-style producer savings accounts”. In other words, the feds intend to go back to something similar to the old NISA program. The Canadian Federation of Agriculture has been recommending a return to NISA as a way to shore up the CAIS program. Of course, making this happen will require provincial approval because the provinces will no doubt be expected to cost share. The other $400 million in the announcement is a direct payment to help address high production costs. Based on past experience, this will probably be paid as a percentage of a producer’s Eligible Net Sales. Unlike the recent Grains and Oilseeds Payment Program, it will likely be paid on all farm commodities, except the ones covered by supply management. Although any money is always welcome, the $400 million will be spread pretty thin. It’s also interesting that the new funding in contingent upon the upcoming federal budget being approved. Previous ad hoc payments, such as the Grains and Oilseed Payment Program, did not have to be passed in a federal budget. Do you think there might be some politics at play? I’m Kevin Hursh.
March 9, 2007
Drought assistance for the southwest unlikely Many people aren’t even aware that crops were a disaster in much of the southwest last year. On Tuesday about 300 people gathered in Cadillac in the southwestern corner of the province to continue their efforts to get drought assistance. Another rally is planned for March 12 at the Provincial Legislature in Regina. Producers are asking for $25 an acre in compensation, the same amount that producers in flooded regions received. While it seems equitable to offer extra assistance to a drought region in a similar manner to flooded regions, the issue is complicated. With flooding problems, you can use unseeded acreage as a way to base additional payments. How do you treat a drought situation? Rains don’t follow rural municipal boundaries, so it doesn’t work very well to pay farmers in one RM and not another. Even within municipalities, there’s a great variation in yields depending upon the crop, the time of seeding and whether the crop was seeded on summerfallow or stubble. I have a lot of sympathy for producers in the drought area. I come from the southwest and my crops weren’t good either. But I doubt the area is going to get the sort of assistance the producers are requesting, even though some municipal, provincial and federal politicians claim to be sympathetic. I’m Kevin Hursh.
March 8, 2007
Maple Leaf hardball Many pork producers in Saskatchewan are wrestling with whether to sign a five-year contract to send their hogs to the Maple Leaf plant in Brandon or whether to throw their support behind a proposal to build a producer-owned facility. Maple Leaf has set June 1 as the date it will end primary pork processing at its plant in Saskatoon. Secondary pork processing will continue past that date, but that won’t help producers who need a place to market their hogs. In response to the Maple Leaf closure, plans are underway for a producer-owned facility. Support is described as strong, but it would likely be two or three years before a new facility could be operational. Sources say the five-year deal to ship to Brandon is being offered at a price premium that looks attractive compared to shipping to Olymel in Red Deer or to plants in the U.S. However, with higher transportation costs, producers are still looking at reduced returns. Hog producers who weren’t normally shipping to Saskatoon, such as those in eastern and southern regions of the province, are not being offered the five-year deal. Maple Leaf is playing hardball, trying to make it as difficult as possible for a producer-owned plant to become a reality. I’m Kevin Hursh.
March 7, 2007
Big drop in flax acres expected The Market Analysis Division of Agriculture and Agri-Food Canada is predicting a drop in flaxseed acreage in all the major producing countries. In the U.S., most of the flax is grown in North Dakota. Flax acreage there is expected to drop by 30 to 40 per cent as more acres go into wheat and corn. In the European Union, biodiesel demand for rapeseed means rapeseed will likely gain acres at the expense of flax. Canada is the world’s largest producer of flaxseed. Saskatchewan, on average, produces four times more than Manitoba and has been the largest producing province since 1993-94. For the upcoming year, Ag Canada is projecting a western Canadian acreage reduction of 38 per cent. Assuming trend yields, production could be down by 42 per cent, making it the second lowest level of production in the past ten years. The lowest production occurred in 2004 when frost damage decimated the prairie flax crop. Following that, prices skyrocketed. Ag Canada is projecting only a modest price increase in the year ahead. However, it’s noted that the weather during the upcoming growing season will be a major factor to watch. I’m Kevin Hursh.
March 6, 2007
Farming in Canada - what the realtors don't tell you I recently received an email from England. The fellow writes, “I am contacting you as I have come across your website while researching the possibilities of renting a farm in Saskatchewan. At this time of year a few realtors from Saskatchewan and Manitoba come over to England and I believe Holland and Germany giving seminars, to encourage farmers to emigrate and buy farms they have for sale back home. Unfortunately there are some cases where farmers have bought farms and emigrated and due partly to bad luck, and some of their own incorrect assumptions, have come to financial grief within a few years. If one could rent a farm to start with, so that we could preserve some of our capital, to see us through the steep learning curve of farming in a different environment, it would be of great benefit to the emigrating farmer and the reputation of the realtors.” This guy tried farming in the Peace River region of Alberta, but is now back in England. He says if he had the money and his wife would allow it, he’d come and have another try on a rented farm on “good” land in Saskatchewan. He directed me to an interesting website advertised in The Farmer’s Weekly, one of the main farming journals in England. It’s www.FarmingInCanada.com. It’s what the realtors don’t tell you from the point of view of someone who came to Western Canada and met with financial disaster. I’m Kevin Hursh.
March 5, 2007
Turmoil within R-CALF One shouldn’t take pleasure in the misfortunes of others, but it’s hard not to smirk at the problems facing R-CALF USA. The protectionist American farm group has caused no end of trouble for the Canadian beef industry on the BSE issue. And R-CALF is a leading proponent of Country of Origin labeling, which will be another problem for Canadian livestock producers. Well, it seems that behind the scenes R-CALF isn’t a very happy organization. There are apparently financial problems and dropping memberships. An elected president was ousted. Then other members of the board resigned. There are also questions about the lucrative contract enjoyed by the CEO. R-CALF is a grassroots movement and it no doubt has quite an array of characters, so internal problems aren’t really that surprising. What is surprising is the depth of the disarray and the fact that somebody with inside information on all the turmoil has created a website so everybody can get a blow- by-blow account. If you want to see all the dirt on what’s happening inside R-CALF, just go to www.swifthorses.com. I’m Kevin Hursh
March 2, 2007
Land prices and rental deals It’s the time of year when a lot of land deals are done – land sales and new rental agreements. There’s a lot of speculation regarding the impact of improved grain price prospects on the land market. Last spring, income prospects were dismal. While land prices seemed to hold up surprisingly well in most areas, land rents were under pressure. Last spring, Ritchie Brothers conducted a colossal land auction near Stockholm on the eastern side of the province. Eighty quarters of land were sold along with a large amount of farm machinery. This spring it seems likely that land prices and rents will both increase – the question is by how much. Hodgins Auctioneers is selling 41 quarters of land by auction March 26 in Tisdale. The event is taking place in the Tisdale Rec Plex. The land, belonging to Healy Farms Ltd. is located in the RMs of Willow Creek and Connaught. Events like this always attract a lot of attention. It’ll be interesting to see what prices do and where all the buyers come from. I’m Kevin Hursh.
March 1, 2007
Money for minimum tillage C-Green Aggregators of Regina has not proceeded as quickly as anticipated, but the company says it plans to start paying enrolled Saskatchewan farmers for their carbon over the next few weeks. Jeff Gross of C-Green says the company started selling carbon on the Chicago Climate Exchange on January 22 and now has over a quarter of the tonnage sold. The amount earned to date is $6.8 million and the price has averaged $4.29 per tonne of carbon. The first payment to producers will be for 25 per cent of the carbon committed. More than 2200 Saskatchewan farmers took part in the first offering by C-Green, earning carbon credits for their minimum tillage practices. Over five million acres were signed up for each of the four years of the program. Just over 6 million tonnes of carbon was committed. Farming practices were subject to an audit through Saskatchewan Crop Insurance. Jeff Gross says just over 2 per cent of the producers involved were found to not be in compliance. C-Green is launching another offering to cover the years 2006 to 2010. Producers would be paid for their carbon credits at the end of each crop year. In this offering, producers from Alberta and Manitoba will also be eligible. More information is available at www.c-green.ca. 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).
