Deficit reduction measures advocated at the G20 summit are universally accepted, but they must not impinge on investments in agriculture development, says the leader of Canada's major general farm group.

Ron Bonnett, president of the Canadian Federation of Agriculture, says people understand the need for fiscal responsibility, given the delicate nature of world economies following the 2008 collapse of financial institutions, and the way global economies had to prop up banks and other lenders.

But deficit reduction should be treated separately from global agriculture program development, Bonnett says.

"In developing countries, investing in agriculture is the best way to build the economy and alleviate poverty," Bonnett says.

In some countries, he says, as many as 80 per cent of those who live in impoverished areas are farmers. Creating programs that help them -- such as road development projects so they can get their production to markets, as well as improved food storage techniques, training and organizational measures -- offer help without the need for expensive and trade-distorting subsides.

Such assistance also speaks to one of the other G20 imperatives -- maternal health and women's health.

"Much of the farming in developing countries is done by women," Bonnett says. "Programs created to help farmers also help women."

A communiqué issued by the EU at the G20's conclusion noted how the next summit, in Seoul, Korea, in November needs to "pave the way for the final deal," with a special emphasis on trade.

"In Toronto, the G20 has proven to be what it said it would be: the premier forum for international economic co-operation," wrote European Commission president Jose Manuel Barroso and European Council president Herman Van Rompuy in a joint statement. "Trade is the most tax friendly and consumer friendly tool to generate growth. We must make use of it."

But Bonnett's not so sure. Even if tariffs are banished, emphasizing trade over all else fails to recognize that hidden subsidies can also cause problems. Bonnett prefers an approach that highlights farmer development, and positions agriculture as opportunity for reducing poverty and for stabilizing local economies in developing countries.

China has announced plans to begin restoration of full access for Canadian beef.

The agreement is good news for beef producers, whose products have been prohibited from entering the Chinese market since the discovery of BSE in May 2003.

Exports will be allowed in stages, beginning with tallow and boneless beef from cattle under 30 months (UTM) of age. Estimates put the value of tallow exports at $40 million per year and $10 million for UTM in the initial stage.

Although agreement exists on the details, the precise date of trade resumption has not been set and cannot be predicted with any certainty, says Travis Toews, president of the Canadian Cattlemen’s Association.

But Toews is quick to emphasize the CCA is pleased the Canadian government has given top priority to pressing Chinese officials for an agreement.

“It takes intervention at the highest levels, including Prime Minister Harper and Minister of Agriculture Gerry Ritz and we are very appreciative of it,” he says.

Discussions regarding full over-30-month access continue, but Toews cautions it may take more than one step to achieve, possibly beginning with bone-in UTM and proceeding in a staged process similar to Hong Kong.

Full access is expected to boost exports to the $110 million range annually.

Toews believes the agreement could put additional pressure on remaining markets such as South Korea, which continue to deny access to Canadian beef.

The current deal is significant since it marks the first time China has resumed imports of beef from a country with a case of BSE.

Toews credits Canada’s robust food safety system and ongoing commitment to food safety, along with the government’s priority on opening China trade, for the positive outcome. 

Cargill Limited applauded the efforts of the federal government as well as the CCA, CFIA and the Market Access Secretariat, calling the agreement historic.

Now that the risk of frost is past, Ontario corn growers are breathing easy after gambling with an early spring planting.

With some growers starting to plant as early as mid-April, most of the province's approximately 1.8 million acres of grain corn and 0.3 million acres of silage corn was planted before May 10 -- the target growers aim for when planting each year.

"This year a lot was in before May 1," says Greg Stewart, a corn specialist with the Ontario Ministry of Agriculture, Food and Rural Affairs. He says growers took advantage of an early start because April was so warm and dry.

The province saw some frost around May 10 but the damage was minimal since the plants were only up at the two and three leaf stage. The frost killed the plants back to ground level but did not reach the growing point.

The greater risk to the plants was potential frost in early June when the growing point of the corn was above ground and could potentially kill the entire crop. But no frost at that time meant all is well with the crop which continues to grow well.

Usually corn is knee high by the first of July, but Stewart says most is taller. In fact, he predicts some will be shoulder high the first of the month.

Some growers got an early start to planting their soybean crops in the province as well, but planting continued for a longer period into late June. Horst Bohner, a provincial soybean specialist with OMAFRA, says most growers had the majority of Ontario's 50,000 acres of soybeans in by May 20. However, some in the deep south with clay soil were planting later in June and some acres were never seeded because of wet conditions.

Bohner says the crop is developing well since the weather conditions -- lots of heat and moisture -- are optimal for soybeans. The May 10 frost didn't cause significant damage since most of the soybean plants had not reached emergence. There are some areas that have suffered from excess rainfall, but overall Bohner says this is the best growing season he's seen in the past decade.

As for diseases, so far both crops have experienced minimal issues. "There are no aphid populations yet, though in the east they have found a few," Bohner says.

Stewart says June was quite wet so they are watching for the development of leaf diseases in the corn. "But at the moment there are no significant concerns in that area," he adds.

The check-off established by the Canadian Cattlemen’s Association is now truly national.

Prince Edward Island became the last province to sign on to the program in late June.

For beef producers in Canada’s smallest province to participate, the P.E.I. Cattlemen’s Association undertook a three-year restructuring. A producer levy had been collected for years, but the organization's status as a commodity group under the province’s natural products marketing act meant the levy was only voluntary. Provincial and national beef organization officials were concerned beef importers might use that legal loophole to circumvent the mandatory levy.

To close that door, the Cattlemen’s Association decided to convert to a commodity board since under the provincial act, boards have authority to collect mandatory levies. That process included a producer plebiscite and a name change to the P.E.I. Cattle Producers.

“This is a positive day for Canadian beef producers,” says Peter Verleun, chair of the provincial group. “We will finally be able to apply a levy to imported beef which benefits from the marketing, promotion and research, carried out in this country.”

National check–off is a mandatory levy of $1 per head collected on cattle sales throughout Canada to fund research and marketing activities on behalf of the entire industry. The goal of the national check-off is two fold -- increase sales of domestic and export beef and find better and more efficient production methods. 

With all provinces signed on, industry is now in a position to begin development of the import levy order, which will see Canada’s beef cattle check-off applied to imported cattle and beef products. It's estimated that application of the national check-off to imported product would generate an additional $800,000 annually, which would be reinvested into the industry.

The move to have a national check-off started in 1985 with a resolution from the Canadian Cattlemen’s Association -- the same year the import levy began on Canadian cattle and beef going into the United States.

Mexico is going to impose new rules which would impede market access for Canadian canaryseed.

The Canadian Food Inspection Agency has received notice from the Mexican government that all imports of canaryseed will be tested for the presence of quarantine weed seeds.

The main target is wild buckwheat, says Kevin Hursh, the executive director of the Canaryseed Development Commission of Saskatchewan.

"There have been some ongoing rumblings that they were displeased with how much wild buckwheat they were finding in canaryseed," Hursh says. "But we did not realize or I don't think listening to the trade talk, anyone realized that they would take it to this extent."

It appears Mexico is aiming for a zero tolerance -- something that is impossible to guarantee. Cleaning plants remove weed seeds, but the cleaning is not perfect. One or two and as many as a dozen wild buckwheat seeds can be found in a 100 gram sample.

Mexico has been Canada's number one canaryseed customer for three years running. Sales averaged 41,000 tonnes annually between 2007 and 2009. Total Canadian exports during that same period averaged 173,000 tonnes. Nearly all of Canadian canaryseed production is grown in Saskatchewan.

No one seems to be sure why Mexico is so concerned about wild buckwheat seeds now.

"Potentially, they might be worried about the introduction of a weed species they don't have, but it's hard to understand how that makes any sense when they have been taking Canadian canaryseed for years and years," Hursh says. "I've had emails from growers suggesting that it's just another excuse to try and lower the price, but I'm really not able to say for sure what their motivation is."

Canaryseed was trading at 20 cents a pound early this week, up from the 12.5 cents being paid before seeding. Even though there are no accurate numbers yet, it is believed that the wet spring has reduced canaryseed acreage in Saskatchewan.

The Canadian Seed Trade Association held a conference call on Monday to discuss the situation with Mexico. The general consensus appears to be that more communication is needed to reach a compromise. 

"Basically, we need to go back and talk to Mexico and try to understand their concern and try to get some rational limits," Hursh says. "Zero is not reasonable at all."

Writing ahead of the market open Wednesday, June 30, the United States Department of Agriculture released its planted U.S. acreage estimates.

Traders expected to see more U.S. corn and soybean acres and less spring wheat. But the corn area came in down from levels indicated in USDA’s March Planting Intentions report. They were also well below most analysts' expectations, while the soybean acreage came in near the top of trade guesses.

USDA said June 1 American quarterly corn and soybean stocks were near year-ago levels, and wheat stocks were above a year ago. Both corn and soybean stocks were below pre-report estimates. The stocks report may be deemed bullish for both corn and soybeans -- called ahead of the opening bell. But the wheat stocks number looks troublingly bearish.

So then, the numbers initially may be seen as bullish for corn, positive to neutral for soybeans and bearish for wheat.

Initial market open calls here Wednesday morning are higher for corn futures, which will lead soybeans higher, and while the wheat numbers are negative, spillover support from corn/bean markets could give wheat futures a boost.

The following table summarizes Wednesday morning’s USDA acreage and quarterly grain stocks reports. Estimates are in millions of acres for the 2010 U.S. acreage report and in billions of bushels for U.S. grain and soybean stocks as of June 1.

U.S. Acreage

 USDA


             USDA                                 March 31    2009


             Wednesday     Average     Range     Plantings   Seedings



Corn         87.872        89.302  88.100-90.153   88.798    86.5


Soybeans     78.868        78.292  76.528-79.600   78.098    77.5


Spring Wheat 13.907        13.693  13.056-13.925   13.906    13.3


Durum         2.675         2.260   2.100-2.400     2.223     2.6


All Wheat    54.305        53.774  53.000-54.200   53.827    59.1




                             U.S. Grain Stocks



                                               2010 Mar 1 2009 June 1


              USDA                                USDA       USDA


              Wednesday    Average     Range    Stocks     Stocks



Corn          4.310        4.613    4.459-4.784  7.694      4.261


Soybeans      0.571        0.592    0.575-0.620  1.270      0.596


Wheat         0.973        0.938    0.929-0.948  1.352      0.657

Corn
Corn was the bullish surprise of this report. U.S. corn growers planted 87.872 million acres this spring, USDA reported, based on surveys of producers the department conducted in the first two weeks of June. The average pre-report estimate had corn acres at 89.2 million. This lower than expected number is a bullish surprise.

Using trend yield, this would give the States a 13.2 billion bushel crop.

On the U.S. quarterly stocks report, USDA pegged their corn stocks at 4.31 billion bushels, well down from trade ideas closer to 4.6 billion bushels. It would indicate that corn demand was far stronger than trade previously believed -- and suggests year-end carryout could soon be revised lower. Also bullish corn.

Soybean
USDA sees the country's soybean planted acreage for 2010 at a record high 78.868 million acres, which could result in a record large harvested area. That would be well up from trade ideas of 78.1 million acres and outdistancing the 77.45 million reported in 2009. This will be a bearish consideration for the soybean market, as some segments of the trading community believed acres would not be as large given wetter spring conditions that may have limited seeding progress. Not so, according to this report.

Acres imply a crop of 3.3 billion bushels.

Countering the bearish acreage number though, U.S. soybean quarterly stocks at June 1 totalled 571 million bushels, below the low end of trade guesses. The stock number will likely generate speculation about how tighter old crop U.S. bean stocks may affect the supply/demand tables going forward.

Wheat
Bearish data for the wheat market. U.S. all wheat acreage is now pegged at 54.305 million acres, up from 53.8 million acres estimated in the March USDA Prospective Plantings report. Acres are still below last year’s 59.133 million acres, but above trade expectations.

U.S. spring wheat was pegged at 13.907 million acres, near the high end of traders' expectations. Traders were looking for a lowered spring wheat acreage estimate. Didn’t get it -- bearish for wheat.

Durum acreage is estimated at 2.675 million acres, easily beating trader expectations and up from the 2.200 million acres USDA projected in the March report.

Farmers in North Dakota have also been dealing with some of the excessive moisture concerns faced by growers on this side of the border, although to a lesser extent. An official with the North Dakota Wheat Commission says that while conditions were generally favourable for the crops, durum acres in this key durum state did not end up as large as earlier expectations and some fields were dealing with stress from excess moisture. But the acres came in somewhere.

Just as Canadian producers cut back their durum acres sharply this year, poor prices over the winter had initially led to talk of a decrease in U.S. durum acres in 2010. However, the announcement of loan deficiency payments from the U.S. government that would guarantee producers about U.S. $6 a bushel, caused expectations to shift back to an increase in plantings from 2009.

On U.S. wheat stocks, the report has it totalling 973 million bushels, above the 930 million bushels in USDA's June supply/demand report. Analysts likely will look at this number and its implications for an even bigger ending stocks projection for the new crop year, indicating U.S. ending stocks for 2010-2011 could be more than one billion bushels. Burdensome -- it's the largest since the 1987-1988 marketing year.  

Other crops
The U.S. seeded 1.524 million acres of canola in 2010, up from 827,000 acres last year. On flaxseed, U.S. acres increased to 410,000 this year, up from 317,000 in 2009.

On oats, 3.176 million acres for 2010, down from initial intentions of 3.364 million and last year’s 3.404 million. 

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.