Optimism too high in corn, soybeans - The Western Producer [PDF]

THURSDAY, DECEMBER 6, 2012

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Optimism too high in corn, soybeans

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RESEARCH | WHEAT

WINTER UPGRADES

Wheat genome breakthrough will have major impact BY ROBERT ARNASON BRANDON BUREAU

USDA numbers baffle analysts | Miscalculation expected to send prices up

It’s not the holy grail of the complete wheat genome, but an international consortium has identified nearly 100,000 genes in the DNA of wheat. The research and the identification of specific genes, published in the journal Nature in late November, should help wheat breeders develop varieties with increased yield, disease resistance and other desirable traits. “This work moves us one step closer to a comprehensive and highly detailed genome sequence for bread wheat, which along with rice and maize is one of the three pillars on which the global food supply rests,” Jan Dvorak, professor of plant sciences at the University of California Davis and a co-author of the study, said in a statement.

BY SEAN PRATT SASKATOON NEWSROOM

Grain markets are far too optimistic about South America’s pending corn and soybean crops, says a trader for a major grain firm. According to Jason Charles, who runs the export trading division of Land O’ Lakes Inc., the second largest co-operative in the United States, that means prices for those trend-setting commodities will be on the rise and prices for those crops, particularly corn, drive prices for other crops. The U.S. Department of Agriculture is counting on South America to produce 150 million tonnes of soybeans in 2012-13. Some crop analysts think it could be as high as 155 million tonnes. Charles believes markets have made a huge miscalculation. He can’t fathom why they are counting on 150 million tonnes of soybean production, which would be up from last year’s drought-reduced crop of 115 million tonnes. That’s a big leap of faith despite 11 million more acres going in the ground. “We’ve set a really optimistic bar,” he said in a Nov. 28 presentation at the Agri-Trend 2012 Farm Forum Event. “We need every day to be sunny. We need two inches of rain a week. We can’t have any infrastructure issues.” It reminds him of the USDA’s overly optimistic summer forecast for a 166 bushel per acre average U.S. corn yield. SEE OPTIMISM TOO HIGH, PAGE 3

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SEE WHEAT GENOME, PAGE 2

DECEMBER 6, 2012 Return undeliverable Canadian addresses to: Box 2500, Saskatoon, SK. S7K 2C4

Albrecht Scheidegger of LaGlace, Alta., grinds down a weld while installing an electric motor into a new auger. There is plenty of work for grain farmers during the winter, from servicing equipment to hauling grain and clearing snow from the yard and around grain bins. | RANDY VANDERVEEN PHOTO

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DECEMBER 6, 2012 | WWW.PRODUCER.COM | THE WESTERN PRODUCER

Wheat genome breakthrough “This sequencing effort has yielded important information that will accelerate wheat genetics and breeding and help us better understand wheat evolution.” A team of scientists from UC Davis, Kansas State University, Cold Spring Harbor Laboratory in New York, the University of Liverpool University of Bristol, the European Bioinformatics Institute and the U.S. Department of Agriculture, c o l l a b o rat e d o n t h e re s e a rc h, which sheds light on a piece of wheat’s complex genome. With 17 billion base pairs, the wheat genome has about five times more DNA than the human genome. It is known as a hexaploid genome because it has six copies of its seven chromosomes. In comparison, the corn genome, which has already been decoded, has two billion base pairs of DNA. Bases are chemical units represented in the genetic code by the letters T, C, G and A. Curt McCartney, a cereal genetics specialist with Agriculture Canada in Winnipeg, said the discovery is significant. Using a technique called shotgun sequencing, scientists identified 94,000 to 96,000 genes and found 132,000 single nucleotide polymorphisms (SNIPs) within the wheat genome. A SNIP, or a change in the sequence of letters in a genome, is the most common type of genetic variation. “A SNIP is a type of DNA marker. When we’re doing our genetic stud-

ies, we need markers to track the inheritance of different pieces of the chromosome,” McCartney said from his office at the Cereal Research Centre in Winnipeg. “So if you’re looking at the same region of the genome, in two different (wheat) varieties, a SNIP marker between those two varieties would constitute a single change in a single base. So you’d have a G in one parent and a C in another parent.” Wheat genetic experts like McCartney will use the SNIPs to pinpoint regions on wheat’s DNA associated with particular traits, such as resistance to leaf rust. Scientists have already mapped disease resistance genes in certain regions of wheat’s chromosome, but they often don’t know precisely which gene is responsible for the desirable trait. “The addition of all these markers is very helpful when you’re actually trying to get to the actual gene that’s encoding a particular trait that you’re interested in,” McCartney said. The research team is continuing its efforts to decode the plant’s complex genome. Richard McCombie, a genetics expert and one of the paper’s authors, said sequencing work will continue. “… these results should have a significant impact on breeding efforts and further research studies of the wheat genomes,” he said. McCartney said it may take another five to 10 years to decode wheat’s entire genome.

REGULAR FEATURES

INSIDE THIS WEEK

RESEARCH | FROM PAGE ONE

Ag Stock Prices Classifieds Events, Mailbox Livestock Report Market Charts Opinion Open Forum On The Farm Weather

COLUMNS

Agribition rodeo: Cowboys provided excitement at the recent Canadian Western Agribition in Regina. See page 37. | MICHAEL RAINE PHOTO

Barry Wilson Editorial Notebook Hursh on Ag Market Watch Taking Care of Business Health Clinic TEAM Living Tips

NEWS

CONTACTS

» DISEASE ALERT: This year’s

» COLD DINING: Winter grazing

»

»

» »

“summer of disease” in Saskatchewan spells trouble for 2013. 5 RAIL LAW: The federal government says it will introduce rail service legislation by mid-December. 15 EARLY SEEDING: Research has found that early seeding canola pays off only half the time when direct seeding. 17 UNIFORM BARLEY: Growing barley with uniform kernel size will improve its use as cattle feed. 31

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is a good option for cattle producers, but it comes with risks. 32 FOREIGN AID: Canada’s foreign aid policy has shifted to focus more on resource company support. 34 ZONE CANADA: Supporters of a livestock checkpoint on the Manitoba-Ontario border worry about funding. 35 CLEAN BEES: Beekeepers may be able to use a protein marker to select for hygienic bees, which are healthier. 71

MARKETS 6

» PRICE OUTLOOK: An analyst says the wheat »

and canola price outlook is encouraging. 6 PRICE TRANSPARENCY: Grain firms are accused of hindering price transparency. 7

OBITUARY | NEIL JAHNKE

Rancher praised for leadership

FARM LIVING 21

» BUS DRIVER: A Saskatchewan farmer has

BY KAREN BRIERE

»

REGINA BUREAU

Saskatchewan rancher Neil Jahnke is being remembered for decades of dedication to the beef industry, but mostly for piloting Canada through the BSE crisis. Jahnke, 70, died Nov. 26 on his Gouldtown ranch. The funeral was Dec. 3. Jahnke was president of the Canadian Cattlemen’s Association in 2003 when BSE was found in a Canadian cow. “His leadership during that difficult time boosted consumer confidence in our beef, and he stood up against protectionist policies that threatened the industry,” said provincial agriculture minister Lyle Stewart. Ralph Goodale, a Regina Liberal MP who in 2003 was in the federal cabinet, said there was never a stronger champion for producers. “Colourful, forceful and fearless, Neil was a natural leader who worked

driven a school bus for 50 years. ON THE FARM: Farming in Winnipeg’s shadow has its pros and cons.

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PRODUCTION 73

» NATURAL GAS: Natural gas is gaining NEIL JAHNKE

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CATTLE INDUSTRY LEADER

his heart out for the industry he loved,” he said. Jahnke served as president of the Saskatchewan Stock Growers Association, Saskatchewan Livestock Association, Canada Beef Export Federation and the Beef Information Centre and was a board member of Canadian Western Agribition. He was named to the Saskatchewan Agricultural Hall of Fame in 2005 and was to receive a Queen’s Diamond Jubilee medal this week. His wife Marilyn, son Shane and daughter J.J survive him.

strides as a potential transport fuel. 73 EMERGENCE: Farmers credit a new opener with their uniform emergence success. 76

Joanne Paulson, Editor Ph: 306-665-3537 [email protected] Michael Raine, Managing Editor Ph: 306-665-3592 [email protected] Terry Fries, News Editor Ph: 306-665-3538 [email protected] Newsroom inquiries: 306-665-3544 Newsroom fax: 306-934-2401 Paul Yanko, Website Ph: 306-665-3591 [email protected] Barbara Duckworth, Calgary Ph: 403-291-2990 [email protected] Mary MacArthur, Camrose Ph: 780-672-8589 [email protected] Barb Glen, Lethbridge Ph: 403-942-2214 [email protected] Karen Briere, Regina Ph: 306-359-0841 [email protected] Ed White, Winnipeg Ph: 204-943-6294 [email protected] Ron Lyseng, Winnipeg Ph: 204-654-1889 [email protected]

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» EMERGENCY TRAILER: Livestock emergency »

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Shaun Jessome, Publisher Ph: 306-665-9625 [email protected]

trailers are available in Alberta. 78 GIRL POWER: Girls are gaining a larger presence in the Agribition show ring. 80

AGFINANCE 84

Robert Arnason, Brandon Ph: 204-726-9463 [email protected] Barry Wilson, Ottawa Ph: 613-232-1447 [email protected]

» AGRIUM TUSSLE: Agrium continues to

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reject calls to split off its retail arm. 84 FLAX PLANT: A destroyed flax plant in Manitoba will be rebuilt in South Dakota. 85

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Optimism too high The latest estimate is for an average of 122 bu. per acre because of drought. Charles said South American planting conditions have been less than ideal. It was exceptionally dry in northern Brazil and there was extensive flooding in northern Argentina, to the point where livestock were drowning. “I don’t think we have the ability this year with how we’re starting to grow more than 140 million tonnes down there, and I think that’s optimistic, to be quite honest,” said Charles. The USDA is counting on 28 million tonnes of corn production from Argentina, the world’s second largest exporter of the crop behind the United States. Charles thinks that number is also out of touch with reality because of the flooding. “We can certainly take 20 to 30 percent off that,” he said. “The high side of corn production in Argentina will not be more than 22 million tonnes.” Charles said the world is counting on record South American corn and soybean crops to replenish dwindling global supplies. Anything short of record production will be bullish for prices. Agustin Bianchini, an agrologist from Argentina who was speaking at the same conference, agreed with Charles that it is foolish to be counting on record production at this early stage of the growing season. “I don’t know about the exact numbers, but I agree on being more conservative. It is too early to forecast crop production,” he said. Bianchini said corn yields are set in mid-December through January and soybeans from late-January through early-February. That’s when rainfall will be critical. However, he agreed it’s pretty safe to assume that Argentina’s corn crop will be smaller than expected because of the rocky start. Some acres were lost to flooding and others won’t be nearly as productive because of nitrogen leaching in the saturated soil. Growers received 500 millimetres of rain over a two month period. He said his price outlook is also bullish because the U.S. corn crop was harvested two weeks earlier than normal, starting in mid-August. That early-harvested crop ended up in the USDA’s carryout estimate for the 2011-12 crop. It will be doublecounted as both old crop and new crop. He believes the USDA’s corn carryout number of 988 million bu. should be closer to 500 million bu., meaning the U.S. corn crop is even smaller than people think it is. “Small crops don’t get bigger. Small crops get smaller. That’s bullish the farmgate, that’s bullish prices,” said Charles. He believes March 2013 futures for corn will test $8.50 per bu. and soybeans should test $18.50. Strong corn and soybean prices will elevate most other grains and oilseeds. “I am bullish commodities and I’m out there buying every day.” He buys 20,000 to 30,000 tonnes of soybeans and 500,000 to 600,000 bu. of corn a day in advance of what he anticipates will be a run-up in prices. Charles operates a farm in Saskatchewan and plans to be 30 to 40 percent sold on his anticipated 2013 production by the end of March because the highest prices typically happen during the battle for acres in February and March.

THE WESTERN PRODUCER | WWW.PRODUCER.COM | DECEMBER 6, 2012

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ASSEMBLY LINE LOADING

Tasha Soderberg, facility assistant at the Richardson Pioneer elevator in Dixon, Sask.,  opens the doors at the top of grain cars Nov. 30. Staff started at about 4 a.m. and worked until about midnight loading cars with wheat and canola headed for Vancouver. | WILLIAM DEKAY PHOTO

FOOD SAFETY | INSPECTIONS

Memo raises inspection questions Beef line at XL Foods | Government says opposition is misinterpreting the memo’s meaning BY BARRY WILSON OTTAWA BUREAU

The Canadian Food Inspection Agency is under fire over another incident at the XL Foods plant near Brooks, Alta. The incident involves a memo that appeared to order carcass contamination be ignored at one inspection point. This autumn, E. coli-contaminated meat sent out of the plant resulted in the largest meat recall in Canadian history and inspectors faced some of the blame. Last week, senior CFIA officials and agriculture minister Gerry Ritz insisted the memo was misinterpreted. The 2008 memo, reissued several times but since amended, was directed at one inspection position in the XL plant responsible for ensuring that meat destined for the Japanese market was from animals younger than 21 months, they said. It was one of 20 inspection positions in the plant. “If there is a checklist of 20 items, they’re all done regardless of where the product is going, domestic or outside the country,” Ritz told the agriculture committee Nov. 29. Opposition critics said the memo shows that exports to Japan receive a higher level of inspection than meat destined for Canadian consumers. The memo directed to the inspec-

tion station for product destined for Japan said: “Our number one priority is to ensure this standard is met with Japan-eligible carcasses. When stationed at this position, ensure that non-Japan eligible carcasses are not inspected for spinal cord/duramater and OCD defects.” It said other inspectors would catch the problem and to deal with contamination in all carcasses at the Japan-dedicated station could lead to unnecessary shutdowns in the meat line for Japan. NDP agriculture critic Malcolm Allen said the memo indicates inspectors were ordered to ignore carcasses with visible feces or ingesta (intestinal material) on them. Senior CFIA official Paul Mayers said the contamination was not being ignored. This was a memo about how to deal with products to Japan. “Fecal matter and ingesta on a carcass at the final stage renders that carcass adulterated with absolute zero tolerance,” he said. “That means that product would not be considered edible, it would not be permitted into the food supply.” Critics remained skeptical and saw it as a breakdown in the food inspection system. Liberal Frank Valeriote called it “willful blindness” and another reason to have a third-party audit of CFIA. “Can you tell me why this willful

blindness does not amount to criminal negligence when CFIA has placed the health and safety of the lives of Canadians at risk?” he asked agency president George Da Pont. “I just simply have to disagree with your analysis,” replied Da Pont at committee. It was a memo to one inspector station that was not involved in food safety assessment. Inspector union president Bob Kingston of the Public Service Alliance of Canada agriculture union met with Da Pont and Ritz in early November to argue that the wording of the memo was a potential problem. The wording was revised. If contamination is spotted, others must be notified and the line stopped as necessary until the problem has been addressed. In a Nov. 30 interview, Kingston said the government cannot downplay the error of sending the memo to inspectors. “I think there was a misunderstanding by the supervisor who wrote that memo about the difference between a regulatory audit and an accreditation audit,” he said. “In a regulatory system, no inspector should ever be told to ignore contamination that they see.” Although CFIA officials insisted there were other inspection sites later in the line that would have caught carcass contamination, Kingston said the next stage was a wash station

to remove microscopic bacterial contamination but not visible fecal or ingesta contamination. “At that point, it has already been through the process and the only contamination that should still be on the carcass should be microscopic,” he said. “In that state, the next wash station should work. If there is visual contamination, all the wash will do is spread the bacteria around the carcass.” He said a “bad culture” existed around food inspection at the XL Foods plant. The leaked memo reflects the malaise and not just at the XL plant, he added. “In southern Alberta, our people often were told to back off,” he said. “They were told by supervisors, managers to give it a break. As we know now, we’re not doing them any favours by giving them a break.” Kingston said the XL plant was one of the sites where CFIA inspectors have been told to stand aside. “At Brooks, we were told to back off from time to time, to give them a break, yeah,” he said. “There was a bad culture there. And a memo like this almost gives license to plant employees to tell CFIA to butt out.” However, he said it is not unique to the Brooks plant. “I can tell you that I could probably produce a half dozen other documents like that (from packing plants) across the country.”

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DECEMBER 6, 2012 | WWW.PRODUCER.COM | THE WESTERN PRODUCER

NEWS

WILDLIFE INSPECTION

DROUGHT | ASSISTANCE

Eastern farmers to get help from feds AgriRecovery | Ag minister confirms program, but details thin BY BARRY WILSON OTTAWA BUREAU

As the 2012 hunting season comes to a close, Strathmore, Alta., district fish and wildlife officer Jim Songhurst pulls over a vehicle towing a trailer to check for harvested wildlife. Songhurst was patrolling roads and fields to ensure hunting regulations were being obeyed. | KEVIN LINK PHOTO

ELECTION | POLICY

Pulse growers block endorsements Board elections | New code of conduct prevents current members from endorsing candidates BY SEAN PRATT SASKATOON NEWSROOM

Saskatchewan Pulse Growers is changing its governance policies in the wake of an election controversy. The organization issued a news release last week saying no director will endorse or campaign for anybody but themselves in an election. The new policy is in response to an unusual action taken by three members of the current board of directors who handpicked and publicly endorsed two of the five candidates running to fill two vacancies on the board. Shawn Buhr, Jim Moen and Bert Vandenberg recruited Robert Hun-

deby and Trevor Simpson to run in the 2012 election and then threw their support behind the young farmers in a news release and in advertisements in community newspapers. That raised the ire of other candidates running in the election and of some of the levy-paying growers. Board chair Morgan Nunweiler said he fielded a steady stream of calls from growers questioning how this year’s election campaign was unfolding. “There were concerns that the SPG board and whole organization were endorsing candidates,” he said. That is not the case, he added. It was three individuals on the board that

issued the endorsements. Those three have since apologized to their fellow board members and to the candidates running in the 2012 campaign. “The board is unhappy that we’ve been put in this situation and had to deal with this, but the board is on the right track,” said Nunweiler. SPG has a director code of conduct, but there was nothing specific in that code related to elections. Now there is. He said the board will welcome with open arms any of the five candidates running in the election. Nunweiler said the board felt it was necessary to publicly state that it had made the governance changes.

“The main purpose for this is to restore some confidence in our board,” he said. SPG has been through a number of dramatic changes recently, including last year’s resignations of its chair, Murray Purcell, and longtime executive director, Garth Patterson. There have also been disputes between board members. Nunweiler said just because SPG has been embroiled in controversy of late is not a sign of deep-rooted problems at the organization. “Changes are not necessarily signs of dysfunction,” he said. “I think our organization is better because of our changes (and) stronger going forward.”

BIG SKY FARMS | ASSETS

Unnamed buyer making bid for Big Sky Farms Auction possible | Identity of potential buyer will become public at time of auction BY KAREN BRIERE REGINA BUREAU

Another suitor is vying for the assets of Big Sky Farms. As a result, an auction could be held in January to sell the Humboldt, Sask., pork producer. Kevin Brennan, senior vice-president of receiver Ernst and Young Inc., said at least one other party met the November deadline to extend the sale process. Olymel LP had offered $65.25 million for the company, which entered

receivership in September, and was selected as a stalking horse bidder. A stalking horse bid is a way to maintain the value of a company’s assets before a bankruptcy sale occurs. However, other parties had until Nov. 9 to submit their own higher bids. Brennan said Nov. 30 one other party sent the required documents and deposited $250,000 to participate in the auction process. He could not name the potential buyer, but said the process becomes

public at the time of the auction. The new player must complete its due diligence by Dec. 14 and submit an offer by Dec. 28. “Their purchase price would have to be superior to that offered by Olymel to give rise to an auction date of Jan. 8,” Brennan said. “If at any point in this time any of the parties that are participating decide they no longer want to participate, or if they don’t submit an offer which is superior to Olymel, then we proceed to close the Olymel deal.”

Olymel will also have the chance to submit a higher bid after the company learns who is bidding against it and at what price. The receiver will disclose the players and the bids several days before the auction. “Then what we do is we declare one of the bids the leading bid and then everybody starts the auction based on that,” he said. Olymel and Maple Leaf Foods are Canada’s largest players in hog processing, and Maple Leaf recently bought Puratone Corp. in Manitoba.

Ontario and Quebec farmers affected by this year’s drought will receive help from the federal-provincial AgriRecovery program, says federal agriculture minister Gerry Ritz. However, the form of help for producers remains unclear and when it will be announced is up in the air. “I don’t have a specific date in mind (for an announcement), but in discussions with my provincial colleagues … we sent very strong signals some days ago, some weeks ago, that AgriRecovery would be in play,” Ritz told the House of Commons agriculture committee last week. “They will have the choice to either move the animals to the feed or the feed to the animals, whichever makes more sense.” It was the news that Ontario Federation of Agriculture president Mark Wales has been waiting to hear confirmed. Ontario, Canada’s most diverse agricultural province and until last year its largest, has suffered hundreds of millions of damage in drought effects. OFA officials met with the federalOntario AgriRecovery group weeks ago to make a pitch for help, but he said they have heard nothing as governments decide what to announce and when to announce it. “That’s excellent to hear because it was pretty brutal this year,” he said. “We have bad weather from time to time, but the tap turned off in early June and it was the end of the summer before many farmers saw any rain.” Wa l e s s a i d t h e a f f e c t e d a re a stretched from western Quebec and eastern Ontario along northern Lake Ontario, into the agricultural powerhouse of southwestern Ontario and as far north as Grey and Bruce counties in the heart of Ontario cattle country. He said the nature of the aid is still uncertain. “It could be more than just a cheque,” Wales said. “We’ll have to see exactly how they decide to roll it out. It might be more efficient to move the animals to the hay than hay to the animals.” Meanwhile, the HayEast campaign to move cattle feed from the Prairies to Ontario and Quebec continues as western farmers pledge hay. They remember eastern generosity a decade ago with the Hay West campaign during a Prairie drought. Ritz said federal and Ontario governments continue to support the project with a promise of a $500,000 contribution to hay transportation costs and up to $2.5 million in matching funding for private or corporate contributions to the HayEast project. The campaign’s 70,000 bale target has not been reached.

NEWS

THE WESTERN PRODUCER | WWW.PRODUCER.COM | DECEMBER 6, 2012

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AGRONOMY | WEEDS

Volunteer canola a concern Pod shattering | Seeds lost to windstorms could be an issue in pulse crops BY SEAN PRATT SASKATOON NEWSROOM

A survey of canola disease in Saskatchewan found that 77 percent of fields in the province had some level of aster yellow infection in 2012. |

FILE

PHOTO

AGRONOMY | DISEASE

Disease pressure expected to worsen Prairie crops | Aster yellows surprised producers in 2012, while blackleg continues to spread BY SEAN PRATT SASKATOON NEWSROOM

Growers need to prepare themselves for an onslaught of disease next year. There is plenty of inoculum in the soil after the “summer of disease,” said Sherrilyn Phelps, regional crop specialist with Saskatchewan Agriculture. Disease is one of the main reasons why a 16 million tonne canola crop turned into 13.2 million tonnes. Farmers can take a number of steps to prevent that from happening again. Saskatchewan’s canola disease survey found 77 percent of fields had some level of aster yellows infection with a mean incidence of eight percent infection. “I personally saw fields that were over 65 percent aster yellows,” Phelps told delegates attending the Agri-Trend 2012 Farm Forum Event. She said a fellow agronomist at Meadow Lake, Sask., had a field that should have produced 40 bushels per acre but delivered seven because of aster yellows damage. “I think we’ve underestimated some of the yield loss that resulted from aster yellows this year,” said Phelps. Sclerotinia was found in 91 percent of the surveyed fields with a 19 percent level of infection, although some fields had more than 90 percent infection. The rule of thumb for that disease is yield loss generally amounts to half of the infection rate. Blackleg infection is on the rise in Saskatchewan. Thirty-two percent of fields had the disease with a mean incidence of 3.7 percent. The disease has particularly spiked in Alberta, where experts suspect

varietal resistance is breaking down because growers are pushing canola rotations. “That’s having a huge impact on the blackleg levels,” said Phelps. Fusarium head blight was the biggest problem in cereals, with 82 percent of sampled fields in Saskatchewan containing at least one head infected with the disease. Leaf diseases were prevalent, and ergot was an issue in pockets of the province. High levels of mycosphaerella blight and ascochyta blight were found in pea fields in the northern grain belt. There was also plenty of foot rot and root rot, which caused up to 50 percent yield loss in some pea fields. The aphanomyces strain of root rot was discovered in Saskatchewan for the first time. “It is one of the major root rot organisms in Manitoba, and worldwide is one of the most devastating root rot organisms. Once it’s in the soil it’s very, very hard to get rid of,” said Phelps. It will be closely monitored next year. Root rot and anthracnose were prevalent in lentil crops in west-central and southeastern Saskatchewan. Phelps said producers should prepare to once again do battle with disease in 2013. The first line of defense is choosing seed with proper germination and vigour that is free of weed seeds and has an acceptable level of seed-borne diseases. “The seed you plant is one of the factors that you do have control over,” she said. Labs are reporting high levels of disease on tested seed. Phelps encouraged growers to get their seed tested at an accredited lab

Blackleg infection was present in 32 percent of Saskatchewan fields in 2012. | FILE PHOTO because it gives them valuable information and provides documentation for insurance claims proving that the seed they planted was in good shape. She stressed that growers should not plant wheat and barley seed containing any level of fusarium graminearum in regions where the disease is not common. In areas where it is common, they should use another seed source when levels exceed five percent. Seed treatments should be used when fusarium graminearum levels are between two and five percent in areas where the disease is common. A threshold of greater than five percent should be used for other species of fusarium. Chickpeas should not be planted if seed contains more than 0.3 percent ascochyta blight. Seed treatments should be used on lentil seed containing more than five percent ascochyta blight, but growers should not use the seed if levels exceed 10 percent. Seed treatments should be used on peas containing more than 10 percent ascochyta. Up to 10 percent sclerotinia and

botrytis is tolerable on lentil and pea seed but will result in seedling blight without treatment. Fusarium infection should be added to the botrytis and sclerotinia numbers. Phelps said a safe rule of thumb is that treatments provide 85 to 90 percent control. Treatment will bring the level of infection down to two to three percent if a seed lot has 20 percent fusarium, which is acceptable. Growers are encouraged to stick to rotations to minimize disease, but Phelps recognizes that farmers often push rotations for financial reasons. If they do, they need to choose varieties resistant to disease, rotate their herbicides and plan on applying fungicide. Farmers should definitely consider choosing disease resistant varieties next year. Research from Melfort, Sask., shows that fungicide application on Harrington barley, which has poor disease resistance, improved yields by 19 to 30 percent. However, yields were boosted by only three to four percent on Newdale, which has fair to good resistance. Growers may want to plan on more than one fungicide application. Timing of application is critical. Fungicide should be applied at the flag leaf stage of development for leaf diseases and at the heading stage for fusarium head blight. Fungicide for sclerotinia in canola should be applied at the 20 to 50 percent bloom stage, ideally 30 percent when the crop is as yellow as it gets. For pulses, it should be applied at the early flower stage, seven to 14 days after the first fungicide application or when growers see symptoms. FOR MORE FROM AGRI-TREND 2012, SEE PAGES 6, 8 AND 16.

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A violent fall windstorm that tossed around canola swaths and hammered yields will have implications for next year, says a crop specialist. Sherrilyn Phelps, regional crop specialist with Saskatchewan Agriculture, said the wind caused severe pod shattering. Farmers in her area near North Battleford, Sask., lost 10 bushels per acre to the wind. “That is 500 pounds of seed per acre that is now sitting in your fields, so canola volunteers are going to be an issue for this next spring,” she said in a No v. 2 8 p r e s e n t a t i o n a t t h e Agri-Trend 2012 Farm Forum Event. Farmers who plant cereal crops on those fields will have plenty of good herbicide control options at their disposal, but those who plant pulse crops will have fewer options and limited efficacy with those options. Growers who decide to push their rotations and plant canola on canola will have to switch their herbicide tolerance systems.

It all depends on your field situation. SHERRILYN PHELPS SASKATCHEWAN AGRICULTURE

Herbicides are not the only tool farmers have at their disposal. They may also choose to increase their seeding rates or pick varieties that are more competitive with weeds. “Those are practices that organic growers use because they don’t have the herbicide options,” said Phelps. They can also vary their seeding dates, delaying planting so they can control volunteers early or seeding early to get a jump on weeds. “It all depends on your field situation,” said Phelps. Herbicide residue is another agronomic challenge growers could be facing in parts of the southern Prairies that received lower than average summer rainfall last year. Most residual herbicides are broken down through microbial activity, but the microbes need moisture to do their job. Phelps said herbicide residue caused severe injury and recropping following the dry years in 2001 and 2002. “This is just kind of a heads up,” she said. “I’m not saying it’s going to happen, but guys should be thinking of their crop rotations and looking at their past herbicide history.” Phelps said some herbicide products have residual properties that can damage crops. For example, Everest and clopyralids cause injury to pulses, canola is sensitive to Pursuit and Odyssey and lentils are extremely sensitive to sulfentrazone.

6

DECEMBER 6, 2012 | WWW.PRODUCER.COM | THE WESTERN PRODUCER

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Bustin’ yields. CDC Austenson Feed Barley

M A RKE T S EDIT O R : D ’ A R C E M C M ILLAN | P h : 306- 665- 3519 F: 306- 934-2401 | E-MAIL: DARC E.M C M ILLAN @PRODUC ER.C OM | TWITTE R : @ D AR CE MCMILLAN

CROP OUTLOOK | PRODUCTION FORECAST

GRAIN | SUPPLY

Wheat seen as good bet in 2013

Rainfall furthers supply concerns

Early predictions | Canadian canola acres to shrink, keeping supply tight and nudging up prices BY SEAN PRATT SASKATOON NEWSROOM

Farmers are in line for lower corn and barley prices in 2013, but the wheat and canola outlook is encouraging, says a Winnipeg grain analyst. Marlene Boersch, managing partner of Mercantile Consulting Venture Inc., told delegates attending the Agri-Trend 2012 Farm Forum Event to expect a resurgence in corn production next year. Strong prices and tight supplies are likely to lead to a seven percent increase in world coarse grain production to 1.19 billion tonnes and a 16 percent increase in coarse grain exports to 145 million tonnes. World corn production will lead the charge, rising to a record 884 million tonnes, up 44 million tonnes from last year’s disappointing harvest. Corn consumption would have to increase by at least 10 percent to mop up the additional supplies. Boersch forecasts a two percent increase in demand, resulting in 125 million tonnes of corn carryout, up from an estimated 118 million tonnes in 2012-13. “That means corn prices most likely are going to be substantially lower and corn prices drive some of the other commodity prices,” she said. Mercantile Consulting Venture is forecasting an average corn farm price of $4.75 per bushel in 2013-14, down from a range of $6.95 to $8.25 in 2012-13. Barley will follow corn down.

Floods in Argentina worry importers

Marlene Boersch, managing partner of Mercantile Consulting Venture, is forecasting positive prices for wheat but weaker feed grains over the next year. | FILE PHOTO futures prices. She said a Chicago December 2013 futures price of $9 per bushel should be a hedging trigger for farmers. “It’s almost a no-brainer. It’s a record price and a very, very good return,” she said. Mercantile Consulting predicts a 16 percent increase in Canadian durum acres in 2013 but a one percent decline in supply because of low carry in. Durum exports are expected to rise six percent this year because of poor 2012 crops in the European Union, Morocco and Kazakhstan. Carryout stocks are expected to fall 25 percent to the lowest level since 2007-08.

Wheat

Oilseeds

The wheat outlook is the opposite of corn. Global acreage and production are expected to rise, but ending stocks will fall because of strong demand for the crop. Production is forecast to rebound to 677 million tonnes in 2013, up from 651 million tonnes in 2012. Ending stocks will contract to 171 million tonnes, down from 174 million tonnes in 2012-13 and 198 million tonnes the previous year because of increased feed wheat demand and a strong export program. China’s corn and barley imports have been falling since the 2012-13 crop year began, but wheat is way up. Boersch expects that to continue, with China’s wheat imports rising 10 percent to three million tonnes in 2013. The wheat price forecast is bolstered by the dismal condition of the U.S. hard red winter wheat crop. It is in the worst shape heading into dormancy that it has been in since the Dirty Thirties. There are also problems with winter wheat crops in the United Kingdom and Ukraine. Despite the bullish outlook for wheat, Boersch strongly encouraged growers to consider locking in

Boersch anticipates U.S. soybean plantings will increase by 1.3 million acres from 2012 and average yield will rise by 1.8 bu. per acre. That would result in 3.33 billion bu. of the crop, up 12 percent from this year’s harvest. Ending stocks for 2013-14 are expected to be 381 million bu., up 172 percent, causing the average farm price to fall to $10.75 per bu. from a range of $13.90 to $15.55 in 2012-13. Boersch sees a dramatic 10 percent decline in Canadian canola acres in 2013-14 because of disappointing yields and strong competition from other crops. “When I talk to Manitoba farmers, they’re going to switch to soybeans and wheat. There’s no way that they’re going to keep growing canola,” she said. A return to average yields would result in a 14 million tonne crop and total supply of 15 million tonnes, down from the 15.8 million tonne supply in 2012-13. Carryout will fall by 228,000 tonnes to 734,000 tonnes. “It’s going to be potentially a very tight canola picture,” said Boersch. New crop canola is undervalued

FIELD FORECASTING Mercantile Consulting Venture expects wheat to be popular among Canadian farmers in 2013 based on estimated returns, while peas could be one of the poorer performers. That should result in more wheat and less peas going in the ground next spring. Average return projections ($/acre) yellow peas $123.68

price & yield assumptions* $7.50/bu.

40 bu./acre

large green lentils $131.65

$21.00/bu.

n/a

canola $133.45

$11.50/bu.

32 bu./acre

n/a

n/a

canaryseed $134.68 flax $142.60

$14.00/bu.

22 bu./acre

red lentils $146.20

$22.00/bu.

n/a

CPS wheat $192.39

$7.50/bu.

50 bu./acre

small green lentils $193.48

$25.00/bu.

n/a

hard spring wheat $203.19

$8.15/bu.

40 bu./acre

durum $213.36

$8.75/bu.

44 bu./acre

$35.00/bu.

n/a

kabuli chickpeas $267.95 * Returns include per acre cost assumptions

Source: Marlene Boersch, Mercantile Consulting Venture Inc. | WP GRAPHIC

compared to soybeans. China will favour Canadian canola over U.S. soybeans if that price relationship continues, which would cause enough additional demand to create a negative canola carryout. That can’t happen, so Boersch anticipates there will have to be price rationing soon. Pulses Boersch advised pea growers to hang onto their pea crop for a while. India had a poor kharif (summer) pulse harvest, and planting of the rabi (winter) is nine percent behind last year’s pace. Chickpeas’ per acre return ranks third and lentils fifth out of the six main rabi crops grown, based on the Indian government’s rabi minimum support price. Boersch said India’s combined 2012-13 kharif and rabi pulse production could be down as much as 25

to 35 percent, which could lead to another buying spree in 2013. “The (pea) market is really quite slow right now, and I think it will remain utterly uneventful until (January-February), so don’t even think about doing anything on the pea market until we get into the new year,” she said. Mercantile Consulting anticipates a five percent increase in pea acres in 2013 because of an expected drop in lentil plantings. Anything more than that would be too much. There is still a glut of lentils on the world market, which has importers buying on a hand-to-mouth basis. “We really do need to clean out some of this hangover from the 201011 crop,” said Boersch. She expects growers to reduce acres by 15 to 20 percent because of strong competition from other crops such as wheat. That would reduce carryout to 316,000 to 211,000 tonnes from an estimated 556,000 tonnes in 2012-13.

BUENOS AIRES, Argentina (Reuters) — Rain that is expected to hit Argentina’s grain belt this week will sustain the floods that have fanned global supply worries by swamping and blocking access to key soybean, corn and wheat areas, local experts said Dec. 3. Importers need all the South American grain they can get after a string of disappointing harvests from global breadbaskets Russia, the United States and Australia. Argentine farm output, particularly in the key agricultural province of Buenos Aires, has come under pressure from months of heavy rain. Even normal rainfall at this point poses a problem in Argentina, the world’s top exporter of soy oil and soymeal. “West, central and eastern Buenos Aires province are flooded. This is flat land that does not have enough slant toward the ocean to drain off. Logistics are in chaos because the floods are crisscrossing over the roads,” said Anthony Deane, head of consultancy Weather Wise Argentina. Showers were relatively light Dec. 2-3. “It was not a lot of rain, but any added moisture at this point sustains the flooding,” Deane said. Until the weekend showers, the rate of soy and corn planting had picked up recently as the weather moderated after the Pampas was lashed by unusually harsh August-October storms. Toward the end of this week, Deane said he expects 100 to 150 millimetres to fall over 60 percent of Argentina’s grain belt, while the remaining 40 percent should receive 40 to 50 mm. Soggy topsoil makes it impossible for farmers to drive their tractors and seeders over their fields without sinking in the mud. The Buenos Aires town of Carlos Casares received 20 to 30 mm of rain early Dec. 3, said Eugenio Borras, a manager for Argentine soy farming giant Los Grobo. The company is based in the town, where soy planting is running 50 percent slower than last year’s pace. “Everything in the centre of Buenos Aires province is very complicated. A lot of land is under water,” said Borras, who manages 62,000 acres of soy cultivation for Los Grobo. “The worst part is the logistics. Farmers can’t get to some of their fields.” As of last week, soybean seeding nationally was running eight percentage points behind the normal pace and corn seeding was 10 percentage points behind.

MARKETS

THE WESTERN PRODUCER | WWW.PRODUCER.COM | DECEMBER 6, 2012

MARKETING | EXPERTISE

CATTLE SECTOR | RISK MANAGEMENT

Buyer beware

Cattle price insurance looks likely

HEDGE ROW

ED WHITE

Y

ou assume your doctor has a medical degree. I’m sure you want your lawyer to have a law degree. You expect grain truckers bringing a B-train into your yard to have a Class 1 licence. You are relieved when the companies that buy your crops are bonded by the Canadian Grain Commission. But did you know that your prospective farm marketing adviser might have no education, training, experience or credentials? Anyone can claim to be a farm marketing adviser. The term essentially means nothing. Anyone can paint up a sign and go into business advising you on how to market your crops. Many farmers in the post-CWB monopoly world are looking for farm marketing advisers for the first time, and they need to realize that the title itself means nothing. Farmers need to do background checks to ensure they are talking to somebody who has at least a little knowledge and training in how to market crops and livestock. There are no specific qualifications or certifications for farm marketing advisers, but I think farmers should look for signs that the person they’re considering employing has shown at least some seriousness about marketing or agriculture. Or anything. Some advisers I know have university degrees in economics or agriculture. That demands some commitment. Others have business degrees or community college certificates. There are also professional certifications and memberships that farmers can look for. For instance, futures traders have to be both licensed and regulated. Professional agrologists require specialized degrees, additional training and experience to qualify as a P.Ag. Some marketing advisers join organizations such as the Canadian Association of Farm Advisors, which provides training and professional development and brings together serious farm advisers in many areas of agriculture from across each province and the country. Belonging to an organization like CAFA probably signifies that somebody is taking his or her job seriously. Most important, of course, is to check a prospective marketing adviser’s history. Has he or she been in business long? Do they have happy clients? The large number of farmers who are considering hiring outside marketing help for the first time might be drawing some unqualified, unskilled and uncaring individuals out of the woodwork, people willing to take your money for their advice. It’s up to you to ensure that if you hire someone to help you market your crops and livestock, they have more than a phoney baloney title on a business card.

7

Western Canada | Price insurance designed to help revive the industry and build the cow herd BY ROBERT ARNASON BRANDON BUREAU

Industry leaders in Manitoba are confident that the federal and provincial governments will unveil a cattle price insurance program for Western Canada, possibly next year. Manitoba Beef Producers has spent the last few years lobbying for cattle price insurance similar to an existing program in Alberta. The lobbying has paid off because government officials are now publicly backing the proposed program. “I feel pretty confident about it,” Manitoba agriculture minister Ron Kostyshyn said during a media scrum at the Rancher’s Forum held in Brandon in late November. “They (producers) feel this is the way we have to go, as far as the viability of (the industry),” he said. “Our livestock numbers (in Manitoba) have dropped so drastically in the last number of years. We have to have some bankable options for the producers.” Alberta introduced a price insurance program in 2009 to help producers manage the price risk of feeding cattle. It guarantees producers a floor price on insured cattle. The proposed program will be available to cattle producers across West-

Cattle price insurance could be coming next year | ern Canada if it comes together, said MBP general manager Cam Dahl. “My understanding is that this will be a western Canadian offering,” Dahl said. Government representatives support the price insurance program, he added. “I would say absolutely that the players involved are committed,” he said. “We’re talking to MAFRI (Manitoba Agriculture) on this subject already and looking at mapping out a plan moving forward.” Dahl said the program will be based

FILE PHOTO

on the Alberta model. “There will be some tweaks along the way. What exactly those are going to be is what we’re going to be talking about over the next few months.” Producers have suggested the premiums in the Alberta program are too high, and Dahl said the issue will be part of the negotiations for the proposed western Canadian program. “Looking at ways to reduce the premiums is one of the things that needs to be worked on.” Canadian Cattlemen’s Association president Martin Unrau said Mani-

toba producers in particular need price insurance to revive the industry. The provincial cow herd dropped to 495,000 in 2012, the lowest figure since 1994. “Ou r c ow h e rd i s d ow n f ro m 670,000 a couple of years ago to just under 500,000 now,” he said at the Rancher’s Forum. Janet Honey of the University of Manitoba said in a 2012 report on Manitoba’s cattle industry that 25 to 33 percent of calves are fed to slaughter weight in the province. Unrau said the feedlot industry would rebound if producers could manage price risk. “If we had a price insurance program in Manitoba today, we would finish cattle, even with no (slaughter) plant … because we could then guarantee the end price,” he said. MBP president Ray Armbruster agreed. “It gives producers marketing options,” he said from his farm near Rossburn, Man. “Producers, instead of just selling calves, may decide to background.… I see producers being able to think about retaining cattle and retaining ownership.” “For the fall of 2013, I would hope that we’re in a position to start taking advantage of a program like that,” said Armbruster.

OPEN MARKETING | PRICE DISCOVERY

Grain firms keep elevator prices under wraps BY ED WHITE WINNIPEG BUREAU

The birth of the free market for prairie grain hasn’t caused a burst of light to shine on grain prices. If anything, prairie grain prices have become more mysterious in the months since the CWB monopoly ended. “They don’t want transparency,” Harold Davis said about most of the large prairie grain companies. “Their view is that if you’re an existing customer, they’ll give you a price.” Davis operates Prairie Crop Charts, an online crop price charting service that provides market prices and analysis for all the major prairie crops. Davis often finds creative ways to represent prairie crop values, sometimes relying on North Dakota and Montana prices when Canadian prices are unavailable or suspect. Canadian wheat and barley prices often diverged significantly from U.S. prices when the CWB monopoly was in place, and many observers expected that the price spreads would vanish once the U.S. border opened. However, Davis said it’s hard to determine the true state of prairie elevator prices because many companies guard those prices. Many elevators won’t give him prices, often those of the major grain companies. Louis Dreyfus Canada has been open with its prices, but otherwise finding available prices has been sporadic. Davis said some of this is probably because of the primitive but evolving

HAROLD DAVIS PRAIRIE CROP CHARTS

prairie grain market, with companies gingerly feeling their way from one export sale to the next. Basis levels and spreads of Canadian grain prices to U.S. futures values are also evolving, with many aberrations appearing. For instance, some prairie medium protein wheat that is similar to the

wheat represented by Kansas City Board of Trade futures has seen basis levels that suggest the grain is being priced as if it has to first be shipped to the Kansas City futures delivery zone, rather than to the export markets where it is actually going. Davis expects that sort of aberration will likely end soon. “We’re beginning to see more sophistication in the basis.” He expects the big grain markets will become more transparent, even if the elevator companies might be more comfortable with less clarity. “There’s going to be a great harmony in grain prices,” Davis said. Even though the CWB monopoly never controlled special crops and small acreage crops, their prices have also suffered a lack of transparency

on the Canadian side of the border. Davis said he often has to use North Dakota and Montana prices for crops because Canadian buyers don’t like being too open with what they’re willing to pay. He hopes all buyers in the postmonopoly world will start to move toward the open pricing common in the United States. “The Americans always seem to have a price,” said Davis.

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8

MARKETS

DECEMBER 6, 2012 | WWW.PRODUCER.COM | THE WESTERN PRODUCER

ANALYSIS | TRENDS

Commitment of traders report is window on grain market MARKET WATCH

D’ARCE McMILLAN

T

he front-of-mind factors for farmers to consider as they work out their marketing and hedging strategies include costs of production, break-even points, cash flow needs and the overall supply and demand fundamentals of the market. Those are the basics, but there are a host of technical indicators that can also help understand market trends and predict where they might go in the future. It is also helpful to be aware of what each group of players in the market is thinking. The participants in grain markets can be divided into three groups: • commercials, which are those in the grain business such as grain handlers, exporters and processors • non-commercials, which are big speculative investment funds • non-reportables, which are small speculative traders. The U.S. Commodity Futures Trading Commission issues a Commitment of Traders report every Friday afternoon about the weekly net shift in positions. It is available at www. cftc.gov. The reports cover the week’s trade ending Tuesday and have nothing

to do with price. They provide information on what the largest industry players are doing. From it we can tell if they are changing direction in their buying and selling power. The report shows the position of each of the groups, whether they are net long, meaning they hold “buy” positions and expect the market to

CURRENCY | BEEF, HOG MARKETS

BEEF COWS MANITOBA FARMS 1990 - 2012

Loonie gains value | Strong buck cuts industry profits BY ED WHITE WINNIPEG BUREAU

Manitoba’s beef cow and pig herds have risen and fallen with the value of the Canadian dollar. The two industries have shown a remarkable similarity in the shape of their expansion and contraction, regardless of different market cycles, disease crises and border issues since the 1980s. Manitoba Agriculture livestock industry analyst Marni Donetz said the similar rise from the late 1980s and then sharp contraction from 2007 shows the profound impact of the Canadian-U.S. dollar exchange rate on livestock production profitability.

BARCHART GRAPHIC

rise, or net short, meaning they hold “sell” positions and are expecting the market to go down. The report compares the positions relative to where they were the previous week. However, to put the numbers into context you need a longer-term view over many months or perhaps years. Graphic, long-term pictures of these shifting positions are available

and market traders. I’ve also heard other analysts talk about the importance of watching to see what big speculators are doing because they have huge amounts of money to invest and the weight of their dollars can have a big influence on price direction. I think a good first step for farmers learning about risk management is to start watching the report to become aware of what all the players are doing. It is a bit like a football player knowing the broad strategies of the opposing team. Espeseth identified a specific example of how watching commercials can provide a signal of future market direction. Commercials are in a record net long position in soy oil. They were building that long position this fall, even as prices across the oilseed complex were falling because speculative traders began to worry about the potential of a record South American soybean crop. However, commercials apparently knew demand for North American soy oil would be great, especially as the last supplies from South America’s 2012 crop were used up. Soy oil futures began to rise as that became known in the wider market later in November, and so did soybeans and canola. So in this case, watching the commercials build up their net long position in soy oil gave warning that the autumn price decline in oilseeds was about to reverse. Follow D’Arce McMillan on Twitter @darcemcmillan.

PIGS ON MANITOBA FARMS 1990 - 2010 3,000

700 650

COOL

BSE

2,500 S

THOUSAND HEAD

600

THOUSAND HEAD

Dollar key factor in livestock trends

Online market data providers allow users to create charts like this. The lines at the bottom show commitment of traders positions. |

from web-based market data providers such as BarChart. The agricultural market price listings on our website, Producer.com, use BarChart data. If you burrow down into the chart offerings there, you’ll find that you can select “indicators.” Among the options available is a commitment of traders line chart. If you select that, a chart showing the positions of the speculators and commercials will appear immediately below the price and volume charts. Sometimes the page does not load properly the first time, but stick with it. It usually works on the second try. Regan Espeseth, an investment adviser and commodity broker with the Royal Bank in Saskatoon, spoke about using futures markets for risk management when addressing the Agri-Trend 2012 Farm Forum Event in Saskatoon Nov. 28. Espeseth highlighted the Commitment of Traders report as a valuable window on the market. He likes to take trading cues from the commercial players. “The number one reason is they have been the most accurate looking back on the charts,” he said in an interview. “They are laser focused on their particular commodity.” The commercial players are directly involved in the grain business. They know what the export market is demanding and how much oilseed crushing plants, flour mills and other end users need. They have a front row seat on the demand picture and work it into their hedge trades, long before the word gets out to the analysts, newsletters

550 500 450

2,000

1,500

1,000 400

91

93

95

97

Source: Stastics Canada

350

91

93

95

97

99

Source: Stastics Canada

“I believe the main factor in the run-up (and subsequent decline) was the change in the exchange rate,” said Donetz. “We went from a very advantageous situation, then to par.” The exchange rate story has often been told within the larger livestock market narrative, but Donetz’s charts of beef cow and pig numbers on Manitoba farms threw the impact of that one factor into stark relief. Recent decades have seen strikingly different issues and crises hit the two industries, she told the Fields on Wheels conference Nov. 9.

01

03

05

07

09

99

01

03

05

07

09

YEAR

11

YEAR Both have faced U.S. trade actions at different times. Beef cattle producers were hit especially hard by BSE in 2003, while hog producers saw a sudden market and profitability slump in 2009 when H1N1 struck. The two industries also follow radically different production and market cycles. Hog production and prices tend to follow a three and a half to four year cycle, while beef cattle have a seven to nine year cycle. The difference in the cycle lengths is primarily because of gestation times and number of offspring which determine the amount of time the

two types of livestock require to expand production in response to profitable prices. Cattle take much longer than hogs. However, both beef cow and pig production have expanded and contracted at roughly the same times. Each rose for many years until a peak in 2007 and then fell sharply for a multi-year period. The timing of the break from expansion to contraction might have been tr iggered by the spike in feedgrain prices, which occurred in 2007-08. However, the biggest challenge to long-term livestock profitability was the reversal of the steady weakness of the Canadian dollar versus the

U.S. dollar. The currency weakness of the 1990s ended in 2002 and the currency went from the low 60 cents US to about 90 cents by 2006 and reached par in 2007. Donetz said the beef cow and pig herds showed signs of stabilizing until this summer’s feedgrain price spike, which has caused more woe to livestock producers. However, she remains optimistic about the outlook for livestock production in Manitoba, especially with beef cattle. “I think there is so much opportunity because it is an industry that is flexible and can use resources that no one else wants.”

MARKETS

THE WESTERN PRODUCER | WWW.PRODUCER.COM | DECEMBER 6, 2012

9

GRAIN SHIPPING | MISSISSIPPI RIVER

Low water, less cargo on Mississippi ships Low river level threatens grain exports CHICAGO, Ill. (Reuters) — U.S. grain exporters have slashed the weight of cargo shipped by barges on the Mississippi River to the Gulf of Mexico by up to 50 percent. The move was necessary because of low water on a critical stretch of the waterway after the worst drought in 56 years. Ba r g e c o m p a n i e s, i n c l u d i n g Ingram Barge and Cargill, have informed exporters that the draft has been reduced to eight feet from the normal 12 feet for shipments on the Mississippi River north of Cairo, Illinois, which means 800 tonnes less in cargo loaded on barges. “That’s a sizable chunk of cargo,” said John Kindra, head of the Illinois River Carriers’ Association and president of Kindra Lake Towing. He said exporters would have to pay

extra in freight charges because of the draft restriction. Less cargo allows barges to ride higher on the water but also increases shipping costs because more barges are needed to haul the cargo. As well, barge tow boats burn more fuel making more trips. Reduced water from the Missouri River, which flows into the Mississippi River at St. Louis, was expected to cause the already-low Mississippi to drop by several more feet in the coming weeks. Sixteen U.S. senators have appealed to president Barack Obama to divert more water from reservoirs on the Missouri River to the Mississippi to prevent barge traffic from shutting down. Low water is a looming disaster, said the senators from states along

Four less feet of draft means barges have to reduce cargo by 800 tonnes. | REUTERS PHOTO the Mississippi and Missouri rivers. “Substantial curtailment of navigation will effectively sever the country’s inland waterway superhighway, imperil the shipment of critical cargo for domestic consumption and for export, threaten manufacturing industries and power generation and risk thousands of related jobs in the

Midwest,” they wrote. The prime area of concern is from St. Louis south to Cairo, Ill. Rocks on the river bottom at two locations on that stretch will become increasingly dangerous for boats as the river recedes, and the river could effectively be closed to navigation if it becomes as shallow as current fore-

casts suggest. Fully loaded barges on the Mississippi contain 1,500 tons of cargo under normal river conditions and have drafts of 12 feet. On the Illinois River, barges are regularly loaded to a nine-foot draft, or 900 tons. Barges lose 200 tons of capacity for each foot of reduced draft.

those heavier than 600 lb. were generally steady. Heifers 300-600 lb. fell significantly, while most heavier heifers rose 50 cents. Auction volume fell 27 percent to 63,137 head. Weekly feeder exports to Nov. 17 fell 10 percent to 1,213 head. This week’s feeder offering was expected to be seasonally large, but auction volume should trail off closer to Christmas. Lower stocker heifer prices may indicate softening demand.

dipped, with the AAA/AA spread narrowing to $8.29. AAA cutouts were $175.77 per cwt., down from $176.63, and AA fell to $167.48, down from $168.09 the previous week.

selected from the weekly report from Canfax, a division of the Canadian Cattlemen’s Association. More market information, analysis and statistics are available b y becoming a Canfax subscriber by calling 403-275-5110 or at www. canfax.ca.

CANFAX REPORT FED PRICES PEAK Alberta fed steer prices hit the highest level of the year at $118 per hundredweight, up $1.86 on the week and up more than $4 in two weeks. Fed heifers were $116.92, up $1.35. The basis tightened thanks to a smaller show list, feedlots current in their marketing and active domestic demand. In Alberta rail trade, the range was $195.75-$196.75. The time it takes packers to take delivery in some cases is stretched to three weeks. The cash-to-futures basis narrowed by $2.50 to -$9.10. It was the best basis since the last week of August. However, it remains about $1.25 weaker than the five-year average. Weekly fed cattle exports to Nov. 17 remained strong, with 11,248 going south. Fed exports have already surpassed last year’s total.

Fe d supplies should be tight through December, but more cows will be available before too long.

COWS LOWER An ample supply of slaughter cows pressured prices down $1 per cwt. D1, D2 cows ranged $55-$77 to average $65.63 and D3s ranged $45$65 to average $58.48. Dressed prices were mostly steady, at $130-$134. Butcher bull prices were steady, averaging $74.52 per cwt. Weekly western Canadian non-fed slaughter to Nov. 24 was steady at 6,610 head. So far this year, slaughter is running 19 percent behind last year. Weekly non-fed exports to Nov. 17 were up 12 percent at 8,683 head Non-fed supplies are expected to tighten.

LIGHT FEEDERS FALL Steers 300-400 pounds fell $1, while

This cattle market information is

LESS THAN 90 DAYS LEFT!

BEEF FLAT U.S. Choice and Select cutouts traded higher earlier in the week but ended mostly flat. The Choice-Select spread widened to more than $21. U.S. cutouts may be at or near their top. Weekly Canadian cutouts to Nov. 23

Simple and Easy way to Earn Up to $1000/hr.

WP LIVESTOCK REPORT HOGS RISE U.S. packers wanted hogs in the typically busy week following American Thanksgiving and had to pay more to get supply. Market ready numbers are tight after drought-induced herd culling earlier in the year. Carcass prices rose. Ron Plain and Scott Brown of the University of Missouri noted the average hog carcass price is 95.9 percent of the cut-out value, which is unusually high for this time of year. The average barrow and gilt live weight in Iowa-Minnesota last week was 274.4 pounds, 0.5 pounds above a week earlier, but down 1.6 pounds from a year ago, they said. Iowa-southern Minnesota hogs delivered at packing plants were $60$61 US per hundredweight Nov. 30, up from $57.50 Nov. 23. The U.S. composite pork carcass

cut-out value was $84.74 Nov. 30, up from $81.92 Nov. 23. U.S. slaughter for the week rose to 2.4 million from 2.07 million in the previous holiday-shortened week. This week was up from 2.36 million a year ago.

BISON STEADY The Canadian Bison Association said grade A bulls in the desirable weight range sold at prices up to $3.85 per pound hot hanging weight. Grade A heifers sold up to $3.75. Animals older than 30 months and those outside the desirable weight range may be discounted.

LIGHT LAMBS STRONGER Beaver Hill Auction in Tofield, Alta., reported 758 sheep and 216 goats sold Nov. 26. Wool lambs lighter than 70 lb. were $122.50-$140 per cwt., 70-85 lb. were

$116-$127, 86-105 lb. were $111$120 and 106 lb. and heavier were $100-$114. Wool rams were $50-$70 per cwt. Cull ewes were $43-$57 and bred ewes were $120-$200 per head. Hair lambs lighter than 70 lb. were $110-$135 per cwt., 70-85 lb. were $115-$125, 86-105 lb. were $100$115 and 106 lb. and heavier were $90-$100. Hair rams were $61-$87 per cwt. Cull ewes were $51-$71. Good kid goats lighter than 50 lb. were $147.50-$195. Those heavier than 50 lb. were $165-$200 per cwt. Nannies were $45-$70 per cwt. Billies were $113-$157.50. Ontario Stockyards Inc. reported 1,277 sheep and lambs and 69 goats traded Nov. 26. All well-fed lightweight lambs sold stronger. Heavy lambs were steady to slightly weaker. Sheep and goats traded steady.

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DECEMBER 6, 2012 | WWW.PRODUCER.COM | THE WESTERN PRODUCER

WPEDITORIAL

OPINION

Editor: Joanne Paulson Phone: 306-665-3537 | Fax: 306-934-2401 E-Mail: [email protected]

AGRICULTURAL ECONOMY | FOOD PRICES

CRAIG’S VIEW

Higher food bill fact of life as production costs rise

T

he baby boomers among us can recall times past when the arrival of Christmas oranges was an exciting and delicious event. Packed in wooden crates, each orange was individually wrapped in paper, usually scarlet or orange, with the wood, the oranges and the paper carrying the exotic scents we associated with the Far East. Many a Christmas season was only made complete when the oranges arrived in the holiday season and the crate was opened with the aid of a hammer. There was no profligate gorging on these citrus delights. They were carefully meted out as a holiday treat. And one orange from that crate would quite nicely fill the toe of each Christmas stocking. Today, these oranges still appear in great numbers at Christmas, in recognition of tradition, but they are also available virtually all year round. Consumers expect it. It’s an example of ever-changing consumer demands as the world’s agricultural production becomes more globally available. We want our bananas, our pomegranates and our radishes to be available all winter, though we know the distances these items must travel. But seldom do we see the irony in complaining about the ever-rising cost of food and the larger percentage of income our food needs require. Last week, Alberta economist Todd Hirsch analyzed Statistics Canada food price data and concluded that food prices are now 28 percent higher than they were in 2002. The consumer price index rose 7.9 percent in Alberta over the same period, and we can assume similar statistics for the other prairie provinces. In a CBC news report, Hirsch explained it thus: “Part of the reason for rising food prices is the very same reason that has lifted farm income over the past five years. Higher commodity prices for grains, oilseeds and livestock have lifted the input costs for bakers and meat packers. These are in turn passed on to the consumer in the form of higher prices at

the grocery store or on the restaurant menu.” Farmers have no need to apologize for receiving more for their commodities and produce. As these pages have often opined, increased productivity, greater costs of production and ever-rising income risk make higher farmer returns from higher commodity prices a necessity if Canada and the world are to continue feeding themselves. Realized net farm income, reported last week by Statistics Canada, reached a record level last year, with the breadbasket provinces showing the largest gains. Some say this reflects the new reality for agricultural prosperity. Let us hope that is true. And if it is, higher food prices will be part of that reality. However, that doesn’t mean farmers are the sole recipients of increases. Every orange in the box takes its portion, as it must if the system of growing, processing and delivering food continues to function. The Common Ground website, developed and supported by American corn and soybean groups, sought to forestall consumer backlash against higher food prices — and the possibility that farmers would bear the brunt — by analyzing one U.S. food dollar. Farms and agribusinesses account for 11.6 percent, food processors 18.6 percent, packaging four percent, transportation 3.5 percent, retail 13.6 percent, food services 33.7 percent, energy 6.8 percent, finances and insurance 4.4 percent and miscellaneous other costs 3.8 percent. Canadian figures are likely similar. In today’s world, commodity prices are higher, farmers’ net incomes are higher and consumers’ food access and choices are wide and growing. It seems a logical turn of events. And it’s the new reality, because we want our daily bread, our fresh food and our Christmas oranges. Let’s get used to it. Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Joanne Paulson collaborate in the writing of Western Producer editorials.

Adopt the pace of nature: her secret is patience. RALPH WALDO EMERSON

A coyote sits quietly listening for rodents moving under the snow on Lake Minnewanka Road near Banff, Alta. | MIKE STURK PHOTO

POLITICAL WINDS | GOOD TIMES

Agriculture minister Ritz’s time in charge blessed with favourable winds NATIONAL VIEW

BARRY WILSON

W

hen offering a state-ofthe-agriculture-industry assessment, federal agriculture minister Gerry Ritz can’t help but sound like the cat that swallowed the canary, except for the feathers in his throat, of course. At a House of Commons agriculture committee meeting last week, the minister recited a list of reasons why these are the best of times.

Commodity prices generally are high “and are expected to remain well above historic levels for the next decade.” Farm net worth is up five percent and 30 percent over the past five years. Realized net farm income last year was up more than 50 percent and while he did not say it, nowhere more so than in his native Saskatchewan. The Canadian Wheat Board monopoly is gone and despite critic predictions of grain industry chaos, traditional wheat board grain acreage is up, producer car use is strong, the ports of Thunder Bay, Halifax and Churchill report increased business and overall, agrifood exports are up six percent so far this year. “The gloom and doom scenario painted by those who opposed mar-

keting freedom has not materialized,” Ritz told MPs. “In fact, we are seeing quite the opposite.” It all bodes well for the changes ministers have agreed to for the next Growing Froward five-year plan that will switch emphasis from farm income support to innovation while saving governments lots of money (although he didn’t talk about that). From the usual chorus of industry critics, there is barely an audible peep during the good times for most. And even for farmers who have not been having the best of times, including Ontario and Quebec producers hurt this year because of drought, the agriculture minister came bearing good news. Governments soon will announce an AgriRecovery package that could include compensation or money to bring in feed to animals or

to transport the animals to where the feed is. The announcement was met with praise from Ontario farm leader Mark Wales. And for the always-wary supply management folks, Ritz even had some good news to report from Canada-European Union trade liberalization talks that have supply management critics hoping for a crack in the dairy product tariff wall. Ritz was in Brussels in November to talk about some of the “sensitive” political issues including agriculture that continue to hold up a deal. Leaders of supply management sectors were there and he said they left happy, content that the government will protect them. “When we start these discussions, supply management is on the table

with everything else but we make it very clear it is one of our defensive positions,” he said “The supply managed sectors were with us in Brussels last week and are quite buoyed by the actions of the government, that we continue to maintain our unequivocal support for our supply-managed sector here in Canada.” So for the most part (hogs excluded), times are good, farmer criticism is muted despite continued anger and a lingering lawsuit by Canadian Wheat Board supporters, opposition MPs rarely lay a glove on him and Ritz is delivering the goods for the Conservative government agenda. Agriculture ministers past who faced almost constant farmer anger, budget demands and government pushback must be wondering why things have become so much easier.

THE WESTERN PRODUCER | WWW.PRODUCER.COM | DECEMBER 6, 2012

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& OPEN FORUM RESEARCH | WHOLE GRAINS EFFECT ON WEIGHT

ECONOMY | DRIVERS

Whole grain plays role in healthy diet

Importance of agriculture finally realized

BY SHELLEY CASE

R

esults of a recent Nanos survey conducted by the Healthy Grains Institute indicate that Canadians are confused about the role whole grain plays in their diets. A clear majority of Canadians (67 percent) said wheatbased products such as bread and pasta contribute to weight gain, but they also said they would feel unhealthier if they eliminated wheat (57 percent) or gluten (46 percent) from their diets altogether. This suggests recognition of the health benefits of whole grain, such as wheat, barley, brown rice and oats, but it also shows that misinformation about the health and nutritional benefits of whole grains and fad diets that promote the elimination of entire food groups has contributed to misperceptions of whole grains. The Healthy Grains Institute was launched last week to study and compile research on the benefits of eating whole grain. It will be guided by an independent scientific advisory council. With a wealth of scientific information available that supports the role that whole grains can play in a healthy diet, the institute will identify and direct Canadians toward scien-

tific evidence that will help them make educated, science-based decisions about the food they eat. Celebrity “authorities” and authors promoting fad diets have made an increasing number of unsubstantiated weight-loss claims that eliminate whole grain entirely. It is important to note that all foods have many components and fit together like puzzle pieces. Removing one significant part could put you at risk of missing essential nutrients in your diet, which are beneficial for cardiovascular health and weight management. For instance, we have seen the gluten-free diet gain popularity in the last few years. Slightly more than 36 percent of Canadians surveyed thought that

gluten-free diets help weight loss, despite the fact that celiac disease affects one percent of Canadians, up to six percent are gluten sensitive and there is no existing scientific or clinical data to support a weight loss claim for a gluten-free diet. Following a gluten-free diet is not necessary unless you have celiac disease or are gluten sensitive. Canadians who follow a gluten-free diet when they don’t need to and do not supplement their diet with other nutritious food may be putting their health at risk. The vast majority of Canadians say that they would feel unhealthier if they removed whole grains from their diets, but they also believe that

whole grains such as bread and pasta contribute to weight gain. These survey results reaffirm the need for education on the role that whole grains play in Canadians’ ongoing quest for weight management. Recent studies have investigated the effects of including whole grain in diets for better weight control and have found evidence to support the role whole grain plays in weight management. Specifically, those who include whole g ra i n s a s p a r t o f a healthy, well-balanced die t are less likely to gain weight over time. Of course, the other side of this is chronic disease because excess weight is associated with preventable diseases such as cardiovascular disease and diabetes. Existing research shows that including whole grains in our diet can potentially help lower the risk of developing chronic diseases such as diabetes and heart disease and reduce obesity. For more information, visit www. HealthyGrains.ca. Shelley Case is a registered dietitian, author of Gluten-Free Diet: A Comprehensive Resource Guide and a member of the Healthy Grains Institute’s scientific advisory council.

RURAL ECONOMY | GRAIN BOOM

Farm income shatters record in Saskatchewan IN COMPARISON

HURSH ON AG

• Realized net farm income for all of Canada: slightly less than $5.7 billion • Saskatchewan: $2.8 billion

KEVIN HURSH

T

he number jumps off the page. Saskatchewan’s realized net farm income for 2011 is estimated by Statistics Canada at a record-shattering $2.8 billion. The previous record was in 2010 at nearly $1.8 billion. While Saskatchewan’s farm income has never been better, Alberta is struggling. The difference: Saskatchewan’s farm economy is dominated by grain, while Alberta relies heavily on livestock. Alberta’s realized net farm income for 2010 was a negative number, minus $178 million. There’s an improvement for 2011, but realized net income was still only $367 million. Even Manitoba, with a much small-

• Quebec: slightly less than $1.2 billion • Ontario : $730 million er land base, is doing better than Alberta. Manitoba recorded a net farm income of $603 million in 2010 and $499 million in 2011. Many numbers can be used to measure the health of the farm economy, but realized net income is probably the most common. It’s the difference between farm cash receipts and operating expenses, minus depreciation. Total cash receipts went up dramatically in Saskatchewan between 2010 and 2011. In 2010, money from the sale of grain and livestock, including any program payments, totalled slightly more than $9 billion. For 2011, cash receipts were slightly more than $11 billion. The expense side of the equation

also increased, but not nearly as fast as the rise in income. Saskatchewan farmers’ total operating expenses increased about $800 million between 2010 and 2011, while depreciation went up by more than $100 million. Alberta had comparable cash receipts, about $9 billion in 2010 and more than $10 billion in 2011. However, expenses were much higher. Of course, the biggest expense for cattle feedlots and hog operations is the cost of feed. Strong grain prices benefit Alberta grain producers, just as they do grain producers in Saskatchewan, but they limit returns in the livestock sector. There has long been a push to get a more balanced farm economy in Saskatchewan, one that’s more evenly split between grain and livestock. Saskatchewan has the second largest beef breeding herd in the country with 30 percent of the cows, compared to 40 percent in Alberta. However, Alberta dominates the feedlot industry. As well, Alberta and Manitoba have much larger hog industries. Saskatchewan’s reliance on grain

has typically been viewed as a weakness. Alberta’s farm income numbers used to regularly eclipse those of Saskatchewan. There were many years when Saskatchewan would have had negative net farm income had it not been for government payments. These days, it’s clear that the big money is in grain. And on the beef side, cow-calf operators have been doing better than the feedlot sector, so Saskatchewan has actually benefited from shipping calves to Alberta for feeding. Preliminary farm cash receipt statistics for 2012 suggest the trend is continuing. Little wonder that land prices are sizzling hot and farm machinery sales are brisk. Maybe it will someday reverse again. Maybe in three or five or seven years it will be livestock making the profit and grain that’s struggling. But for now, grain is golden and that makes Saskatchewan king of the provinces when it comes to realized net farm income. Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at [email protected].

EDITORIAL NOTEBOOK

JOANNE PAULSON, EDITOR

P

otash and oil are traditionally huge in the Saskatchewan economy, but if the government relied on them to make budget this year, it would be a sorry situation. The real class among sectors is agriculture. The province’s mid-year report notes that business investment in such things as housing construction is partly fuelling the economy. The population is rising, jobs are plentiful and life seems good. The budget will balance. “Though potash production and sales have been impacted this year by weak global demand, many of the other indicators for 2012 are also up,” said the report. “2012 crop production is estimated at 26.4 million tonnes, down 0.9 percent from 2011, but above the budget level. As a result, the 2012 real GDP growth forecast has been revised up.” That’s despite resource revenues dropping by more than $400 million. Meanwhile, Saskatchewan farm cash receipts are up seven percent to $8.64 billion, and realized net farm income soared 58 percent to $2.85 billion in 2011. Cash receipts are even higher in Alberta, up 15 percent to $8.76 billion, although net farm income was low. Manitoba is not faring as well, partly because of the flooding last year. Years ago, whenever things went awry in western agriculture, people (urbanites? politicians?) would say something like, “it’s no big deal; it’s only eight percent of GDP. Agriculture is just not as important as it used to be. Potash and oil and uranium are the way of the future.” That, of course, is true to a point. The non-renewable triumvirate in Saskatchewan, the massive oil economy in Alberta and a significant amount of mining in Manitoba are all crucial to the prairie economies. So is agriculture. It may not pay royalties, but it reverberates through the economy — especially in Saskatchewan — with massive spin-off effects. Who buys the most expensive stuff, such as combines, in Western Canada? Farmers. How much in income, fuel and sales taxes does that deliver to governments? No idea, but it’s huge. Doug Elliott, publisher of Sask Trends Monitor, also pointed out that agriculture still employs more people in Saskatchewan — 40,000 — than mining, oil and gas at 24,000. Agriculture is noticeably back in the spotlight, and Saskatchewan’s mid-year financial report is testament to that.

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DECEMBER 6, 2012 | WWW.PRODUCER.COM | THE WESTERN PRODUCER

OPEN FORUM LETTERS POLICY:

PROVE FRACKING SAFE

Letters should be less than 300 words. Name, address and phone number must be included for verification purposes and only letters accepted for publication will be confirmed with the author.

To the Editor:

Open letters should be avoided; priority will be given to letters written exclusively for the Producer. Editors reserve the right to reject or edit any letter for clarity, brevity, legality and good taste. Cuts will be indicated by ellipsis (…) Publication of a letter does not imply endorsement by the Producer.

After reading the article entitled, “New methods open doors to opportunity, controversy” (WP Nov. 8), I was struck with how much industry information was included, and how little mention was made of landowners’ very legitimate concerns or of the environmental damage that has already occurred in the path of this new technology. Despite claims that “we have been fracking in Alberta for 60 years,” multi-stage high pressure horizontal hydraulic fracturing has been practiced here for less than 10 years. While only .07 percent of overall

water use goes toward this process, it is important to note that this is water which will never return in usable form to the water table, as it is contaminated with carcinogens and endocrine-disrupting chemicals. The majority of chemicals presently used are dangerous to human and animal life through inhalation, direct contact or consumption (through contaminated water, soil or plants). Scientists in the United States have predicted that the contaminated water underground will find its way into the aquifers within three to five years. It will do us and our descendants little good to know what these chemicals are once they have found their

way into our environment. The farmland taken out of production is another issue. Each well takes up to about seven acres of land for the well pad and roads for access. Multiply that by 5,000. This land is difficult if not impossible to reclaim in most cases. In addition, access to farmed acres is limited, as it becomes difficult to move farm equipment around the installations.   In our area, we are saturated with horizontal fracking, with even more wells planned under the old regulations. We and several of our neighbours feel that we have experienced health effects due to this activity. These effects mirror those reported in other areas where horizontal

fracking has taken place. There are reasons why this process is under bans and moratoria in many countries and municipalities throughout the world. The National Farmers Union has called for a moratorium, along with the Alberta Surface Rights Group, the Council of Canadians and many others. The future of our province will depend, not on production of oil and gas, but on fresh water and productive farmland. Our generation will be judged by our descendants. We do not want to harm the energy industry; we simply want it to stop present operations until they develop their practices to a point where independent scientific study determines them to be safe. Some informative websites include: www.canadians.org/fracking, www.frackingcanada.ca, www. endocrinedisruption.com and www. ernstversusencana.ca Nielle Hawkwood Cochrane, Alta.

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www.pioneer.com/yield Canola yield data summary averaged across 3 years (2010-2012). Yield data collected from large-scale, grower managed Proving Ground trials across Western Canada as of November 1st, 2012. Product responses are variable and subject to any number of environmental, disease and pest pressures. Individual results may vary. Multi-year and multi-location data is a better predictor of future performance. Refer to www.pioneer.com/yield or contact a Pioneer Hi-Bred sales representative for the latest and complete listing of traits and scores for each Pioneer ® brand product. Roundup Ready® are registered trademark used under license from Monsanto Company. Pioneer® brand products are provided subject to the terms and conditions of purchase which are part of the labeling and purchase documents. The DuPont Oval Logo is a registered trademark of DuPont. ®, TM, SM Trademarks and service marks licensed to Pioneer Hi-Bred Limited. © 2012, PHL. PR273_PG_Yield Ad_AE_NEW-v2

Re: “Speedy passing of food bill may put brakes on trade” (WP, Nov. 15) The Canadian Food Inspection Agency has always been committed to working with stakeholders to make food as safe as possible. In fact, Bill S-11, the Safe Food for Canadians Act, is based on extensive consultations with Canadians and industry on how we can strengthen our system even further. Before the recently passed act can be brought into force, new supporting regulations need to be made. These regulations will be developed in consultation with regulated parties and affected stakeholders, including producers and food processors. The act will provide the CFIA with clearer and more consistent rules for all food commodities, whether they are produced in Canada or imported into Canada so consumers can be confident that all food is safe, regardless of its origin. Under the act, provisions will be included to register or license importers, holding them accountable for the safety of the food commodities they bring into the country. This will put importers on a more even footing with our domestic and export-oriented processors. The act will also provide the CFIA with strengthened authorities to require regulated parties to maintain better traceability systems, which, in turn, will expedite the recall of unsafe food and further prohibit unsafe food products from entering the Canadian market. I can assure your readers that this traceability system would include strong privacy provisions that outl i n e au t h o r i z e d a c c e s s t o a n d intended uses for traceability information. These provisions would be in addition to the protections already in place under the federal Privacy Act. The CFIA is committed to a strong, fair and consistent food safety system that will benefit all Canadians. George Da Pont, president, Canadian Food Inspection Agency, Ottawa, Ont.

THE WESTERN PRODUCER | WWW.PRODUCER.COM | DECEMBER 6, 2012

CWB BALL GAME To the Editor: I am writing this letter in response to comments made in an op-ed column written by former CWB director Henry Vos (WP, Nov. 15). In it, Henry states, “There was a drought in 1982 and our crop was small: 25 bushels per acre for No. 1 wheat and 15 bu. per acre of canola. “At that time, the CWB was not accepting any wheat at our location and also controlled canola deliveries.” After much research and talking to my father, who has farmed over 50 years, canola has never been under control of the CWB. So how on earth did the CWB control the canola deliveries in 1982? To the best of my knowledge, canola has always been an open market crop, and you could sell it to the highest bidder. Sounds to me like Henry is a bitter

former director of the CWB who just had self-interest in mind when he got elected, and took his ball and went home when he wasn’t going to get his way. Then the government stepped in and took the CWB monopoly away. Craig Sorensen, Ogema, Sask.

CUTBACKS HURT TOURISM To the Editor: Cutbacks to Parks Canada contained in the (Stephen) Harper government’s omnibus bill C-38 will hurt Saskatchewan’s tourism industry.  This summer, the Canadian Vintage Motorcycle Group sponsored a vintage motorcycle tour of sites of the 1885 Northwest Resistance. Participants in Geezers on Wheezers Five came from as far away as Quebec and

Nunavut. At the Battlefords, knowledgeable staff showed us the top-notch Western Development Museum, and young guys in Northwest Mounted Police gear gave a spectacular cannon demonstration at Fort Battleford. A walking tour at Batoche was brought alive by a fellow whose greatuncle fought alongside Metis general Gabriel Dumont. But we heard that tours and programs, such as we enjoyed, would likely be cut. Since 2000, our semi-annual motorcycle tour has injected considerable cash into local economies. And that’s just a drop in a big tourism bucket. So even if the implication of a shrivelling Canadian culture doesn’t fire you up, if it’s money we’re talking, adequate federal funding for our national parks and historic sites is not a cost. It’s an investment that pays with a multitude of economic spinoffs. Now we hear winter trails in

Prince Albert National Park cannot be groomed. You might want to try helping your local MP connect the dots that join tourism investment, the quality of vacationer experience and benefits to the grassroots economy.

their grandparents and ancestors recognized and honoured. I think the young generations are doing a much better job than some of our adults, especially when it relates to Remembrance Day and “Lest we Forget.”

Doug Bone, Elrose, Sask.

John Fefchak. Virden, Man.

ACT OF RESPECT To the Editor: Manitoba premier Greg Selinger is wrong when he tells us Remembrance Day services are a matter of religious freedom. They are a matter of respect and remembrance. Often, we are reminded that the modern generations of today have no respect or show no gratitude for our Canadian heritage, the heritage that

“Any other collateral?”

CHRISTMAS | GIVING THANKS

Story of the boy and a red wagon SPIRITUAL VIGNETTES

TD Canada Trust

To thrive, a farm also needs the right financial conditions

JOYCE SASSE

I

n a little Mexican town there was a simple little church where the true spirit of Christmas lived. It was the custom on Christmas Eve to put many candles on the altar and, close by, figures of the Nativity scene. There was the manger in the stable, and Mary and Joseph, the Baby Jesus lying in the straw, and the animals in their stalls. Overhead was the one bright star that guided the Wise Men to Bethlehem. Early one Christmas morning the pastor of the church went to see that all the little figures were in place for the first service. He was horrified to see Baby Jesus was gone. The pastor looked everywhere but he could not find the Baby Jesus. As he left the church he was almost run over by a little boy racing a red wagon along the sidewalk. It was Pedro, the baker’s son. The pastor smiled and started to speak to the boy when, suddenly, he noticed, in the red wagon, the missing figure of the Christ Child. “Pedro,” he cried. “It was you. You took the Baby Jesus. Why did you do it?” Pedro hung his head and was silent. The pastor scolded and questioned. Still Pedro would not explain. He just hung his head. “It — it was like this,” Pedro finally blurted out. “I — I wanted a red wagon for Christmas, and I prayed. I asked Jesus to let me have a red wagon. And — and I promised Him that if I got one, I’d give Him a ride in it. It’s his birthday, you know.” The good pastor knelt down and looked carefully into the boy’s face. There were tears in the pastor’s eyes. “I am sorry I scolded, Pedro. I didn’t understand. You are quite right. It is his birthday, and you have given him the finest gift of all.”

Andrew & Robert Franke Grain & Cattle farmers

Jolene Bolding TD Agriculture Specialist

TD is committed to helping farmers build for the future. The Franke twins first came to us in 2001 with an ambitious plan to grow their grandparents’ farm. Though they were barely over 20, their TD Agriculture Specialist quickly recognized their potential and backed their plan. Over the years, Jolene has been there for every major financial decision affecting the farm, helping it grow to thousands of acres and over 250 head of cattle. A personalized approach to agriculture finance, like Jolene’s, is something all TD Agriculture Specialists bring. Maybe it’s time you brought one to your farm. For more information, visit a branch or tdcanadatrust.com/agriculture

Banking can be this comfortable

— Source unknown Joyce Sasse writes for the Canadian Rural Church Network at www.canadian ruralchurch.net.

13

® / The TD logo and other trade-marks are the property of The Toronto-Dominion Bank or a wholly-owned subsidiary, in Canada and/or other countries.

14

DECEMBER 6, 2012 | WWW.PRODUCER.COM | THE WESTERN PRODUCER

NEWS

FARM ECONOMY | FINANCIAL RESULTS

FOOD SECURITY | WHEAT PRODUCTION

Prairies steal Ontario’s top rank in ag economy Ontario’s drop from largest provincial agricultural economy to third spot is likely a blip, says an Ontario farm leader. Ontario Federation of Agriculture president Mark Wales says 2011 and 2012 farm financial reports from Ottawa reflect record grain and oilseed prices that boost prairie returns, while 2012 market returns reflect droughtreduced Ontario results. “I don’t think this is a true reflection of Ontario’s agri-food strength,” he said. According to farm financial data released by Statistics Canada, the Ontario farm economy recorded a realized net income (receipts minus expenses and depreciation) of $730 million in 2011, far behind Saskatch-

ewan’s $2.8 billion and Quebec’s $1.2 billion. Farm cash receipts for the first nine months of 2012 again show Ontario in third place at $8 billion, behind Alberta’s $8.7 billion and Saskatchewan’s $8.6 billion. “I would bet that 2011 is probably an anomaly, but it really depends on where grain prices stay in the long run,” he said. “You do have record canola prices, strong pulses and grain, and there was some increases in meat prices. These have particular impact on the Prairies. It bodes well for all provinces in the long run if we could just get some stability in production. Weather has been erratic.” This year’s drought cut hundreds of millions of dollars worth of produc-

tion from livestock and grain producers in eastern Ontario and the GreyBruce cattle heartland, as well as fruit production in southwestern Ontario and grain production in many parts of the province. “This year will see the almost total collapse of the apple industry, partially the tender fruit sector, the drought dramatically affects people across the province and low hog prices are hitting Ontario hog producers hard although it is hitting western hog producers as well,” he said. “This will not be a good year.” The federal and provincial governments are poised to hear details within weeks about an AgriRecovery payment to compensate for some of the damage.

GM wheat opposition ‘road block’ to food goal GM technology seen as essential to meet demand STORIES BY BARRY WILSON OTTAWA BUREAU

World wheat production will have to increase at least 60 percent in coming decades, and genetically modified varieties are inevitably part of the solution, says a leading Australian breeder. Peter Langridge, chief executive officer of the Australian Centre for Plant Functional Genomics in Adelaide, told a Genomics Canada con-

ference last week that population growth will require significant increases in production. Yet land restrictions, limited water resources and a growing privatization of wheat research make the goal difficult to achieve. “These are exciting times, but it also is a worrying time,” he told the conference Nov. 28. In a later interview, Langridge said public resistance to GM wheat is “an obvious road block.” However, he said many companies and countries continue to work on the technology, which must be part of the solution if the production increase goals are to be met. “I simply don’t see any other way to meet that challenge,” he said. “There has to be GM wheat at some point.” Hybrid wheat varieties can also be part of the solution, he added. The University of Adelaide researcher also suggested that the introduction of GM wheat will likely not happen first in the developed world but in a country such as China or India, where food demands are high and growing. “China has invested $5 billion in developing GM wheat, and when it is a choice between hunger or GM wheat, it will be introduced,” he said. “And if China introduced GM wheat, India will follow.” Langridge said similar consumer and environmental resistance was seen decades ago when new grain varieties and production practices were introduced into India in what came to be known as the Green Revolution. “There was huge controversy,” he said. “It ended up saving 200 million lives, and not many decisions in history can be said to have had that impact.” When asked about the potential impact of ending the CWB’s wheat innovation and breeding, Langridge said there was an impact on the direction of wheat breeding in Australia when that country’s single desk wheat board was abolished. He said the Australian Wheat Board acted as a central source of information about what wheat varieties the markets wanted. That public market informationclearing-house has been lost with the privatization of the board, and companies now direct their research to products they think will sell and make money. “What has happened in Canada is really déjà vu in Australia,” he said without stating a position on whether it was a good move. “It has affected our breeding program. There now is a disconnect between our breeding efforts and what the market needs.” Langridge said genetic work with wheat is one of the most complex tasks in his business. Work continues on unraveling the wheat genome, but with 100,000 genes in wheat, it is six times larger than the human gene. “Genomics have a huge role in future advancements in the wheat industry, but this is a hugely complicated endeavour,” he told the conference.

NEWS

THE WESTERN PRODUCER | WWW.PRODUCER.COM | DECEMBER 6, 2012

15

TRADE | AGRICULTURE

Bank deputy chair calls for national food strategy Direction needed | Frank McKenna, former New Brunswick premier, says Tories’ free trade deals lack long-term vision OTTAWA BUREAU

The Canadian government should have a national food strategy vision before it locks the industry into trade deals, says a senior Canadian business executive. Frank McKenna, deputy chair of the TD Bank Group and former New Brunswick premier, told a GrowCanada conference in Ottawa Nov. 28 that agriculture is an economic powerhouse, but signing free trade deals without an industry plan is shortsighted.

SHIPPING | REGULATIONS

Feds promise rail service legislation by mid-December Federal transport minister Denis Lebel says the government will table a rail service level guarantee bill in Parliament by mid-December. He said he could not discuss the details of the government position, but it will respond to shipper complaints. “Will they (shippers) get everything they want? Probably not,” Lebel said. “But we will give them the tools they need.” The legislation will be tabled before Parliament rises for its Christmas break in mid-December, he said. It will not be debated in Parliament at least until next year and then only depending on the priority given it by the Conservative government. Bob Ballantyne, chair of the Coalition of Rail Shippers, said shippers want the right to a service level agreement with railways, a credible dispute resolution process if railways do not meet the standard and the ability to have railways penalized for not meeting service standards. Ballantyne said he’s concerned that the government isn’t signaling its intention to introduce strong shipper rights in the forthcoming legislation. Canadian Pacific Railway and Canadian National Railway have been lobbying strongly against new regulations, arguing market forces should allow the development of service agreements between shippers and carriers. Any regulatory obligations could derail railway investment, they say. Shippers have argued that it is not a fair fight. Railways have the upper hand and any negotiation on service standards is biased against them. “We’ll see how well CN and CP have done on this,” said Ballantyne. “The minister’s comments are not too encouraging.” The rail service issue is longstanding. The Conservatives appointed former Alberta treasurer Jim Dinning last year to try to find a way to achieve middle ground, but his effort failed and his report said a significant gap remains between the two sides.

“We have the cart before the horse,” he said. “I think we need a national food strategy and then figure out where trade and market access fit into that.” As an example, McKenna cited the government’s decision to join the Trans-Pacific Partnership Asian rim trade negotiation without an understanding of what agricultural sectors could be damaged. He said he has a brother in New Brunswick in the hog business and a cousin in the supply managed chicken industry. “There has been some speculation

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STORIES BY BARRY WILSON

that joining the TPP talks could lead to abandonment or some erosion of supply management,” said McKenna. “We haven’t had a national debate about that or a debate about where we want the industry to go and how it could be affected.” He said farm sectors should be more involved in planning trade strategies. Conference Board of Canada vicepresident Michael Bloom argued that agricultural innovation in Canada lags in large part because private sector investment is low. “Government funding of research

and development in Canada is relatively strong, but business funding is low,” said Bloom. “I think the issue is that we find it hard to attract private capital.” McKenna said the private sector “doesn’t carry its weight” in supporting innovation in Canadian agriculture. “I really do believe that in the productivity agenda, we are falling behind in Canada,” he said. “We’re doing well and feel we’re in a comfortable pew, but we are falling behind and because of our lagging productivity, governments lose

$75 billion or more in lower revenues.” Bloom said regulations and public resistance to scientific advances that could make agriculture more productive are key parts of the problem. “There is a disconnect between how the system functions and the public perception of it,” he said. Bloom said education is the answer. McKenna said GMO resistance, particularly in Europe, is not always about food. Often, it’s an attempt to protect small farmers.

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I N N O V AT I O N B Y T H E M O S A I C C O M P A N Y

16

NEWS

DECEMBER 6, 2012 | WWW.PRODUCER.COM | THE WESTERN PRODUCER

INPUTS | SHIPPING COSTS

CANADIAN WESTERN AGRIBITION | CATTLE

Exporter recommends buying fertilizer before 2013

Kazakhstan delegates looking for forage seed

Problems on the Mississippi River could drive up prices in Western Canada BY SEAN PRATT SASKATOON NEWSROOM

Growers should consider buying their fertilizer before the new year, says a grain merchandiser. “That is something that I would definitely put more focus on this year than I have in years past,” said Jason Charles, who runs the export trading division of Land O’Lakes Inc., the second largest co-operative in the United States. Charles told farmers attending the Agri-Trend 2012 Farm Forum Event that the Mississippi River is so low that a 322 kilometre section of it will likely be shut down for dredging

starting Dec. 10. That river system carries about $2 billion of fertilizer a month from New Orleans to suppliers in the U.S. Midwest and in Western Canada. If the river closes, the price of getting fertilizer to those markets will rise because barges are the cheapest form of transportation. Additional costs would likely be borne by farmers. “We w ill see fer tilizer pr ices increase as we go into the spring barring any weather changes,” said Charles. “There’s only one thing that can change it. It’s got to start raining and it can’t just rain a little bit.” The summer drought in the Mid-

west that dramatically reduced corn yields also took its toll on the Mississippi River, which is fed by tributaries from Ohio, Illinois and Missouri. The section of the Mississippi that will likely be closed for repairs has a bedrock bottom so the U.S. Army Corps of Engineers will have to blast away the rock to dredge the river. Charles said agricultural companies located along the river have asked U.S. president Barack Obama to declare the Mississippi River a disaster area. “I don’t know that I’ve ever heard of the world’s most major river artery being called a disaster area but that’s where we’re at,” he said.

New buyers | Officials from Kazakhstan examine forage crops as country expands beef production BY KAREN BRIERE REGINA BUREAU

Kazakhstan is well known for its grain production. Delegations from that country have been attending Canadian trade shows for years, looking at equipment that will work on fields and climatic conditions that are similar to those in Saskatchewan. However, a delegation to this year’s

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Canadian Western Agribition was looking for something a little different — forage seed varieties. “Kazakhstan is developing livestock protein,” said Kanat Akshalov, head of soil and crop management at the Barayev Kazakh Research and Production Centre of Grain Farming in the countr y’s Akmolinskaya region. “After Soviet times, everything was lost. The amount of cattle dropped and forage production also followed.” The country’s large state farms sold off their livestock to generate cash flow when the Soviet Union collapsed. Individuals and small farmers kept their cattle, and most of the country’s herd could be found in lots of one to three head owned by villagers. The cattle are generally all-purpose and used for dairy and beef. Beef production is now increasing quickly as the countr y looks to rebuild its industry with larger enterprises of up to 3,000 head each. Kazakhstan plans to buy 70,000 purebreds from North America and Australia to cross with its own breeds, and earlier this year it resolved to become a meat exporter by 2020. It can now supply only its own needs. “We are buying many cattle from Canada, and of course we should prepare some forage,” Akshalov said. Officials recently announced a program to develop feed production and forage. He said there is already some alfalfa production in Kazakhstan, and producers are starting to develop perennial, brome and annual grasses. Seed production of native crops is also occurring, but the country hasn’t yet bought forage seed. Akshalov said producers still have a lot to learn about which grasses they need to ensure fresh green forage throughout the season. The delegation also met with Canadian producers to talk about rations. Akshalov said the country has one million head of cattle. Most of the larger herds are based on Angus, Hereford and Charolais imports. Farm enterprises are generally large at 35,000 to 50,000 acres, he added. He said most operators are more comfortable with grain farming and cash crops such as canola, flax and legumes and don’t pay attention to developing better cattle feed. Cattle remain outside all winter in southern Kazakhstan, similar to Canada, but in the north there are mostly smaller operations that keep their animals inside. During the Soviet era, the cattle were housed in huge barns that now have mostly decayed. The beef industry still has advances to make in grazing management and hay storage, Akshalov said. Hay storage mostly involves piling cut forage into stacks rather than making bales. About 70 percent of the country, or nearly 450 million acres, is considered pastureland, but less than half is used.

NEWS

THE WESTERN PRODUCER | WWW.PRODUCER.COM | DECEMBER 6, 2012

17

CANOLA | SEEDING TIME

Yield trials examine value of early seeding in dark brown soil Study found an overall benefit, but results depend on weather and tillage practices BY BARB GLEN LETHBRIDGE BUREAU

Early seeding canola will increase yields most of the time, says an Alberta oilseed specialist, but there are caveats for those in dark brown soil zones. Murray Hartman of Alberta Agriculture told a Nov. 23 meeting of the Alberta Canola Producers Commission that early seeding will likely pay off on dryland under reduced tillage systems but leads to higher yields only half the time when using direct seeding. Hartman said early seeding of Argentine canola has been widely adopted, but some producers are thinking twice about its benefits. To answer their questions, he looked at yield data from 2002-12 on dryland in the dark brown soil zone and found an overall benefit from early seeding, though much depends on weather and tillage practices. Early seeding produced higher yields in reduced tillage systems in seven of the nine years studied but only four out of nine using direct seeding. “I would say certainly it looks like a real probable for reduced tillage, but for direct seeding, early seeding (first week of May or earlier in the dark brown soil zone), it’s only 50-50.” Hartman said early seeding generally resulted in higher yields in most other soil zones. He has also recently explored the benefits of soil and foliar applied boron to canola crops. “It seems to be being promoted more in the last five years than it has in all my previous experience,” Hartman said. He examined published, independent research on boron that amounted to 44 site-years of data. Yield benefits from boron were the exception rather than the rule. “If I had to put this into a probable, maybe or unlikely, this is a very strong unlikely,” he said. “Save your money. Don’t put it on boron. Overall, that’s a very good recommendation.” Hartman said farmers must carefully sort through the wealth of advertising for canola seed varieties, treatments and agronomic boosts when making cropping decisions. “It’s kind of hard to filter out the truth from the scams or the misinformation or the doctored trials.” He told producers to consider whether claims are based on plant function or plant content. “I don’t care what the plant has. What does it need? Try to ignore those ones that are based on function claims.” Hartman said data from unbiased, independent research in Western Canada should be given more weight than claims from those with a vested interest, although the latter should be reviewed as well. Results from at least 20 location years of data are best and should ide-

ally come from more than one region on the Prairies. A response is worth considering if it’s positive more than half the time. “I like to try to keep it simple and say this is a probable, a maybe or an unlikely.”

Data shows direct seeding in early May in the dark brown soil zone increases yield about half the time. | PHOTO

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