Prairie farmers are going to get some extra government help to deal with one of the wettest seasons in recent memory.

The federal and three Prairie provincial governments will pump an additional $450 million into a program to cover farmland that either couldn't be seeded or was washed out after seeding due to near non-stop rain in the spring and early summer.

Federal Agriculture Minister Gerry Ritz called the aid "the largest and fastest relief package" ever delivered under AgriRecovery, a program designed specifically for natural disasters.

"Affected Prairie producers will receive $30 per acre in assistance to help them take immediate measures to protect, rehabilitate and manage affected cropland," Ritz said Thursday in Saskatoon.

The funding fell short of what some farm groups wanted, but was welcomed nonetheless.

"We were hoping for a little more than that, but it's in the ballpark, that's for sure," says Ian Wishart, head of Keystone Agricultural Producers, the largest farm group in Manitoba.

"And governments these days are very careful with money, so we are certainly pleased to see these kinds of numbers."

Theresa Bergsma, executive director with the Manitoba Corn Producers Association, was also grateful for the help.

"I think any amount of money for those acres that were not able to be planted is helpful in planting some cover crop and, once it dries out, getting that land re-established so that next year's it's up and ready to go."

In Saskatchewan, the province hardest hit by rainfall, some said the money may not be enough to cover expenses.

"It would cover close to some of the basic input costs, but it doesn't go any further than that," says Don Connick, a grain farmer near Gull Lake and vice-president of the Agricultural Producers Association of Saskatchewan.

"If you have your money in the ground and then it was subsequently destroyed, that means that you're out of pocket."

Heavy rainfalls have washed out fields across the Prairies this year, making many areas simply too soaked to seed.

Total seeded acreage this year will be more than three million hectares below the normal level of 24 million, according to estimates Thursday from grain-handling company Viterra.

Another 800,000 hectares that was seeded was drowned by the rain that kept coming through June and early July.

Politicians and farmers have said the devastation is the worst they've seen in decades.

"I have never, in my farming career, seen a spring where we had this kind of moisture and these kind of conditions," Connick says. "Some people are going to take a big hit"

"It's record wet in a lot of areas and... it's a lot larger area than the last few years," Wishart says.

The Canadian Wheat Board has signed an agreement with China's largest grain importer.

The deal is set to be Western Canadian producers' largest wheat sales to China in five years -- 500,000 tonnes of Canadian western red spring wheat -- and is worth about $130 million at current market values. The potential purchaser is COFCO.
 
"This is an important agreement that builds on a 50-year history of sales and co-operation between Prairie farmers and our valued Chinese partners," says Ian White, CWB president and CEO.
 
The deal, to be executed before the end of 2011, was signed July 3 at Expo 2010 in Shanghai. The event is part of the half-century relationship between Prairie growers and their Chinese customers. Industry and government officials from both China and Canada joined CWB officials at the event, including Gerry Ritz, minister of Agriculture and Agri-Food and minister for the CWB.
 
White says the agreement is significant in a "very competitive market," noting direct involvement by the federal government was an important element in securing the agreement.

The memorandum of agreement comes on the heels of the largest long-term agreement ever for malting barley, which was signed in April between China and western Canadian growers. In April, a deal was inked that will see guaranteed minimum sales of 500,000 tonnes of malting barley over three years to COFCO.
 
Over the past half-century, China has imported more than 120 million tonnes of western Canadian wheat and barley -- that's enough to make 279 billion loaves of bread and 55 billion bottles of beer. The CWB has operated a branch office in Beijing since 1994, one of only two CWB offices outside Canada.

Canola growers in Alberta's Peace region are seeing an unusually high infestation of lygus bugs early in the growing season.

The bugs are normally a problem later in the year after the flowers come off and the new generation of lygus damages the seeds, says Scott Meers, integrated crop management specialist with Alberta Agriculture and Rural Development.

But according to Meers, this year, the bugs are feeding on the canola at such high levels that the crop is not even flowering. This presents a difficult issue, according to Meers, since many of the crops in the area are drought-stressed and have already been sprayed for cutworm.

"The problem is hard to deal with," Meers says, "because there are no established thresholds for lygus in early flower. There is no scientific basis for recommending control."

In fact, he points out that studies have concluded some feeding and flower loss has no detrimental effect on the yield, while other research indicates that light feeding levels can actually increase yields.

Meers recommends that it may be worthwhile to consider an insecticide application where there is a good stand that is not too drought-stressed. "If the crop has been trying to flower for four or more days but cannot because of the lygus pressure, the insecticide should reduce the lygus to a level that will allow flowering."

High levels of lygus are generally associated with drought conditions, so a good rain could also allow the crop to push through and come into flower.

Meers says the bugs are easy to identify. Although the immature bugs resemble aphids, a simple rule of thumb to remember is "if they are plodding and move slow they are aphids, if they are running or move fast they are lygus."

Ontario grain and soybean growers have learned their first check off payment to the new Grain Farmers of Ontario organization will be an average of $1.75 per acre.

Collection of the check off, which the organization calls a license fee, will start with this fall's harvest.

The sum is close to the anticipated $1.70 per acre fee that was predicted in 2007, when the plans to form a new organization were solidified. Corn, wheat and soybean farmers previously paid check off to their commodity groups, at a rate that was equivalent to the new license fee.

Some growers thought the amalgamation of the three commodity groups into the GFO might result in lower fees. But Erin Fletcher, the organization's manager of public affairs and communications, says the check off is designed to move GFO to the next level.

"As an amalgamated organization, we have a broader scope," she says. "The license fee will help us achieve our goals."

Those goals are slowly being revealed as the GFO rolls out its strategic plan, likely to be approved by its board late this summer. It contains four pillars: research, production information, market development and public affairs and advocacy.

The organization issued its first research grants of the 2011 fiscal year last month, with a plan to invest $1.2 million into 75 projects covering insects and disease, agronomic research, utilization and market development, and plant breeding over the course of the year.

It also recently teamed up with provinces growing corn, soybeans and wheat from Manitoba east to create the Canadian Field Crop Research Alliance, to access funding that's national in scope.
Finally, the GFO held a market development meet-and-greet last month in Guelph attended by 40 companies and groups that wanted to develop partnerships with GFO members. 

"Our big thrust is in partnerships," says Fletcher. "We're open for business and we have the time and money to develop projects."

Canola growers, unable to plant due to excess moisture, are sending seed back to suppliers.

Denise Maurice, vice-president, Crop Production at the Canola Council of Canada says they expect to see higher rates of canola seed returns to the major suppliers this year. According to Maurice, initial crop forecasts suggesting the number of seeded acres of canola in Canada would reach 17 to 18 million acres in 2010 may have influenced the volume of seed ordered by retailers.

"That was an ambitious target," she says. But it wasn't lack of interest in growing canola that squelched the seeding forecast. It was excessive rainfall across the Prairies that drowned hopes for a record crop.

Maurice predicts Saskatchewan will return more seed than either Alberta or Manitoba because both of those provinces were further ahead in their seeding operations when the rains began. She says many of the major corporations which supply canola seed have programs to encourage growers and dealers to return unused seed. She notes growers received reminders about seed return deadlines from the Canadian Canola Council and their suppliers.

Extra notices were sent to keep seed returns top of mind for growers, Maurice explains. Getting seed by deadline ensures growers qualify for whatever assistance programs their supplier company offers and protects their investment.

"Growers make a huge investment in seed," Maurice says.

Canola seed requires cool storage to maintain its vigour and most farms don't have the facilities to store the seed properly, she adds.

Brad Ewankiw, an oilseed manager at Bayer CropScience, says his company's policy is to encourage growers and retailers to return all unused seed.

"That's so we can store and test it properly to ensure it retains its quality for the next growing season," he explains.

Ewankiw says the usual return rate on canola seed is about 10 per cent, although higher return rates are expected this year.
 
"We're still receiving seed from retailers and don't have good intelligence on that (final) number yet," he adds.

New markets, the chance for stronger infrastructure and continued work on orchard pest management are some of the projects slated for $5 million federal-provincial funds in British Columbia.

"This investment will allow the tree fruit industry to find new technologies that will help them stay ahead of the curve in the global market," says Stockwell Day, president of the Treasury Board and minister for the Asia-Pacific Gateway.

Provincial minister of Agriculture and Lands, Steve Thomson, says the funds will give tree fruit growers an innovative edge to promote B.C. grown fruit and compete with producers in other regions.

"In our discussions, the industry identified some areas, such as marketing and infrastructure, where they wanted to focus efforts and make further improvements," he says.

New environmentally friendly packing and storage infrastructure, marketing opportunities that raise the profile of fresh and processed apples, and to building on work accomplished by the sterile insect release program in the Okanagan and Kootenay regions are firm plans already in place for the funding.

B.C. Fruit Growers' Association president Joe Sardinha says there are about 800 orchard operators in B.C., generating $900 million in economic activity.

A British Columbia orchardist is concerned that low quality cherry imports from the United States will impact the local market.

Christine Dendy says she's found bags of cherries imported from California at a local chain grocery store -- and most of the product appeared to culls, below grade, split, rotten and under-ripe.

Dendy is treasurer of the Okanagan-Kootenay Cherry Growers' Association. She's concerned that consumers will be so disappointed in the poor quality of this early, imported fruit, they'll be turned off purchasing local fruit as it enters the marketplace this week.

Dendy analyzed the fruit from the grocery store and found one bag was 65 per cent culls, decayed or below Canada No. 1 grade. A second bag was 78 per cent below grade.

"Only 68 of 248 cherries were edible and more than 47 per cent were badly split, decayed, rotten and otherwise culls. They could never have qualified to be sold, let along packed and exported, if they were from Canada," she says. "It's very frustrating. B.C. fruit exported to California is required to meet stringent grading standards."

The rest of the fruit in the bags was mostly below the required brix, a measurement of the fruit's sugar content, she adds. Dendy also found fruit flies in the produce and is worried it may be spotted wing drosophila, an Asian insect pest first discovered last year in B.C. The pest has the potential to devastate soft fruits. It's attracted to fruit that's ready to harvest, not rotting fruit, so is of particular concern.

Rob Ormrod, horticulture specialist for Western Canada for the Canadian Food Inspection Agency, says spotted wing drosophila is already in B.C. and predicts it will never be eradicated, so research focus is on how to deal with it instead of trying to prevent it from coming in.

Although local growers feel it's unlikely the pest will overwinter in the Okanagan, Ormrod expects warmer microclimates like compost heaps could provide enough protection for the pest to survive the cooler temperatures.

British Columbia is the country's largest producer of cherries, with an estimated value of about $40 million at the packinghouse.

As crops develop and storm activity increases, more claims are flowing into the member companies of the Canadian Crop Hail Association.
 
The most recent numbers from the end of June, show Saskatchewan had registered the most claims at about 650, followed by Manitoba at 230 and Alberta at just under 100. The Alberta total does not include claims filed as part of crop insurance coverage.

In Saskatchewan, the biggest storm date was June 21 with claims from the east side of the province around Carlyle and Arcola all the way to the west side around Swift Current and Shaunavon. A few claims were also reported that day from locations such as Unity and Meadow Lake. Claims are also coming from many other dates in scattered locations across the province.
 
At about 650 claims, Saskatchewan is ahead of the 300 claims filed at this time last year, but is well behind the 1,000 claims filed at this point in 2008.

In Manitoba, the 230 claims is about equal to last year's claims. Historically, though, about 400 claims are filed by this date.
 
While the claims are scattered across southern Manitoba, the majority have come from the southwestern corner, particularly between Alexander and Rivers as well as Elkhorn to Kenton.

Alberta producers have made fewer than 100 claims; storm activity in Alberta has been light. However, claim numbers are expected to increase significantly from storms that occurred June 28 and 29 in the Highway 2 corridor and in the Barrhead area. The most damage to crops to date has been from storms that occurred June 23 and 24 in the Vermillion and St. Paul area.
 
Hail claims in Alberta are running ahead of last year, but well below a typical year when about 400 claims would be expected by now.

The Value Chain Management Centre has released a workbook designed to help Canadian producers improve their bottom line profits.

Centre director Martin Gooch claims that a number of producers who have applied the ideas in the workbook have actually doubled their profitability within eighteen months. He says farmers gain a new perspective of their operations when it comes to meeting the needs of customers and consumers and boosting their competitiveness.

Value chains are part of a growing segment of the international agri-food sector evolved to help businesses adapt to a rapidly changing commercial environment.

The workbook was originally used as a tool during value chain workshops, but this makes it a stand-alone document. It builds on the premise that change cannot be prevented and successful producers will adapt more effectively than their competitors.

Users are challenged to look critically at their business and address questions about developing effective business relationships and value chain alliances, managing risk, reducing costs and improving revenues.

The focus is on producers who want to learn about the benefits of a value chain alliance over the short, medium and long-term as well as the key principles of value chain management and how the maintenance of a successful alliance relates directly to their own specific business.

A portion of the workbook is available at the centre's website at www.vcmtools.ca. Additional releases can be obtained by contacting Joanne Falk at joanne@georgemorris.org.

Grain markets generally rose over the past week, and in the aftermath of the June 30 United States Department of Agriculture acreage and grain stocks report.

The report inspired a sharp rise in the corn market, which in turn helped drag other markets along with it. The USDA forecast of U.S. corn acres falling well short of trade expectations at 87.87 million acres was unexpectedly 900,000 acres short of the March Prospective Plantings Report.

Still, it seems a rather odd acreage result for corn given the near-record U.S. corn planting pace this spring, and traders expecting an increase to 2010 corn acreage from the March report rather than a decrease.

But that was the number. And, combined with the record old crop quarterly corn usage pace as reflected by USDA's Quarterly Grain Stocks Report, signalled that corn prices were too low and triggered strong buying enthusiasm.

From the Canadian perspective, this report could encourage some Prairie users to extend coverage on feed barley if the sense is now that less U.S. corn will be available to the livestock market over the next year than previously thought. I doubt though there will be less distillers dried grains as ethanol production likely holds up.

Broader Markets

Stock markets have been trending lower. There are continuing concerns over European debt and weakening consumer confidence data for both the U.S. and China. This calls into question the global economic recovery and has investors still on edge.

Regarding the broader market of stocks -- in the U.S. for instance -- I still view warily the chart of the S&P 500 stock index (Standard and Poor's) getting perilously close to the "death cross" (50 day moving average crossing below the 200 day average) and the Commodity Research Bureau commodity index now trading below its 200 direct market access. The TSX looks similar to the S&P 500.

Difficult in this environment to envision a near-term sustainable rally unless a dramatic turn for the better in employment statistics is recorded soon or a sudden big drawdown in crude oil stocks occurs.

If not, then the macro-markets will be in a state of malaise at best until we get second quarter earnings starting up. Does the phrase ”darkest before the dawn” apply as we get over the end of the quarter two position squaring? Or will stocks continue to fall? Who knows?

But the spike in volume along with a negative crossover of the MACD indicators (Moving Average Convergence Divergence) on the charts of various stock indices is ominous.

These stock index charts reflect the broader sentiment of the global investing community. And if market opinion at this time is of the view that investors wish to withdraw positions from the markets, that is simply going to be a drag on all markets, ag included, even if weather issues emerge to threaten production.

While we will always pay strict attention to the fundamental issues of supply and demand specific to individual ag markets, these macro-economic tidal forces cannot be easily dismissed in our ag world, especially in today's world where the speculative ebb and flow of cash in all markets can be so influential in setting price direction.

Markets remain concerned about economic direction in the aftermath of the recent G8/G20 meetings in Toronto, with a general communiqué suggesting major governments will soon pursue a simultaneous plan to both increase taxes and cut government spending. While on one hand, it is admirable for governments looking to reign in mushrooming budget deficits, there is a concern that pursuing such a tax and save policy at this time may threaten a still fledgling global economic recovery, one that seems to be faltering in fact.

So then, such government moves towards austerity too soon could advance deflation and the dreaded "double dip" recession.

Elements of the market are coming to grips with the decision by the Europeans to primarily force fiscal restraint upon the world economy. This comes at a time when the global economy is only just beginning to show signs of strength evolving from the recent recession. Yet it is all materially reminiscent of the policies of the 1930s that took a recession in North America and most of Europe and turned it into a global depression that lasted for nearly a decade.

And if a period of deflation rather than inflation does develop -- not good news for commodity and equity markets.

These macro-issues of global economic direction and the potential fall out are issues we all need to be aware of.

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.