Farm Credit Canada - June 29, 2007

Note from Editor Kevin Hursh & Associate Editor Allison Finnamore

There were some distribution issues last week and not everyone received their copy of the Express. Our apologies. Hopefully we have the problems rectified this week.

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For story ideas and comments, please email kevin@hursh.ca.

Excessive moisture is the biggest problem facing crops across the Prairie region. Areas with well above normal growing season precipitation dwarf the areas where moisture has been below normal.

Doon Pauly, a crop specialist with Alberta Agriculture and Food, says the Highway No. 2 corridor from Calgary north to nearly Edmonton has been particularly hard hit. He notes the Lacombe area has received 14 inches (350 mm) of rain since April 1.

Pauly says canola crops have faired worse than cereals due to poorer establishment. Weed control operations have often been delayed. As well, crops in the wet areas are generally delayed in their development.

In the latest crop report from Saskatchewan Agriculture and Food just two per cent of the cropland in the province is rated as having short or very short topsoil moisture, while twenty-five per cent of cropland is rated as having surplus topsoil moisture.

In the northeastern region of the Saskatchewan Grain Belt, 51 per cent of the cropland is rated as surplus. In the east central region, 42 per cent has surplus topsoil moisture. Flooded crops, crop yellowing and ruts from sprayers are reported.

The water troubles continue into Manitoba. Along with the tornadoes that have been widely reported, there has also been excessive rainfall –- up to 100 mm last week in many areas. All too often the storms have come with hail.

The crop report from Manitoba Agriculture talks of crop yellowing and lodging as well as rampant disease pressure.

The June farm survey by Statistics Canada shows Prairie producers planted a record area of canola and field peas, while in Quebec, a record area of corn was planted.

Although slightly smaller than the seeding intentions survey back in March indicated, the June survey pegged Prairie canola acreage at 14.5 million acres, up 17.2 per cent from last year. The previous record was 14.2 million acres in 1994. In Ontario, the seeded area of canola almost tripled to 50,000 acres following last year’s steep decline.

While canola acreage is up, the other major Prairie oilseed crop fell. Flaxseed acres are 1.3 million, down 34.4 per cent from last year. The five-year average is 1.9 million acres.

Prairie producers reported planting a lot less spring wheat. Total plantings were down 19 per cent to 14.8 million acres, the lowest area reported since 1970. The five-year average is 18.2 million acres.

In contrast to the spring wheat decline, the area seeded to durum rose by one million acres to 4.8 million, but still remained below the five-year average.

An estimated 10.3 million acres of barley is seeded on the Prairies, an increase of 1.8 million from 2006. The five-year average is 10.5 million.

More oats were also seeded this year, an increase of 8.1 per cent to 4.9 million acres.

Total field pea area in the Prairie provinces increased 16.8 per cent to a record 3.6 million acres. This is higher than the March intentions indicated and was likely spurred by near record high prices for field peas. Field pea area has steadily increased over the past decade.

Lentil acreage is estimated at 1.335 million acres, up 4.6 per cent from last year. Canary seed is up 32.8 per cent to 445,000 acres. Mustard is up 31.5 per cent to 435,000 acres and chickpeas are up 34.8 per cent to 430,000 acres. The plantings of lentils, canary seed and mustard are higher than the March intentions survey indicated, while chickpeas are significantly lower.

In Quebec, producers planted a record 1.1 million acres of grain corn, up 17.1 per cent from 2006 and 7,400 acres more than the previous record set in 2002. Ontario producers planted 2.1 million acres of grain corn, an increase of 34.4 per cent over 2006 and an area just 50,000 acres shy of the 1981 record.

In Ontario, 47 per cent of the corn area is planted to genetically modified varieties, while in Quebec it’s 52 per cent of the total.

Ontario producers planted 3.9 per cent more soybeans, an area of 2.2 million acres. This is just 85,000 acres short of the record set in 2004 and 2005. Quebec producers planted nearly 435,000 acres of soybeans, down 9.5 per cent from last year.

Forty-nine per cent of the total soybean plantings in Ontario and 48 per cent of the soybeans in Quebec are genetically modified varieties.

Data for the survey came from 29,000 Canadian producers. More information is available at www.statcan.ca.

Taiwanese officials have announced the reopening of their border to boneless beef from Canadian cattle under 30 months of age. All federally inspected Canadian beef processing plants are eligible to export says Arno Doerksen, chair of the Canadian Beef Export Federation.

“This is long-awaited and very exciting news,” Doerksen says. “There is great expectation in our industry for our return to the Taiwan market, which has historically offered the highest value per kilo for Canadian beef.”

In 2006, the country imported about 100,000 tonnes of beef products mainly from Australia, the United States and New Zealand. Exports of Canadian beef to Taiwan reached their highest level in 2002, with 8,000 tonnes of beef being shipped for a value of $42 million. The federation forecasts Canadian beef exports to Taiwan could grow to 10,000 tonnes for a value of $62 million by 2015.

Ted Haney, the federation’s president, was recently in Taiwan and says Taiwanese importers appeared committed to resuming import and sales of Canadian beef.

The federation’s Taiwan office has already started a promotional campaign to re-establish Canadian beef in the Taiwanese market.

The new provincial government in P.E.I. has served notice it has no intention of letting losses continue to mount at the province’s only federally inspected beef plant.

Atlantic Tender Beef Products was built during the height of the BSE crisis, thanks in large measure to funding from the previous administration. Auditor General Colin Younker pointed out in his annual report that taxpayers are currently on the hook for over $30 million in direct funding and loan guarantees.

Premier Robert Ghiz announced during a news conference last week that his government has authorized a $1.4-million loan to the facility. However, he says the tap will be turned off until he is satisfied the plant is on a secure financial footing.

"We can’t control the market but what we can control is the loss of taxpayer dollars," Ghiz says. "We cannot afford to keep losing money like we have been losing money."

The Premier has announced the establishment of a working group to study operations at the facility, which is jointly owned by the province, the region’s beef producers and Co-op Atlantic. The group will include provincial treasurer Wes Sheridan, Development Minister Richard Brown, Agriculture Minister Neil LeClair, Environment Minister George Webster, industry representatives and government officials.

The Premier says he hasn’t ruled out selling the plant, which handles 500 animals a week at peak production and has a workforce of approximately 100. Ghiz says he also wants the group to identify potential new markets, both within the region and beyond.

While that happens, the new Premier will try to convince his counterparts in New Brunswick and Nova Scotia to contribute financially to the operation. The closure of several beef plants in those provinces has left the Island facility as one of the largest federally inspected slaughterhouses in the region. Ghiz is also looking for help from the federal government.

United Food and Commercial Workers Canada is applauding a decision by the Manitoba Labour Board that supports the right of migrant agricultural workers in Manitoba to join a Canadian union and participate fully in collective bargaining.

The Manitoba Labour Board has ruled that workers employed at Mayfair Farms in Portage la Prairie, including seasonal migrant workers on the farm, are entitled to be represented by UFCW Canada Local 832.

On September 1, 2006, an application for union certification was made by the UFCW to represent the 65 workers at Mayfair Farms, the majority of which are migrant workers from Mexico. More than 65 per cent of the workers had signed union cards.

The employer claimed the seasonal Mexican workers were not employees under the Manitoba Labour Relations Act. As well, 43 of the workers reportedly signed statements last October saying the union misled them and that they did not want to join the union. The employer’s objections were denied in the ruling.

In the wake of the Manitoba decision, Wayne Hanley, the national president of UFCW Canada, is repeating his call to the Ontario government to drop its prohibition on unions for migrants as well as domestic agricultural workers in that province.

UFCW Canada says it has three other farm union certification applications pending a decision by the Quebec Labour Relations Board. The farms are located about 25 kilometres south of Montreal, and as in Manitoba, a majority of the labour force is made up of migrant workers.

The Canola Council of Canada supports the federal government’s call for targeted reductions in trans fats in Canadian foods over the next two years.

Health Minister Tony Clement announced on June 20 that the government is adopting the Trans Fat Task Force’s 2006 recommendations to restrict the trans fat content on most food to less than five per cent of the total fat content. For vegetable oils and soft, spreadable margarines the maximum is two per cent.

A two-year window has been created for food companies to choose their solutions to the trans fat issue with the good health of Canadians in mind.

“An immediate deadline for compliance could have led to less healthy solutions that would cut trans but raise saturated fats,” says Dave Hickling, Canola Council vice-president.

According to Hickling, canola oil is the healthiest trans fat solution because it’s trans fat free and the lowest in saturated fat of all commercially available fats and oils.

Hickling notes that the food industry is already turning to a specific type of canola that produces “high stability” canola oil for use in baking, deep frying and making margarines.

The B.C. government has amended its Land Title Act to make it easier for farmers to enter into long-term leases with landowners.

"Until now, it has been both difficult and expensive for farmers to access unused portions of agricultural lands," says B.C. Minister of Agriculture and Lands Pat Bell. "They had to either go through the expense of subdivision or draft complicated legal arrangements. These amendments will ensure they are able to enter into long-term leases without going through subdivision requirements."

The changes address undesirable side effects that arose out of a 1996 judicial case involving such leases, which decided the subdivision requirements in the Land Titles Act enacted in 1922 were mandatory, meaning land needed to be subdivided before three-year or longer leases could be registered.

“This case drew attention to the issue and a number of examples came up,” notes B.C. Agriculture Council executive director Steve Thomson.

Richmond-Delta agricultural lawyer and cranberry grower Ralph May spent years spearheading an industry lobby to get the changes.

"I believe most farmers will benefit from the assurance that their long-term leases are valid," he says. "The amendments will allow farmers leasing land to make long-range plans to cultivate it in an economically and environmentally sustainable way."

B.C. Agriculture Council executive director Steve Thomson calls it “a good little change that will help.”

It does not yet affect a lot of properties but could impact more in the future as producers retire, land values increase and/or more non-farmers buy up agricultural land for investment or country estates.

This situation is becoming more common in both the Fraser and Okanagan valleys, B.C.’s prime agricultural production areas. Many of these non-farming landowners are willing to lease out unused portions of their land on an ongoing basis. While farmers using the land for cash crop or hay production will accept year-to-year leases, producers who want to put in longer-term crops are reluctant to make the investments without long-term security.

"Leases offer an opportunity for persons who do not farm or retired farmers to make their land available to farmers for production, rather than leaving it unused,” says Thomson. “For example, a person who wants to lease an unused orchard wants to know he will have a right to the land for 10 years before he invests time and money in a replant. These amendments permit that by giving the lease legal status regardless of what the landowner chooses to do at a later date.”

A study by Ontario Pork and the Guelph-based George Morris Centre, designed to develop a plan for building and maintaining differentiated (or niche) market initiatives, emphasizes the importance of value chain management in developing sustainable niche initiatives.

“What you sell is the inevitable result of a series of processes,” says Martin Gooch, senior research associate at the centre. “Unless you clearly understand the requirements of your end-market consumers and can translate those needs into informed management decisions, your business will never achieve its full potential.”

The study, “A Stepped Approach for Developing and Maintaining a Differentiated Pork Initiative,” seizes on earlier research by the centre that showed a market for differentiated pork clearly exists in Ontario, particularly in the greater Toronto area.

Gooch, who conducted the new study with centre associate Terri-lyn Moore, notes there are already successful differentiated pork and other agri-food initiatives operating in North America and overseas. They prosper because they emphasize value rather than low price, says Gooch.

For example in Ontario, Berkshire pork -- a tasty heritage breed that has captured consumers’ imaginations -- offers value-added possibilities through co-ordinating production, processing and marketing operations.

And in New Zealand, pork producer Murray Battersby and his wife Helen developed Murrellen pork based on the connection between low animal stress levels and superior meat quality. Consumers have shown their support by keeping Murrellen pork flying off the shelves.

“Our goal is to identify market opportunities, and to provide Ontario pork producers with the tools to take advantage of these situations in order to become more competitive,” says the organization’s communications director Keith Robbins. “The value chain management approach allows those already in differentiated markets to strengthen their operations.”

The Ontario Federation of Agriculture is welcoming news that standards will be established for acceptable tingle voltage levels in Ontario.

OFA president Geri Kamenz says it’s an issue that impacts the livelihood of 4,500 Ontario dairy farm families and another 15,000 farm families raising livestock.

The plan calls for the Ontario Energy Board to review and establish appropriate standards for tingle voltage. Tingle voltage, also known as stray voltage, has affected Ontario producers for decades. The most obvious symptoms include a decrease in the production of milk from dairy cows or weight gain in other animals.

The OFA says that in severe cases, animals will refuse to drink from water bowls and other sources because of the transmission of electrical shock through the water.

The federal government has announced a $10-million investment over four years for its Community Pasture Program. The new funding will be used to enhance carrying capacity and range health through additional brush control, water development and forage rejuvenation measures.

Now in its 70th year of operation, the federal Community Pastures Program manages 85 pastures on approximately 2.3 million acres in Saskatchewan, Manitoba and Alberta. A livestock grazing and breeding service is provided to more than 3,100 producers each year.

The pastures are located in a variety of landscapes and comprise some of the largest remaining contiguous blocks of native prairie grasslands in Canada.

Farmers with gopher problems have a new weapon in the battle against the pest. Leroy Schwartz of Swift Current, Sask., has created "The Gopher Trap" and it is proving to be an effective control option.

"On one particular piece of alfalfa that is 40 acres, I've been able to trap 6,400 gophers," says Schwartz, confirming how effective the 250 traps he put on that land have been in catching the pest this year.

"We've saved the field. Last year we were unable to cut it and this year we have a very nice stand of alfalfa."

The trap is three inches wide by 18 inches tall. It is set at the entrance of the gopher hole. When the gopher sticks its head through the trap it touches the trigger which releases a metal panel. The panel is spring loaded and comes down on the gopher’s neck, suffocating it in 10 to 20 seconds.

"The Gopher Trap" won the Best New Invention and People’s Choice awards at the Western Canada Farm Progress Show, June 20-22 in Regina.

Schwartz says people like the trap because it is a humane way to deal with the gopher and unlike poisoning, has no impact on other wildlife such as hawks and owls.

The development of the trap began over a year ago. Schwartz, who manufactures the product on his farm, went through many prototypes before perfecting the trap as it is today.

The response by both farmers and businesses at the Farm Progress Show was overwhelming according to Schwartz. He expects to increase production of the trap, which will mean increasing to a staff of four to meet the increased demand. During the Farm Progress Show, Schwartz had interest from companies wanting to sell the trap in their stores.

Many areas of southern Saskatchewan have been facing growing gopher populations and while Schwartz doesn't believe this is the complete solution, it can help farmers deal with the rodent.

"I don't think we'll ever get to the point where we can make enough traps as to what is required."

Statistics Canada released its updated Canadian 2007 crop acreage survey results on Tuesday. Given seeding delays due to wetness across a large portion of northern Saskatchewan and through central to northern Alberta this spring, trade opinion had been that growers were likely forced to reduce canola and spring wheat acreage from original intentions and turn to shorter season crops such as barley and perhaps oats to some extent.

This survey suggests that has occurred, but to a much lesser degree than most in the trade had anticipated. It should also be noted that this survey was taken around the first week of June while the seeding season was still in full swing. Therefore, final seeding results may not be completely reflected in the numbers StatsCan gathered below. Expect further adjustments.

The following is a summary of Statistics Canada 2007 grain and oilseed acreage estimates and revised 2006 acreage.

The Canadian Wheat Board recently reported that farmers in Canada's grain belt planted their smallest spring wheat area since 1970. Based on this data they may be right, as higher prices for competing crops combined with high costs of fertilizer and planting delays is pushing Canadian wheat production potential down rather sharply this year.

My analysis suggests Canadian all-wheat exports will decline significantly in 2007-08 relative to the current marketing year -- perhaps 5 million tonnes lower to about 13.5 million tonnes given reduced 2007 production. A decline in Canadian wheat supply was already anticipated by the trade, but this data probably goes 1.5 million tonnes beyond most trade expectations in terms of diminished exportable supplies from Canada.

This is not only important to global wheat fundamentals where an additional one-million-tonne reduction in exportable surplus is meaningful, but it also goes to the extra handling capacity that grain companies can devote next year to other commodities. This change will allow for on average an extra 100,000 to 150,000 tonnes of monthly bulk shipping capacity to be devoted to barley, canola, peas, etc.

The extra handling capacity amid a macro global trend of being demand-driven should be constructive to 2007-08 “basis,” as trade is now apt to be hungrier to handle product after the traditional harvest rush subsides.

If the StatsCan numbers are to be believed, the expected surge in Canadian barley acres from the April estimate did not occur. This should be supportive for prices and justify barley as being the highest priced feed grain in Canada. Tightening barley inventory in the year ahead may result in imports of U.S. distillers grains, possibly corn, and push more animals to be fed in the U.S. (provided a trend yielding corn crop is reaped and supply is available). Market direction into the harvest period and beyond will depend greatly on the Prairie grain quality spread.

By the end of 2007-08, the supply/demand balance sheets of all Canadian farm commodities are poised to be historically snug. This bodes well for above average price offerings for 2008 and ensures that respective acreage battles in 2008 start early.

Mike Jubinville of Pro Farmer Canada offers information on commodity markets and marketing strategies. Call 204-654-4290 or visit http://www.pfcanada.com to find out more about his services.