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Note from the editor

Note from editor Allison Finnamore

Mike Jubinville is currently on a speaking tour in Western Canada. If you haven't had a chance to hear him yet, he'll be travelling to events in Manitoba over the next couple of weeks; drop by and introduce yourself. Due to his travel schedule, his regular Market Focus column is on a brief hiatus. 

Also, if you have time next Wednesday, December 8th at noon (EST) check out the webinar presentation by Michelle Painchaud on vision and goal setting for 2011. This is one of a series of upcoming webinars by FCC and Canadian Farm Business Management Council. To learn more or register for the event, visit http://www.fcc.ca/en/LearningCentre/specialevents_e.asp

Your comments, questions and story ideas are always welcome. You can contact me at allison@finnamore.ca.


1. New pricing option set for feed wheat

The Canadian Wheat Board has created a new pricing option for feed wheat. 

"Wet weather throughout the growing season means more feed wheat in the bins than there has been in at least six years," says Ian White, CWB president and CEO. "This has created a difficult situation for many farmers (and) as much as a quarter of all wheat harvested this year could grade as feed." 

The new pricing program was launched earlier this week. It gives farmers the choice of immediately locking in prices for Canada Western feed wheat. In a news release, the CWB says the new pricing program uses the CWB's early payment option in a new way, as a means of striving for the highest returns for feed wheat from the current market environment.

"Farmers tell us they'd like to lock in a feed wheat price this year, so we've adapted an existing program to enable them to do that," White says. "Farmers can now choose the feed-wheat price that suits them best, taking into account their market view and cash flow needs." 

In an average year, over 70 per cent of Prairie spring wheat is in the top two grades. This year, only 38 per cent is expected to grade Nos. 1 or 2, leaving about 35 per cent as No. 3 and 25 per cent as feed. The CWB states that not since the cold summer and wet harvest of 2004 has it expected such a high volume of feed wheat. 

Details of the program are available at www.cwb.ca/epo.

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2. Syrup funds running slow

A drop in consumer demand for maple syrup south of the border means most Canadian producers will have less money to make merry this holiday season, says a senior official with Quebec's producers' union. 

"The recession in the United States has hurt (and) the current exchange rate is bad for us," says Simon Trépanier, acting executive director of the Fédération des producteurs acéricoles du Québec.

According to Trépanier, the federation's 7,300 members produced a total of 88 million pounds of syrup in 2010, 73 million of which were inspected bulk.  

That represents roughly 90 per cent of total Canadian production and almost 80 per cent of total world production. 

Last year, all 93 million pounds of bulk syrup were sold at a market price of $2.72 a pound. However, as of this week, only 73 million pounds of this year's bulk production was sold, and that was at the going rate of $2.74 a pound. A record 109 million pounds of maple syrup were produced in 2009-10. 

Maple syrup is produced under quota in Quebec and payments pooled to producers. Payments are based on bulk sales made to approximately 90 buyers accredited by the province's syrup marketing and sales agency. Since bulk sales have dropped, producers will receive only about 80 per cent of the production revenues they were expecting this year. 

"Yes, it came as a shock for some," Trépanier says.  "We've gotten some angry phone calls." 

However, he adds that most producers understand the economic realities that have driven down U.S. consumer demand for their product. 

Trépanier says producers are also aware that unsold syrup will be stockpiled at the federation's big warehouse near Quebec City and will likely be sold in the future. 

"It is always good to have a surplus in stock," he adds.  "It helps to feed the market when demand returns -- and it will return."

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3. Turkeys euthanized at Manitoba farm

The Canadian Food Inspection Agency says all 8,200 birds at a commercial turkey farm in the Rural Municipality of Rockwood, Man. have been euthanized after an outbreak of avian influenza. 

Health officials have stated the strain of avian flu found on the farm was a low-risk, low-severity form of H5N2. This strain is common in wild birds such as ducks and geese, and has been found before in turkeys, including a 2009 outbreak in British Columbia's Fraser Valley that resulted in thousands of birds being euthanized. The strain found north of Winnipeg is more mild than the one in B.C., officials say. 

The CFIA says on its website that animal welfare experts were on hand to oversee the birds euthanized. It says the carcasses will be disposed according to environmental regulations and internationally accepted disease-control guidelines.                                   

Once that's done, the agency will oversee the cleaning and disinfecting of barns, vehicles, equipment and tools so that any remaining infectious material is eliminated. 

Two poultry farms that had contact with the infected farm remain under precautionary quarantine and are being closely monitored for signs of illness.
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4. Minister tweets environmental farm plan renewal

Ontario farmers began blazing an environmental trail nearly 20 years ago with a stewardship program built around peer-to-peer assessment of producers' operations and government support to make farms as eco-friendly as possible. 

Back then, tweeting was restricted to birds. 

Now, tweeting -- the use of the social media site Twitter -- is a popular activity, and it was used last week in an unprecedented way by Carol Mitchell, provincial Minister of Agriculture, Food and Rural Affairs. 

Via her Twitter account, @cmitchellmpp, she unveiled a major funding initiative -- an additional $3.05 million for the province's Canada-Ontario farm stewardship program and the highly regarded environmental farm plan. 

"For the first time, we announced through Twitter, support for (the program)," Mitchell says, reiterating the funding commitment at the Ontario Federation of Agriculture annual convention in Toronto. 

She told the farmers in attendance that through the environmental farm plan "you continue to show your respect for the environment. You are excellent stewards of the land." 

The federation notes this support was in addition to the $7.6 million in government funding that was budgeted for environmental farm projects across the province in 2010. 

"We applaud the Ontario government for using incentives instead of regulations to promote environmental improvements," says Bette Jean Crews, who was re-elected president of the federation at the convention. 

Crews notes the OFA was concerned the funds available for best management practice adoption were declining, and stressed that the federation had called on the ministry to shore up its support. 

"The current infusion (of funds) will undoubtedly address that concern," Crews says. 

Later, she called the environmental farm plan "the right program, at the right time, for the right reasons." 

The plan is a self-administered, environmental risk assessment that includes an action strategy indicating how concerns identified in the assessment should be dealt with. The Ontario Soil and Crop Improvement Association is responsible for the program's on-ground delivery. 

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5. Wet weather dampens P.E.I. soybean harvest

What was shaping up to be a banner year for soybeans in Prince Edward Island has been washed away by poor harvest weather. 

Growers planted over 40,000 acres in 2010, marking the first time the crop exceeded barley in land under cultivation. The growing season was picture perfect; markets were strong and an Island-based company began shipping non-genetically modified soybeans to Japan for food consumption. 

However, the season took a turn for the worst in late October. November was even worse. A combination of frequent rain, snow and high winds made harvesting difficult. Farmers could do little but watch as the elements ruined a potential payday. 

"We could be looking at losing up to 20 per cent of the crop," says David Mol, president of the Island Grains and Proteins Council. "Certainly, the quality of what is being harvested now is not there." 

Mol says little of what was harvested in November would be able to meet the grade for human consumption and will end up as livestock feed. He says it will take a great deal of drying to get the soybeans even to the point they can be used as feed. Mol has been growing soybeans for several years and he was able to get all 700 acres harvested before the weather took a turn for the worst. 

"There are a lot of new growers and some may have left it just a little too late," he says. "It is a really fine balance." 

The field crop specialist with the Department of Agriculture agrees with that assessment. Doon Pauly says producers growing for the food market must meet strict standards for moisture content. He notes many growers were in a situation where their crop was not quite ready for harvest and they decided to wait an extra day or a week. "Unfortunately, the weather hasn't co-operated," he says. 

Pauly says the acreage lost could be up to 20 per cent but adds it's impossible to tell yet. 

"It varies from farm to farm and from region to region," he notes, adding, "right now, the emphasis is just on getting what is left off, knowing it is going to be used for livestock feed." 

Michael Delaney, the general manager of the P.E.I. Grain Elevator Corporation says the provincial Crown corporation is helping growers as much as it can to dry their product. He says the corporation has already shipped 18,000 tonnes of soybeans out of the province to be processed for oil. 

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6. Low freight rates spell good news

A lack of demand has resulted in the softening of ocean freight rates, which is good news for Canadian farmers. 

David Przednowek, manager of ocean freight and terminal operations with the Canadian Wheat Board, says the lower prices have been attributed to poor supply and demand fundamentals. 

"The market is coming to a realization that there are new vessels that are coming in, and there isn't enough demand to keep up with the increase in freight, so it's been pushing rates lower," Przednowek says. 

Grain, coal and iron ore are the main commodities that move by boat as far as dry bulk trade is concerned. Przednowek says grain accounts for only 10 per cent of the global dry bulk trade.   

One reason for the lack of demand for freight is the uncertainty regarding the global economy. 

"Coal and iron ore are the two big movers. The North American, European, Japanese steel industries are in recovery mode, but they haven't caught up to where they were two years ago, so the demand has diminished," Przednowek says. 

He says a number of countries have started using more of their own product, which is contributing to the lack of shipments. 

"Chinese demand has been strong, but they have been using more of their own iron ore to make steel of late," he says. "They are still importing, but not as much as they have been." 

Przednowek says more ships are coming into the market, with about 80 million more deadweight tons available to the market now than there was one year ago. 

"In order for demand to soak up all that supply, dry bulk freight has to grow six or seven per cent over the next few years to keep up, and right now the forecasts aren't for that to happen," he says. "Even though you have countries like China and India developing, the expectation is that they can't keep up with all of the freight that is hitting the market. So medium to long term, the outlook for the market is pretty negative." 

"That's good, because the softer the ocean freight rates are, the better it is for Canadian farmers," Przednowek notes.

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7. Announcements aimed to increase farm profits

Several federally-funded agriculture initiatives were announced in the last week. 

British Columbia's fruit growers, for instance, received another instalment to help with removal and disposal costs of tree fruits and grapes. 

The $533,000 is the second instalment from the Orchards and Vineyards Transition Program, a federal program being complemented by a provincial replant program to help fruit growers in British Columbia adapt to industry pressures and changing markets. 

Meanwhile, $475,000 is going to help Canadian vintners increase exports and strengthen their production process. 

Funding of $213,206 through the AgriMarketing Program will help vintners develop a long-term international strategy. A further $266,150 through the Canadian Integrated Food Safety Initiative will go to upgrade the CVA's Hazard Analysis of Critical Control Points-based material -- HACCP -- which outlines step-by-step food safety standards for wine producers. 

The federal government also announced a $313,000 investment in New Brunswick to create new opportunities for the province's dairy farmers to produce new specialty cheeses. 

The Dairy Farmers of New Brunswick will receive up to $235,000 to identify and develop techniques to help New Brunswick dairy farms become more profitable by increasing their efficiency. As well, Milk 2020, a not-for-profit company established by New Brunswick dairy farmers and processors to drive research and innovation in the sector, will receive up to $78,000 to identify specialty cheeses that could be produced using New Brunswick's surplus milk. That funding is coming through the Canadian Agricultural Adaptation Program.

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8. Program needs producers

Alberta Agriculture is looking for producers to participate in its AgriProfit$ business analysis and research program for the 2010 production season. 

Accountants work to report your revenues and taxes, but AgriProfit$ goes the next step to provide a detailed economic analysis of your operation, says Jesse Cole, production crops economist. 

According to Cole, the program provides a detailed financial analysis of the farming operation. And it allows participants to drill down to their own unit cost of production on details like cost per bushel per tonne, cost per cow or cost of gain on fed cattle. 

The current focus is on crops and beef operations. Analysis can be done by field, by crop or by type of beef enterprise, including backgrounding-feedlot, cow-calf or grasser. Data is gathered through on-farm interviews. 

Participation is free on the condition that producers agree to share their information with researchers. Cole says the information is used to produce benchmark reports for the province on topics like regions, soil zones and types of operation. 

Since only averaged results are published and the data is released on an aggregate basis, Cole assures producers that confidentiality is maintained. He notes, "If there were only three participants in an area that could be recognized, then we don't use the information for an aggregate analysis of that particular region." 

The program tends to have a low drop-off rate, says Cole, since most participants find the information fills a gap, allowing a detailed assessment of the farm's enterprises over time. Individual operation analysis combined with provincial benchmark reports provide a powerful business tool for identifying strengths and weaknesses and charting profitability targets. 

New participants are encouraged to sign up since a larger participation rate makes the data more statistically reliable on an aggregate level. This benefits everyone using the information.  

For more information check out www.agric.gov.ab.ca under programs-business management.

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9. Mandatory PVY testing introduced

Starting in spring 2011, all seed potato planted in New Brunswick must be laboratory tested to determine the level of Potato Virus Y it may contain. 

The province introduced the mandatory PVY testing earlier this month as part of a commitment to improve quality in its potato industry. 

Joe Brennan, chairman of Potatoes New Brunswick, says some seed potato was tested in the past but it was not a requirement. 

"We did have to plant certified seed but that didn't necessarily mean we knew the level of virus in the seed," he says, explaining PVY is an issue across North America. "It is spread by aphids and other insects and is an economic problem affecting yield and quality of crops." 

The province amended a portion of the potato Disease Eradication Act to include mandatory post-harvest laboratory testing for PVY following consultation with the province's potato industry. 

The laboratory testing requirement is for anyone selling seed to growers in New Brunswick, whether the suppliers are located in the province or not. The testing must be done in a laboratory recognized for seed potato certification testing. And, it must be done on all seed potato varieties, including classes pre-elite, elite I, elite II, elite III, elite IV and foundation. 

The only exemption is pre-elite and elite I lots that are to be planted on the farm where they were originally produced. 

The regulation changes were initiated by industry stakeholders to assist in monitoring, controlling and reducing the level of PVY planted in New Brunswick's potato crop. 

"If 10 per cent of plants are affected by PVY, that potentially affects 10 per cent of a grower's crop," Brennan says. "Of course, there are other variables that can affect crops, such as weather, but this is a step to help reduce some of the variables." 

He adds that while some areas limit how much PVY-affected seed growers can plant, others don't. The maximum PVY level allowed for planting in New Brunswick has not been established. 

"This is an initial step in New Brunswick to see how large the problem is," Brennan says. "In 2011, we will know exactly what's being planted and then we can see what steps we need to take to improve the situation." 

Brennan says the mandatory testing may increase costs for growers in the short term, but the higher quality seed that should be available will result in better crops. 

Producers are encouraged to investigate and secure 2011 seed stocks early. Supplies of low virus seed of some varieties may be limited.

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Disclaimer

The editor and journalists who contribute to FCC Express attempt to provide accurate and useful information and analysis. However, the editor and FCC cannot and do not guarantee the accuracy of the information contained in this report and the editor and FCC assume no responsibility for any actions or decisions taken by any reader of this report based on the information provided in this report.

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Copyright 2010, Farm Credit Canada