Beleaguered pork producers received some good news late last week with the announcement that China will allow Canadian pork imports into the country.

According to Gary Stordy of the Canadian Pork Council, Canada is the first country to enter into a protocol agreement with China.

Stordy says the existence of the Canadian Quality Assurance program was pivotal to securing the necessary certification agreements from China.

Producers will be required to sign off that they are in compliance with the program. This will allow the Canadian Food Inspection Agency to follow through on the protocol that opens the door to pork from approved processing plants into China.

The CQA is an on-farm food safety program launched by the CPC in 1998, setting a new standard for quality pork production. The program is based on the international HACCP -- Hazard Analysis Critical Control Point -- standard that identifies potential hazards and determines critical points where controls are required for safety and compliance.

China imposed an import ban on Canadian pork in April 2009 due to concerns over the H1N1 flu. Stordy notes the ban has significantly affected the industry, resulting in declines of fresh cut exports from 3.9 million kilograms in 2008 to 282,000 kilograms in 2009.

The total value of pork and pork product exports declined to about $38 million in 2009 from $47 million in 2008 -- a decrease from 36 million kilograms to 26 million kilograms.

In an interview from Paris where he was on a trade mission to the World Organization for Animal Health, Agriculture Minister Gerry Ritz says the certification agreement applies to all Canadian provinces.

Significant flooding is being forecasted by Manitoba Water Stewardship.

The group issued its first spring flood outlook for 2010 late last week. They call for significant flooding on the Red River in southern Manitoba. Still, anticipated levels are expected to be 0.3 to 0.9 metres (one to three feet) lower than last year. The group says run-off on the Red River in Manitoba is expected to be above average from Emerson to Morris, but average from Morris through Winnipeg and into Lake Winnipeg. Run-off on the United States portion is expected to be well above average.

The potential for spring flooding in Manitoba will largely depend on weather conditions" the stewardship group states in a news release. "With unfavourable weather, conditions along the Red River could be about 0.3 m higher than in 2009, but still 0.3 to 0.6 m lower than in 1997. The timing and speed of the eventual breakup and the amounts of precipitation in the next eight to 10 weeks will have considerable effect on the flood potential."

Elsewhere, it says, flooding in low-lying areas of the Interlake and along the Souris River watershed is also likely, with average weather patterns through spring.

More details on the 2010 flood outlook are available at: www.gov.mb.ca/waterstewardship/floodinfo/advisory.html.

Close to two dozen Prince Edward Island processing growers will be paying a steep price as a result of the worldwide decline in french fry consumption.

Last year, both Cavendish Farms and McCain Foods cut the acreage going to their P.E.I. processing plants. Although the cut in both cases was close to 15 per cent, it was not uniform -- some growers were cut as little as two per cent while others suffered cutbacks in the range of 30 per cent or greater.

This time around, some growers are being cut out of the processing picture all together.

As growers gathered in Charlottetown recently for a potato trade show, a number of them were considering whether they would even be planting this year.

Cavendish Farms has told close to 20 growers they won’t be buying any product from them at all. McCains has done the same for 12 of its growers.

Cavendish spokesperson Mary Keith calls the decision “regrettable” but realistic, saying the market for french fries has been stagnant in the wake of declining restaurant sales during the economic downturn.

Greg Donald, general manager of the P.E.I. Potato Board, says the move could result in additional growers leaving the industry.

There's also concern some growers may convert to table stock production, causing an oversupply that could drive prices down in that sector. Donald says the board is advising its members not to grow any potatoes without knowing where they will be sold.

Agriculture Minister George Webster says his department was informed of the decision by the two processors. He says most producers being cut loose have small acreage and little in the way of storage facilities.

He shares Donald’s view that many of the impacted growers may exit the industry.

"These growers will have to soul search and decide whether to try the open market or, worst case scenario, discontinue," Webster said at a workshop held in conjunction with the potato trade show. "It’s a changing landscape out there. We have to change with it, but when the recession ends, there will be growth.”

Both Mike Nabuurs, the executive director of the P.E.I. Federation of Agriculture, and Elwin Wyand, the P.E.I. district director of the National Farmers Union, say the move is a major blow to the province’s No. 1 commodity.

Nabuurs says the reduction will result in severe economic problems for all sectors of the Island economy. Wyand says it appears the two processors are creating a situation where large producers will be virtually held hostage to whatever price the companies choose to offer since they will have a major investment and no alternative markets.

Processing accounts for close to 60 per cent of Island production. Last year’s crop of 85,000 acres was the smallest since 1992.

An unusually mild winter and a dearth of snow means syrup producers in Eastern Canada are ready for a harvest season that is already underway in some regions -- weeks earlier than usual.

"I don't remember the last time I saw a winter like this," says Serge Beaulieu, president of the Fédération des producteurs acéricoles du Québec. "It's been great for tapping and repairing lines. Now it's up to Mother Nature to provide us with sap."

According to Beaulieu, his federation's 7,300 members have 40 million taps on maple trees across the province.

Most years, each tap provides enough sap to produce about 2.2 pounds of maple syrup.

In 2009, each tap reached a record average of 2.65 pounds, despite record amounts of snow that had producers fearing a fourth consecutive poor harvest. By the end of the season, the province had an all-time-high harvest of some 110 million pounds.

Also last year, a 10-year-old collective agreement among producers that allows surpluses to be stockpiled led to both an increase and stabilization in the price of maple syrup.

In 2009, the price flirted with a record-high $3 per pound, while a 540-millilitre can of maple syrup fetched nearly $10.

Quebec accounts for more than three-quarters of the world's maple syrup production and 91 per cent of total Canadian production.

Beaulieu, who is also a dairy producer, has 28,000 taps in production on his lands near Valleyfield in the southwest corner of the province. The average Quebec producer has 6,000-7,000 taps. He says he's been making small amounts of syrup since mid-February.

"That's not unusual for this area," he adds.  "But some producers in places like the Lower St. Lawrence (which borders New Brunswick) have started, too. That's got to be a first. They are usually covered in several feet of snow, but this year they have hardly any."

Beaulieu says he's unsure what affect the mild weather, which he believes is the result of the effects of El Nino rather than global warming, will have on sap flow.

"The real run-off won't start until mid-March," he notes. "This year's harvest will depend entirely on what happens during the two weeks after that."

He says a combination of warm days and cool nights are ideal for sap flow.

A blizzard that swept through much of Central and Eastern Canada for two days last week has also altered conditions on the ground in some areas.

What's certain, Beaulieu says, is that maple syrup producers are ready like never before.

"We've had easy access to our tree stands all winter," he says.  "A producer who isn't ready now never will be."

Prince Edward Island agriculture producers are already paying more for electricity than their counterparts across the country, but the bill could go even higher.

Electricity in Canada’s smallest province is delivered by a private company, but the price is regulated by a government appointed commission. Two years ago, the commission gave the utility permission to discontinue block pricing for high-use residential customers as of April 1, 2010.

The pricing system was designed to give a better rate to 3,400 rural customers who use more than 2,000 kilowatt hours per month.

The province confirms over half that total are producers and Mike Nabuurs, executive director of the P.E.I. Federation of Agriculture, says they could face increases in the range of 30 per cent.

“We are already paying among the highest electricity costs in the country,” Nabuurs says. “Farmers just can’t afford this given the state of the economy and the situation facing our industry. We are very close to seeing agriculture disappear in this province.”

Elwin Wyand of the National Farmers Union agrees. He says the increase was put in place without even asking for input from the farming sector.

However, as the April 1 deadline approaches, there are signs the increase could be put on hold. Energy Minister Richard Brown has asked the energy commission to reconsider their ruling. The utility has also indicated a willingness to sit down with the farming community and discuss the issue.

“Demand side management remains a priority, but we have to consider that this policy may have negative impacts on some people, such as farmers, whose businesses operate under the residential electricity rates,” Brown says. “Given the state of our economy and of agriculture in particular, I do not believe this is the right time to come forward with measures that could increase the farmers’ cost of doing business.”

Nabuurs says he's frustrated by the fact the change seemed to catch even the provincial government by surprise. He says the federation only discovered the change while working with a senior citizen’s group that is also lobbying against the changes.

For large electricity users like potato farms that require ventilation for proper storage, the increase could raise monthly bills between $8,000 and $20,000 per year depending on the size of the operation.

Ontario producers are teaming up with a leading food processor to make sure urban consumers in the province understand that wheat, the pride of the Prairies, can also be a local Ontario food grown in their own province.

Since the late fall, Cobourg, Ontario-based Weetabix has been part of an advertising and public relations campaign with the Grain Farmers of Ontario, extolling the virtues of Ontario spring wheat and winter wheat.

The GFO says the initiative is in line with regional marketing efforts for Ontario food, encouraging more residents and businesses to buy locally grown products. Mainly, it’s aimed at Toronto, the consumer hub of Canada.

The Weetabix promotion is based on healthy lifestyles. It features billboard and radio advertising and in-store sampling events, along with branding on people-powered Eco-Cabs in downtown Toronto.

About one-quarter of the wheat used in Weetabix is grown just east of the city in Northumberland County.

“We have been a strong supporter of local farmers since 1978,” says Jeff Bakker, vice-president of finance for Weetabix Canada. “Whenever possible, Weetabix will continue to use crops grown close to home.”

Wheat production has opened up in Ontario with the advent of new varieties, as well as its popularity in a corn-soy-wheat rotation. Winter wheat is also seen as having a positive environmental impact, providing soil stability when land would otherwise be barren, and reducing run-off in the spring.

Weetabix employs more than 200 people at its Cobourg operation. It manufactures more than 90 brands of cereals for Canada, the U.S. and Britain, including Alpen and GrainShop.

“The collaboration between GFO and Weetabix will increase awareness, and ideally consumption, of Ontario wheat,” says Barry Senft, CFO chief executive officer. “We foresee great opportunities resulting from this partnership.”

A market analyst with the Canadian Wheat Board says production acres for barley will decrease in 2010.

Arvin Pirness says reduced livestock numbers in North America is one factor in the projected drop in seeded barley acres this year. Another factor is the high carry-out from a record 2008 crop, especially for malting and good quality barley.

Pirness spoke at the recent Grainworld conference in Winnipeg.

He says in 2010, feed barley faces competition from growers in the Middle East who have had a good crop year. Production in Ukraine -- the largest feed barley exporter with 42 per cent of the global market -- continues to be a major influence in global markets. Ukraine’s export share is expected to rise to 44 per cent in 2010-11, while Canada’s is expected to remain at one per cent.

Feed barley also faces field space competition from peas and oilseeds and reduced demand due to increased supplies of dried distillers grain and feed wheat in the livestock feed market, Pirness says. Lower stocks for 2010 should help maintain prices, he adds.

Pirness doesn’t expect to see another bumper barley crop in North America in 2010. He notes malting barley in particular is sensitive to weather events and wonders if it’s possible to get a third good crop in a row here.

Global demand for malting barley is flat, according to Pirness. He says the recent recession caused a drop in beer sales in North America and Europe.

A rise in beer sales in China may not compensate for the demand decline because China can boost its own production of malt barley to meet domestic demands. China now produces 60 per cent of its domestic malt barley requirements. Canada’s projected share of China’s import requirement is 11 per cent, down from 15 per cent last year.

Pirness also points out that the volume of malt extracted from a tonne of malt barley is rising. That means a rise in beer production won’t necessarily result in increased demand for malt barley.

Priness says prices for feed barley and malt barley should remain fairly stable, although malt barley could see a small decline. He states demand is cautious and production output forecasts remain uncertain due to the crops’ sensitivity to weather events.

Significant funding for Canadian oil seed research was announced earlier this week.

The federal government announced $19 million for the Canola Council of Canada for research work.

An investment of $14.5 million will bring scientific expertise together for the Canola Cluster to focus research and innovation on oil nutrition, meal nutrition and production. Results are expected to help the industry expand the profile of canola oils as a healthy oil while increasing the value of the meal.

The cluster will also focus on nutritional benefits of flax for humans and animals. The planned clinical trials are aimed to move the flax industry closer to its goal of attaining health claims in its target markets.

The investment will be matched by industry.

In addition, $4.6 million will fund research of the clubroot in canola project that’s goal is to combat a pathogen that threatens canola production.

Last week, the Canadian Wheat Board ran its annual Grainworld conference, which highlights the market outlook for various cropping sectors and introduces the first new crop (2010-11) Pool Return Outlooks and Fixed/Basis Price Contract offerings.

Wheat
Before getting started, I just wanted to also briefly mention the Thursday, Feb. 25, CWB PRO update for the current 2009-10 marketing year. The CWB's price projections for most classes of wheat sold during the current 2009-10 crop year increased slightly. PROs for durum and malt barley were left unchanged and feed barley was revised slightly lower.

While the wheat PROs were mostly higher, the CWB notes that global supplies remain burdensome and pointed to recent United States Department of Agriculture data showing an increase in world wheat ending stocks. Movements in the currency markets and outside commodity markets will be a factor in wheat prices going forward, according to the CWB.

Old crop durum PRO's were steady on the month. Ample world supplies and favourable North African crop conditions continued to keep the market under pressure. The rapid depreciation of the euro has also led to reduced demand from the European Union.

Below is a quick summary of 2009-10 CWB PROs, in Canadian dollars per tonne, basis in store St. Lawrence/Vancouver.

 Source: Canadian Wheat Board                               


                                   2009/10    2009/10    


                                     PRO        PRO    


Wheat                              February   January   


1 Canada western red spring 14.5%   265.00     262.00  


1 Canada western red spring 13.5%   244.00     242.00  


1 Canada western red spring 11.5%   212.00     211.00  


3 Canada western red spring         194.00     189.00  


1 Canada prairie spring red         195.00     190.00  


1 Canada western red winter         187.00     183.00  



Durum


1 CW amber durum 14.5%              210.00     210.00  


1 CW amber durum 13.0%              202.00     202.00  


1 CW amber durum 11.5%              195.00     195.00  

At present, there's an overabundance of Canadian durum supply in storage. And there's a threat of that supply getting larger this growing season if acres are not reduced or old crop doesn't get aggressively marketed.

There's no easy resolution to the ongoing over-supply situation in durum. Perhaps it would be best for the CWB to move aggressively forward and sell product into the marketplace. Move it into the feed markets, move it into the world markets -- get rid of this durum that is sitting on Canadian farms.

New Crop 2010-11 Wheat
Global wheat and durum production is expected to decline in 2010, according to a preliminary forecast released by the CWB.

Early of course to make firm predictions, with North American winter wheat still in dormancy and the spring wheat crop not yet planted. But looking at the broader signals, the CWB predicts global wheat production at 651 million tonnes in 2010, which would be down from 677 million in 2009.

Looking at Canadian production in particular, the CWB estimates the upcoming crop at 24 million tonnes, which compares with 27 million in 2009.

But global production will still surpass demand, resulting in a continuing build in world ending stocks -- projected next year near record levels at around 204 million tonnes.

For durum, the CWB was projecting global production of 34.2 million tonnes in 2010, down from 37.4 million the previous year. Canada’s contribution to that total is estimated at 3.8 million tonnes, down from 5.5 million. Large global stocks with relatively favourable growing conditions in North Africa should keep prices under pressure.

New Crop 2010-11 Wheat PROs
The board’s first price projections for wheat and durum for the new crop 2010-11 marketing season are listed below, compared against the initial price projections made at this time last year in Canadian dollars per tonne, basis in store St. Lawrence/Vancouver.

 Source: Canadian Wheat Board                               


                                   2010/11    2009/10   


                                     PRO        PRO    


 --Wheat--                         Feb 22     Feb 23/09


1 Canada western red spring 14.5%   245.00     302.00  


1 Canada western red spring 13.5%   236.00     289.00  


1 Canada western red spring 12.5%   224.00     282.00  


1 Canada prairie spring red         206.00     250.00  


1 Canada western red winter         202.00     243.00   



 --Durum--


1 CW amber durum 14.5%              202.00     314.00  


1 CW amber durum 13.0%              197.00     303.00  


1 CW amber durum 11.5%              190.00     293.00  



 --Barley                                            


1 CW barley Pool A                  150.00     161.00


Select 2-Row CW                     208.00     263.00  


Select 6-Row CW                     190.00     243.00  

Wheat 
Obviously, not a lot at this time to get excited about on the wheat price outlook for new crop. In fact, on a relative basis to other cropping options, the message here is that growers should be doing what they can where possible to avoid growing wheat for 2010.

But if one needs to grow spring wheat in 2010, which is likely the case for most Prairie growers, it is most economically advantageous to grow a mid-quality, high yielding wheat. Why? Two reasons:

1) When in surplus, respective premiums between wheat types are typically narrower than normal

2) CWB PRO structure via the Fixed Price Contract should enable one to capture that type of price spread.

For No. 1 Canadian western red spring 13.5 wheat, new crop PRO currently projected at $236 a tonne, translates into elevator delivered returns of approximately $4.80 to $5.05 a bushel, depending on Prairie location.

The PRO for Canadian Prairie spring red at $206 a tonne, translates into elevator delivered prices ranging from $4.00 to $4.22 a bushel, again depending on Prairie locations.

It would appear in many cases, based on the above CWB pricing data, that mid-quality CPS wheat offers the superior per acre margin potential given the relative yield advantage over CWRS wheat.

The CWB believes, as do I, that global wheat prices will continue to face pressure from large global stocks in the 2010-11 marketing year.

Although wheat production is expected to decline in 2010, the drop in production is not expected to result in any contraction in stocks. In fact, unless growing season problems emerge, world production is still expected to exceed usage and result in another small increase in stocks in the coming year.

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.