Quebec dairy farmers say they are "deeply disappointed" by the refusal of Canada's biggest cheese makers to accept a court ruling that upholds new federal cheese regulations.

"It's a big setback," says Marcel Groleau, president of the Quebec Federation of Milk Producers.

Saputo and Kraft Canada are appealing a ruling against their challenge of a new federal regulation that changes the standards for domestic and imported cheeses in Canada.

"It's hard to sit down with them and work together to develop plans for the development and commercialization of new products if they are still fighting the new rules," Groleau says.

The dispute began a year ago when Kraft, Parmalat and Saputo jointly filed an application with the Federal Court of Canada, challenging the new regulatory changes to the Food and Drugs Act and the Canadian Agricultural Products Act.

Under those regulations, which came into effect on Dec. 14, 2008, cheese makers are strictly limited in their use of natural constituents of milk -- widely referred to as modified milk, milk solids or dairy ingredients. 

Specifically, cheese makers must use more full-fat milk and less modified milk, most of which is imported.

In their court challenge, the companies argued the regulations would increase their production costs, resulting in higher prices for consumers and threatening the competitive environment for Canadian cheese products.

"The regulations are bad for everybody," Lino Saputo Jr., Saputo's chief executive officer, said in an interview earlier this year. "They make no sense."

According to Saputo, his company has been using imported dairy solids to make cheese for more than 30 years.

In addition to helping to stabilize cheese and make more consistent product, he says modified milk helps lower production costs, enabling Canadian cheese makers to compete with international brands.

The regulation, adds Saputo, also force his company to change all their cheese recipes.

"It's infuriating," he says.  "We pride ourselves on innovation and the development of new products (and) those efforts are being thrown out the window."

He says the regulation is intended to benefit dairy farmers, who are the cheese makers' principal suppliers, but claims the new rules will not have the desired effect. 

"There may be some gains (for farmers) in the short term," Saputo says, "but if consumption goes down because of price increases, cheese makers will be buying less milk. We're not against dairy farmers, we're for cheese."

The cheese producers hope the Federal Court of Appeal will overturn the ruling and "protect the integrity and future of Canadian cheese."

But Groleau says he and Quebec's 13,000 dairy farmers disagree.

"Their appeal risks stopping our efforts to commercialize our (full-fat milk) surpluses," he says, adding they could generate as much as $40 million in revenues.  "We need to stop arguing and move forward."

Producers attending the Canadian Bison Association's annual convention were pleased to hear that demand for bison is not expected to go away anytime soon.

The yearly meeting was held earlier this week in Regina, part of the Canadian Western Agribition.

"The industry is on an upswing," says CBA president Mark Silzer. "We've seen stable prices and in fact, prices for finished product in the United States are at historical highs."

Silzer says the strong prices are a reflection of growing consumer interest and demand for bison products due to the healthy, nutritious, natural and tasty attributes of the meat. 

"As we wrapped up our convention, we had an international group of marketers who gave the unanimous message that we're headed for a real shortage in supply based on what were seeing at the consumer demand level," he says.

A good portion of the current demand is coming from the United States and surprisingly, even the recession has helped the bison industry.

"Due to the global recession, we've seen sort of a shift away from the higher end cuts, but because people still want to eat bison, they're looking for burger meat.  So we've seen our cull cow prices at historical highs," Silzer remarks.

This has allowed some producers to cull out some of their older cows and retain heifers, resulting in more youthful herds in Canada. However, the CBA is looking for herds to grow and new producers to enter the industry.

"One of our major pushes over the next couple of years here is going to be to try and get some new people into the industry and try to grow it (bison production)."

The fact the bison prices have been strong for almost two years now is something Silzer believes will help bring some new producers into the industry.

"The stable prices over the last couple of years are sending the message that this thing (bison industry) is getting some legs under it, and I think that is going to create some interest."

As part of the CBA's National Convention, they also hold a sale of breeding stock. The sale is tied in with a show that takes place at Agribition. The average price for the bison in the sale was $1,795 on 60 animals sold. This was down from the 2008 CWA sale, where the average was $2,090 on 65 head.

Can anti-aging cream and pharmaceuticals become permanent parts of Prince Edward Island agriculture?

Both of those high-value products are made from oil extracted from plants like crambe and borage -- each in the experimental stage in Canada's smallest province.

But Andrew Hebard is hoping to change that. He's the president of Nature's Crop International -- a North Carolina company that specializes in growing, processing and supplying identity presented specialty oilseed products.

With financial help from the federal and provincial governments, the company recently announced plans to build an oil extraction plant in the central P.E.I. community of Kensington. The company began contracting acreage of specialty crops this year, shipping it to U.S. plants for processing. The conversion of a former trucking depot into the processing plant is expected to be complete by the time the 2010 crop is harvested.

The interest definitely seems to be there on the part of the P.E.I. farming community.

This year, 1,000 acres of crambe went into the ground.  Hebard says that will increase to 3,000 acres in 2010. By 2013, he hopes to have 20,000-30,000 acres of the specialty crops in the ground, generating $5.4 million annually in farm gate receipts.

He says the specialty crops fit well in the potato rotation and offers growers a high-value cash crop in the off years from potato production. He assures the company will pay "competitive prices" and will settle its accounts within 30 days of delivery.

"There is a deep culture here of high quality agriculture," Hebard says. "Growers are receptive to new ideas."

He adds P.E.I. was chosen because of its proximity to high-level research into natural plant-based bioactive, including work at the Crops and Livestock Research Centre and the National Research Council in Charlottetown.

The oilseed will be brought to the Kensington site for cleaning and preliminary tempering. The seed will then be crushed in an expeller unit, which separates the raw oil and the seed shell (meal). The raw oil is sent through a pressurized filtration system where solids are separated and removed. Filtered raw oil is then further processed or shipped; separated solids are packaged for sale or disposal. The seed meal will be stored on site and sold for livestock feed or soil additives.

In addition to crambe, the processing plant will be able to handle industrial hemp, sunflower, calendula, field gromwell, rapeseed, meadowfoam and cuphea.

Ontario's plans to boost the minimum wage to $10.25 an hour could be a "catastrophe" and cost the province's fruit and vegetable farmers $73 million, says a new report.

In "Minimum Wage Increases in Ontario: Understanding the Significance in Horticulture," Al Mussel and Claudia Schmidt of the George Morris Centre say the proposed 28 per cent increase in the minimum wage would decrease profitability in some commodities by almost half.

"These constitute real cash losses to farmers," say the authors. "Little opportunity currently exists to adjust to this labour cost change."

Ontario has been pushing the minimum wage issue for years. Average wages to full-time agricultural employees in the province are among the lowest overall, surpassed only by the accommodation and food service sector.

In 2007, Ontario announced the hourly wage would be increased to $10.25 from $8 hour, by early 2010. Horticultural sector leaders bristled at the jump and immediately warned of dire results.

They noted Ontario fruit and vegetables are labour intensive to grow and process and that they compete head-to-head with cheap imports. Increased labour costs would make homegrown produce uncompetitive, they said, but hadn't quantified the potential damage until Mussel and Schmidt's report was released.

The authors can't understand why the province would legislate a minimum wage increase in a sector that is already struggling and has a significant reach to urban food consumers through government-sponsored initiatives such as Foodland Ontario. 

"Government has explicitly supported initiatives drawing on horticulture in local food marketing and land use planning," they say. "That means the province must be counting on horticultural processing to stabilize Ontario's suffering manufacturing sector…but [the proposed increase] puts public policy at odds with itself, and confuses the public interest that government has articulated for horticulture."

British Columbia's damage claims for this year's wine grapes are the highest ever recorded.

Last winter's mid-December freeze is being blamed for the record high losses, although the total claims in B.C. for production insurance this year were actually lower than the year before.

Larry Plett, production insurance general manager with the agriculture ministry, says this year there's about $28 million to $30 million in damage claims for crop losses. This includes grains in the Peace area and tree fruits damaged by hail. Of that, he estimates $20 million will go to grape growers.

Last year, B.C. recorded $35 million in total claims for crop damage in the province, mostly from a late spring frost that decimated the Okanagan Valley's cherry crop.

Claim totals in 2009 and 2008 are far above previous years: $16 million in 2007 and $18.6 million in 2006. Prior to that, many yearly total claims were only $2 million to $5 million, Plett says.

Years like 2009 just prove the value of the crop insurance program, notes Plett. "There's a lot of money going into farmers' hands this year."

It was this spring at bud break when growers discovered that many grape vines had sustained top damage and that the primary clusters of grapes had been badly hurt by the cold. In some situations, young vines were killed or damaged.

Damage varied depending on location and variety of grape. In some vineyards, the mercury plunged to -26 C last winter, a temperature that could be fatal for some of the more vulnerable varieties.

The good news is that weather forecasters predict a milder winter this year. 

Farmers who collect payments from oil and gas companies shouldn't automatically assume the payments are all income and fully taxable for the year they are received.

A portion of the payment -- or the entire amount -- could be capital in nature, giving rise to a capital gain. 

You may have signed a lease for surface rights. This is often in the form of a lump sum for such things as land damages, inconvenience, severance and the first year's rent; without any specific allocation to each category. The lease will also set out a periodic rental payment for subsequent years.

Recent technical interpretations by Canada Revenue Agency confirm that the portion of the initial lump sum equal to the rental to be paid in future years is considered income, while the remainder is capital, says Tom Devaney, a chartered accountant from Edmonton.

The capital portion is considered to be proceeds of sale, resulting in a capital gain or loss. A reasonable allocation of the total cost of the property can be deducted against these proceeds in calculating the net gain. If the land is considered to be qualified farm property, then the capital gains deduction may be available to offset some or all of the gain.

Devaney notes that where the amount of land disposed is not more than 20 per cent of the total property area, CRA will accept any reasonable portion of the cost that the taxpayer wishes to allocate against the proceeds. This approach is also acceptable when dealing with easements or right-of-way payments, which are considered capital in nature.

Payments relating to crop losses or fence damages, temporary workspace and tower rents are usually considered on account of income.

Getting the right classification could leave some extra change in your jeans so it's worthwhile to consult your tax advisor.

A recently released economic impact study shows more northern Ontario farmland is coming into production and growing demand will strengthen the economies of the area's agriculture industry and community.

The study was a collaboration between stakeholder groups in the districts of Thunder Bay, Rainy River, Kenora and Cochrane.

Don Murray, a consultant with the Guelph-based consulting firm Harry Cummings and Associates Inc. who conducted the study, says it was a "first-of-its-kind" examination of the businesses related to agriculture in northern Ontario. The goal of the study was to examine agriculture's role with other sectors of the economy.

Economic discussions in northern Ontario communities often focus on the forestry and mining sectors, both of which have been suffering in recent years. While agriculture may often be overshadowed in these discussions, Murray says the study confirms agriculture has been a relatively "steadier" sector in the north.  In the Thunder Bay District, agriculture supports 605 on-farm jobs. In the same area, the forestry, logging and manufacturing sectors lost over 2,500 jobs between 2001 and 2006.

The study identifies a huge inventory of land available in the north that is being brought into active agriculture production.

"(We're) seeing natural pasture land being converted to more intensive cropping activities, and that is a pattern we are seeing across several districts in the North," Cummings says.

Future crop production opportunities could expand as climate change projection models suggest the growing season in the southern portions of the Thunder Bay District is expected to increase.

Northern agriculture industry leaders are excited with the findings of the study and the potential the area has to offer.

"With a local market of approximately 120,000 there are many possibilities for those who wish to go into direct market. With lower land prices and a supportive community it is a great place for young entrepreneurs to consider."

Peggy Brekveld, president of the Thunder Bay Federation of Agriculture says the research will be used in three ways -- to inform all levels of government and business of the importance of farming, to encourage agriculture-friendly policies and to develop strategies to encourage further processing ideas and growth in current farm operations.

A funding announcement for Newfoundland and Labrador's dairy industry should help lower feed costs by producing more in-province forage.

A $12 million land development program, announced last week, will help the dairy industry produce forage. This will reduce the need to import feed and put more money in the hands of producers.

Kathy Dunderdale, the province's minister of natural resources, says the dairy industry currently imports about 22,000 tonnes of forage a year, adding up to $4.4 million.

"We want to be able to produce more of that forage within the province, lowering the transportation and fuel costs for farmers," she says.

Over the next three years, the provincial government will invest $6 million to help producers develop larger acreages of land for increased forage production. Funding will be matched by individual dairy producers for a total expenditure of $12 million on land developments projects.

The provincial government states the initiative will ensure long-term job security for existing farm employees and will create approximately 360 seasonal jobs as the land is developed. They also predict that crop input and equipment suppliers will see an increase in employment and sales as a result of increased forage production and harvesting activities.

The Dairy Farmers of Newfoundland and Labrador applied for funding to create and administer the land development initiative on behalf of its 37 registered dairy producers. The organization is the regulatory body for the production and marketing of milk in the province.

"Additional land development is critical in overcoming the challenge of inadequate forage production and the development of a more competitive sector," says Robert Walsh, chairman of the Dairy Farmers of Newfoundland and Labrador.

The initiative will secure the continued production and supply of industrial milk to existing secondary processing facilities and provide potential for expansion and new processing opportunities. Increased utilization of industrial milk will enable the province to fulfill production requirements related to its share of the national industrial milk quota.

In 2001, Newfoundland and Labrador's dairy farmers joined the National Milk Marketing Plan and were allocated a quota target of 31 million litres of industrial milk production annually by 2016. If the province is successful in achieving its allotted industrial milk quota within the National Milk Marketing Plan, the province's dairy industry would double in size from 2001 to 2016.

Canada's pulse crop industry received a substantial boost from the federal government.

$4.4 million has been allocated to four areas. All are aimed at increasing profitability for Canadian pulse growers by adding value to the peas, beans, lentils and chickpeas they produce.

The funding comes from the AgriFlexibility fund. $1.5 million will go toward an initiative to highlight the sustainability of pulse crop production. The goal is to capture premium prices by marketing Canadian pulses as environmentally friendly; pulses produce their own nitrogen, reducing the need for manufactured fertilizer.

Another $1.5 million is for the Pulse Health, Innovation and Commercialization project. The focus will be on finding new markets based on the health attributes and sustainability of pulse crops. Studies have shown pulses can help reduce chronic health issues such as diabetes and heart disease.

"Consumer demand for healthy, environmentally-sustainable products is growing," says Barry Grabo, chairperson of Pulse Canada. "Combined, the health and environmental benefits of pulses make them an ideal ingredient for food companies and manufacturers looking for innovative solutions."

The funds will also help with transportation issues faced by the pulse crop industry. $1.13 million will be allocated for accessing better equipment and to ensure the smooth flow of product from the field to end-use destinations. Pulse Canada has been working to improve the reputation of not only being able to access a top quality product but also providing reliable delivery to foreign customers.

The last part of the funding announcement -- $308,000 -- is for international marketing of Canadian pulses. The goal is to promote pulses as being important for health and environmentally-conscious markets worldwide.

"By working together to improve the systems we have in place, ensuring access to markets and pursuing new market opportunities, we can enhance an already successful pulse industry," Grabo says.

I continue to watch with astonishing interest as cash bids for both large green and red lentils in Western Canada have steadily worked their way higher these past number of weeks, despite the large supply of both crops.

In the past two to three weeks, we have seen a rapid acceleration in lentil bids with reds now at 32-34 cents and large greens as high as 35-36 cents. Wow!

Average yields for lentils in Saskatchewan were in the 1,350 pound area, but producers in some isolated areas were pulling off yields of 2,500 pounds and better.

High yield and strengthening prices -- what more could a grower ask for?

The source of this rising price trend has been demand from the export market. Despite large crops in Canada, grain production in India is unlikely to satisfy local demand this year. India’s summer ‘kharif’ crop was affected by dryness and its winter ‘rabi’ crop production remains in question. As a result, I have upwardly revised my estimate of 2009-10 Canadian lentil exports to 1.2 million tonnes (up 0.2 million tonnes).

Pigeon pea production in India is coming in lower than expected -- and with the increasing recognition in the current market of a more attractively priced and substitutable split green lentil, Canadian origin greens are picking up some of the slack. Pigeon pea prices landed India are around US $1,250 per tonne. Richleas just traded at US $925 per tonne, with large green lentils reportedly around US $50 per tonne higher.

The demand element from India is thus increasing, and with strengthening bids is likely to draw increased farmer selling here to meet those expanded export needs for the current year.

As such, the lentil market rally has continued to surprise everyone (myself included). But while the price trend remains higher, I think current market premiums are worthy of bumping up cash sales further in a scaled in sales approach.

Impossible to say where the top to this market will be -- no reason yet to suggest we are there yet. Three or five cents higher -- don’t know -- but probably within this range.

Always tough to get an absolute handle on the India buying situation as it has emerged as a significant “non-traditional” buying source for lentils. No telling how long their interest lasts, but this latest price flurry is worthy of your attention.

Return on lentils per acre far exceeds that of any of the major crops grown on the Prairies. I can’t help get somewhat concerned when one crop stands out amongst the crowd. Paranoia perhaps, but I’m concerned about the whack-a-mole effect. When this market does peak, it may be tougher catching it on the way down. These are excellent pricing opportunities to get something done.

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