Wheat and durum prices improve, but still lag competing crops The Pool Return Outlooks for both wheat and durum have been increased substantially, but the prices still aren’t very exciting versus the alternatives. In the June PRO released yesterday, most milling grades of wheat are up by $18 a tonne, while durum is up by $10 to $18 a tonne. It should be noted that both the May and the June PROs dropped a bit. With this latest improvement, the price prediction for No. 1 CWRS wheat with 13.5 per cent protein is about $4.60 a bushel once average Saskatchewan freight and handling is deducted. The CWB’s Fixed Price Contract for No. 1 wheat is currently running around $5.10 a bushel after making all the deductions. The PRO for No. 1 durum with 13.0 per cent protein has improved to about $5 a bushel after deductions. In the case of durum, the Fixed Price Contract is well below the PRO, so there’s really no reason to use this pricing option. Not long ago, $5 a bushel for wheat or durum was pretty exciting. These days it doesn’t stack up that well against the $6 a bushel for peas and $9 a bushel for canola that many producers have locked in. I’m Kevin Hursh.
June 27, 2007
Crop acreage surprises Seeding plans changed quite a bit this spring. Back in March, Canadian farmers intended to plant 17 million acres of spring wheat. Statistics Canada says only 15.2 actually went in the ground. Canola held pretty steady. Intentions were 14.8 million and Stat Can says 14.5 million acres actually went in the ground – a 17 per cent increase over last year. Barley ended up with a 19 per cent increase over last year – about what was expected. Oats did not see the big increase that was anticipated. They’re up only 5.7 per cent from last year. While somewhat less than intentions, the durum increase is large – up nearly 27 per cent. Field peas increased more than the March intentions indicated. They’re up 16.5 per cent – not a surprise considering the very good prices available for old crop and new crop peas. Lentils increased somewhat more than expected. They’re up 4.6 per cent. Flaxseed acreage crashed even more than anticipated and is down a whopping 34 per cent. Canaryseed and mustard acres are both up a bit more than expected, with acreage increases of more than 30 per cent as compared to last year. Chickpeas are up nearly 35 per cent, but considerably fewer chickpeas than expected went in the ground. Many of those acres probably went to field peas instead. I’m Kevin Hursh.
June 26, 2007
Rain makes grain - to a point Excessive moisture is the biggest problem facing crops in both Saskatchewan and Manitoba. In the latest crop report from Saskatchewan Agriculture, just two per cent of the cropland in the province is rated as having short or very short topsoil moisture. Twenty-five per cent of the cropland in the province is rated as having surplus topsoil moisture. In the northeastern region of the province, 51 per cent of the cropland is rated as surplus. In the east central region, 42 per cent has surplus topsoil moisture. Flooded crops, crop yellowing and ruts from sprayers are reported. The water troubles continue into Manitoba. Along with the tornadoes that have been widely reported, there has also been excessive rainfall – up to 100 mm in the past week in many areas. All too often the storms have come with hail. The crop report from Manitoba Agriculture talks of crop yellowing and lodging as well as rampant disease pressure. The general rule of thumb is that rain makes grain. Years with high rainfall are generally the years with the biggest crops. This year, too much rain is threatening production over a big chunk of the prairie region. I’m Kevin Hursh.
June 25, 2007
Producing food, not just commodites When you visit with Trenton Baisley, the CEO of the FarmPure Family of Companies, it’s easy to get excited about the future of agriculture. FarmPure is based in Regina and it’s owned by a group of pedigreed seed growers. Pedigreed seed sales are the foundation of the business. FarmPure Seeds works with 30 public and private breeding institutions in countries around the world to access new crop varieties. In 2006, the company purchased SW Seeds with a big forage processing facility in Nipawin and a canola seed cleaning and treating plant in Laurier, Manitoba. However, it’s the company’s other divisions such as FarmPure Foods and FarmPure Beverages that sets the organization apart. The company has a unique oat mill in Regina and it has developed numerous food products based on pure oats. The process starts with specific varieties grown under identity preservation. The resulting food products are certified to be free of contamination from other grains making them suitable for people with Celiac disease and for those with wheat allergies. FarmPure has also developed promising beverages. There’s long been talk about value added agriculture – producing food rather than commodities. FarmPure is making it happen and it will be interesting to see how the future unfolds for this ambitious farmer owned venture. I’m Kevin Hursh.
June 22, 2007
Dealing with a shortage of workers Saskatchewan’s representative to the national Outstanding Young Farmers program will be announced today at an awards banquet at the Western Canada Farm Progress Show in Regina. The OYF program in the province is run by alumni – past winners from the program. This is an interesting group of entrepreneurs from across the province. At a gathering last night of OYF alumni and this year’s three nominees, it was interesting to hear that one of the biggest challenges facing progressive farm operations is labour. There are labour shortages in all sorts of industries. With the oil patch paying big dollars, it’s tough to attract people and that’s certainly true in agriculture. Without employees, it’s often impossible to expand the farm operation and take on new ventures. Some of the OYF alumni are turning to other areas of the world, most notably Europe to secure employees interested and knowledgeable about agriculture. Others are foregoing business opportunities due to the lack of workers. Anyone who has employees knows the importance of a competitive compensation package and good working conditions. The fancy term “human resource management” was seldom heard among farmers a few years ago, but it’s now a fact of life for those farms that have more work than family labour can accomplish. I’m Kevin Hursh.
June 20, 2007
Ethanol needs a flack jacket Overall, there’s strong support among Canadians for renewable fuels, but the naysayers are highly visible and they get a lot of attention. It’s almost like our society can’t stand too much good news. In the midst of such a positive development for farmers, rural development and the environment, it becomes news whenever someone has something negative to say. Increasingly you hear the food for fuel argument which says it’s unethical to burn grain for energy when there are starving people around the world. The amount of disposable income spent by Canadian consumers on food has steadily declined. If there’s seven cents worth of wheat in a loaf of bread rather than five, it won’t be a big deal in North America. In developing nations, the poor are often peasant farmers. These people will benefit from the world grain price increase. In fact, they should benefit more than their urban cousins will be disadvantaged. What renewable fuel can do for the rural economy and for the environment makes it a worthy public investment. Ethanol and biodiesel are going to become less expensive to produce as technology develops. Meanwhile the extraction of scarce petroleum resources continually costs more. Biofuels are the best opportunity in a generation for the grain industry and for rural Canada. We shouldn’t let the critics go unchallenged. I’m Kevin Hursh.
June 18, 2007
Water water everywhere It’s rare in mid-June for flooding to be causing more crop damage than drought in Saskatchewan. The latest crop report from Saskatchewan Agriculture and Food says flooding caused damage in all areas of southeastern Saskatchewan last week with up to 20 per cent of some fields damaged. In east central Saskatchewan, the report rates 27 per cent of crops with surplus topsoil moisture. However, the crop report doesn’t capture the whole picture because it was still raining when the reporting deadline hit. Last night, I got a look at the Saskatoon area while departing in an airplane. After four inches of rain, there’s a lot of standing water in fields. Precipitation maps posted by the PFRA go up until June 16 and they show Saskatoon as below average for springtime precipitation. Once all the recent rainfall is factored in, that moisture deficit will be erased. Especially in southern areas of the province, it’s hard to complain about rain. Last year, June was wet and then the tap turned off and July was extremely dry and hot. Goodness knows what will happen this year. For most producers though, rain a couple weeks from now would be a lot more welcome than more rain in the immediate future. I’m Kevin Hursh.
Equipment gets bigger, but time grows shorter The Western Canada Farm Progress Show starts Wednesday in Regina. Attendance is actually the best at the Farm Progress Show when the weather is the worst. When the weather is rainy and fields are wet, farmers are more likely to take the time to attend the show and see what’s new. Windy weather also tends to have this effect because it prevents spraying operations. Over the past weekend, there was a huge amount of rainfall in many areas. This, on top of earlier wet weather, has delayed weed control operations. If fields dry up enough to allow sprayers to roll, Farm Show attendance will likely be affected. It’s difficult for producers to take a day or two away from the farm if that means foregoing timely herbicide applications. For those who can attend, one of the big attractions this year promises to be the new 84-foot air drill from Seed Hawk. Promoters say the huge drill provides precise seed placement along with the capacity to seed a massive number of acres each day. Ironically, even though farm equipment gets ever larger, producers seem to have less and less time during the growing season to attend events such as the Farm Progress Show. I’m Kevin Hursh.
June 13, 2007
Saskatchewan Biofuels Investment Opportunity (SaskBIO) Another piece in the biofuel development puzzle was added yesterday. Premier Lorne Calvert announced an $80 million repayable loan program over four years for new ethanol and biodiesel facilities that have producer and/or community investment. The facilities must be at least two million litres a year and must have at least five percent investment from producers and/or the local community. The more local investment, the higher the loan amount becomes. At 50 per cent community or producer investment, the loan is 10 cents per litre of new capacity. A 100 million litre facility in this case would qualify for the maximum loan of $10 million. Repayment terms are based on profitability. Calvert made the program announcement at the North East Saskatchewan Ethanol Forum held in Tisdale. In addition to the Premier, Agriculture Minister Mark Wartman was in attendance as was the newly appointed Minister of Regional Economic and Cooperative Development Lon Borgerson, the MLA from Saskatchewan Rivers. It’s been Wartman and Deputy Premier Clay Serby who have pushed biofuel development within the provincial government. Saskatchewan is recognized as the biofuel leader on the national stage. It’s heartening to see the progress of groups such as Ensask Biofuels of Tisdale, North West Terminal of Unity and Gardiner Dam Terminal of Loreburn in developing new ethanol projects. There’s every reason to expect these facilities and others will be prosperous ventures that grow the Saskatchewan economy. I’m Kevin Hursh.
June 12, 2007
Great time to be a farmer Overall, the Saskatchewan crop is looking good. Producers in east central and northeastern Saskatchewan have struggled to get crops seeded into saturated soils and that’s been the number one cropping concern this spring. The latest crop report from Saskatchewan Agriculture and Food has a long list of other problems that includes gophers, frost, flea beetles, cutworms, heavy weed growth, hail and disease. Still, over 80 per cent of all the major crops are rated in good to excellent condition. The one exception is canola, which is a bit lower at 76 per cent good to excellent. If you can grow a good crop, there’s actually the opportunity to make some money this year. How often can we say that? It’s hard to believe, but perhaps the stars are aligned. Crop potential is excellent and crop prices are strong. While prices could drop in the months ahead, there have already been opportunities to lock in strong prices on a portion of the expected crop. New crop canola prices of around $9 a bushel have been available. Yellow peas have been at $6 a bushel for fall delivery. We’re a long way from having a crop in the bin, but we might as well enjoy the moment. More Saskatchewan farmers than usual have the promise of a good crop and the potential for profitability is better than at any time in the past decade. I’m Kevin Hursh.
June 11, 2007
Rail car leakage points to bigger problems It’s often relatively minor things that garner public attention and make people mad. That may be the case with the most recent charges against the railways. According to the Canadian Wheat Board, the railways have lost $4 million worth of grain over the past two years due to leakage from poorly maintained rail cars as well as a sharp increase in wrecked cars from derailments. On the leakage issue, the CWB says that over the past two crop years it has recorded losses of 6,100 tonnes of wheat, durum and barley leaked from the bottom gates of railcars while in transit or waiting to be unloaded at port. The railways receive an allowance of $4,300 per railcar each year for maintenance. According to research done by the Farmer Rail Car Coalition, actual maintenance costs are closer to $1,500 per car each year. Not only are the railways pocketing money at the expense of farmers, but the cars aren’t being properly maintained and that’s costing farmers more money. The value of the grain leakage is small compared to the cost of poor service and Canada’s resulting bad reputation as an unreliable grain supplier. However, grain leakage is easy to measure and easy to understand, and it’s symptomatic of the poor service the railways are providing. I’m Kevin Hursh.
Rail car leakage points to bigger problems It’s often relatively minor things that garner public attention and make people mad. That may be the case with the most recent charges against the railways. According to the Canadian Wheat Board, the railways have lost $4 million worth of grain over the past two years due to leakage from poorly maintained rail cars as well as a sharp increase in wrecked cars from derailments. On the leakage issue, the CWB says that over the past two crop years it has recorded losses of 6,100 tonnes of wheat, durum and barley leaked from the bottom gates of railcars while in transit or waiting to be unloaded at port. The railways receive an allowance of $4,300 per railcar each year for maintenance. According to research done by the Farmer Rail Car Coalition, actual maintenance costs are closer to $1,500 per car each year. Not only are the railways pocketing money at the expense of farmers, but the cars aren’t being properly maintained and that’s costing farmers more money. The value of the grain leakage is small compared to the cost of poor service and Canada’s resulting bad reputation as an unreliable grain supplier. However, grain leakage is easy to measure and easy to understand, and it’s symptomatic of the poor service the railways are providing. I’m Kevin Hursh.
June 8, 2007
CAIS turmoil The Alberta government has 12 field analysts in rural communities across the province to help producers understand and access the CAIS program. Yesterday in Olds, Alberta I heard a presentation by one of the field analysts and I learned a few things about the CAIS income support program. CITI, the CAIS Inventory Transition Initiative has been paying producers based on a recalculation of CAIS benefits using beginning as well as ending inventory values. Producers have received 50 per cent of any increase in payments for 2003 and 2004. For the 2005 program year, only 40 per cent is being paid. A total of $900 million was allocated for this initiative by the federal government and it looks like there won’t be enough money to pay out much additional money above those percentages. The new inventory valuation is being fully implemented for 2006. Many producers will see a cut in their 2006 payments due to higher grain inventory values at the end of the year. For 2007, reference margins will also be adjusted to reflect the different valuation. Some producers are likely to see a drop in their reference margins. A new producer savings account similar to the old NISA program is being developed. According to the CAIS field analysts I heard, details probably won’t be available until September and discussion is ongoing on how payments will be triggered. As usual, our farm support programs are in a state of turmoil. I’m Kevin Hursh.
June 6, 2007
More specialty canola needed Another large restaurant chain in the U.S. has made a zero trans fat commitment and will use Omega-9 canola oil from Dow AgroSciences. CKE Restaurants announcedyesterday that its Carl's Jr. ® and Hardee's® restaurant chains are making the conversion.This continues the trend of food companies converting to zero trans fat canola oil and will mean more acres contracted for specialty canola oil in Western Canada. CKE Restaurants isn’t a well-known name on this side of the border, but the CKE system includes more than 3,000 locations in 43 states and in 13 countries. CKE is publicly traded on the New York Stock Exchange and is headquartered in California. Other food companies previously announcing a conversion include Wendy’s, Taco Bell, KFC and McDonald’s. In addition to Dow AgroSciences, the other company contracting specialty canola and meeting the need for zero trans fats in food is Cargill Specialty Canola Oils. There are two primary factors influencing the new market. The first stems from the obesity epidemic plaguing North America, and the second from new mandatory labeling in the U.S. that requires food processors to show trans fat content on the product label. Specialty canola continues to grow as a percentage of the total canola acres on the Canadian Prairies. I’m Kevin Hursh.
Ontario farm promises resonate in Saskatchewan Ontario is heading for an election in October and agricultural policy promises to figure prominently. The Opposition Progressive Conservative Party has already unveiled its agricultural platform with a number of interesting proposals. PC Leader John Tory says his government would increase support for farmers by $150 million in its first budget and would have $300 million more for farmers by the final year of its term. There would be a “Buy Ontario” strategy ensuring that all public institutions purchase food from Ontario producers. The PC Party is also promising to work with farmers to negotiate a long-term, stable and flexible model of farm supports with the federal government, based upon the Quebec agricultural model. Quebec has a farm program known as ASRA through which many commodities receive support based on their costs of production. The PC Party in Ontario believes the Liberal government of Dalton McGuinty is vulnerable in rural areas because it hasn’t provided adequate support to producers. While farm income in Saskatchewan is finally on an upswing, the opposite is happening in Ontario. What happens with farm policy there could have ramifications at the federal level. I’m Kevin Hursh.
June 5, 2007
Grain haulers need GPS mapping There’s a legion of custom grain haulers across the prairies, but I’ve yet to encounter one who uses GPS mapping. Some farms are easy to find and easy to give directions to. Others, like mine, are out in the sticks. What’s worse, many custom truckers want to access my farmyard from No. 1 highway to the south of me and there’s no good way to communicate the trucking route. I rarely use the trucking route and it isn’t that easy to follow the signs. GPS units that provide full mapping are getting better and better for less and less money. If I was a custom trucker or the owner of a custom trucking company, it’s something I’d investigate. Anything to save time and cut down on confusion should be worth its weight in gold. Getting lost on country back roads with a big Super-B can’t be any fun. It isn’t easy to turn those rigs around when you run into a dead end. It’s especially tough if you don’t reach a destination in daylight. There should be a way for provinces and municipalities to better communicate trucking routes and have that available on the dash mounted GPS units. I’ve seen grain truckers with satellite radios. Why not use the satellite system and invest a few hundred dollars for GPS to know just where you are and what the road system ahead looks like? I’m Kevin Hursh.
June 3, 2007
Lucrative carbon credits? Australian farmers are hoping to cash in big on carbon credits. Kondinin Group is made up of Aussie farmers and the group publishes a magazine called Farming Ahead. The May edition has an article on the launch of the Australian Soil Carbon Accreditation Scheme. According to the article, the Australian government isn’t acknowledging the carbon sequestration properties of the soil. However, industry demand for carbon credits has meant the launch of a private trading system. This sounds a lot like what has happened in Western Canada with C-Green Aggregators. The Aussie scheme is being promoted as potentially very lucrative – so lucrative that actual farming could become a secondary income for some producers. To be eligible, farmers need to show an improvement in their soil’s carbon levels. The scheme has kicked off with a three-year trial. The article says farmers are to be paid annually for the carbon they have sequestered in the past year and it as at their discretion whether they continue to improve their soil to be eligible for another round of carbon credits. Aussie farmers aren’t receiving big money yet, but soil carbon is an issue worth watching. I’m Kevin Hursh.
June 1, 2007
Hold the Mayo There has been a great response to name that grain company. With the takeover of Agricore United, Saskatchewan Wheat Pool is looking for a new name. First the serious name suggestions for the merged grain company. There was Prairie Grain, Prairie Pool United, Heartland Agricorp, SaskPool (as one word), Canadian International Grain Company, Agri-Pool, and Prairie Grains Unlimited. One person suggested the name AgPro be retained. That’s what Saskatchewan Wheat Pool operations are called in Alberta and Manitoba. Another suggestion was Phoenix Agro, because the organization rose like a phoenix out of the financial ashes. Now the humorous suggestions. Many of these poke fun at Pool CEO and president Mayo Schmidt. There was Hold the Mayo, Cement Schmidt House, Schmidtload Grain Handling and a few that shouldn’t be mentioned on the radio. Another suggestion was Pool United, because the initials are PU. Someone else noted that the initials from Agricore United are AU and that’s the elemental symbol for gold. Since Agricore executives are getting golden parachutes, why not the name Gold Pool. The suggestions that gave me the biggest chuckle were a couple of folks who suggested the new name should be ADM or Archer Daniels Midland. They said this would probably save a future name change. Thanks to everyone who sent in their ideas. 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).
