Ontario grain farmers continue to push for cost of production Many Saskatchewan grain farmers have had some good years and they’ve built up their AgriStability reference margins. With different crops and much higher costs, most Ontario grain farmers say they haven’t built up that same protection. Grain and oilseed farmers in Ontario lobbied hard for a Risk Management Program (RMP) that was implemented within that province back in 2007. However, it is supported by only the Ontario government. The feds haven’t come to the table. RMP support prices are established for each eligible crop based on the cost of production. Producers pay premiums depending upon what percentage of the support price they want to insure. Here on the Prairies, most producers will tell you that a program covering the cost of production would be wonderful. But there’s little expectation that it will ever come to pass. Expectations are different in Ontario. Maybe it’s the influence of having such a large supply managed dairy sector where prices are based on a cost of production formula. Maybe, it’s because producers in neighbouring Quebec have long had lucrative farm programs. And maybe it’s because Ontario farmers feel that they have some political power. Ontario farm votes are up for grabs and can be enough to swing entire ridings. The squeaky wheel gets the grease and Ontario farmers are squeaking loudly. I’m Kevin Hursh.
February 25, 2010
Lentil market analysis I enjoy the Pulse Market Report regularly prepared and distributed by Saskatchewan Pulse Growers. Since it’s available by email and at saskpulse.com, they avoid the time lag of some other market reports. The most recent report, sent out yesterday, has three analysts commenting on the lentil market. Although still high from a historical perspective, lentil prices have dropped quite dramatically in recent weeks. An estimated 25 per cent of the lentil crop is yet to be marketed. It makes you wonder what some producers were waiting for. Prices were sitting in the 38 cent a pound range for quite some time, but that obviously wasn’t enough to pry all the stocks out of producers’ hands. Most analysts are suggesting that prices will continue slipping as they move downwards towards new crop values. A record seeded acreage of Canadian lentils is predicted. Many estimates are calling for more than 3 million acres. Those projections are one of the main reasons for softer prices. Producers often blame Statistics Canada, but in this case it’s private estimates that have moved the market. The analysts think there will be a bigger increase in red lentil acreage than in greens and therefore red lentil prices may be the softer of the two in the year ahead. I’m Kevin Hursh.
February 24, 2010
Some crop insurance prices look good Details of the 2010 Saskatchewan Crop Insurance program have been announced. Some crops are going to enjoy insured price levels that look attractive compared to the market. The insured prices are based on a December estimate. Since then, a number of commodities have softened. On wheat, durum, barley, mustard and field peas, the insured prices are close to current price levels. However, canola has an insured price of $9.07 a bushel, which is a fair bit above the current market. Flax is quite attractive as well at $9.65 a bushel. Canaryseed has a crop insurance price of 19 cents a pound, a cent or two above the current price. On lentils, crop insurance is using a price of 26 cents a pound for large green and 27 cents on reds. Current lentil prices are higher than that, but new crop bids have been well under those levels. Rather than the base price, producers can choose a Variable Price Option or an In-Season Price Option. The Variable Price Option uses a July price forecast and the insured price can increase or decrease by as much as 50 per cent in relation to the base price. The In-Season price option uses a six month average of prices from next September to February. It too can increase or decrease by a maximum of 50 per cent as compared to the base price. In my opinion, the base price has a strong probability of being the highest of the three on the aforementioned canola, flax, canaryseed and lentils. I’m Kevin Hursh.
February 23, 2010
Rare praise for AgriStability After several good years financially for most grain producers, the AgriStability program is finally proving its worth. Through each incarnation from AIDA, to CFIP, to CAIS and finally to AgriStability, there have been improvements enabling the program to more accurately measure each farm’s reference margin. The valuation of grain inventory is now better and there’s an improved mechanism for adjusting reference margins for operations that are growing larger. With comparatively strong grain prices in recent years, combined with good crops in many regions, reference margins have improved. Shea Ferster of Meyers Norris Penny in Saskatoon says he has seen situations in the grain industry where producers are virtually bulletproof going into the 2010 growing season because they’ve built up strong reference margins. If they have a poor crop or if grain prices are bad, or even if both of these events come to pass, they’re protected. Of course, not all farmers have had good crops in recent years, and situations vary widely from one farm to the next. But as a general rule, AgriStability is now a huge asset for many grain producers, particularly those who maximized their reference margins in the years when they didn’t have claims. I’m Kevin Hursh.
February 22, 2010
New crop PROs are ugly It’s not surprising, but it is disheartening. The Canadian Wheat Board has released its first new crop price estimates for wheat, durum and barley. In most cases, the prices expected in the new crop year are even lower than the prices expected for the current crop year. After deducting average Saskatchewan freight and handling, No. 1 CWRS wheat with 13.5 per cent protein is expected to be worth $5.00 a bushel in the current crop year. The new crop Pool Return Outlook is $4.83 a bushel. On No. 1 durum with 13 per cent protein, the PRO in this crop year is $4.02 a bushel. For next crop year, that is expected to drop to $3.88. Two-row malting barley has a current crop year PRO of $3.14 a bushel. That is expected to slide marginally to $3.08 a bushel next crop year. The start of the new crop year is more than five months away. A lot could happen to improve price prospects. At this point, however, the price outlook on all the cereal crops can best be described as ugly. I’m Kevin Hursh.
February 21, 2010
Carbon policies become less certain Alberta has a carbon offset program. Aggregators in that province have been putting together carbon offsets from farmers and ranchers and selling them to industry. Saskatchewan is widely rumored to be on the verge of implementing an in-province carbon trading system modeled after what is happening in Alberta. Similarly, the government of Canada is planning to emulate what happens with carbon reduction policy and carbon trading in the United States. The argument is that Canada needs to follow the policies of its major trading partner. However, Barack Obama’s climate change policy appears to be in trouble. It’s facing numerous legal challenges, including one from the state of Texas. The climate change theory has suffered a number of setbacks in recent months and that has invigorated opponents. It all started with revelations that the Climate Research Unit in England had fudged some of its data, while working to stymie any scientists who had evidence refuting climate change theories. More recently, the head of the Climate Research Unit has admitted that any global warming over the past 15 years has not been statistically significant. Given the newly found scientific uncertainty, policy directions are now less certain as well. I’m Kevin Hursh.
February 18, 2010
$4,000 per farmer under Farm Business Development Initiative Through the Saskatchewan Ministry of Agriculture, under the Growing Forward program, there’s a Farm Business Development Initiative. In my opinion, this hasn’t been well promoted, but up to $4,000 is available to help individual farmers engage private sector business services and/or access farm-related education and training programs. The farmer has to pay a minimum of 25 per cent of the consulting or training costs. The whole idea is to help farmers develop business plans and enhance business skills in nine areas - business strategy, marketing, production economics, human resources, finance, environment, succession planning, business structure and risk management. To get started, just contact one of the Ministry’s regional offices or call the Agriculture Knowledge Centre in Moose Jaw (1-866-457-2377). The first step is to complete a “Taking Stock” booklet to help identify your needs. Then you can set up an appointment with your local Ministry of Agriculture Farm Business Management Specialist and the specialist will help you determine what services to access. Support of up to $4,000 to help pay for private sector business services and/or training programs is an opportunity many producers should be accessing. I’m Kevin Hursh.
February 17, 2010
What's the carbon footprint of your grocery basket? I continue to be a skeptic about climate change and whether any change is caused by mankind’s carbon dioxide emissions. But, whether or not you believe in the theory, carbon programs and policies are on the way that will alter how primary producers do business. One example is the carbon footprint symposium planned for March 2 in Saskatoon. Agriculture and Agri-Food Canada is partnering with Enterprise Saskatchewan and Stark and Marsh Chartered Accountants to hold the event. If you think carbon footprinting is all airy-fairy stuff, consider that Wal-Mart wants to use carbon credit accounting for future product sales. In addition to the calories and ingredients, food would be labeled with the amount of carbon it took to get that product to market. The assumption is that consumers will buy lower carbon footprint products to help save the planet. Pulse Canada has been studying this issue because Canadian lentils, peas and beans should have a comparatively low carbon footprint and this may be an advantage in the marketplace. Of course, the carbon footprint isn’t always easy to determine, so this may mean lots of new work for chartered accountants. Personally, I shake my head at stuff like this, but a lot of experts think carbon footprinting is the next big wave. I’m Kevin Hursh.
February 16, 2010
BIXS may make cattle ID worthwhile Many cattle producers have grown disenchanted with the increasing livestock identification and traceability requirements. However, the biggest benefits may yet to be seen and they may be unrelated to disease traceability. The Canadian Cattlemen’s Association is building a value chain database called the Beef InfoXchange System or BIXS. It will enable individual animal performance, health, carcass data and more to be uploaded to a central database at each step of the beef value chain. For the first time, producers will be able to follow the performance of their calves through the feedlot and into packing plants. Of course, the basis on the system will be the ID program which identifies each individual animal. If the ID is required anyway, we might as well be making use of it. Most cow-calf producers have no evidence of how their calves grow or how the carcasses grade. With information will come power – power to adjust genetics and production practices and hopefully the power to command premium prices for premium livestock. Officials are hoping for a spring launch. More information is available at www.bixs.cattle.ca. I’m Kevin Hursh.
February 15, 2010
Distillers grains flow into Canada Distillers grains are playing an ever larger role in livestock ration formulation. It isn’t just distillers grains from local ethanol plants. The U.S., with its huge ethanol industry, is exporting large amounts of the co-product. According to the American Renewable Fuels Association, approximately 30.5 million tonnes of distillers grains were produced last year in the U.S. Of that total, a record 5.64 million tonnes worth nearly $1 billion was exported. Mexico was the top destination, with Canada ranking second. We imported over 800,000 tonnes of U.S. product. Ethanol production is often demonized as using food for fuel. However, in a typical dry mill ethanol plant, one third of the corn entering the facility is returned to the livestock feed market in the form of high-protein distillers grains. Only the starch in the grain is converted to fuel. The remaining protein, fat and other nutrients remain in the co-product. I’m Kevin Hursh.
February 12, 2010
Cattle ID feedback Over the past couple of days, I’ve heard from a number of cattle producers questioning the electronic ID program. Some producers say they were initially supporters of individual animal ID. Others say the mandatory system has always been industry driven rather than producer driven. There are stories of poor retention rates for the RFID buttons and reports of cattle with numerous holes in their ears. The cost and the work involved in tagging and re-tagging animals are major points of contention. There are also stories of confusion over how the rules are applied by CFIA. Some producers are using the ID system for their own herd management, but still question Canada’s direction on the issue. Overwhelmingly, we have commodity beef and yet we’re implementing a Cadillac ID system. We have a beef industry that’s tied to the U.S., but our main trading partner has backed away from a national ID plan. For a law to work, people have to accept the reason for the law. Increasingly, Canadian cattle producers are wondering if the ID rules are paying any dividends. I’m Kevin Hursh.
February 10, 2010
A grain vac solution A guy who runs a custom grain vac business gave me some good advice that I’d like to pass along. Check grain bins for spoiled grain on the top and if you have a problem, you’re best solution may be a grain vac. Moisture tends to accumulate in the center-top of a grain bin. That’s where you may find significant spoilage. On some crops, the entire top of the bin is prone to crusting over. If you start loading grain out of the bin, the spoiled grain on the top is sucked down into the load. By the time you know there’s a problem, there’s often no way to remedy the situation. If you find the spoiled grain before loading, you can sometimes remove the problem with a shovel. However, this can be difficult depending upon how full the bin is and the size of the access holes. This can be a great use for a grain vac. Since you don’t actually have to plant your feet in the grain, there’s less mixing of the spoiled grain and the good grain. Plus a grain vac can be used if the bin is full or if the grain is eight feed down from the lid. Whether you own a grain vac, rent a grain vac, or hire the services of someone with a grain vac, getting rid of spoiled grain on the top of bins is a great use for this technology. I’m Kevin Hursh.
February 9, 2010
Canada and the U.S. go opposite directions on livestock ID Here in Canada, we’re enhancing our livestock identification programs. Individual animal ID with radio frequency ear tags, age verification, premise ID, animal movement records – about the only thing that isn’t planned is a GPS locator attached to each individual animal. Incredibly, American efforts for a National Animal Identification System are back to square one. After years of work and millions of dollars of investment, critics of the system have carried the day. Last week, U.S. Agriculture Secretary Tom Vilsack announced that the USDA will develop a new flexible framework for animal disease traceability. Efforts will only apply to animals moved in interstate commerce. The plan will be administered by the States and Tribal Nations. As well, lower-cost technology will be encouraged. The goal is a collaborative process meaning there will be lots of talking before anything happens. Some observers in the U.S. say this is a victory for the nation’s family farmers over the political power of corporate agribusiness. Here in Canada, we’re piling on more animal ID expenses, while our main trading partner is going the opposite direction. Most cattle producers on this side of the border understand and support individual animal ID, but are we now going too far? I’m Kevin Hursh.
February 8, 2010
Yet another farm safety net review One of the great agricultural pastimes in this country is debate over farm safety nets. We’re at it again. At last week’s meeting in Toronto of federal, provincial and territorial agriculture ministers, there was a new commitment to consult with producers and farm groups on business risk management programs.You may remember that the federal Conservatives initially came to power with a promise to replace the CAIS program. Instead, they tinkered with it a bit and changed the name to Agri-Stability. Neither CAIS, nor the new Agri-Stability is able to deal with prolonged industry downturns like the ones in beef and hogs. There are a myriad of other problems too. It’s far too complicated and it doesn’t provide fair treatment to producers who do their own income stabilization by having more than one farm enterprise. Before CAIS, there was AIDA which operated in much the same way. We’ve been on the same track for a long time. Now the Ministers are going to consult and report back at their next meeting in July. There may be a move to implement livestock price insurance and there may be tinkering with Agri-Stability, but don’t hold your breath waiting for major changes. Governments do not seem willing or able to consider anything other than income stabilization as the main farm program. As long as that continues, any changes will be largely cosmetic. I’m Kevin Hursh.
February 7, 2010
I’m a climate change expert and I’m here to help you On Friday, I heard a presentation by a bright, young woman who is a PhD student at McGill University. Bano Mehdi has two science degrees and extensive work experience on climate change issues. Her goal is to become a leading expert in the field of agriculture and climate change. She presented the usual data showing a warming world and making the link to greenhouse gas emissions. Where she raised my ire and the ire of other producers in the room was when she tried to extrapolate what climate change might mean for Canadian farmers and what we should be doing to adapt. The fancy models suggest the Canadian Prairies may be warmer but wetter in the years ahead. Will it be so warm that crops shrivel in the summer or will we benefit from a longer growing season? Will the extra precipitation shown by the models be enough to compensate for the higher temperatures? No one knows. The scientific intentions may be honourable, but it’s tough to take these vague climate forecasts seriously. Scientists have difficulty predicting next week’s weather. The seasonal, three-month forecasts are scarcely better than flipping a coin or reading the Farmers’ Almanac. Nebulous climate forecasts for five, ten and twenty years into the future are of very little practical use to producers. I’m Kevin Hursh.
February 4, 2010
The $31.70 per cow problem needs to be addressed Many people in the cattle business love to hate the big packing companies. For that reason, it’s difficult to garner support for paying compensation to the packers for the extra costs they incur when they slaughter cattle over thirty months of age. It costs an estimated $31.70 more to slaughter an older animal in Canada as compared to the U.S. This is due to the more stringent Canadian rules for disposing of Specified Risk Materials. The Canadian Cattlemen’s Association says that due to the differential, an increasing number of cows are going to the U.S. for slaughter. To fill the gap, Canada is importing an increasing amount of beef from Australia, New Zealand and South America. For 2010, beef imports from these countries will likely approach the 76,000 tonne limit. There will be pressure to issue supplementary import permits. It’s very difficult for Canadian packers to compete for Canadian cull animals when there’s a $30 plus disadvantage built into the system. It’s reasonable for the federal government to provide compensation to make up this difference and paying the money to big and small slaughter facilities across the country is the logical way to fix the inequity. It’s difficult to know how much of this money would end up in the hands of producers, but it does no one any good to export Canadian cull animals when the jobs and the beef should be staying here. I’m Kevin Hursh.
February 3, 2010
Baby boomers are not like their parents The Canadian Farm Business Management Council is hosting its annual Managing Excellence in Agriculture Conference in Saskatoon. The opening speaker last night was the renowned futurist Dr. Lowell Catlett from New Mexico State University. Catlett explains how the world has changed over the past generation and how that is impacting all facets of agriculture. The parent’s of baby boomers led a life with few frills. The baby boomers are much more affluent and therefore our demands and expectations are far different. Rather than just nutritious food for sustenance, there’s demand for organic, free range, slow food, food with a smaller carbon footprint, and food that can address health problems. Twenty years ago, the number one determinant for ranchland values in the western side of the U.S. and Canada was the quantity and quality of the forage the land could produce. Now the number one price determinant is proximity to a destination resort. Lowell Catlett says the world has abundance the likes of which it has never seen. The biggest profits won’t be in basic food commodities. The big money will be in the products that cater to the values and the whims of affluent consumers. I’m Kevin Hursh.
February 2, 2010
R-CALF points to Canadian beef subsidies Canada has filed a WTO complaint against the American imposition of COOL - country of origin labeling. The main advocate of this expensive, protectionist legislation is the farm group known as R-CALF. If you can risk raising your blood pressure, listen to what R-CALF is now saying about Canadian beef production. In a letter sent to the U.S. Department of Agriculture and the U.S. Trade Representative, R-CALF says Canada should be considered in violation of the WTO because we continue to subsidize our cattle and beef sector in order to penetrate the U.S. market. According to R-CALF, Canada is using “its treasury to out-compete independent U.S. cattle producers, whose prices are depressed because Canada is unjustly and artificially propping-up its cattle supplies beyond what the available market can bear.” R-CALF has compiled a long list of our subsidies. This includes some loan programs in Manitoba, the CAIS program and a bunch of programs that date back to when the BSE crisis first began. It would be great to have a proper analysis of Canadian support for the beef sector versus what U.S. producers receive. Zealots like those in R-CALF probably wouldn’t believe it anyway, but it would be useful to have a true comparison for people on both sides of the border who like to base their opinions on facts. I’m Kevin Hursh.
February 1, 2010
Winter precip still below normal One big snowstorm hasn’t been enough to bring winter precipitation back up to normal. The system that came through the province around January 23 dropped a lot of snow over a wide region, but there wasn’t much base for it to build on. For the month of January, precipitation maps show northeast and east central Saskatchewan recorded above normal precipitation. An area from Melfort to Wynyard had more than one and a half times normal precip. There are also areas of above normal January precip in south central and southeastern Saskatchewan. The rest of the province though and virtually all the Prairie region were below normal for January despite the snowstorm. If you look at the three-month map covering November, December, and January there are only isolated pockets where precip has been close to normal. In the vast majority of the Prairie region, winter precipitation has been well below normal. For a decent spring runoff and the recharge of surface water supplies, it appears we’ll be looking for more snowfall in the months ahead. 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).
