Federal and provincial agriculture departments will consult with agriculture producers over the next few months on ways to improve the current set of farm support programs.

The group of agriculture ministers agreed to conduct a review of the business risk management programs like AgriStability, AgriInvest and AgriFlex when they met earlier this month.

“There will be another round of consultations with farm groups across the country,” says federal Agriculture Minister Gerry Ritz.

Both the federal and provincial governments will begin consultations with producers and agricultural groups on the challenges facing the sector, BRM programs and the opportunities. Results of those consultations will be reported to ministers this summer.

"Governments have a responsibility to listen to producers," says Bob Bjornerud, Saskatchewan's minister of agriculture.

"Farmers and ranchers are the first people impacted by the policy and programs we create. We need to engage our producers as we work to improve our business risk management programming," Bjornerud remarks.

Ontario Agriculture Minister Carol Mitchell believes this review will be effective.

 “It will give the opportunity to farmers to get out, have their voices heard and talk about what their needs are now and going into the future,” Mitchell says.

The idea of a livestock insurance program was also discussed and is expected to be a part of these consultations. Alberta is already testing a program. Some cattle producer organizations see it as a way to control risk by locking in an insured price for their livestock.

“We discussed livestock insurance and how it could work for producers while respecting our international trade commitments. We will keep working closely with the livestock industry to ensure our programs meet their evolving needs,” Ritz says.

Many farm groups say they appreciate the program review, but state the changes are too slow in coming.

The Canadian Federation of Agriculture says the long-lasting economic hurt facing hog, cattle and the horticulture industry means immediate changes to AgriStability are needed.

“Livestock producers, especially pork and cattle farmers, have seen their reference margins decimated over the past few years. Many are reaching the point where they will have difficulty even passing the viability test to receive support. Farmers were expecting to see concrete results and got more consultation,” says CFA President Laurent Pellerin.

Pellerin is willing to sit down with government officials and discuss the short-term measures they believe will be effective.

“The adjustments put forward are intended to be short-term, temporary improvements that will allow the current suite of BRM programs to provide some additional and essential aid to struggling producers,” Pellerin adds. 

“In the long-term, the CFA and its members remain committed to work with governments in developing a BRM suite that supports a national food strategy and would help to eliminate the need for these types of temporary solutions in the future.”

The Canadian Federation of Independent Business says AgriStability needs improvement.

The independent organization represents 105,000 small and medium-sized Canadian businesses, including 7,200 agribusinesses. CFIB releases a monthly agriculture business barometer which they say gauges agri-business optimism for the year ahead.

In an open letter to provincial agriculture ministers and the federal minister, CFIB agribusiness members say they would sooner garner their profit from the marketplace, however, they say agriculture producers continue to be impacted by the after effects of the recession.

In a recent overview of Canadian agriculture business, CFIB found confidence in the agriculture sector continues to lag behind other industries with an index of 54.5 (the national index sits at 66.9).

"While governments cannot solve many of the global problems that have impacted the agricultural sector, they can certainly take steps to improve the tax and regulatory environment in which agribusiness owners operate," CFIB states in a news release. "Additionally, they can make programs like AgriStability more farmer-friendly."

The CFIB also surveyed 1,081 of their agribusiness members and says respondents noted their top concerns with the AgriStability include the predictability of financial support, complexity of paperwork required and the classification of eligible income and expense items.

CFIB says their survey results indicate AgriStability "is not working and it appears that meaningful changes are required to help those producers who really need assistance during long downturns in the market."

The group suggests the ministers review government's approach to business risk management programs and consult with industry to integrate concerns. As well, CFIB suggests customer service standards be implemented.

The survey also found that 44 per cent of respondents believe government should provide a business risk management program for whole farm disaster protection, while close to 40 per cent thought whole farm income stabilization and cost of production coverage should be provided by a BRM program.

The CFIB surveyed its members to determine what they thought the role of government should be in providing BRM programs and how it should help producers manage risk. Most respondents -- 74 per cent -- responded that they would like government to help with foreign government issues like border closures. Another 70 per cent want government to help manage larger farm risks beyond producer control.

Survey results further determined that 85 per cent of agribusiness members feel government should help address drastic risks to income from sources like natural disasters, weather, disease or market failure.

Complete survey results are available at
http://www.cfib-fcei.ca/english/advocacy/canada/1-agri-business/1339-
pushing_for_business_risk_management_programs_that_really_work__when_
they_need_to.html.

Canada’s cattle industry has been out in front of the American cattle industry when it comes to the adoption of traceability systems. It now appears that gap will widen as the U.S. government goes back to the drawing board and looks for ways to make a national livestock tracking system work.

"After concluding our listening tour on the National Animal Identification System in 15 cities across the country, receiving thousands of comments from the public and input from states, tribal nations, industry groups and representatives for small and organic farmers, it is apparent that a new strategy for animal disease traceability is needed," says United States Department of Agriculture Secretary Tom Vilsack.

"I've decided to revise the prior policy and offer a new approach to animal disease traceability with changes that respond directly to the feedback we heard."

The idea is to now let the different states work on developing traceability systems that will work for each jurisdiction’s livestock producers.

"We are committed to working in partnership in the coming months to address many of the details of this framework, and giving ample opportunity for farmers and ranchers and the public to provide us with continued input through this process," Vilsack says.

After several years of promoting a national identification system, the USDA could only get 37 per cent of national livestock premises to register.

“We were hearing from a lot of concerned producers about the approach we were taking, so the secretary has announced a new direction and approach,” says USDA Chief Veterinarian John Clifford. “We will be starting very soon to work with the industry, state and tribal governments to start the development of a proposed rule for that purpose (improving livestock traceability)."

One of USDA's first steps will be setting up a forum with animal health leaders so industry can discuss ideas for developing a flexible, co-ordinated approach to animal traceability. The work will also look at producer concerns about the cost of traceability and finding technology that works for most operations.

The Prince Edward Island government has agreed to a request from the potato industry to double the allowable cap on virus levels from three to six per cent.

“Obviously it was a very difficult recommendation to make,” says Greg Donald, general manager of the P.E.I. Potato Board. “However, we have sought input from growers and other industry stakeholders every step of the way and I am confident the measure has widespread support.”

He says growers were informed of the results of the post-harvest testing during a closed door meeting in late January. The results have not been made public, however, Jim Bagnall, the provincial government's agriculture critic, says he's heard results were as high as 30 to 40 per cent. That figure has not been disputed by the potato board or the provincial government.

P.E.I. is the only province to conduct post-harvest testing for PVY and potato leaf roll virus. In settling on the six per cent cap, Donald says the board wants to ensure quality seed would be planted this spring, while at the same time, protecting the long term survival of the seed industry. If the cap had not been raised, producers would have been forced to import seed, meaning additional costs when prices have been flat.

In addition to the cap, Donald says the board is taking a number of measures to ensure the cap can return to its previous level for the 2011 crop. He says seed co-ordinator Mary Kay Sonier has already met with growers in western P.E.I. to identify areas where virus levels have been high. Similar meetings will be held with growers in other regions.

Producers selling seed are listed on the board’s website. Donald says this year test results are listed. The results go from zero to 3.2 per cent for PVY. All of the samples listed zero per cent for potato leaf roll.

Donald says the P.E.I. department of agriculture has offered the board additional manpower as it prepares a plan to deal with the virus level. He added the board is also revisiting their aphid monitoring program to ensure it’s as effective as possible.

“We have faced high virus levels before and we have come through it and I am confident that will be the case again this time,” he says. “The end goal is to have the highest quality crop possible and make sure the seed industry remains viable.”

Orchard renovation across the country should increase as the result of $2.3 million investment by the federal government in the Okanagan Plant Improvement Corporation.

Agriculture Minister Gerry Ritz met with hundreds of growers at the British Columbia Fruit Growers’ Association annual meeting in Kelowna and heard their concerns about back-to-back disastrous years and returns that aren’t meeting the cost of production.

He promised his staff would work with provincial agriculture staff to see if they could "tweak and twist" existing safety net programs to assist with the current issues.

PICO is owned by B.C. growers and will expand its board to include Ontario grower Cathy McKay -- the first step in a partnership project between growers in B.C., Ontario and Quebec.

Each will contribute additional funds to the Developing Innovative Agri-Product project bringing the total over the next three years to $3.2 million for apple and cherry cultivar research and development. As well, the project includes research into horticultural practices best suited to each cultivar, optimum post-harvest storage conditions and sensory evaluations, says John Kingsmill, PICO's CEO.

The corporation works with researchers at the Pacific Agri-food Research Centre in Summerland to manage and commercialize new varieties of fruit. Growers will partner with them to conduct field testing trials on each new variety.

Hundreds of selections are now evaluated each year at PARC and the more input into each of them, the better, Kingsmill says.

Ultimately, the goal is to lengthen the season that fresh apples and cherries are available to market and to produce varieties less susceptible to insects and disease, yet have flavour and texture attractive to consumers.

In 2008, apple and cherry production accounted for 77 per cent of the farm gate value of tree fruits grown in Canada, with cherries valued at $25 million and apples at $178 million.

Upgrades and modernization will be carried out at the Newfoundland Feed Grains Society facility in Stephenville, N.L.

The facility will receive $400,000 to do the work. Government sources say key upgrades include the installation of new storage tanks and a ship unloader and conveyor system. The equipment and process improvements will enhance quality control of the stored grains, minimize spoilage risks due to moisture and increase capacity and the efficiency of the operations.

The Newfoundland Feed Grains Society Inc. is a co-operative of dairy and poultry agribusinesses, working together to purchase, transport, store, process and distribute grains, corn, soya and all forms of livestock feeds.

Canadian horse owners and horse meat processors who want access to international markets for human consumption will soon be required to comply with new tracking rules.

The new reporting rules are effective July 31 and target domestic and imported equine animals brought for slaughter at federally inspected facilities.

Owners will be required to present and sign off on an Equine Information Document, which will include a unique identification for each animal, as well as a record of illness and medical treatments administered for the six-month period prior to slaughter. 

The Canadian Food Inspection Agency advises horse owners with animals for slaughter to start tracking right away. After July 31, processors will need the 180-day history for any equine delivered for slaughter.

CFIA says the new tracking rules are driven by requirements imposed by the European Union to prevent certain prohibited medications and substances from entering the food chain.

Guy Gravelle, CFIA media relations officer, says the EU represents about two-thirds of the entire Canadian export market for horse meat. Smaller markets include Japan and Mexico, says Les Burwash, manager of the horse program with Alberta Agriculture.

Burwash says the EID is the first step to establish a traceback and food safety program for the equine industry. Plans are to implement a full radio frequency identification system -- similar to that for cattle -- within three years.

Burwash says any producer looking for a baseline price at an auction market will be forced to comply with the new rules, otherwise the animal will likely sell for less.

He explains many dealers will be forced to discount a potential slaughter horse without an EID, since they would need to hold the animal for the mandatory 180-day period.

In 2008, Canada exported almost 21,000 tonnes of horse meat. The largest processing plant is located in Alberta with smaller facilities in Quebec, Ontario and British Columbia.

For more information, check the CFIA website at www.inspection.gc.ca.

Quebec cattle producer Camille Cloutier has been around animals all his life, so he understands the idea behind a new slaughterhouse built to calm cows stressed by transport with classical music and windows in penned areas.

“The more secure animals feel, the better,” says Cloutier. He's also the president of a group of 135 Quebec producers who supply hormone and antibiotic-free beef cattle to Les Viandes Laroche.

Les Viandes Laroche is building the $11 million slaughterhouse near its processing plant and headquarters in the town of Asbestos, smack in the middle of a rural triangle cornered by Sherbrooke, Drummondville and Victoriaville. It will process up to 700 cattle a week when it opens in May.

According to company owner Claude Laroche, the animals will be treated royally from start to finish at the facility, from feeding and watering to music and outdoor views.

“Transport stresses the cattle,” he explains. “That’s bad for the animal and for the meat for a number of reasons, like the higher (acidity) levels that result.”

Roughly half of the meat will go into the company’s Canton Selected Meat line, which Laroche describes as “high-end beef meat, tender and lean, from a mainly grass fed animal, bred in the right environment, without growth hormones and for which it is possible to trace the origin.”

He sells much of the 8,000 kilograms his company processes each week to specialized grocery stores, restaurants and hotels across the province.

A former teacher who started a small slaughtering company in his native Asbestos 35 years ago, Laroche turned to processing and distribution of beef, pork, poultry, veal, lamb and delicatessen meats in the 1980s. He says the rise in demand in the 1990s for traceable, high-quality beef led to him creating a small group of cattlemen who could provide certified animals. The network has since grown to 135 producers.  

“Demand for high-quality, safe beef has grown exponentially,” Laroche says. “It doubles every year.”

He adds his partnership project will enable everyone -- producers, breeders, finishers, distributors and retailers -- to profit from that demand.

Cloutier agrees.

Previously, the multi-generational producer sold his annual production of about 80 calves at the local auction barn, “like everybody else.”

Since 2003, when he joined the producer network and began to adhere to the strict guidelines and protocols required by Laroche, he's getting $200 to $250 more per animal.

“And it’s a lot of fun, too,” Cloutier adds. “We share and discuss our ideas with Laroche and end users and we all try to adapt ourselves to respond to changing consumer needs. I’ve never seen or heard of an arrangement like this in Quebec or Canada. For a producer, it’s an amazing experience.”

We have seen some stabilization in grain markets this week following what, for the most part, has been a very disappointing month for grain and oilseed producers, watching a steep and steady erosion in prices.

Unfortunately, I don’t believe we are out of the woods yet for depressed grain market valuation as bears lurk behind many trees. But I do sense that downside risk is fairly limited.

In fact, ag markets are likely in the process of putting in a base over the course of February and we’ll be looking for some type of spring rally for our next selling opportunity on a number of commodities. New crop marketing ideas will be further explored then as well.

But market fundamentals of individual farm commodities are not all we should be watching these days. PFCanada commentaries have demonstrated many times for its subscribers the linkages between the ag and outside markets (equities, energy, metals, etc.).

Not that there are fundamental reasons for these markets to necessarily flow in somewhat unison. Instead, perhaps it is more a reflection of large volume speculative capital, which ebbs and flows from the broader marketplace. It could also serve as a signal of ever-fickle market sentiment of the day to the latest piece of macro-economic news gauging how well the world is pulling itself out of recession -- or not.

Key Broader Market Points to Watch

1. Stock Markets. The Dow Jones Industrial Average in January posted its first serious setback since bottoming and rallying steadily from the March 2009 low. And the Dow earlier this week ticking below 10,000 seems rather ominous.

Looking on the monthly Dow chart, one can see the rally of the past year simply as a corrective move back to a 50 per cent retracement of the October 2007 high to the March 2009 low. Could this be a point of overhead resistance?

That’s especially a concern given the Dow’s weak performance in January, identified on the monthly chart by a bearish “key reversal." Essentially the market at one point early in January rallied above the December high, but closed the month below the December low. And January was the first real losing month for the Dow in about a year.

2. Metals. Copper has been referred to as having the PhD or master’s degree of foretelling global economic health. When the price of copper is on the rise, it suggests global economic conditions are improving. I realize I am really oversimplifying, but that’s the gist of it.

On chart of continuous copper futures, we can see a decisive break below the 50-day moving average in recent trading days, a line which has served as important chart support for the past year. Could this be a signal of global economic development slowing again, or just a severe hiccup in the road to recovery?

On the monthly copper chart, similar to the Dow, copper also posted a “key reversal” in January.

3. Shipping. In regard to declining demand, a look at the weekly Baltic Dry Freight Index chart would indicate this to be the case. Since posting its high weekly close of 4,507 the week of Nov. 15, the index has retraced to about 2,700 and is testing an important support line.

And while this market could see a small recovery bounce, a test down to support at 2,200 could occur soon, indicating the demand for overseas shipping could be slowing and an indicator of economic health -- or not.

Is this simply a result of the coming Chinese New Year (the week of Feb. 14) or has the global economy indeed returned to its downhill slide? Difficult to say, but caution is warranted.

4. Commodity Index. Finally, a look at the Reuters/Jeffries Commodity Research Bureau Index, also trending lower all through January and into the start of February. This index reflects the commodity sector as a whole (energy, metals, ag, etc.), so indications of an extended downturn don't bode well for those who are bullish energies, metals, softs or even grains.

The start of the 2010 calendar has not been friendly for the commodity markets so far. And while we did see a mildly friendly supply/demand report for soybeans and corn on Tuesday (Feb 9) from the United States Department of Agriculture, there remain significant headwinds thwarting rally attempts for the grain markets, at least for now.

The bright side is I continue to believe grain markets generally are in the longer term process of transition to a sideways trending range, following a two years up, two years down, two years sideways cyclical tendency. At the moment, we are in the process of perhaps carving out the lower end of various ag trading ranges, which has sparked anxiety amongst us all. But at this time, our inclination remains low to do anything in terms of grain marketing.

Seasonalities suggest a basing pattern first, then the possibility of a bounce going into spring. Impossible to be precise about timing, and the introduction of new fundamental variables could obviously change the outlook (that is, spring weather or any other unexpected surprise). But given the bearish set-up of broader market variables, it would seem a sustained independent rally in the ag sector is unlikely right now. Not yet -- not until at least some of the trends above start to turn higher.

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.