Hursh Consulting & Communications: Kevin Hursh on Agriculture

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Hursh on Agriculture

August 29, 2008

Alberta beef turmoil
There’s a lot of dissention in the Alberta beef industry. Alberta Beef Producers recently wrote an open letter to its producers concerning the Alberta Livestock and Meat Strategy. The Alberta government is throwing a bunch of money at the livestock industry, but that money comes with strings attached. Age verification and premise ID will be required for producers wishing to receive all the money. Beyond that, there’s a proposed schedule for additional mandatory requirements covering everything from animal movement to weaning date. All of this will be under the control of an Alberta agency. The government seems to have usurped the democratic role of producers to determine policy direction. Alberta Beef Producers is concerned that the provincial government’s strategy is not market driven, not directed by democratically chosen producers, includes significant additions to regulatory costs and that it creates duplication of jurisdiction among federal, provincial and industry initiatives. Alberta Beef Producers believes Alberta should work with its provincial counterparts to develop national solutions to national issues. And those strategies should be developed in collaboration with producers. Alberta is the country’s beef industry leader, but it’s currently facing an unprecedented level of turmoil. I’m Kevin Hursh.

August 28, 2008

Not the time for food safety cutbacks
On one hand the federal government claims to be doing a good job in promoting, monitoring and policing food safety. On the other hand, the federal government has been cutting back on the resources it devotes to food safety. Here’s one example. Agriculture and Agri-Food Canada has significantly reduced funding to the Canadian Horticulture Council for the development and implementation of on-farm food safety programs. According to the Horticulture Council, Ag Canada has reduced the existing contribution agreements by 40 per cent effective immediately and new requests for funding are not being considered in this fiscal year. There are many aspects to food safety. It starts on the farm and ends in the kitchens of the nation. Government inspectors can’t be everywhere. However, with the Maple Leaf Foods listeria outbreak, public attention is more focussed on food safety than ever before. If you were to ask Canadians whether the government should devote more resources to food safety, the answer would be a resounding yes. Governments should be paying attention to public opinion. Now is the time for increased investment in food safety, not cutbacks. I’m Kevin Hursh.

August 26, 2008

Food quality myths
The listeria outbreak has been tragic. Other tainted food outbreaks in Canada pale by comparison. However, some of the conclusions drawn by pundits are misguided. Maple Leaf Foods is a huge food processor, so its listeria problems have affected a lot of people in many different geographic regions. But being large does not make Maple Leaf any less safe. In fact, large facilities that export are under a higher level of scrutiny. I’m not a food quality expert, but I’d bet that large facilities devote proportionately as many or more resources to food safety than smaller facilities. A local abattoir isn’t going to have a health problem that affects people across the country, but that doesn’t mean it won’t have problems. Organic foods have a paper trail that says they have been produced without crop protection products, but that has little to do with bacterial contamination. It’s great to support locally produced food, but local doesn’t necessarily mean safer. You can grow your own tomatoes and make salsa out of them, but that doesn’t guarantee that a jar of your salsa won’t go bad. I’m Kevin Hursh.

Rain later, not now
It feels almost sacrilegious to hope against rainfall, but rain at this point in the season will not be good news for a lot of producers. In addition to delaying harvest, there will be crop quality ramifications. While producers are concerned on their wheat, durum and malting barley, one of the biggest worries is lentils, particularly large green lentils that can quickly go from a number one down to a two or extra three grade. According to the latest crop report from Saskatchewan Agriculture, 33 per cent of the lentil crop has been combined. A lot more lentils are ripe and ready to be combined and those are the crops most vulnerable. More producers than usual swathed lentils due to the shortage of Reglone desiccant and wet weather is particularly bad news for a swathed crop. Laying flat on the wet ground, lentil swathes can take a long time to dry. Lentil prices are near record highs. It’s the big money crop this year. A yield of 1200 pounds an acre at a price of 36 cents a pound is a gross return of over $400 an acre. There will be producers with 1800 pound crops of red lentils, which at 42 cents a pound will gross about $750 an acre. Current prices do not show significant discounts between the number one and the number two grade, but falling below a number two is not good news. I’m Kevin Hursh.

August 25, 2008

Very little Reglone likley to come from the U.S.
The shortage of Reglone to desiccate pulse crops has had producers scrambling. One producer who realized the shortage early bought a large amount from a supplier in the northern grainbelt and resold it to producers in the south. I heard of another grower who found product several years old at an input supplier in Alberta. It appears that very little Reglone will be coming north from the United States. Mark Goodwin of Pulse Canada says even though growers can import Reglone for their own use and even though it appears the Pest Management Regulatory Agency will turn applications around quickly, supplies are also short in the U.S. Goodwin is advising producers who are considering the Grower Requested Own Use Program to make sure they lock in supplies in the U.S. before they fill out the application and pay the container disposal fee. Goodwin says a 30 per cent shortfall in Reglone is expected south of the border. A fourfold increase in the price of sulphuric acid used for potato desiccation has increased the demand for Reglone. As well, there’s a new emergency use for Reglone on canola in North Dakota. From the rumblings I hear, producers are likely to be dealing with shortages of other products before next spring. I’m Kevin Hursh.

August 22, 2008

8.5 x 14 Olympic event
It’s a small world. Yesterday, I had a flat tire while swathing canola. The tire wasn’t in very good shape by the time I caught it, but fortunately it could be patched - fortunate because it would have taken a lot of time to obtain a replacement. A number of calls couldn’t locate any in Southwest Saskatchewan. You’d think an 8.5 x 14 implement tire would be easy to find. The scarcity is being blamed on … the Olympics. Many factories have been temporarily closed in Beijing to improve the air quality. With the world watching, the Chinese government wants to minimize air pollution for the athletes, the spectators and international journalists. With those factories not running in the lead up to and during the Olympics, there are more shortages than usual on a whole host of items, including tires. The world has become increasingly interconnected. International trade patterns are extensive. Anything that disrupts production or just in time delivery has wide reaching ramifications. The reality really hits home when specific implement tires are in short supply due to something totally unrelated – in this case an international sporting spectacle. I’m Kevin Hursh.

August 21, 2008

Thirty per cent fewer hog producers in Saskatchewan
Not surprisingly, Canadian cattle and hog numbers are dropping. Statistics Canada says the farm inventory of hogs dropped 11.6 per cent between July 1 of last year and July 1 of this year. Hog prices have improved recently, but the industry has sustained terrible losses for an extended period of time. Market prices haven’t been high enough to compensate for dramatically higher feed grain prices. The industry still has 13 million hogs, similar to the number back in 2000, but it has lost a lot of its smaller producers. Stat Can says there are 19 per cent fewer hog producers in the country compared to a year ago. The biggest decline is in Saskatchewan with producer numbers down a whopping 30 per cent, followed by Alberta with a 24 per cent drop. The cattle and calf inventory on July 1 totalled 15.2 million head, a decline of 4.3 per cent from a year earlier. This continues the downward trend started in 2006. The number of cattle in feeding operations has declined 12.3 per cent since last summer. Stat Can says the number of farms reporting cattle and calves has stabilized at around 107,000 operations. This follows a loss of 8,500 cattle farms the previous three years. There are no signs of herd rebuilding as beef heifers for replacement are down 2.0 per cent from the same time last year. I’m Kevin Hursh.

August 19, 2008

If you can't beat 'em, eat 'em
It’s estimated that nearly 50 per cent of India’s grain stocks are eaten by rodents, either in the field or when the crop is being stored in warehouses. According to a report this week by Reuters news service, authorities in Bihar, one of India’s poorest states, are calling on everyone to eat rats. There are even plans to offer rats on restaurant menus. Rat meat is already eaten by some people in India. The Bihar government argues that more people dining on rats will lower human consumption of grain. Plus, there will be fewer rats to eat grain. Cultural differences pertaining to animals and food are amazing. Depending upon your faith, you may not eat pork or you may not eat beef. Most people in North America are turned off by the idea of eating dogs and horses because they’re companion animals. The aversion to rats is because they’re dirty rodents. It is an amazing statistic though that nearly 50 per cent of the grain in India is destroyed by rodents. Makes you wonder why there are so many people who obsess about the amount of grain used to produce biofuels. I’m Kevin Hursh.

August 18, 2008

Grasshopper goo
The grasshopper population seems to be on an upswing. The 2008 grasshopper forecast map indicated a few hotspots, but the overall hopper population was expected to be quite low. I didn’t see many hoppers in the spring, but there are lots now. In my case, they seem to love the canola fields, even though canola isn’t supposed to be their preferred food source. This week’s crop report from Saskatchewan Agriculture lists grasshoppers as a major insect problem in all regions of the province, with the exception of the northeast. In southwest Saskatchewan, there are cases of harvested peas being stained with grasshopper goo. The crop report also says that in the Moose Jaw area, grasshoppers have reduced some lentil yields by up to 40 per cent. Even a low infestation in lentils can cause a lot of damage because the hoppers nip the pods and they drop to the ground. Hot August weather probably favours egg laying. A high population of adults and an extended time period for egg laying might mean more problems for next year. I’m Kevin Hursh.

August 17, 2008

Hot weather pushes crops
A string of days in the 30 to 35 degree range is going to push crop maturity. While it will shave some yield off later maturing crops, it will help gain some time in the race to have crops mature before the first frost. With Reglone in short supply, there may be producers able to forego the application of a desiccant. The intense heat may do the job. Hopefully, the heat won’t have too many crop quality ramifications. Sometimes it can contribute to green seed in canola and take plumpness out of barley. The Canadian public seems to be conditioned to think that the hotter the summertime weather the better. This sort of weather in June or July is never good news for crop production. When temperatures approach 35 degrees, yield potential suffers. If moisture is lacking, high temperature are especially bad news. At this point, vacationers at the lake will be on the same page as many farmers. The hot weather creates some issues, but this is one of the rare times when it could be a net benefit to a lot of producers. I’m Kevin Hursh.

August 14, 2008

Harvest prices
A lot of grain, oilseed and specialty crop prices have softened with the approach of harvest. CGF Brokerage and Consulting of Saskatoon is reporting a yellow pea price of $8.50 a bushel, down significantly from the $10 a bushel available earlier this year. Large green lentils are listed at just under 38 cents and reds are listed at just under 43 cents a pound. Both are down from a few weeks ago. Canaryseed is in the 27 cent a pound range, down from 29 and 30 cents not long ago. Specialty crop buyers are waiting to see how the harvest goes and producers are hesitant to sell at prices that have slipped. The last couple of years, prices have steadily strengthened after harvest, but there are no guarantees. We’ve also seen years where the best prices are at harvest time. At this point in the season, prices can turn on a dime. A frost or a spell of wet harvest weather can change the yield outlook and grade distribution and push prices up. On the other hand, if harvest proceeds and yield prospects remain favourable, prices could remain flat or even recede unless there’s an unexpected level of demand. I’m Kevin Hursh.

August 13, 2008

New herbicide dispensing system
DuPont has a new PrecisionPac system which allows herbicide retailers to mix and dispense dry soluble herbicide customized to a producer’s acreage or sprayer size and the producer’s weed problem. I hadn’t heard about this until I saw a story about it by Allan Dawson in the Manitoba Co-operator. The PrecisionPac dispensing machines can combine up to size active ingredients. More PrecisionPak herbicide products are expected in the years ahead. With PrecisionPak, producers can get a bag of product for a specific acreage. You just pour it in the tank, mix it up and spray it. The packages of dry soluble are easier and cheaper to ship to retailers and there’s more room in the warehouses. For producers, there are no jugs to rinse and return or cardboard boxes and pallets to dispose of. According to the Manitoba Co-operator story, there are many failsafe measures built into the dispensers to avoid getting the wrong products. A number of crop retailers are pilot testing the system this year. From the outside, the dispensers look a bit like a pop machiner. DuPont says PrecisionPak won’t be available at every retail location, but the system sounds like it has a great future. I’m Kevin Hursh.

August 12, 2008

Big increase with Crop Insurance variable prices
Prices have been approved for the variable price option of Saskatchewan Crop Insurance. The base prices were estimated last December. For producers who picked the variable price option, a July price estimate is used and the price levels are allowed to move up or down as much as 50 per cent. On average, the variable prices this year are 25 per cent higher than the base prices. The crop insurance base price on spring wheat is $5.31 a bushel. The variable price is $7.16. Canola has also seen a big jump going from $9.19 to $11.23 a bushel. The biggest jump is on large green lentils. The base price is 23 cents a pound. For those picking the variable price option, the insured price is 34 cents a pound – an increase of 50 per cent. The increased prices are a double edged sword. There’s more protection in the event of a yield shortfall, but the premium also sees a corresponding increase. About 2,500 Saskatchewan producers picked the variable price option on some or all of their crops - about 10 per cent of the producers in the crop insurance program. A full listing of all the variable prices should be posted soon at www.saskcropinsurance.com. I’m Kevin Hursh.

August 11, 2008

Reglone is sold out
Reglone is in short supply. In fact, most suppliers are sold out and they won’t be getting any more. Without this popular desicant, a lot of pulse crop producers, particularly lentil growers are going to be scrambling. Observers believe more Reglone than usual was used on field peas because there was more re-growth and more hail damage and because peas are more valuable this year. More was probably used on red lentils than usual too. In drier years, red lentils often ripen without desiccation. A lot of growers who were planning to use Reglone will have to make alternate plans. Liberty herbicide is registered as a desicant on lentils, but then you shouldn’t use the crop for seed. Liberty could sell out fairly quickly too. With desiccation options limited, more producers are likely to swath their lentils, but that can be painstaking if you don’t have an appropriate swather. Reglone can be imported from the U.S. by individual growers under the Grower Requested Own Use program
(http://www.pmra-arla.gc.ca/english/appregis/grou/grou_imp-e.html).
Doing that requires finding a supply in the U.S. and sending an application to the Pest Management Regulatory Agency. Unfortunately, there’s a tight timeframe available to jump through all the necessary hoops. I’m Kevin Hursh.

August 10, 2008

Terra Grain provides a wheat marketing option for area farmers
The new Terra Grain Fuels ethanol plant at Belle Plaine is impressive – not just for its size, but for how it’s conducting business. In early 2007, Terra Grain contracted with area farmers for wheat deliveries for both 2007 and 2008. At the time, $4 a bushel was enough to attract two-year contracts. As time progressed, wheat prices rose sharply. Terra Grain went back to its farmer-suppliers and offered a $1 per bushel top up for the second year as long as producers would sign up for a third year. For those taking the offer, the 2008 price became $5 a bushel and the price for next year has been set at $5.50 a bushel plus up to 25 cents a bushel more depending upon what happens with input costs. The commitment to producers can also be seen by all the wheat piled on the ground. Like many large facilities, Terra Grain has been a bit slower getting into production than the owners hoped. But it has fulfilled its delivery commitments by piling wheat on the ground. There’s about 1.5 million bushels in a couple of huge steel bins and there’s another 2.5 million bushels in big piles on the ground. It’s good to see a company recognize that it needs a long term relationship with producers. I’m Kevin Hursh.

August 7, 2008

Malting barley price expectations drop
Whenever the Canadian Wheat Board issues a mid-month Pool Return Outlook it’s because price expectations have changed significantly. Yesterday, the CWB issued a mid-month PRO for malting barley in this new crop year and the news wasn’t good. As compared to the July 24 PRO, malting barley price expectations are down by $15 a tonne. The average Saskatchewan price on two-row malting barley has gone from an expectation of $6.44 a bushel down to $6.11 a bushel. The main reason is a large and generally good quality European barley harvest. European values have dropped by close to $60 a tonne over the past two weeks. At this point, locking in a malting barley price through the CWB’s CashPlus program appears to have been a good decision. About a thousand producers have used CashPlus to price about 270,000 tonnes of malting barley. After early hesitation, most of the major barley selectors are participating in the program. Many producers locked in malting barley prices of around $6.50 a bushel by using CashPlus. I’m Kevin Hursh.

August 6, 2008

Frost threat looms
Over the years, August frosts have caused a lot of crop damage. This year, with crops in most areas running a week or two behind normal, frost worries are greater than usual. This week’s crop report from Saskatchewan Agriculture shows how crops are lagging. On average over the past five years, 11 per cent of the province’s field peas and 7 per cent of the lentils have been combined by this time. This year, hardly any peas and lentils have been combined yet. The average date of the first fall frost varies widely. Saskatchewan Crop Insurance data shows that at Pelly, north of Yorkton, the first fall frost typically comes on August 31. At Yorkton, the first fall frost usually occurs on September 14 – a big difference in dates over a relatively short distance. For most locations, the first frost usually comes the first or second week of September. However, crop damage can occur even if the official temperature doesn’t reach the freezing point. The warm temperatures across the province this week are pushing crops to maturity, but an August frost remains a big threat. I’m Kevin Hursh.

Fertilizer price analysis hard to obtain
Oil prices have been dropping. Grain prices have been dropping. What’s happening with fertilizer prices? It’s easy to find market forecasts and commentaries on oil and on all the grains, oilseeds and specialty crops. It isn’t easy to get good analysis on nitrogen and phosphorus. Around the beginning of July, the November futures price for canola hit $700 a tonne. Since that time, prices have steadily declined and yesterday November canola was down to around $564 a tonne. That’s a drop of $3 a bushel in a little over a month, a huge decline in the projected income of producers. With canola, soybean, corn and wheat prices all declining, shouldn’t that be easing the potential demand for fertilizer? Shouldn’t fertilizer prices be dropping too? While you can find all sorts of analysis on why grain and oilseed prices have slipped and all sorts of predictions on where they are likely to go, the same can not be said for fertilizer values. Many producers are wrestling with whether or not to buy their fertilizer for next year, as record high prices threaten to go even higher. In the absence of good information and analysis, it’s a difficult decision. I’m Kevin Hursh.

August 4, 2008

CWB director election could be pivotal
The next battleground in the Canadian Wheat Board debate will be the director elections this fall. Despite a lot of bluster and ongoing promises, agriculture minister Gerry Ritz and the Harper Conservatives have not put a legislated end to the CWB single desk – not even on barley. The WTO negotiations were a threat to CWB operations, but those negotiations collapsed in Geneva and may not be resurrected for years. Now the forces for and against are gearing up for this fall when five of the ten farmer-elected director positions are again up for election. The Harper Conservatives are proposing a regulatory change that would remove the current $10,000 spending restriction on advertising expenses for third party intervenors. In other words, farm organizations, business groups and agribusiness will be free to spend as much as they want to influence the opinions of producers, so the election will not be low key. A high profile candidate has just announced his intention to run. Jeff Nielson, a producer from the Olds area of Alberta will run on a platform of marketing choice. As president of the Western Barley Growers Association, Nielson has been a leading critic of the Canadian Wheat Board. Producers should be the ones to decide the fate of the CWB and the upcoming election could be a big turning point. I’m Kevin Hursh.

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