Hursh Consulting & Communications: Kevin Hursh on Agriculture

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Hursh on Agriculture

November 30, 2008

Federal initiatives in disarray
The power struggle underway in Ottawa leaves agricultural policy in a vacuum. For the next week and probably a lot longer, MPs are going to be preoccupied. It isn’t at all clear whether the Conservatives are going to remain at the helm or whether a coalition of the other parties will successfully usurp power. Even though the Conservatives gained seats in the election, they obviously won’t be governing like they have a majority, if they’re governing at all. Whether you think it’s good or bad, changes to the Canadian Wheat Board Act now seem less likely. Details on the federal / provincial Growing Forward program won’t likely be going forward very quickly. The nation’s beef and pork industries have been calling on the government to challenge the Americans on country-of-origin labeling. With Ottawa in disarray, that important initiative could be seriously delayed. Beyond COOL, there’s a need for federal leadership to support the red meat sector, but that will be even further down the list of priorities in the current environment. We’re into a time of political gamesmanship with the overall economy facing huge challenges. I’m Kevin Hursh.

November 27, 2008

Conservative tactic may backfire
Conservative Members of Parliament from Saskatchewan including Andrew Sheer of Regina-Qu’Appelle, Ed Komarnicki of Souris-Moose Mountain and David Anderson of Cypress Hills-Grasslands have sent letters to farmers urging them to vote for market choice candidates in the Canadian Wheat Board election. Anderson is Parliamentary Secretary for the CWB. All the letters are similar, naming the specific candidates to support. The letters are on House of Commons letterhead. Larry Hill, chair of the CWB’s farmer-controlled board of directors says he’s disappointed that Anderson and other MPs have chosen to interfere in the democratic process. The Conservative position on the Canadian Wheat Board is already well known. It’s hard to believe very many producers would be influenced by a letter from their Conservative MP. In fact, the opposite may be true. The Conservative MPs must have known that they’d take some heat for their letter, but I wonder if they fully examined the ramifications. Most producers are not fond on any politician telling them what they should believe and what they should do. I’m Kevin Hursh.

November 26, 2008

Pulse market is not a pretty picture
The December Pulse Market Report being distributed by Saskatchewan Pulse Growers includes an analysis by Mark Tycholiz, president of an international special crops brokerage company. It’s a blunt analysis that paints a disturbing picture of what’s happening in pulse crop trading. Tycholiz says there are importers defaulting on their purchases because they can no longer afford the price tag. In some cases, importers are walking away even though they’re going to lose a 20 to 25 per cent deposit. Tycholiz says there are several reports of distressed product in many ports around the world. “As sales slow down, our stocks of unsold product increase in Canada,” says the special crops trader. He points out that consumption that is lost will not be made up in the future. It’s gone forever. Some analysts are suggesting that people will pay up for food despite the problems in the economy. Tycholiz disagrees, saying that in the current environment, it’s all about the supply of money and credit. He concludes his analysis in the Pulse Market Report by saying that it’s the time to be cautious, conservative and diligent about maintaining the health of your business. Things will improve, he says, but it will take time. I’m Kevin Hursh.

November 25, 2008

Tough times in the cattle business
Agribition looks much the same as ever, but this is a time of tremendous stress in the beef industry. This fall, after years of delay, the United States implemented COOL, country-of-origin labelling. As a result, most American packing plants are no longer buying Canadian cattle. They don’t want the cost of the segregation and separate labelling. This is another blow for an industry already reeling from low returns. The average operation in Saskatchewan has about 70 cows. If that average operation sold 65 calves this fall and if the calves averaged 550 pounds, the total return was likely less than $40,000. That’s a gross return of $40,000 and a net return that’s probably a negative number for a year of taking care of a cow herd. Not surprisingly, there is a very limited market for bred cows this fall. Many are going to the slaughter market. A year ago, the high value of the Canadian dollar was hammering the livestock industry. This year’s dramatic drop in the value of the loonie has helped support cattle prices, but it has been scarcely able to compensate for the negative effects of COOL and the meltdown in financial markets. Saskatchewan has millions of acres of land that can only be harvested through the mouth of a cow. The cattle business is here to stay, but the trends and the economics suggest fewer producers and a reduced herd in the years to come. I’m Kevin Hursh.

November 24, 2008

How about $5.35 for your wheat?
In these uncertain economic times, it’s unusual to hear about a grain price contract for next year and the year after. Terra Grains is the big, new ethanol plant near Belle Plaine, halfway between Regina and Moose Jaw. The company is again using Canadian Western Agribition to launch wheat purchase contracts. For 2009, producers can contract wheat for $5.10 a bushel delivered to the plant. If producers contract for two years, they can get a price of $5.35 a bushel. With the two-year contracts, there is a clause which will increase the price if input costs rise. These contracts with Terra Grains do not include an Act of God clause in the event of a crop failure. Producers tend to grow high yielding, low protein wheat varieties for the ethanol market, but they’ll want to make sure they don’t contract more production than they’re likely to produce. Will $5.10 or $5.35 a bushel be enough to attract producers? It’s hard to predict what prices will be next month let alone next year or the year after. I suspect interested producers within a reasonable delivery distance of Belle Plaine will examine the prices being offered and see if those prices make sense based on their typical yields and what can be projected for input costs. More new crop contracting opportunities from various companies are likely to become available over the next couple months. I’m Kevin Hursh.

November 23, 2008

Opportunities and limitations in direct marketing
Farm couples from B.C. and Quebec were chosen as Canada’s Outstanding Young Farmers for 2008 at an event that concluded over the weekend in Calgary. I had the pleasure of attending some of the event and hearing the presentations of the honourees from across the country. It’s interesting to note that three of the seven couples are involved in direct marketing to consumers. Wayne and Nicole Oulton of Nova Scotia raise beef, chickens, turkeys, sheep, deer and a number of other species and put them through their own abattoir and poultry processing plant selling the meat through an on-farm store. Lyne Groleau and Marco Couture of Quebec have a 180 sow farrow to finish operation – a small hog farm by today’s standards. However, they process a lot of the hogs in their own abattoir and sell directly to consumers. The OYF couple from Ontario, Chris and Christy Hiemstra market honey as well as bee pollen for human consumption and they sell directly to consumers from their farm. There’s no doubt that direct marketing has become a much larger aspect of Canadian agriculture. It is allowing many small to medium sized farms make a decent living. While direct marketing initiatives tend to be highly visible, in my opinion they will remain the exception rather than the rule, especially in a province like Saskatchewan where we produce way more food than we can consume locally. I’m Kevin Hursh.

November 20, 2008

Urea prices as low as $595 a tonne
Nitrogen prices are highly variable and some retailers are going to take large losses. Thank you to all the people who e-mailed me with information on fertilizer prices in their region. Urea, 46-0-0, was well over $900 a tonne in most locations through the summer. One grower reporting prices in the Watrous area says urea there is now $750 a tonne, but phosphate, 11-52-0, is still very high at $1,380 a tonne. Another grower indicates urea prices of $615 a tonne at Grenfell and $600 a tonne at Moose Jaw. However, he says there is no drop in phosphate, sulfur and potassium. The lowest price I’ve heard for urea in Saskatchewan is $595 a tonne. That was for immediate pickup at an outlet in northwestern Saskatchewan. From Sweetgrass, Montana there are reports of urea at $450 a tonne picked up. A front-page story by Mary MacArther in this week’s edition of The Western Producer talks about a group of farmers and Hutterite colonies from Alberta and Saskatchewan bringing in urea from Russia. The projected price for producers is $450 a tonne or less. One thing is for sure. In the current environment, it pays to shop around. I’m Kevin Hursh.

Fertilizer price watch
It’s difficult to know what’s happening with fertilizer prices at the retail level. Internationally, urea and ammonia prices have dropped dramatically. In many cases, the international price is less than half of what was being quoted in the summer. How quickly and to what extent will that filter back into the Canadian Prairies? The pipeline is filled with fertilizer that was bought at high prices. Understandably, fertilizer retailers don’t want to take a loss on existing inventory. On the other hand, producers are anxious for whatever savings they can find. A number of producers have e-mailed me recently indicating a drop in nitrogen prices. The price of urea, 46-0-0, was over $900 a tonne in the summer. While many retailers say their price hasn’t budged, a few producers are now reporting prices of $750, $675 and even $650 a tonne. Let me know what’s happening with fertilizer prices in your region. I won’t provide names, but I’d like to indicate broad geographic regions where prices are coming down. Is the decline in nitrogen prices only a few isolated cases or is it starting to become general? Drop me an e-mail (kevin@hursh.ca) and from time to time I’ll let everyone know the information I receive. I’m Kevin Hursh.

November 18, 2008

Hard to pencil profits at current fertilizer prices
Like a lot of producers, I had some soil testing done this fall and I just got the results back. On one field, I used a yield target of 28 bushels per acre of canola. Even at that relatively modest yield, the soil test results estimate that 70 to 80 pounds per acre of nitrogen is needed on top of 40 to 45 pounds of phosphate and 15 to 20 pounds of sulfur. There’s lots of speculation that fertilizer prices are going to drop, but there still isn’t a lot of evidence at the retail level. At the fertilizer prices being quoted, applying the necessary nutrients to that field will cost well over $100 an acre. On Roundup Ready canola, the Technology Use Agreement is being added to the price of seed this year. The top varieties carry a price tag of $9 a pound. At five pounds of seed per acre, that’s another $45. The lowest price glyphosate seems to be in the range of $9 to $10 a litre for a concentration of 360 grams per litre. So add another $10 to $15 an acre for a burnoff and an in-crop application. Other canola systems will end up with a similar price tag. So fertilizer, seed and herbicide alone are going to total more than $160 an acre. Canola at $9 to $10 a bushel doesn’t look very profitable unless the price of fertilizer comes down. I’m Kevin Hursh.

November 17, 2008

Canadian Agricultural Hall of Fame is mainly Ontario
I have the honour of being a member-at-large on the board of the Saskatchewan Agricultural Hall of Fame. Because of that, I took a little extra notice when I saw a news release announcing inductees to the Canadian Agricultural Hall of Fame. The induction to the national organization takes place during the Royal Agricultural Winter Fair in Toronto each November. There were four inductees this year – all residents of Ontario. The only name I recognized was Jack Wilkinson, former president of the Canadian Federation of Agriculture. The Canadian Agricultural Hall of Fame has been in operation since 1960 and I wondered how many inductees there have been from Saskatchewan over the years. Going through the website, I counted 19 inductees from this province. How many from Ontario? My quick count was 88. The current board of directors includes no one from Saskatchewan. To nominate someone, you have to be a member. An individual membership is $100. A corporate membership is $500 and you must be prepared to cover the cost of the induction – either $2,500 or $4,000 depending on the type of portrait. Any hall of fame is going to be someone subjective, but the Canadian Agricultural Hall of Fame seems to revolve around the province of Ontario. That’s unfortunate for an institution that presents itself as Canadian. I’m Kevin Hursh.

November 16, 2008

Saskatchewan Pulse Growers election
For most of the crops we grow, producer-run checkoffs have been implemented to fund research and market development. This is true for pulse crops, canola, flax, mustard, canaryseed, oats and winter cereals. Each commodity organization is governed by a board elected by producers. Generally, directors receive a per diem and have their expenses covered, but the monetary compensation is small compared to the valuable time taken away from the farm. Not surprisingly, it’s often tough to find producers willing to let their name stand for the various commodity organizations. Most positions are filled by acclamation or appointment, but every now and then, there’s an election. Saskatchewan Pulse Growers has an election this year. Three producers are vying for two positions on the board. The candidates are David Beach of Weyburn, Dwayne Moore of Rosetown and David Knobbs of Kindersley. All the producers in Saskatchewan who grow pulse crops should have received a ballot in the mail together with brief bios of each of the candidates. Take the time to read the bios and make your choices. Ballots must be received by the Returning Officer no later than Friday, December 3. I’m Kevin Hursh.

November 13, 2008

From lawns to cropland
There have been a growing number of municipal restrictions on the use of pesticides for cosmetic purposes around homes and gardens. This has become the thin edge of a wedge. This week, the Canadian Cancer Society convened a meeting to look at whether cosmetic pesticide restrictions should be followed by tougher regulation against the use of pesticides in agriculture. Even though crop protection products are tested and re-tested and only registered if they’re deemed to be safe, there are always studies that seem to show links between pesticide exposure and an increased risk of cancer. There might be a hundred other factors involved, but a large part of the general population believes that all crop protection products are bad. They don’t differentiate one from another. It’s a chemical so it has to be bad. They worry about minute amounts of pesticides that may be on their neighbour’s lawn. Meanwhile it’s OK for dogs and cats to defecate and urinate wherever they want. And cars and trucks roll by all the time spewing emissions that we know are harmful. The agriculture industry was lazy in its opposition to cosmetic pesticide restrictions. With that ban established in many urban centers, guess what the next target is going to be. I’m Kevin Hursh.

November 12, 2008

Biological weed control
Up until now, there hasn’t been much for biological pest control agents for Prairie grain producers. That should change in the years to come. Karen Bailey of Agriculture and Agri-Food Canada’s Saskatoon Research Station has won a prestigious award due largely to her work with naturally occurring microorganisms for weed control. A fungus is now being developed as a granular bioherbicide for broadleaf weeds including dandelions and Canada thistle. The first application will be in turfgrass and Scott’s Miracle-Gro is working on the commercialization. That’s expected in a couple of years. Bailey says more work needs to be done to make the technology cost effective for field crops, but she’s optimistic that it’ll happen. The fungus has no activity on cereal crops. You broadcast the granules on the soil prior to weed emergence and the weeds are infected as they germinate. It should be especially useful for organic growers. Bailey is also working with other researchers on a fungus for the control of scentless chamomile in lentils. It appears to have a good fit when applied with reduced rates of herbicide. Another project involves a species of bacteria for the control of green foxtail and wild oats in crops such as wheat. Karen Bailey has been working in this area for many years and her work is starting to pay dividends. I’m Kevin Hursh.

November 11, 2008

The Sask. Party's agriculture record
The Saskatchewan Party government is one year old and from an agricultural policy perspective there has been both good and bad. It’s certainly good news that the provincial government seems to be well on its way to getting the burden of education tax off of farmland. Given the rosy economic outlook in Saskatchewan, now is certainly the time to fix this longstanding inequity. One of the major agricultural promises of the Sask. Party was a review of Saskatchewan Crop Insurance. Not surprisingly, the review found there aren’t any easy answers to making the program more lucrative. Don’t expect any revolutionary changes for 2009. Administration for the AgriStability program will be brought home to Saskatchewan. AgriStability, like CAIS before it, is frustratingly complicated. Hopefully, putting this federal/provincial program under provincial administration will improve service and delivery. However, it won’t mean any changes to how the program actually works. The worst aspect of the Sask. Party’s agriculture record in its first year has been livestock policy. The government has been largely ineffectual in stemming the downturn in the cattle and hog industries. I’m Kevin Hursh.

November 9, 2008

Bison are looking good
The annual general meeting of the Saskatchewan Bison Association was held a few weeks ago in Moose Jaw. The Canadian Bison Association’s national convention, as well as their national show and sale will be held during Canadian Western Agribition in Regina later this month. Of the many alternate livestock species promoted back in the 90s, bison are one of the few where the future still looks bright. There aren’t many wild boar producers left. Unfortunately wild boars that escaped from farms are an ongoing problem in many regions. Ostrich producers gained a lot of attention for a few years, but there was never really an end use market. Only those who sold breeding stock early in the game ever made money. The elk industry showed a lot of promise for many years, but elk velvet sales never recovered from Chronic Wasting Disease and the loss of the Korean market. There are still a few producers raising elk, but many have exited the business. In contrast to wild boars, ostriches and elk, returns are good for bison. The business has rebounded since the BSE crisis. Demand for bison meat is surpassing the supply and returns appear to be far better than what beef producers are earning. I’m Kevin Hursh.

November 7, 2008

Bjornerud's candor isn't enough
We’ve become accustomed to politicians saying one thing in opposition and doing something completely different when they become government. What isn’t so usual is to have politicians admit it. In some ways, it’s refreshing to hear Saskatchewan agriculture minister Bob Bjornerud freely admit that he used to call for provincial farm support programs that would match Alberta’s generosity. Now that he’s in power, he has no response to the hundreds of millions of new dollars Alberta is handing its livestock sector. This is despite Saskatchewan being in its strongest financial position in decades. While Bjornerud’s candor is appreciated, it doesn’t change the dishonesty of the Saskatchewan Party catering to the farm vote when it was in opposition. It’s amazing that livestock groups aren’t crying foul more publicly. There have been some Saskatchewan initiatives like support for water development and a plan to sell crown grazing lands to producers, but these are low budget items compared to what Alberta is doing. Bjornerud claims to be working on long-term ways to support the livestock industry. I wonder how honest that claim is. I’m Kevin Hursh.

November 6, 2008

Most specialty crop prices continue to slip
The latest newsletter by CGF Brokerage and Consulting of Saskatoon paints a disappointing picture for most specialty crop prices. Green lentil bids have softened with large green lentils now below 30 cents per pound. Some buyers have pulled their red lentil bids, but 33.5 cents a pound is available fob farm. CGF says yellow pea sales can be made at prices around $5.50 a bushel fob farm. Six dollars is hard to get. The chickpea market is described as all but dead. Bids are few and far between and movement is slow. Mustard prices have held up better than other commodities. However, the recent increase in the value of the Canadian dollar has shaved two cents a pound off mustard prices over the past week. Nearby prices for yellow mustard range from 40 to 45 cents per pound. Canaryseed prices are quoted at 20 cents a pound delivered as buyers are trying to discourage sales. There is a bit of good news in flax and canola. CGF sales flax prices have increased this past week with bids of $12 a bushel delivered. On canola, basis levels have become more attractive and are now only $15 to $20 a tonne under the futures price. I’m Kevin Hursh.

November 5, 2008

Wanted: Employees for expanding farms
When I talk with producers about agricultural issues and challenges, the labour situation comes up with increasing frequency. Farm equipment is often oversized in an effort to compensate for a lack of employees. Rather than running a couple of combines, some producers are opting for one big combine. However, there are an increasing number of farms with 5,000, 10,000 and even 15,000 acres. This requires multiple seeding outfits and two or three combines going steadily. It also requires competent people as operators. Attracting this sort of person requires a good wage and working conditions, because there are lots of other employment choices. One of the challenges for grain operations is creating year-round work. Good employees gravitate to year-round opportunities. Some observers believe the shortage of labour is going to limit the expansion of farms. Others say that large operations are doing a better job of providing steady employment and they seem more willing to provide the pay and the benefits needed to attract and retain employees. Add one more jobs skill to the list for jack-of-all-trade farmers. These days you need to be a human resource manager in addition to everything else. I’m Kevin Hursh.

November 4, 2008

CWB election up for grabs
The Canadian Wheat Board election looks far more active than the recent federal election. The CWB election is occurring only in the even-numbered districts, but in many of those districts you see far more election signs than you did for the federal election. The federal election results were a foregone conclusion in almost all of the rural Saskatchewan ridings. Conservative candidates won by a landslide. In many cases, the other parties seemed to only make a token effort. In the Canadian Wheat Board election, many of the districts are up for grabs. Several high-profile directors have served the maximum length of time and cannot run again. The federal election was about a multitude of issues. There’s just one overriding issue in the CWB election and many producers are passionate about it, either on the pro-choice side or on the single desk side. The results are anyone’s guess and the results do matter. If one or two more pro-choice directors are elected, that will substantially increase the likelihood of changes to the single desk authority. Here’s hoping that producers take the time to mail back their ballots. Like federal elections, voter participation has been disappointing in the past. I’m Kevin Hursh.

November 2, 2008

Put it in plastic
In some parts of the province, there was a major move to plastic grain bags this fall. That seems to be especially true in the northeastern part of the grain belt where the long, white sausage-shaped bags dot the landscape. This is relatively low cost grain storage and it seems to be especially popular among producers with larger acreages, particularly if they have lots of rented land. Rented ground doesn’t always come with good grain storage and trucking grain back to a central yard site can be impractical. Producers using the grain bag system do report some concerns, the main one being wildlife. Ravens sometimes like to peck holes in the bags and raccoons can also inflict damage. Once a bag starts to tear, there’s not much you can do to stop it. Producers also wonder about deer climbing up on the bags, especially when the snow gets deep and hard. Another problem is disposing of the plastic. The bags can’t be reused and there’s no recycling program for the left over mounds of plastic after the grain is removed. It’ll be interesting to see how producers make out with the bagging system and whether the use will continue to grow. I’m Kevin Hursh.

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