Beef and pork troubles round out list of top '09 stories Yesterday, I listed my top three agricultural stories of 2009 - the crop that defied the weather, the drop in grain prices and the trade barriers erected on flax and canola. Number four on the list is the continuing difficulties in the beef sector. Rather than three major beef packers in Canada, we now have only two – XL Foods and Cargill. The XL plant in Moose Jaw remains closed. Beef producers feel trapped. Marketing options are limited and no one is making money. Canadian beef has long enjoyed preferential access to the American market, but the rules of the game have changed due to the high value of the Canadian dollar combined with the American imposition of COOL - country-of-origin labeling. More analysts are questioning the long-term sustainability of the Canadian beef sector. That questioning is going on in pork too. That’s number five on the list. In addition to COOL, the pork industry was hurt by H1N1, inappropriately labeled swine flu. Saskatchewan hog production has been absolutely decimated in recent years and ’09 saw the highest profile failure of all. Big Sky Farms, the province’s largest hog production company filed for creditor protection. With the Saskatchewan government owning the majority of Big Sky shares, it will be particularly interesting to see this situation play out in the year ahead. I’m Kevin Hursh.
December 29, 2009
Top agricultural events of '09 The top nine of ’09 has a nice ring, but the big agricultural events of the year actually fall into just five broad categories. In agriculture, weather is usually a big story and it certainly was in ’09. The Saskatchewan crop had more lives than an alley cat. Despite drought, delayed maturity, the threat of frost and an extremely late harvest, the crop was above average overall and absolutely stellar in some regions. The flip side of the equation and number two on the list is the big drop in grain prices, particularly on the cereals. After record high prices in ’08, many crops have dropped back to disappointing levels. There are still some profitable crops, particularly lentils and canola, but the year ahead is uncertain. Profitability will likely depend on growing the right crops and having an astute marketing plan. The number 3 story of the year is the crop export barriers that have emerged. Europe has restricted our flax and China has restricted our canola exports. Even a visit by our Prime Minister wasn’t enough to change Chinese policy. Which commodity will be the next to run into a trade barrier? I’ll talk about number 4 and number 5 on the list on tomorrow’s commentary. I’m Kevin Hursh.
December 28, 2009
Money is on sale Interest rates are lower than anyone can remember. There isn’t much risk in predicting that interest rates are eventually going to rise. That’s the only direction they can move. Various analysts are advising consumers not to get themselves into more debt than they can handle and this is good advice for farmers as well. Farm debt has been rising and a significant increase in rates would hit a lot of producers hard. Record high interest rates back in the early 80s precipitated years of farm foreclosures. It seems hard to believe that interest rates hit 15, 18 and even 20 per cent plus. No one is predicting that sort of escalation this time around. Most analysts say any increase in rates will be moderate and gradual. In recent years, loans with variable rates have been a great deal. Locking in a fixed rate has provided peace of mind, but it’s been costly. There may come a time to convert variable rates into fixed rate loans, but what’s the right time to do that? As we approach a New Year, money continues to be on sale and that doesn’t seem likely to change in the immediate future. I’m Kevin Hursh.
December 23, 2009
Family meeting time? Succession planning. The experts say it’s never too early to start. Unfortunately, it’s a topic that many farm families find difficult to tackle. Over the years, expectations sometimes develop about who will take over the farm and how it will be accomplished, but all too often the family members actually have very different expectations. There are tough questions to answer. Everybody needs to be on the same page. How can the younger generation afford to take over? What about the non-farming kids? Will the retiring generation have enough to live on? When and how will decision making be transferred? The people who work in farm succession planning say the first step is to have everyone talk frankly about what they want to see happen and how they see themselves fitting into the overall picture. The view of in-laws is also important. Until everyone’s aspirations are on the table, it’s tough to make any long-term plans. One family discussion may not be enough to launch succession planning, but you have to start somewhere. The upcoming holiday season might provide a good opportunity for a family meeting. I’m Kevin Hursh.
December 22, 2009
Food safety misconceptions As everyone gathers for family meals over the holidays, there will be lots of discussions about food and food safety. Unfortunately, misconceptions and misplaced priorities have become commonplace. With the advances in science, it’s seemingly possible to find traces of anything anywhere. Zero tolerance has taken on a whole new meaning. As detection limits drop ever lower, zero isn’t where it used to be. This is a public relations problem for agriculture and a real barrier to agricultural trade. Consumers are often confused, poorly informed and misguided. For many, any amount of chemical residue is unacceptable. They need to know and understand that zero is usually unrealistic, unattainable and unnecessary. And organic food is not necessarily a solution. Organic certification does not rely on residue testing. It’s simply a paper trail of certifications that a food was produced following certain protocols. There are some good reasons to support and nurture local food production and distribution. But terms like local, all-natural and organic should not be equated with safety. On the other hand, minute traces of approved products are not a cause for concern. I’m Kevin Hursh.
December 21, 2009
Intercropping looks promising Many producers have tried intercropping peas and canola over the years, but as seeding technology advances, this may become more practical. There certainly seems to be yield advantages. Scott Chalmers and Scott Day, agrologists with Manitoba Agriculture, did replicated intercropping trials this year at Melita, Manitoba. The results are amazing. The experiments involved varying the seeding rates of the peas and canola and measuring the yield. Canola alone yielded 50 bushels an acre. Peas alone yielded 35. The best intercropping result gave basically the full yield of peas, plus 35 bushels per acre of canola. In every case, the total production from intercropping was substantially higher than the individual crop. Clearfield canola was used so that weeds in the mixed crop could be controlled with Odyssey. Harvest timing and pod shatter could still be a problem with intercropping. Plus you need to separate the seed after harvest. However, if a significant yield advantage can be realized, it might be worth the effort. It should be possible to set up modern seed drills with one row seeding peas and the next seeding canola, each at appropriate depths with appropriate fertilizer. That intercropping advantage wasn’t available in the past. I’m Kevin Hursh.
December 20, 2009
Limited snow cover There sure isn’t much snow cover anywhere in Saskatchewan. Since the middle of November, with a few minor exceptions, precipitation has been well below normal. An area along the Alberta border west of Maple Creek is about normal and there’s a spot south of Melville that show up as about normal, but everywhere else has been dry. In fact, most of the Saskatchewan grain belt has had less than 40 per cent of normal precipitation over the past month and that means very little snow on the ground. We’ve certainly had some cold weather and that increases cattle feeding requirements, but the limited snow cover has been good for grazing cattle on stockpiled forages. The precipitation maps show almost the entire agricultural area of Manitoba is also at less than 40 percent of normal precip for the past month. Alberta shows a different picture. East central Alberta has been dry and so has the Peace River region. The rest of Alberta, has had normal to above normal precip, which means substantially more snow than any where else on the Prairies. I’m Kevin Hursh.
December 17, 2009
PROs have dropped a long ways The Pool Return Outlooks for wheat and durum have both dropped a bit more. The drop on wheat is as high as $6 a tonne. The drop on durum is $2 to $3 a tonne. The little bit of good news is that the December PRO on malting barley is up by $3 a tonne. The first PRO for the current crop year came out at the end of February. The market has fallen a long way since then. After deducting Saskatchewan freight and handling, No. 1 CWRS wheat with 13.5 per cent protein now has an expected value of $5.08 a bushel. That’s down $1.20 a bushel from where the PRO started in February. No. 1 durum with 13 per cent protein has a current PRO of just $4.34 a bushel, a drop of a whopping $2.40 a bushel since the first prediction. Two-row malting barley has a current PRO of $3.14 a bushel. That’s down $1.14 from where it started. It’s good to monitor market and price predictions, but as this year has shown, the outlook can change in a hurry. I’m Kevin Hursh.
December 16, 2009
Impressive market shares Agriculture and Agri-Food Canada has published a statistical overview of the Canadian pulse and specialty crop industries. On a number of commodities, Canada dominates world trade. Based on data from 2008, Canada’s share of world dry pea exports is an impressive 54 per cent. The next largest pea exporter is the U.S. at 16per cent of the world market. Our biggest customer by far for peas is India. Canada has 68 per cent of the world trade in lentils and by far the biggest export destination is Turkey. By comparison, the U.S. has only 10 per cent of the lentil export market. In canaryseed, Canada accounts for 83 per cent of world exports. The next biggest exporter is Belgium followed by Argentina and Hungary. Mexico and Brazil are our two biggest customers for canaryseed. Canada’s share of world mustard seed exports is 51 per cent. The other significant exporters include Germany, India, Netherlands and Ukraine. The United States is the biggest customer for our mustard followed by Belgium and Germany. When you add up Canadian sales of lentils, peas, mustard and canaryseed for 2008, the total comes to $1.9 billion. Most of that comes from Saskatchewan. I’m Kevin Hursh.
December 15, 2009
Alliance buys Finora Alliance Grain Traders, known by many as Saskcan Pulse, has announced another major acquisition – the second in a week. The latest, announced yesterday, is a deal to purchase the assets of Finora. This comes hot on the heels of Alliance announcing the purchase of Parent Seeds in Manitoba. The Finora deal involves four pulse and specialty crop processing plants in three locations. There are two plants at Wilkie, a plant at Assiniboia and a plant at Gibbons, Alberta about 40 km north of Edmonton. The purchase price is US $8.9 million. Alliance says all the Finora processing plant staff and plant management team will remain. In the Parent Seeds deal, the Parent family will continue to manage the facilities. While farmers will continue to deal with familiar people at the plants, there has been a dramatic consolidation in the companies buying pulse crops. Alliance already has two plants in Regina, two plants at Rosetown, a plant at Aberdeen and a facility at Milestone. The company also has operations in Turkey, Australia and the U.S. On one hand, it’s great to see a Saskatchewan-based company grow to be such a major player. On the other hand, there are concerns whenever marketing options disappear. I’m Kevin Hursh.
December 14, 2009
Canola and lentils are the bright lights As producers consider their cropping options for next year, two crops are generating the most attention – canola and lentils. Despite the Chinese ban on Canadian canola due to blackleg concerns, prices are quite good. As the two new crushing plants at Yorkton come on stream, domestic demand should improve. Record canola yields were achieved this year, making canola a top money-earner in many regions. Expect more acres to go in the ground in the spring. The star performer has been lentils. Despite a huge Canadian crop, prices have been strong and rising, defying the predictions of many analysts. Lentil returns are even better than returns from canola, but lentils are not adapted to the higher moisture regions of the province. Lentil acreage will undoubtedly be higher next year and that has many producers worried. Will we overproduce the market demand and kill the goose that’s laying golden eggs? The interest in canola and lentils is understandable. Returns look meager for crops such as wheat, durum and barley. Flax and field peas are better than the cereals, but they aren’t stellar. The outlook could change in the months ahead, but at this point, canola and lentils are the bright lights. I’m Kevin Hursh.
December 13, 2009
CashPlus was a good deal for 08-09 The Canadian Malting Industry Association is saying the top-up payment for the CashPlus program should be $25 a tonne. The Canadian Wheat Board says the returns achieved throughout the crop year averaged $19.15 a tonne higher than the amount paid to producers in upfront, guaranteed prices. From this amount $6.26 per tonne was deducted for various expenses. The net result is that $12.89 a tonne or about 28 cents a bushel will be going to the more than 1,200 Prairie farmers who participated in the CashPlus program for malting barley in the 2008-09 crop year. The Western Barley Growers Association, Saskatchewan MP David Anderson and the Western Canadian Wheat Growers have all issued news releases claiming money has gone missing and farmers should be receiving more, but they don’t seem to have any tangible evidence. Rhetoric aside, as one of the producers who participated in CashPlus, I’m pleased. The program guaranteed me $6.50 a bushel and now I’ll be receiving a top-up of 28 cents. By comparison, malting barley in the regular pool account is only going to generate about $5.40 a bushel. Producers who locked in early through CashPlus earned an extra $1.40 a bushel. For me, criticism of the program rings rather hollow. I’m Kevin Hursh.
December 10, 2009
Democracy isn't a spectator sport One of the best speakers I’ve heard in a long time was yesterday at the Farm Animal Council of Saskatchewan meeting in Saskatoon. While FACS is dedicated to responsible farm animal care, the closing speaker at their conference was Bruce Vincent, a third generation logger from Montana, who is now a professional speaker. Vincent says both logging and agriculture are resource based industries being affected by well-meaning urbanites who subscribe to the Walt Disney nature utopia. He says social movements have turned into industries. It has become a big business to sell environmental fear. His advice for agriculture is that the general public wants to hear a message of hope for the planet and agriculture is the safest and most productive it has ever been. The enemy, says Vincent, isn’t the general public. The enemy is ignorance. We need to tell our story. We need to build bridges. If we aren’t at the table, well-meaning urbanites are going to protect us and the environment to death. Vincent presents three truths which are worth pondering. One: democracy works, but it’s not a spectator sport. Two: when people lead, leaders follow. And three: the world is run by the people who show up. I’m Kevin Hursh.
December 9, 2009
More expansion for Alliance Alliance Grain Traders has announced the purchase of Parent Seed Farms of Manitoba. Parent is big in dry edible beans – navy beans, pinto beans, black beans and coloured beans. The two processing plants are located near St. Joseph, about a hundred kilometers south of Winnipeg. The purchase price is $10 million. A lot of producers don’t realize how large Alliance Grain Traders has become. The Saskcan main plant is located in Regina. Also in Regina is the Saskcan Agtech plant. Alliance also owns Arbel, the largest exporter of pulses in Turkey. The facilities in Turkey also include durum semolina, pasta and bulgar wheat. Across Saskatchewan, Alliance has the Saskcan Pulse Depot plant east of Rosetown as well as the processing plant north of Rosetown. Then there’s the Saskcan Horizon plant at Aberdeen and the Saskcan Milestone facility. Down under, Alliance has the Australia Milling Group plant. In Williston, North Dakota, Alliance has the United Pulse Trading plant. When it comes to pulse crops, Alliance, based in Regina and headed by Murad Al-Katib, has become a prominent worldwide player. I’m Kevin Hursh.
December 8, 2009
Up or down for the Canadian dollar? For many months, mainstream analysts have been predicting the Canadian dollar will go to par with the American greenback. Some are even predicting we’ll go above par. David Drozd, with Ag-Chieve in Manitoba has been taking a contrarian view. Drozd does technical analysis, graphing lines of support and lines of resistance and noting two-day reversals on pricing charts. I’m not a big believer in technical analysis, but Drozd has established a pretty good track record. After peaking at just under 98 cents on October 15, the Canadian dollar has weakened. Drozd notes that the value has recently been confined to a three cent trading range between 93 and 96 cents. He believes it’s going to move down to test 90 cents. If it breaks 90, the next target is 85. If Drozd is right, he’s going to garner a lot of attention. Based on his analysis, Drozd also believes the U.S. dollar index is ready to move up, while crude oil is vulnerable to a downward correction. Stay tuned. The Ag-Chieve website is www.ag-chieve.ca. I’m Kevin Hursh.
December 7, 2009
Input cost comparison Fertilizer and fuel prices have come down dramatically, but farm machinery costs remain very high. The Statistics and Data Development Unit of Alberta Agriculture and Rural Development publishes average farm input prices for Alberta for selected commodities. The information is now available in a new format that allows you to see current prices and compare those to price changes over the last five years. On diesel fuel and fertilizer, prices peaked in the summer and fall of 2008 and have since declined dramatically. The Alberta data shows the price of phosphate fertilizer, 11-51, peaked at about $1,350 a tonne in October of ‘08. Phosphate prices are now under $500 a tonne. Urea, 46-0-0, also peaked in October ‘08 when it reached nearly $950 a tonne. The current price is around $425. In contrast, equipment prices peaked this year and have remained high, probably due to the strong Canadian dollar. A four-wheel drive tractor in the 325 to 375 horsepower range was listed at $220,000 in September of ’08. The price is recent months has been around $250,000. A 3,500 bushel hopper bottom grain bin has seen an almost steady rise in price for the past five years. At the beginning of 2005, the price was about $9,500. Now that bin is well over $13,000. I’m Kevin Hursh.
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December 6, 2009
Interesting crop stats The November estimate of field crop production from Statistics Canada was released on Friday. Here are some of the interesting numbers. The average canola yield in Saskatchewan this year is pegged at 34.8 bushels an acre. The yield difference seems to keep widening between canola and the other two main oilseeds – flax and mustard. The average flax yield was only 23.1 bushels an acre while mustard was 17.7. With the extremely late harvest, it isn’t surprising that winter wheat acreage is down, but the numbers are dramatic. Saskatchewan had 450,000 acres of winter wheat in the fall of 2008. This fall, there’s only 200,000 acres. Across Western Canada, winter wheat acreage has dropped from 1.2 million down to 650,000. The Statistics Canada data breaks down yields by crop subgroups. The yields for large green and red lentils were virtually identical at 1,390 and 1,381 pounds per acre respectively. Small green lentils were quite a bit higher at 1,510. There was a big yield difference between hairless and regular canaryseed. Hairless canaryseed is listed at 932 pounds per acre, with regular at 1,278. Little wonder that most producers still grow the regular canaryseed even though it’s very itchy to deal with. You can find the full production estimate report on the Statistics Canada website. I’m Kevin Hursh.
December 3, 2009
Lessons from climategate The mainstream media has been slow to pick up on climategate, but now the scandal is getting widespread coverage. Email correspondence that was never meant to be public has cast doubt over the whole science of climate change. There’s talk of lost data and data that has been manipulated. The emails also show concerted efforts to stifle any dissenting views. Climategate does not disprove global warming, but it confirms what many skeptics have suspected. Science has become intermingled with advocacy. For a while, it looked like climategate would not make major headlines. Now, even the big media outlets that seldom question global warming theories are covering the scandal. Yet to be determined, will climategate affect what happens in Copenhagen where world leaders are meeting to talk about new carbon reduction targets? Reducing emissions and cutting our carbon footprint are laudable goals even if the link between carbon dioxide emissions and global temperatures is tenuous. Policies around the world are being geared to reducing emissions and climategate may not have much effect on the overall momentum. Hopefully, however, this will be a wakeup call for the scientific community. Don’t mix science with spin doctoring. I’m Kevin Hursh.
December 2, 2009
Largest weather network in Western Canada The Canadian Wheat Board’s partnership with WeatherBug has evolved into a service that will be very useful to producers. This private weather network, linking on-farm monitoring stations was launched two years ago. I’ve checked it out on-line a couple of times and I was underwhelmed. Now, the CWB and WeatherBug have launched a website at www.weatherfarm.com and it does provide a unique service. The 700 field stations are linked via the Internet and you can get real time data from any of the weather stations. Most producers will be pretty close to at least one of the stations so the information will be pertinent. You can see the temperature, wind speed and wind direction at any given moment. You can also look back at the weather variables from previous hours, days or weeks. WeatherBug is now installing lightning detection sensors, which will detect cloud-to-cloud and cloud-to-ground lightning activity. This should allow for advanced detection and alerts of severe weather. With the network that’s been established, all sorts of additional features should be possible. To check it out, just log onto www.weatherfarm.com and fill out the little bit of registration information that’s required. I’m Kevin Hursh.
December 1, 2009
Public support has increased for ethanol and biodiesel The Canadian Renewable Fuels Association has released survey results showing strong support for alternative fuels. I’m sometimes skeptical about how survey questions are presented and how the results are interpreted, but in this case, the question wording has been released. Question: Do you strongly support, somewhat support, somewhat oppose or strongly oppose a requirement that all gasoline include 5 per cent ethanol by 2010 and diesel includes 2 per cent biodiesel by 2011? “Strongly support” accounted for 42 per cent of the responses. “Somewhat support” was 32 per cent. “Somewhat oppose” and “strongly oppose” totaled 20 per cent, while 6 per cent responded that they didn’t know. Overall, 74 per cent of the surveyed people supported the Renewable Fuel Standard. According to the Canadian Renewable Fuels Association, this is an eight per cent increase in support since the last survey in April 2008. The “strongly support” category has gone up by 16 percentage points over that time. There has been a lot of negative media on ethanol and biodiesel in recent years, but public support appears to be stronger than ever. 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).
