$100 a tonne for maximum elevator tarriff The Canadian Wheat Board has been warning producers to exercise caution when signing malting barley contracts. Knowing the terms and conditions and understanding what you’re signing is good advice with any contract. With malting barley, it’s also a good idea to check primary elevator tariffs. The published rates are the maximum a grain company can charge for receiving, elevation and loading out. These rates are available on the Canadian Grain Commission website. When you look at the rates, one company stands out. Most companies on most grains have a maximum posted rate of somewhere between $10 and $25 a tonne. However, Canada Malting Co. Ltd. with its big malting plant in Calgary and other plants in other cities is posting a maximum handling tariff of $100 a tonne. If you go back and examine past postings, Canada Malting was at $40 a tonne early in the crop year and then it suddenly bumped rates to the ridiculous level of $100. Many producers have reported contractual problems with Canada Malting. Since the company can legally charge its maximum published tariff, there’s probably no way a producer can actually win a contract dispute. I’m Kevin Hursh.
April 28, 2009
Viterra looks for investments I saw an email from someone in Australia asking, “What can you tell me about Viterra?” Viterra has acknowledged that it is in discussions to purchase ABB Grain Ltd. of Australia. The reported, but unconfirmed purchase price would be over a billion dollars. Where do you start in describing Viterra to someone in Australia? Viterra used to be Saskatchewan Wheat Pool, before it took over Agricore United. Agricore United was United Grain Growers, Alberta Wheat Pool and Manitoba Pool Elevators. Saskatchewan Wheat Pool used to be a farmer grain co-op. It went public in the mid-90s and had a near-death experience from financial problems. CEO and president Mayo Schmidt has turned a financial basket case into the country’s leading grain company. The company is now in expansion mode. Interestingly, it was a series of bad investments in everything from Robin’s Donuts to a grain terminal in Gdansk, Poland that got Sask Pool into financial difficulty years ago. Hopefully, Viterra knows what it’s doing as it pursues Australia’s ABB Grain. I’m Kevin Hursh.
April 27, 2009
Big jump in Saskatchewan farmland values It isn’t very often that Saskatchewan leads the nation with increasing farmland values. Our farmland has long been the least expensive in Canada, so we’re finally playing some catch-up. The latest Farmland Values Report from Farm Credit Canada indicates that the average value of farmland in the province increased by 8.8 per cent in the last half of 2008. Since the publication of the first FCC Farmland Values Report in 1984, this was the largest increase ever seen in Saskatchewan. This 8.8 per cent is on top of a 5.6 per cent increase in the first half of ‘08. In neighbouring Alberta, farmland values increased only 2.2 per cent in the second half of last year. The overall economic slowdown has combined with difficulties in the livestock sector to limit price increases in Alberta. Here in Saskatchewan, strong grain prices in 2008 along with outside investment in farmland propelled land prices higher. Farmland was a pretty good investment last year as compared to most mutual funds. I’m Kevin Hursh.
Where are all the peas coming from? The Stats Can seeding intentions report released on Friday had lots of surprises. Perhaps the biggest surprise is field peas. Most observers have been calling for a decline in pea acreage. The seeding intentions survey shows a five per cent increase in peas to a new record of 4.2 million acres. With yellow peas at only $6 a bushel and with new crop contracts at only $5.50 a bushel, peas aren’t very attractive from a price perspective. In southern Saskatchewan, there’s an expectation that a lot of pea acres will switch to lentils where the price forecast is much stronger. While Stats Can is calling for an increase in lentil acres, those numbers are in line with trade estimates. Perhaps peas will be down in the south, but pick up acreage in central and northern regions of the grain belt. Another surprise is that the prediction that barley acreage will be up slightly. Like peas, barley was thought to be decreasing due to poor prices. It’s easy to discredit the Stats Can numbers. They’re based on a survey taken weeks ago and many producers claim they don’t provide accurate information when called. While actual seeded acreage often varies from the intentions report, Stats Can usually picks the overall trend. The numbers might be surprising, but they’re the best estimates available. I’m Kevin Hursh.
April 23, 2009
Anything But Cereals Cereals suck. There are attractive prices available in oilseed crops and in pulse crops, but cereal grains aren’t keeping pace. In the latest Pool Return Outlook from the Canadian Wheat Board, the PRO has dropped by 38 cents a bushel on wheat, 41 cents a bushel on durum and 15 cents a bushel on malting barley. After deducting average Saskatchewan freight and handling, No. 1 CWRS wheat with 12.5 per cent protein has an expected price of just $5.85 a bushel in the upcoming crop year. That’s 60 cents a bushel below the price expected in this crop year and its $2.55 a bushel below the price in ’07-08. The PRO on number one durum with 12.5 per cent protein has slumped to $6.10 a bushel, less than half the price of two years ago. Two-row designated barley now has a new crop PRO of $3.93 a bushel, down dramatically from the $5.50 pooled price in the current crop year. Another cereal crop – canaryseed – remains at 17 to 18 cents a pound. Feed barley and oats aren’t great either. In the oilseeds, canola isn’t far from $10 a bushel and in the pulse crops, attractive new crop lentil contracts are available. Some producers would like to adopt an ABC policy – Anything But Cereals. I’m Kevin Hursh.
Alberta Livestock and Meat Agency receives $30 million Alberta has just announced another $30 million to support its livestock and meat sector. Back in June of last year, Alberta announced a huge $356 million initiative. Livestock producers received $300 million of that in direct payments as long as they complied with mandatory traceability requirements. The other $56 million went to create ALMA, the Alberta Livestock and Meat Agency. This most recent funding of $30 million will be delivered by ALMA. The money will go to international market development, value-added market development, research, industry development, and on-farm technology adaptation. Applications for the funding will be accepted starting May 1. On one hand, it’s good to see this major investment in innovation and market development, but it’s also disconcerting that Alberta is taking the lead like it’s the only meat producer in the country. Alberta is the biggest cattle province and it has the lion’s share of beef packing. Still, a lot of the beef coming out of Alberta packing plants originates on Saskatchewan ranches and farms. We’re a big part of the value chain, but we’re stranded on the sidelines wondering how Alberta’s initiatives will affect our competiveness. I’m Kevin Hursh.
April 21, 2009
Lentils defy logic Lentil prices continue to confound market analysts. At Pulse Day during Crop Production Week back in January, there was a general consensus that both red and green lentil prices were likely to sag as the new crop year approached. Instead, prices continue to strengthen. Back in January, red lentil prices were 30 cents a pound and most observers considered that a good price that producers should capture. Now, red lentils are an amazing 43 cents a pound. Top grade large green lentils are 40 cents a pound or more. New crop contract prices are also far higher than any of the analysts predicted and those prices also continue to strengthen. Both reds and large greens have new crop contract prices of 27 cents or better. The seeding intentions report from Statistics Canada comes out this Friday. Everyone expects the report to show a big increase in lentil acreage. In fact, lentil acreage may end up being even higher than the report indicates because it’s based on a survey conducted a number of weeks ago and lentil prices have increased since that time. Big acres typically mean dropping prices, but the lentil market has been defying logic. I’m Kevin Hursh.
Canada is losing the battle for trade access Despite efforts on the part of our federal government, the Americans continue to have a lot better agricultural trade access to a number of foreign markets. Nearly six years after the initial outbreak of BSE in this country, South Korea continues to ban all Canadian beef. The U.S. has the same BSE risk status as Canada, but it reestablished access to the South Korean market in June 2008. Canada is now calling on the World Trade Organization to begin consultations to address the beef import ban. The Americans also have preferential access to the North African nation of Morocco. In this case, beef isn’t the issue. It’s durum wheat and pulse crops and a lot of money is at stake. Morocco is buying about $300 million a year worth of Canadian durum and about $16 million a year worth of green lentils. Both the Canadian Wheat Board and Pulse Canada say Canadian exports are in danger from a free-trade agreement signed four years ago between Morocco and the United States. That agreement will increasingly put Canadian products at a tariff disadvantage. On lentils, that disadvantage will eventually grow to $400 a tonne. It’s critical that the federal government continue addressing these sorts of trade issues. I’m Kevin Hursh.
April 20, 2009
And the race is on Seeding has started in parts of southwestern Saskatchewan and if the weather holds a lot more producers will be heading to the field this week. In most other parts of the province seeding is still one to three weeks away as producers wait for the land to dry and warm. In the majority of years it seems that early seeded crop produces better yields. Last year, early seeded peas in the southwestern corner of the province were covered with a blanket of snow and the temperature dipped well below freezing for a number of days. Those peas took a long time to emerge, but they were still typically the top yielders. A lot of factors go into the decision of when to head to the field including the calendar, moisture conditions, soil temperatures, the weather forecast, the readiness of equipment, input availability, labour availability, calving season, and how many acres you need to cover relative to the size of your equipment. Another factor is what your neighbours are doing. It’s tough to hold off when you see outfits starting to roll around you. I’m Kevin Hursh.
April 16, 2009
Education tax relief For most producers, farmland property taxes are going the right direction this year, courtesy of the provincial government addressing the long-standing education tax issue. On Wednesday night, the Rural Municipality of Francis south of Regina held its annual spring ratepayers meeting. Reeve George Leier provided some preliminary calculations on property taxes in the RM. The municipality will be applying the same mill rate this year. The education mill rate has declined dramatically. There has also been a reassessment which has raised assessed farmland values. On one quarter of very good farmland in the RM of Francis, the assessment has increased about 18 per cent going from $75,600 to $89,400. The property tax will total about $766 this year, down from $854 last year. On a medium quality quarter, the assessment has increased from $44,000 to $47,800, but the property tax bill will decline from $497 to about $410. On a lower quality quarter, the assessment has increased quite dramatically going from $23,500 to $31,300. In this case, the property tax is increasing just slightly going from $193 to $195. Most producers are going to be getting good news when they get this year’s property tax statements. I’m Kevin Hursh.
Beef industry optimism amid the distress There’s financial distress in the cattle industry. Producers are exiting the business and the beef breeding herd is dropping. Despite this, cattle producers point to some reasons for optimism. At bull sales this spring, good quality bulls have commanded strong prices. Producers who are serious about the industry realize the need for superior genetics and they’re willing to pay for it. Overall, there has been some improvement in cattle prices in recent months. The value of cull bulls can be particularly good for producers who have purebred papers to prove the age of the animal. With this age verification, bulls can be exported to the U.S. and that opens up extra marketing options. Producers say another market class showing extra strength is light weight feeders suitable for going out on grass this spring. With a number of producers selling off their herds, there’s extra grazing land available at a low cost. This has generated more demand for grassers. The province has a core group of committed, low-cost producers who are determined to outlast the market downturn. For them, the glass is half full rather than half empty. I’m Kevin Hursh.
April 14, 2009
Ag equipment sells better than consumer goods Here’s more evidence that agriculture is doing better than the overall economy. Deere and Co. has just merged it commercial and consumer equipment division into its ag equipment division. The new division will be called agriculture and turf. Deere’s farm equipment division has been doing well. Meanwhile, consumer equipment such as leaf blowers, riding mowers, utility tractors and gas barbeques haven’t been doing so well. For fiscal 2008, Deere posted a record net income of $2.05 billion. For the first time, more than half of ag equipment sales came outside of the U.S. and Canada. Ag equipment sales were up 37 per cent in fiscal ’08 while profits were up 54 per cent. By comparison, in commercial and consumer equipment, operating profits declined last year. The slumping U.S. economy is cited as the main reason. Deere is trimming some jobs with the reorganization. The company claims it will now be more efficient and competitive with the new agriculture and turf division even with the economic downturn. I’m Kevin Hursh.
April 13, 2009
Soil conservation revolution Easter Monday was a windy spring day in many parts of the province. Where I farm, the dirt roads were a dust storm by times. Twenty years ago, more than just the roads would have been blowing. The spring of 1989 following the drought of ’88 was particularly bad. A lot of topsoil moved as producers watched helplessly. Soil piled up like snow banks at the edge of stubble fields. Many practices have changed in the past two decades. Even in the semi-arid brown soil zone there’s a lot less summerfallow and the land that is left fallow typically has weeds controlled by herbicides rather than tillage. When a big portion of the landscape was being tilled three to six times a season, a windy, dry spring could turn the country into a dustbowl. There’s been a virtual revolution in farming practices. The norm now is direct seeding with minimum soil disturbance. The soil is healthier, the air is cleaner, and windy spring days don’t turn the landscape into a serious erosion event. I’m Kevin Hursh.
Money is on sale When have you ever seen interest rates so low? Variable rates are significantly lower than fixed terms, but at some point it seems logical to assume that rates are going to rise and then it will be good to have some loans locked up. Most analysts are saying that any big increase in rates is a long ways away. However, there is a fear that eventually the economy will go into a period of inflation with corresponding high interest rates. The low rates we have right now encourage more aggressive bidding on farmland and they make it easier to justify the purchase of equipment. What cash flows at four or five or six per cent interest wouldn’t be so easy if rates eventually went to eight, nine or 10 per cent. Back in the early 80s, high interest rates caused the failure of many farm operations. Rates of 15, 18 and 20 per cent plus put an incredible strain on all sorts of businesses. I recently had a producer tell me that he was paying $500 a day in interest back in those years. Debt is an important business instrument, but it needs to be handled with care. I’m Kevin Hursh.
April 8, 2009
How is your herbicide IQ? The herbicide world is getting more complicated. There have been a few new chemistries in recent years, but most of the new names are coming from different mixes and brands. One of the new chemistries is sulfentrazone, which goes under the trade name Authority. At this point, it’s only registered for chickpeas, but it looks like a great product for the control of kochia. There’s another brand of glyphosate this spring. Great Northern Growers, which involves the Skinner family at Wilkie, has introduced KnockOut Extra, which it says has added competition to the glyphosate market in time for spring burn-off operations. Viterra has started its own branded product line. Its newest release is a herbicide called Pulse Star, which is the same active ingredient as Pursuit. Viterra is also marketing Foothills A, which is the same as Horizon NG; Wildcat, which is repackaged Puma Super; Broadside which is Refine SG and MCPA Ester; and a product called Cypress, which is Horizon and Target. It’s really difficult to keep track of all the new product names, chemistries and uses. Spectacular cases of crop damage can occur if you get things wrong. I’m Kevin Hursh.
April 7, 2009
Good and bad in new crop contract prices New crop contracts have become more readily available. Some seem attractive. Some not so much. A number of companies are offering new crop lentil contracts. There’s lots of interest in seeding red lentils and contracts are available at 25 to 26 cents a pound with an Act of God clause. Without an Act of God clause, I’ve heard contract prices as high as 27 cents. Large green lentil contracts are in the 25 cent range. New crop canola can be locked in at over $9 a bushel in a number of locations. I’ve seen new crop flax listed at around $10.50. Fixed Price Contracts for wheat are available through the CWB. No. 1 CWRS wheat with 13.5 per cent protein can currrently be locked in for just under $6.00 a bushel after deducting average Saskatchewan freight and handling. Most producers will probably find that unattractive since it’s about 50 cents a bushel below the new crop Pool Return Outlook. Some new crop chickpea contracts have become available. On mustard, contract prices seem to be running around 30 cents a pound for yellow and 24 to 25 cents a pound for brown and oriental. That’s down dramatically from the mustard contracts that were available before Christmas. I’m Kevin Hursh.
April 6, 2009
Money resumes for BMPs Saskatchewan and the feds have finally signed the new Growing Forward bilateral agreements. This is for agriculture programming outside of the farm safety net programs. The new Farm and Ranch Water Infrastructure Program will be popular and so will the support for farm business planning. With the new agreement, support will again be available for BMPs, Best Management Practices for producers who have an approved Environmental Farm Plan. This time around, PCAB, the Provincial Council of Agriculture Development and Diversification Boards will be administering the entire program including payments to producers. Last time, payments were handled by the PFRA. It’s going to take a while for PCAB to get everything up and running. Producers have to be approved before they spend any money, so don’t expect to get support for a new GPS guidance system before seeding. Support under the program for GPS guidance is 30 per cent to a maximum of $15,000. Establishment of shelterbelts garners 50 per cent support. Up to 75 per cent is available for erosion control projects as well as capping and sealing old water wells. The overall maximum for an individual producer doing a number of eligible projects is $50,000. More information on the eligible BMPs is available at www.saskpcab.com. I’m Kevin Hursh.
April 5, 2009
Good deed by Monsanto The big multi-nationals seldom receive much praise. They’re viewed as heartless and profit-driven. The scholarships and sponsorships they provide are often overlooked or discounted. For that reason, the recent $10 million commitment by Monsanto didn’t receive a lot of attention. The $10 million is a grant to establish a scholars’ program to identify and support young scientists interested in improving research and production for rice and wheat through plant breeding techniques. While rice and wheat are two of the world’s most important staple crops, research has fallen behind other crops. The scholars’ program is named after Dr. Henry Beachell and Dr. Norman Borlaug, who pioneered plant breeding and research in rice and wheat, respectively. They are considered fathers of the green revolution. The program is being administered by Texas A&M University. Applications will be reviewed by an independent panel of global judges. Applications are being accepted until May 31 and the first winners will be announced in October. The hope is that the $10 million from Monsanto will jumpstart additional investment in rice and wheat. I’m Kevin Hursh.
April 3, 2009
PFRA lost in bureaucratic dust storm The PFRA is no more. The name has a proud history in Western Canada, especially in Saskatchewan. The letters stand for Prairie Farm Rehabilitation Administration. Unbeknownst to most people, the department was officially known as the PFRA & E for about the past year. The E stood for environment. Now the name has been dropped entirely and the PFRA has been rolled into a new branch of Agriculture and Agri-Food Canada. The new branch is called Agri-Environment Services. Apparently having a national service with the word Prairie as part of the name wasn’t acceptable to senior bureaucrats. The moniker has been deemphasized in recent years, but now it is officially gone. The PFRA was set up in the 1930’s in the midst of the dust bowl years. The name is synonymous with soil conservation, irrigation development, the Shelterbelt Centre at Indian Head and the system of federal community pastures. The new structure was rolled out to employees at a recent electronic town hall meeting. There are new directorates with forgettable names and the organizational chart has more boxes than Wal-Mart. It’s an inauspicious end to a proud institution. I’m Kevin Hursh.
April 1, 2009
Late, but dry spring Conditions could change quickly, but at this point it appears that seeding will get a late start. There isn’t much snow left in southwestern Saskatchewan, but other areas still have a covering. Temperatures have remained below normal meaning the spring melt has been gradual with more moisture soaking into the ground. That’s good for grain producers, but it can create problems for cattle producers who rely on runoff to fill dugouts and dams. A late spring is not translating into a wet spring. More than half of the Saskatchewan grain belt has had below normal precipitation since last fall. Only a small area of the southeastern part of the province is sitting with above average precip. Looking at the neighbouring provinces, most areas of Manitoba are above average for winter precip, while most parts of Alberta have been dry. Generally speaking, producers in Saskatchewan and Alberta would welcome a good shot of moisture this month. Usually, significant moisture at this time of year ends up as wet snow rather than rain and of course that could further delay seeding activity. I’m Kevin Hursh.
Mega farm auction talk I spent yesterday standing around in the mud at a farm auction sale and had the opportunity to talk with a number of producers. It’s interesting how many grain farmers are wondering about farm structure and farm size and how the future is going to unfold. Five thousand acres used to be a big farm, but now there are many operations of 10,000 or even 20,000 acres. Is that the way of the future? Is the small to medium sized grain farm doomed? Are more outside corporate interests going to continue jumping into production agriculture? While the industry is moving rapidly to much larger operations, there were reportedly about 3,000 people at this big farm auction south of Regina with another 400 people viewing and bidding off the Internet. As is the case at most auctions, some pieces of equipment went surprisingly high and others seemed to be on the low side, but there was a market for all the equipment from the large to the small. Most of the equipment was at least a few years old so this may not have been a sale of interest for really big farm operations who want the newest and the biggest equipment. Sales like this one show that while the industry is changing, there are still lots of efficient and profitable enterprises that aren’t mega farms. 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).
