Faced with a decreased supply of hogs from central Canada, Larsen Packers is sweetening the pot for local pork producers.

The Maple Leaf-owned plant, located in Berwick, Nova Scotia, needs a minimum of 1,500 hogs a week to operate effectively, according to plant manager Mike Lee.

Larsen has been relying on imports from Ontario and Quebec, but that supply is in jeopardy due to declining production. On January 15, Lee sent a letter to Maritime pork producers offering an $8 freight subsidy for hogs delivered to the plant, and proposed a one-year fixed-term contract to try to maintain processing levels.

The trouble is, Maritime hog production is also in steep decline. Pork Nova Scotia, the marketing agent for hogs in the province, reports that in 2009 pork production dropped 62 per cent in Nova Scotia and eight per cent in New Brunswick. P.E.I., the region's largest supplier of hogs, saw production drop 37 per cent.

“My primary concern right now is looking for hogs to stabilize the kill part of the operation. Given the number of hogs in the Maritimes, we're hoping to be able to do that,” says Lee.

But with the federal government encouraging pork producers to get out of the industry, maintaining supply may be a challenge.

Tim Seeber, executive director of the P.E.I. Hog Commodity Marketing Board, welcomes the Larsen offer but he isn't convinced it will be enough.

“It's a better offer than what we've seen in a long time from anybody, but it's too little too late,” remarks Seeber.

“In the past, our producers have asked Larsen for a larger operating window, and their window was six months. Our producers wanted contracts, and they wouldn't offer contracts. Now we have producers committed to long-term contracts in Quebec, and we have producers in a financial hole. They've been losing $30 a hog for almost two years now, and we don't know how much longer they can stay in the business.”

Lee won't reveal how many hogs Larsen is currently bringing in from Ontario and Quebec or what the response has been to his appeal for Maritime-sourced hogs.

“We're still gathering data, but it's been positive from the folks that have contacted us. Once we get all the data, we'll meet with the producers, and if contracts are appropriate that's something we'll discuss with them at that time. We hope it's not too little too late,” he says.

Larsen Packers currently employs 350 to 400 people. It has been owned by Maple Leaf Foods since 2000.

The federal government continues to focus on expanding international market access for Canadian agriculture goods and products. Federal Agriculture Minister Gerry Ritz has just returned from a trade mission designed around developing new market opportunities in Mexico, Colombia and Guatemala.

"The government will continue to work to get access to international markets where farmers can continue to drive Canada's economy," stresses Ritz during a news conference with reporters.

In Mexico, Minister Ritz announced a $5 million investment to boost the Mexican appetite and raise consumer awareness of Canada's safe and top quality food. The Canada Brand initiative will drive promotional activities in Mexico for a wide range of products including canola. In 2008, Canadian agriculture exports to Mexico totaled $1.6 billion.

Ritz's trip to Mexico included meetings with their Secretary of Agriculture, Francisco Mayorga and Secretary of Economy, Gerardo Ruiz Meteos where common ground was found over the problems with U.S. Country of Origin meat labeling laws.

"I also raised a number of areas of concern including the need to fully restore our trade in beef underscored with accepted world science."

In Colombia, Ritz emphasized the government's desire to get the new Canada-Colombia free trade agreement (FTA) implemented. He says without the deal, Canadian agriculture exports face tariffs that average 17 per cent.

"We ask the opposition in the House of Commons to help pass the FTA as soon as parliament resumes. The faster we get this finalized, the sooner our producers can again compete on a level playing field in the growing Colombian market," says Ritz.

The Colombian mission also included a focus on reopening that market to Canadian beef breeding stock and genetics. As well, the Colombian government committed to work with Canadian officials to negotiate animal health conditions that would allow Canadian sheep and goat imports.

In Guatemala, Minister Ritz pressed for full beef market access and duty free access for pork and other agriculture products.

"I sent a strong message that Canada is committed to concluding negotiations with Guatemala and Central American countries so we can get freer trade rolling between our regions as soon as possible."

In 2008, Guatemala imported $32 million of Canadian agriculture goods.

Four major Canadian farm organizations are joining forces to push the federal government for greater investment in primary agriculture research. 

The Grain Farmers of Ontario, the Grain Growers of Canada, the Fédération des producteurs de culture commerciales du Québec and the Alantic Grains Council have formed an organization called Farmers for Investment in Agriculture. They claim to represent more than 100,000 Canadian farmers.

"At a time when most industrialized countries are making huge investments in farming to capitalize on growing world food demand, public research funding for agronomics in Canada has dropped 40 per cent since 1994, after adjusting for inflation, resulting in a serious loss of both research infrastructure and scientists," say the groups through a news release.

FIA is calling on the government to double core agronomic research over the next 10 years. The proposal would bring funding back to 1994 levels by 2020.

“The government must develop a national strategy on agriculture that puts the needs of Canadian farmers at the top of its list,” says Don Kenny, chair of the Grain Farmers of Ontario.

The farm organizations are worried that without reinvesting in core agriculture research funding, Canadian farmers will start to loose ground to other countries. Australia was cited as one of the countries that is dedicating much more funding resources to agronomic research.

“Agriculture as an industry turns every dollar of research investment into a 10 dollar economic benefit for Canada through the growth of the domestic food sector, increased exports and lower food costs,” says William Van Tassel, vice-chair of the Fédération des producteurs de culture commerciales du Québec.

Research is more important today then ever before, according to FIA. The Food and Agriculture Organization of the United Nations predicts that global agriculture has to grow by 70 per cent by 2050 to feed an additional 2.3 billion people, creating demand that Canadian farmers need to be prepared to capitalize on.

“There is no better investment for Canada than an investment in food,” says Doug Robertson, president of the Grain Growers of Canada.

“We have some of the most fertile farmland in the world with access to the third largest supply of the world’s fresh water and we are not maximizing our crop production,” he says.

Quebec’s growing ice cider business is in jeopardy because of a new government regulation that producers say is both needless and counter-productive.

“It doesn’t make any sense,” apple grower François Pouliot says about the year-old rule change, which obliges ice cider makers to press the fruit used to make the sweet alcoholic nectar on their own properties.

An industry pioneer in Quebec, Pouliot said he has never pressed apples on his 110-acre property near Montreal in the two decades he has been making the beverage.

“The government says they did it to keep the industry small and artisanal.  But all they’ve done is increase our costs and make us less competitive.”

Pouliot is one of province’s three big ice wine producers accounting for some 90 percent of the ice cider being made. From that, $10 million in annual liquor sales is generated.

Normally, Pouliot harvests 95 per cent of the 43,200 bushels of apples he grows in the fall. Those apples are put into cold storage until winter and then pressed. In past years, they were taken to nearby Enderle Apples, a family-owned industrial presser that produces an average of 650,000 gallons of apple juice for producers like Pouliot and big processors like Lassonde.

Pouliot then picks the remaining five per cent of his crop in late December or January, depending on the temperature. He also had them pressed at Enderle and uses that juice to make high-end, award-winning ice ciders that fetch $50 for 375 ml -- and put Quebec on the world map among ice cider connoisseurs.

This year, however, Pouliot had to spend $200,000 purchasing the biggest press on the market to meet the new rules. Instead of usual days-long turnaround from Enderle, he said it took him several weeks to press the apples from the fall harvest. As a result, he was able to harvest only half of his winter apples, while the rest now hang rotting and worthless on his trees.

Pouliot is hopeful that a meeting he and a few other big producers had in the fall with the ministers of the three government departments that share jurisdiction over ice cider production will soon bear fruit.

An agriculture ministry spokesperson said the matter is still being discussed within government.

"I'm sure they'll see the light. But it’s too late for us this year,” says Pouliot.

The agriculture industry is a study of contrasts.

New technologies and uses for agriculture-based products are emerging and showing great promise for the future; yet there are many sectors of the industry that are struggling economically from forces beyond their control.

Carl Fletcher, the strategic planning and business development program lead with the Ontario Ministry of Agriculture, Food and Rural Affairs, says the opening line of Charles Dickens' A Tale of Two Cities probably sums up agriculture right now. “It was the best of times, it was the worst of times...”

The new year is always a good chance to re-evaluate and refine business practices. At the recent FarmSmart Agricultural Conference at the University of Guelph, Fletcher collaborated with his colleagues to assemble what he described as a smorgasbord of top business tips for farm operators for 2010.

Fletcher said it is important that farm operators know what their passions or strengths are in the farm business and that they bring in expertise for the areas where they are weaker.

“Most self-employed people tend to be production oriented. That is why they are in that business. It is okay, but if you want your farm to thrive you have to find other people and use other people who are keen on some of the (other) things,” he says, such as marketing, financial management and people management.

Fletcher also advised farmers to look for ways that they can improve their business by five per cent.

“We are all looking for the big ticket thing, but over time doing a lot of things better adds up to doing some big changes.” 

Fletcher used the example of a baseball player with a batting average of 0.250 and a top baseball player with a sky's-the-limit salary and batting average of 0.300 to highlight his point.

“Consistently capturing that one more hit in at-bat, or five per cent, means the difference between an average salary and a phenomenal salary,” reasons Fletcher.

On the expense side of the ledger, Fletcher would like farm operators to look for ways to reduce costs by five per cent. Combining the two -- reduced costs and increased revenues -- will result in increased margins of 10 per cent.

With the expectation that interest rates will soon be rising, Fletcher says farm operators may want to think about locking in fixed rates on term loans or refinancing to free up debt-serving capacity. He recommends operators pick an upper-limit interest rate they are comfortable with so they don’t get caught off-guard if or when rates increase.

Other tips in Fletcher’s top 10 list include:

• access the business planning and training opportunities available
• show your appreciation to the people in your life and farm business and share laughter with them
• listen to your consumers and tune up your marketing plan
• know your cost of production
• develop and implement a human resources management plan
• take the next steps in succession planning
• manage the impact of petroleum prices/petroleum corn/petroleum dollar

Over the past several years Dr. Don Flaten, soil scientist at the University of Manitoba, has been asked just how many pigs, cattle, or poultry Manitoba can support without overloading the soil and waterways with phosphorus.

Dr. Flaten took on the challenge and after some number crunching, he discovered Manitoba could support 598,802,395 weanlings without adding more phosphorus to the province’s agriculture land than the crops would take up as they grew.

Unfortunately, he grins, that magic number applies only to weanlings. “It doesn’t include the mothers and fathers,” he says. Nor does that number allow for any other livestock production in the province.

According to Flaten, trying to calculate the number of livestock an entire province can handle is an impossible task. Each and every field has a different phosphorus requirement, he says. And, although 73 per cent of Manitoba’s agriculture land and 86 per cent of Saskatchewan’s cropland have suboptimal phosphorous levels, it doesn’t mean livestock numbers can continue to rise throughout the province without supervision.

The amount of manure that can be spread on a field depends on whether the crop will be grazed or harvested mechanically, the number of setoffs and the type of manure.

Flaten explains the difference in phosphorous uptake between a mechanically harvested crop and a grazed crop is substantial, with grazed land requiring the fewest applications of manure. He suggests grazing land should have only one application of hog manure every 40 years or one application of cattle manure every 56 years.

Generally, grassland that is harvested mechanically can receive an application of hog manure once every six years or an application of cattle manure once every nine or 10 years, Flaten says.

But, Flaten emphasized these numbers are only guidelines.

“Manure [spreading] has to be managed field by field,” he says. In addition, he noted the tools are already in place to accommodate field by field testing.

If the phosphorous level in a field is less than 60 parts per million, there’s no need for concern, Flaten says. Levels between 60 ppm and 180 ppm require ongoing monitoring. Anything over 180 ppm is a red flag and neither synthetic phosphorous nor manure should be applied to that field. 

In the end there is no one size fits all solution, Flaten says. The true maximum for livestock density can only be determined when the farm fields, the community situation and existing regulations for air and water quality are taken into account.

Alberta Agriculture and Rural Development has just released a new calculator helping producers understand the losses associated with applying liquid manure to farmland. The calculator not only determines how much of the ammonia nutrient is not being utilized, but also determines the cost of those losses.

Research indicates as much as 35 per cent of whole-farm ammonia emissions occur during land application of manure, says Atta Atia, an air quality specialist with ARD.

“The estimation of these ammonia losses is beneficial in assessing ammonia conservation techniques, improving nutrient management recommendations and helping users choose an environmentally friendly and economic application method,” says Atia.

The new calculator allows for quick and straightforward input of several variables such as manure characteristics, soil condition, land size and application techniques. It can be found at the ARD website and farmers’ individual inputs can be easily modified to assess the effect of the changes.

Input occurs over four screens beginning with field identification, land area and soil moisture. Users have the option of using metric or imperial units and can choose between swine or cattle manure.

Default values are provided for total ammonia nitrogen and dry mass content, but Atia notes the most accurate data can be obtained from manure analysis done in a private laboratory. Although none are located in Alberta, such facilities are available in Saskatchewan.

Additional input fields require the amount and application rate, the specific application technique (such as broadcast or deep injection), followed by current air temperature and wind speed data.

The program provides graphs showing the relative and cumulative nitrogen losses over time, plus a printable results report. By just clicking on the bars located by the results summary, both the graphs and the report will reflect the changes in real time.

Check out the new calculator at www.agric.gov.ab.ca. Go to “Decision Making Tools – Livestock” and look under “General.”

Canadian and American agriculture equipment manufacturers are predicting slower sales for tractors and combines throughout 2010. According to a survey from the Association of Equipment Manufacturers, double-digit sales drops are expected before the bottom is reached in 2011.

"The recession reached the agriculture sector in 2009, and the drop in equipment sales in most categories is attributed to a combination of the fall in commodity prices, significant drops in net farm income, the tightening of credit throughout the ag equipment distribution channel, and the overall reduction in economic confidence," says AEM Vice President of Agricultural Services Charlie O'Brien in a news release.

The AEM is made up of North American agriculture equipment manufacturers and it polls its members annually on sales predictions for a variety of farm-related equipment.

"The recession is expected to continue to drive negative growth rates in many equipment categories in 2010. However, it is important to keep in mind that the larger equipment has been coming off of some very good production years, specifically the 100 HP tractors, which were at a 25-year-high watermark in 2008," says O'Brien.

In Canada in 2010, the AEM is predicting sales of large four wheel drive tractors will drop by 18 per cent, the biggest of any class of equipment. Canadian combine sales are expected to drop 13 per cent when compared to 2009.

"Other influencing factors fuelling market uncertainty include legislative issues such as cap and trade, the ongoing debate on increasing food production while reducing agriculture's contribution of approximately 30 percent of the world's greenhouse gases, Country Of Origin Labelling, and emission standards that will raise the cost of powered equipment," reasons O'Brien.

Two wheel drive tractors over 100 horsepower are anticipated to see a drop in sales of eight per cent this year while the 40 to 100 hp units will only drop four per cent when compared to the amount of sales made in 2009.

The AEM is predicting a stabilizing of farm equipment sales in 2011 and strong upward movement in 2012. For combines, four-wheel drive tractors and large 100 hp two-wheel drive tractors, modest sales increases of zero to four per cent are expected in two years' time. Smaller tractors, 40-100 hp and less than 40 hp, will see larger gains. AEM members expect those sales to grow by as much as six per cent in 2011 and 10 per cent in 2012.

The Alberta government is introducing a new radio frequency identification (RFID) technology assistance program to promote the adoption of traceability systems in the cattle production chain.

Tennis Marx, a traceability systems specialist with Alberta Agriculture and Rural Development, says the program will provide assistance on a cost shared basis between the government and the applicant.

The program is currently targeted at feedlots and backgrounders feeding more than 1,000 head of cattle annually, but will be expanded to include other participants in the future.

Eligible expenses include hand-held and panel readers as well as the software necessary to upload the RFID tag numbers to the Canadian livestock tracking system. Installation costs done by a licensed service provider as well as infrastructure modifications necessary to install a panel reader would also be eligible. For example, Marx says, this would include costs relating to changing a chute handling system to accommodate the reader.

The program will cover up to 70 per cent of the eligible costs to a maximum of $20,000 for panel reader systems and a maximum of $3,000 for hand-held readers. Marx notes qualifying purchases can include a combination of panel and hand-held equipment, but the maximum assistance will be $20,000 per premise.

Application forms and detailed information about the program can be found at www.growingforward.alberta.ca.

Winnipeg canola futures have tumbled rather sharply since the start of the month. Cash prices are down nearly a dollar a bushel in this timeframe. We have seen a bit of a levelling off in recent trading sessions, but is it just a pause in the market action? The weakness has been associated with the declines in global oilseed and vegetable oil markets such as Malaysian palm oil, European rapeseed and the Chicago Board of Trade (CBOT) soy complex during the month.

On the export front, sources confirm at least two cargoes of Canadian canola were sold to Pakistan last week. But a lack of follow-through buying interest has limited the canola market’s ability to respond with any upside momentum at this time.

The trade dispute with China remains unresolved. Domestic Chinese rapeseed valuation, if backed off to Canada, suggests prices $30 per tonne above the current market could be achieved if trade to China could be conducted without current blackleg restrictions.

Domestic crush margins on canola seem reasonably good, though there continues to be difficulty in disposing canola meal given the ongoing salmonella trade restrictions on meal shipments to the U.S.

The surfacing of some hedge orders from elevator companies has helped to undermine canola with chart-based speculative liquidation contributing to the market’s steady downward slide. Large domestic supplies of canola and the ample world global oilseed situation are all negative influences.

Weaker outside market factors such as the equities, energy and metals are helping to maintain a defensive tone in the ag markets generally. Therefore, rallies are considered selling opportunities for producers, ahead of the next expected slip lower. That said, supportive short-covering efforts can come into play periodically.

The emerging soybean supply glut and record U.S. and South American crops, means our canola is a “sell the rally” market until such time the fundamental situation changes. Global oilseed supplies are now exceeding demand, meaning carryout expectations are going higher for the current marketing year and likely next year unless production threats develop in 2010-11.

Looking at the charts, canola futures remain in a broad sideways trend. Unfortunately, this market is on a mission right now to test the bottom end of that range. Resistance is seen at a level just above $400 per tonne. Major support lies in a zone from $380 to $360 per tonne. With many negative influences for the oilseed complex into the end of February, that support level just may be tested.

I’m not much interested in chasing the market lower and prefer to exercise patience at this time. Growers should be looking for local basis premiums on deferred delivery positions for both remaining old crop supply and also for a portion of intended new crop production for fall 2010 delivery.

Hard for me to be specific and general on basis opportunities as that is a very localized consideration which varies widely depending on location.

But from a futures perspective, the oscillating nature of what we view as a transition to a broader sideways trending market suggests we shouldn't be chasing the market lower; however, I cannot discount the very real possibility that we may well see lower futures/cash prices in the immediate days and weeks ahead.

As we transition to a more favourable seasonal pricing timeline starting later this winter and into spring, we could see futures retrace at least some portion of recent declines. Using the March contract for old crop, a move back towards $400 per tonne would not be unrealistic. With a decent basis, we’d be shooting for the equivalent of about $9 per bushel for cash return.

On new crop November canola, a move back towards the $420 per tonne area might be enough to trigger new crop forward contracting for fall delivery. 

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.