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Note from the editor

Allison Finnamore

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


1. Canola growers polled on marketing

It is a survey that will create plenty of discussion in the farming community. 

Prairie canola growers are being asked if they would be interested in having the Canadian Wheat Board sell some or all of their crop on a voluntary basis. 

The Manitoba Canola Growers Association is conducting the survey in response to a resolution by its members passed five years ago to investigate alternative marketing methods. 

The CWB can be a sensitive issue and polarizing subject among some farmers in light of the long-running battle over the sales monopoly on western Canadian wheat, durum and malting barley. 

"We have been very serious and very diligent about being absolutely neutral about the board's other activities," says MCGA Vice-President Ed Rempel. "We approached them and this is strictly business." 

A meeting was held on Nov. 18, 2010 to discuss the mechanics of how the CWB would market and move canola from farm to port. 

"Without getting too specific, they (CWB) feel from time to time, there may be a way to reduce costs somewhat. They have said in fairness, that it is not a great deal (of money), which tells us the line (grain) companies and crushers are doing an okay job, but they thought they could add some value," Rempel says. 

The MCGA says potential benefits for growers include professional marketing by a producer-controlled organization, risk management through price pooling and greater use of producer cars and the Port of Churchill. 

The MCGA ran ads containing the survey in western Canadian agriculture media this week. It has four questions and room for comments. The main question is "how many tonnes of canola would you be interested in having the CWB market on your behalf?" The survey can also be completed online until the end of April at http://www.mcgacanola.org/

"We think a lot of producers are going to be curious about this," says Rempel, comparing it to putting your toe in the water. "Depending on their size, they may commit 100, 200 or 300 tonnes, if they are a larger producer."  

It is believed at least 200,000 tonnes of canola spread across the prairie region are needed to make the idea viable. A marketing plan would also have to be developed and approved by both the CWB board of directors and the minister responsible for the CWB. 

Saskatchewan has the highest canola production in Canada. Sask Canola, which represents provincial growers, is not commenting on the survey until after it holds a board of directors meeting on April 20.

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2. Brewers support Maritime growers

Grain growers in New Brunswick, Nova Scotia and Prince Edward Island have an opportunity to take advantage of a growing market in their region -- malt barley. 

Brewers from Atlantic Canada recently gathered in Halifax, N.S. to celebrate the end result of some of that malt barley. Produced by Canada Malting, Maritime Malt is a new malt product made from barley grown exclusively in the Maritimes -- what Jay Hamachek, director of North American Business Development for the Canada Malting company, calls an identity-preserved product. 

"It can be traced back to the region, to the farmer's field," he says, explaining the product meets a need the craft brewing sector has been looking for. 

"Many Maritime brewers have been looking for ways to support the local farmers for a long time," says Randy Lawrence, brew master of Sea Level Brewing in Port Williams, N.S. "The launch of this Maritime Malt is a great way to connect with the farming community and demonstrate our industry's commitment to producing excellent craft beer from local ingredients." 

Maritime Malt brings Canada Malting's central and eastern Canadian malts to three. It already included Ontario Select and La Québécoise. 

"We are happy to be a part of this collaboration between the farming, brewing and malting industries and we are very pleased with the warm reception from the Atlantic brewing community," says John Holliday, president of Canada Malting. 

The recent launch brought together brewers from around the region to offer samples of beers produced from the new malt. Growers who produced the malt barley also attended. 

"This is a very timely opportunity," says Stephen Kell of Parrish and Heimbecker, a grain trading and milling company which operates across Canada. "As livestock numbers decline, so does the demand for feed grains. Opening up this new market for malt barley creates the chance for these farmers to continue to grow barley and have a demand market in order to market their production." 

So far, about 40 farmers in New Brunswick, Nova Scotia and Prince Edward Island have started growing malt barley for the Maritime Malt product. 

"Every farmer in Canada knows how to grow barley, or has grown the crop for a feed grain in the past," Kell says. "Since the malt barley is a food product, our objective is to find the best barley growers and coach them in producing this higher quality grain."

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3. P-5 deal expected to lengthen new entrants' wait times

A move by the Eastern Milk Pooling Agreement to harmonize its producer quota policy is likely going to mean longer wait times for new entrants into the dairy industry. 

The pool, commonly called the P-5, includes Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island. The new P-5 agreement means Quebec will have 12 new entrants each year, Ontario will get 10 and the three Maritime provinces will each get one. 

Previously, P.E.I.'s New Entrant program, which was operated by the Dairy Farmers of Prince Edward Island, accepted two applicants a year, says Harold MacNevin, chair of the commodity organization. It would usually take a couple of years for an application to be accepted. 

With only one space available now, it can do nothing but extend wait time, he says. 

MacNevin says there are also changes in the administration of the program. Previously, the new entrant purchased at least 12 kilograms of quota and then got a four year loan of another 12 kilograms. Beginning in year five, the quota was paid back at the rate of one kilogram per month. 

Now, though, the quota will be loaned for the full five years and only one kilogram will be repaid each year, extending the support out to 17 years. Another change that has been discussed is limiting the support to farms holding less than 35 kilograms of daily quota, but he says that is still under consideration.

MacNevin says the new program does not help with the transfer of ownership from one generation to the next. "In fact, for someone to qualify using a farm that was previously operated by a member of their family, it must have been out of the dairy operation for a minimum of two years," he says. 

MacNevin explains that stipulation was established so that the sons and daughters of existing dairy farmers could not enter the family business at the expense of another producer's quota. 

 "Dairy farms have one of the highest rates of family succession in agriculture. We have a lot of family farms that are continuing on. I know our numbers are dropping, but still we're higher than most other sectors in agriculture," he says. 

MacNevin says the loaned quota is treated the same as their own quota, meaning the new entrant can fill or lease it as they see fit. It is also part of their quota base for calculating leasing limits as producers are permitted to lease 25 per cent of their holdings in or out each month.

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4. Quebec sees drop in farm cash receipts

Talk about your double-edged sword. 

A Quebec crunching of federal statistics on 2010 cash receipts show that revenue from animal production in the province rose by $178 million (or 4.2 per cent) to a record $4.41 billion. 

But that success led to lower payouts from the province's farm subsidy program, resulting in an overall drop in total farm cash receipts for Quebec producers last year. 

"I think it shows the importance of farm subsidies for some areas of production," says Patrick Lemire, a biofood analyst with the Institut de la statistique du Québec. 

According to the institute's sixth annual analysis of Statistics Canada numbers for the agricultural sector in Quebec, gains in cash receipts were highest for hog (a 21 per cent increase), egg (up 9.9 per cent) and calf (up 3.6 per cent). 

Hindering the sector's performance were lower cash receipts in cattle (down 9 per cent) and hen and chicken production (down 4.4 per cent), as well as lambs, sheep, turkeys and hatcheries. 

As a whole, the total amount of cash receipts for producers dropped 3.9 per cent -- from $7.4 billion to $7.1 billion. 

According to the institute, that decline was primarily due to a decrease of $443.1 million (a 41.8 per cent drop) in subsidy program payments, which amounted to $617.2 million. 

It also noted that crop production sales contracted by $22.2 million (down 1.1 per cent) down to $2.05 billion. 

Lemire cautioned against reading too much into the cash receipt results. 

"It's too early to draw any conclusions," he says.  "We have to wait until the statistics on farm expenditures come out (in the fall) to get a complete picture of the financial situation of producers for a given year." 

Lemire adds, however, that the cash receipts snapshot is an important economic indicator for an industry that accounts for seven per cent of Quebec's gross domestic product.

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5. Biofuels impact farm equipment storage

Alberta Agriculture is warning farmers about the implications of the Renewable Fuel Standard that comes into effect in April 2011. 

The new standard will impact best practices when it comes to safeguarding your equipment, says Michael Bevans, project engineer with the Agricultural Technology Centre in Lethbridge. 

The federal mandate, which requires a renewable fuel component be added to fossil fuel, sets a level of a five per cent ethanol blend for gasoline and a two per cent blend for diesel. 

The new blends mean farmers will need to make some changes to their storage practices if they want to avoid operation problems with their equipment. Bevans warns that biofuels will spoil over time. 

Since biofuel breaks down and decomposes over time, he recommends a good rule of thumb is not to keep it more than six months. Using spoiled biofuel can cause problems with fuel injectors and pumps. 

Bevans notes that biofuels, which act as a solvent, will break down the natural buildup in storage tanks with implications for the injection system. He says farmers should consider installing a good filtration system, with a size of 10 microns or smaller on the filter, to provide adequate protection. 

Farmers also need to know that, because biofuels absorb water vapour, storage tanks need a good water separation system, one that uses additives that separate the water from the fuel so it can be drained off. 

Bevans says producers should be asking their supplier about the percentage of biofuel blend they are delivering since the blender has to meet an annual requirement. This means individual shipments could fluctuate over the year. 

The production date is also important, since it will affect fuel tank storage timing as well as winter storage of equipment with fuel in the tanks. Finally, Bevans recommends talking to equipment dealers for advice on best practices when it comes to biofuels. 

Contact the Alberta AgInfo Centre at 310-3276 (toll free in Alberta) for fact sheets and additional information on contacts about technical questions.

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6. CFIA ups poultry compensation payments

The Canadian Food Inspection Agency is increasing the maximum amount that may be paid to producers whose poultry is ordered destroyed during a disease outbreak. 

The amended Compensation for Destroyed Animals Regulations, effective immediately, raise the maximum amounts so that compensation better reflects the true market value of poultry. 

For example, farmers were formerly compensated up to $8 per chicken raised for egg production. The maximum amount is now $30. Compensation for turkeys raised for breeding purposes was previously capped at $90 per bird, but that amount has now increased to a maximum of $250. 

Ducks, geese and pigeons are not included in the current regulatory amendment. Consultations with producers of these species are ongoing. The same market-based model of compensation will be used to determine if adjustments are needed for these species. 

The CFIA states that compensation is an important tool they use to encourage early reporting of outbreaks. Their goal is to rapidly identify all exposed premises, and to trace and destroy all infected poultry in order to limit the spread of the disease and the possible impact on the economy, and human and animal health.

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7. Poultry plant to be sold

Canada's largest private poultry processor and a company representing producers in Nova Scotia and Prince Edward Island have teamed up to buy the Maple Leaf Foods facility in Berwick, N.S. 

Value of the transaction, expected to close May 13, was not disclosed in Friday's announcement. 

Maple Leaf announced the closure of its prepared meats plant in Berwick last November, with production scheduled to end April 29.

The buyer is Eden Valley Poultry, a new poultry processing company made up of United Poultry Producers Inc, owned by poultry producers in Nova Scotia and P.E.I. and privately owned Maple Lodge Holding Corp. 

"We are very pleased to have reached this agreement that will result in the plant being converted into a new poultry primary processing facility," says Rick Young, executive vice-president, transformation, Maple Leaf Consumer Foods. 

"This is a very positive outcome which will bring new opportunities for people currently employed at Berwick and the community of King's County. It also fulfills the commitment we made last November to find an alternate use for the plant that would leverage the benefits of the existing facility." 

Immediately upon closure of the transaction, Eden Valley Poultry will begin decommissioning the Maple Leaf facility, with construction and retrofitting to commence as soon as possible. 

The new facility is expected to be operational by early summer 2012, processing more than 40 million kilograms of poultry annually and employing about 200 people. 

Maple Leaf Foods Inc., with annual sales of some $5 billion, is a leading Canadian food processing company headquartered in Toronto. It employs 21,000 people at operations across Canada and in the United States, Europe and Asia.

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8. Local food awards recognize champions

Leslie Carson is giving hospital food a good name. 

Carson, Director Food and Nutrition Services for Guelph's St. Joseph's Health Centre, is being recognized for offering quality, local food at her facility, in a new report called Ontario Local Food Champions. 

The report, led by Ontario's Friends of the Greenbelt Foundation, acknowledges three leaders from public institutions and three farm groups that have taken exceptional steps to incorporate more Ontario food onto the plates of municipalities and public institutions. 

Carson was cited for overcoming operational barriers to provide more Ontario food to residents in a health care facility. After she and her team began offering salads and hot dishes made with Ontario foods, the satisfaction rate with food service climbed to 87 per cent among St. Joseph's patients and residents, compared with Ontario's 60 per cent average. 

According to the report, with 115 million meals served to patients and residents at Ontario's health care facilities, vast opportunities exist for Ontario food to be served in such facilities. 

"The more Ontario food purchased by the province's institutions, the better it is for our economy, environment and farmers," says Burkhard Mausberg, president of Friends of the Greenbelt Foundation. "The role models recognized [in the report] are creating the ripple effect of change that is needed to grow the amount of Ontario food in broader public sector institutions." 

Other winners were Jaco Lokker, Director of Food Services, University of Toronto, St. George Campus who last year purchased 65 per cent of food from Ontario, and the City of Markham, the first Ontario municipality to adopt a local food policy. Last year, more than 30 per cent of food procurement by the municipality was Local Food Plus certified, Canada's only local sustainable food certification.

On the farm side, Vineland Growers, Algoma Orchards and Rowe Farms were recognized for representing "the strength in Ontario's agricultural community to develop innovation that meets the unique needs of broader public sector institutions."

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9. Market Focus - Oat market update

During the last week, the hubbub over the release of the United States Department of Agriculture acreage report, weather issues and more have been driving the major U.S. grain and oilseed price momentum. 

Meanwhile, Chicago oat futures have almost gone unnoticed. They quietly, though aggressively, rallied. And futures brought higher cash oat bids in Western Canada. 

Growers had been quite disappointed with the performance of the oat cash market this winter -- failing, it seemed, to live up to the emerging tight supply-demand balance developing this year. 

And it has been a point of increasing concern to see Chicago oat futures continue to trade in carry fashion despite what the projected tight stocks situation would otherwise indicate. We were starting to wonder whether commercials had found a way to muddle through the remainder of the current marketing year with adequate coverage already in place. 

Fortunately for growers, the market has now made a sudden move higher. In a matter of days, cash oat bids for both old and new crop have made a significant move upward, well under $3 a bushel in Saskatchewan only a week ago, to today something more on the order of $3.20 to $3.30 a bushel and upwards of $3.50 to $3.60 a bushel in Manitoba. New crop as well -- $2.50 or so in Saskatchewan last week -- and on Wednesday at $3.30 to $3.40 a bushel, as much as $3.60 to $3.70 a bushel in Manitoba. 

Finally, after a price plunge through February and March, the oat market is responding more in line with how its fundamentals would seem to warrant. Of course, a big blast higher in U.S. corn and wheat markets has helped the cause of oats, but oats needed to do this. Otherwise, old crop supplies were going to be pared down to bottom-of-the-barrel supplies with little hope of boosting new crop acres. A sudden leap of 50 cents to as much as $1 a bushel (depending on location) now puts oats into a much more competitive position for new crop acres. 

Looking at a couple of charts of Chicago Board of Trade oat futures, the market peaked like many other commodities on Feb. 9, and then suffered a rather devastating decline, culminating in a first-half March crash on the nearby CBOT May contract to a low at $3.15 a bushel (March 16). 

May oats then came roaring back -- with much of the gain to the time of writing on April 5 at $3.9125 per bushel, accomplished only over the past four trading days. Now, May still needs to clear resistance, which is only pennies above around the $3.95 a bushel area, then key overhead resistance at $4 a bushel, before a test of contract highs seems feasible. 

On new crop December oat futures, already charging into new contract highs, finishing on April 5 at $4.0750 a bushel. Big gains were posted the past couple of trading sessions as a new sense of urgency on either side of the border is being put forward this spring to buy oat acres. 

That sense of urgency picked up last Thursday with the release of USDA's prospective planting report, with the government agency predicting 2011 U.S. oat seeded acreage falling to a new low at just 2.84 million, down 10 per cent from the 3.14 million planted a year ago. If realized, it would be the lowest on record. In 2009, American producers planted 3.4 million acres to oats. 

But of course, the recent sharp rally in oat prices would not have been possible were it not for the resurgent corn market. That said, I believe oats has merit to trade higher on own fundamentals. 

Now we'll wait with great interest for the first Canadian spring seeding intentions report from StatCan due for release on April 26. 

Oat prices need to be competitive with wheat and canola in order to attract increased acreage for 2011. 

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.

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