Saskatchewan farmers should not have any problems purchasing good quality pedigreed seed.

"The germination on almost all crops is up over the long-term averages," says Bruce Carriere, owner of Discovery Seed Labs in Saskatoon. "The diseases are down according to the long-term averages and it looks pretty good."

It is a sharp contrast from the poor quality crop in 2010.
"We had such terrible growing conditions throughout the whole year. You had the wet summer. You had the wet fall. We have been doing this for twenty years and I'll guarantee that was the ugliest year that we have ever seen as far as seed value goes."

Carriere released germination and vigour statistics at the Saskatchewan Seed Growers Association annual meeting during Crop Production Week in Saskatoon.

The average germination rate on 2011 pedigreed seed is between 93 and 94 per cent for wheat, barley, peas and lentils. Durum and flax checked in at 89 per cent. Oat germination is the lowest at 84 per cent due to late seeding.

"We had a late start because oat is always the last thing you are going to put in,” says Carriere. “The oat germinations are down. The test weights are probably down as well because we are seeing thinner seed in there."

Another trend is the gradual westward movement of fusarium graminearum. The spores are being blown in the wind and are now in nearly every crop district. Carriere says some are only at trace levels, but it is showing up virtually everywhere.

Based on the number of seed samples received from farmers for testing, Carriere offers a few predictions on which crops might see acreage increases this year. He's confident more chickpeas will go in the ground because the number of samples submitted for testing has already surpassed the previous year's total. Other crops that could see more area planted in 2012 are canola, peas, wheat and oats.

The future of pulse and specialty crops

Murad Al-Katib, President and CEO of SaskCan Pulse and Alliance Grain Traders, shares his thoughts on the future of the Canadian crop industry.

Watch more FCC learning videos on our multimedia page 

Recent figures from Statistics Canada show the cost of farming is going up faster than the financial returns.

The federal agency's Farm Product Price Index for October 2011, released last week, says crop and livestock prices received by Canadian farmers rose 12.2 per cent from October 2010.

"October marked the fifteenth consecutive year-over-year increase, 11 of which have been double digit," Statistics Canada states.

The report also says the farm product price index has increased 29.7 per cent since 1997.

In other words, a basket of representative farm products from across Canada worth $100 in 1997 would sell for $129.70 today.

However, a close analysis shows the price increases may be a bit misleading and farmers aren't making as much money as the figures suggest, says Jared Carlberg, a University of Manitoba agricultural economist.

Carlberg points out Statistics Canada's Farm Input Price Index, released last fall, which shows that the cost of inputs has increased 36.3 per cent since 2002. That is, farmers who 10 years ago paid $100 for fuel, fertilizer and other inputs pay $136.30 today.

This means farm production costs have risen faster over a shorter period of time than market prices have, Carlberg says.

"It's nice to see high commodity prices, but obviously it doesn't mean more money for farmers," he says. "If they're not behind, they're not very far ahead and I think most farmers would be able to tell you that."

Doug Chorney, president of Keystone Agricultural Producers, Manitoba's general farm organization, says his own experiences confirm Carlberg's analysis.

Chorney, who grows grains and oilseeds near Selkirk, Man., says he recently locked in 25 per cent of his 2012 canola crop for fall delivery at a near-record contract price of $11.12 a bushel.

On the other hand, when he began farming in the early 1990s, Chorney paid around 18 cents a pound for anhydrous ammonia. Last fall, the same fertilizer cost him 61 cents a pound.

As another example, Chorney paid 27 cents a litre for purple diesel fuel in 1998. He's now paying $1.10 a litre.

"While we've seen the price index go up, the biggest drivers of our variable costs have gone up much faster," Chorney says.

Canadian canaryseed exports are going to Mexico, but at a much slower pace following stricter weed seed guidelines introduced in August.

A Canadian Food Inspection Agency　phytosanitary certificate is required,　stating the shipment has no quarantine weed seeds in a one kilogram sample. This includes buckwheat, stinkweed, cow cockle and cleavers. In order to meet the standards, the crop usually needs to be double cleaned and possibly colour sorted by the exporting company.　

The canaryseed is tested upon arrival in Mexico.　If there are　15 or fewer noxious weed seeds in a one kilogram sample, the shipment can stay -- but needs to be recleaned. If there are more than 15 weed seeds, it cannot remain in the country.

The current import rules are an important issue to Canadian exporters because Mexico usually purchases about one-quarter of Canadian canaryseed, which is nearly all grown in Saskatchewan.

"Something needs to be done, because what's happening right now in canaryseed is that we are being held to a standard that no other grain is being held to," says Larry　Frisky, a director with the Canaryseed Development Commission of Saskatchewan.

Large　cargos of Canadian wheat and canola containing buckwheat are allowed into Mexico. There are also questions about the regulations for millet.

"We haven't been able to confirm this, but it is my understanding that millet, also a birdseed, is not under the same restrictions as canaryseed," says Kevin Hursh,　CDCS executive director. "If that is the case, I think canaryseed is being unfairly singled out."

Growers attending the CDCS annual general meeting on Jan. 9 voted in favour of a resolution asking　the federal agriculture minister to　revisit the issue, which first surfaced in mid-2010.　　

Canpulse Foods in Kindersley　has moved about 2,500 tonnes of canaryseed to Mexico over the last few months -- less than half of the normal shipment amount.　General Manager David Nobbs says none of their shipments　have been rejected.

"We are shipping product now as an industry. It is not huge volumes. It is restrictive, but my personal opinion is these are the rules and we are probably going to end up playing at these levels for awhile,"　Nobbs says.

Canaryseed producers believe prices would be higher if it weren't for the reduced sales into Mexico. Prices have been steady at 26 to 27　cents a pound, but there were smaller than normal crops in both 2010 and 2011. Statistics Canada reports stocks are at low levels.

The Canadian Cattlemen's Association has released some of the major cost factors that will be part of the discussions if Canada is forced to seek authority to impose tariffs on American exports to offset the negative effect of country of origin labelling.

Last November, the World Trade Organization issued a ruling in favour of Canada’s position that the United States' country of origin labelling -- COOL -- discriminates against live cattle and hogs heading south from Canada.

This is the first time the CCA has discussed the costs, which were released in a report. John Masswohl, CCA director of government and international affairs, says CCA wanted to respond to a legitimate interest in the use of check-off dollars to fight COOL.

He notes the costs of COOL are large, and while they are unable to give pinpoint accuracy for litigation reasons, "we wanted to paint a picture of what the ball park looks like."

The report points to the impact of COOL on the proportion of U.S. cattle on feed placements that include Canadian feeder cattle.

Taking into account the time period before and after the implementation of COOL on Sept. 30, 2008, the rules resulted in a loss of U.S. imports of Canadian feeder cattle of about 480,000 head in the first 80 weeks.

This reduction equates to a substantial reduction of 6,000 head per week. That's compared to average weekly feeder cattle exports of 10,494 head in 2007 and 8,372 head in 2006.

The estimated impact of COOL on the ratio of imports of fed cattle to U.S. slaughter show COOL reduced imports relative to slaughter by 30 per cent, or about 400,000 head during the time before and after the implementation of COOL on Sept. 30, 2008. That's a reduction of 5,000 head per week.

This compares to average weekly fed cattle exports to the U.S. before COOL of 16,333 head in 2007 and 13,534 in 2006.

The report also examines the effect on the fed cattle basis or the difference between Canadian and U.S. fed cattle prices. Based on econometric analysis of weekly fed cattle prices from 2005 to 2010, the COOL widened the negative price basis by the equivalent of US $4 per hundredweight.

The CCA continues to work with the U.S. industry to avert an appeal and resolve the outstanding issues. The full report can be found at www.cattle.ca under Action News for 2012.

Ontario's pork sector is taking a grassroots approach to tackle a persistent viral disease, porcine reproductive and respiratory syndrome, or PRRS.

Last week, Ottawa announced it was dedicating almost $295,000 for small-scale projects designed to control and eradicate PRRS.

PRRS causes reproductive failure in breeding stock and respiratory tract illness in young pigs. The disease costs the Canadian industry an estimated $130 million per year.

This initiative will be co-ordinated by the Ontario Pork Industry Council's Swine Health Advisory Board (OSHAB). Ottawa says it will serve as a model for other provinces, and will share the results with the industry as well as the Canadian Swine Health Board.

"This funding will allow the advisory board to provide ongoing leadership to develop PRRS area regional control and elimination projects in Ontario," says Dr. Jane Carpenter, OSHAB's lead on this project.

She calls the regional approach unique.

"It allows for grassroots engagement by producers who are ready to implement change in areas throughout Ontario, whether it is a control or elimination program," she says.

The collaborative two-year project will involve producers, veterinarians and industry and will pilot a strategy for advanced biosecurity and disease control.

Over the long term, the project will improve strategies used by producers and service providers to reduce PRRS transmission.

MP Dave Van Kesteren, who made the announcement in Ridgetown at the Southwest Agricultural Conference, says the support would "help the pork industry enhance its world-class biosecurity and disease control, bolstering its bottom line and our overall economy."

Although new safety standards have been set out for portable augers used on farms, it could take a couple of years before producers see the results on the market.

The Canadian Agricultural Safety Association says in the meantime, manufacturers are getting set now to work the new standard into their equipment designs.

The new Canadian Standards Association standard for portable agricultural augers was developed over several years by the Agricultural Machinery Technical Committee of the Canadian Standards Association. The committee includes farmers, manufacturers, regulators and researchers from Canada and the United States. The group considered research results, member experience and similar standards in the U.S. and Australia.

Jim Wassermann, an engineer with the Prairie Agricultural Machinery Institute in Saskatchewan, is a member of the team that came up with the new CSA standard. He says most of the upgrades in the auger standards relate to the design of the intake guard and the auger driveline.

"Those are the areas where most injuries take place," he says. "The standards team has now come up with practical options to prevent a hand or foot from contacting the rotating flighting without restricting product flow."

He notes an example where a retractable intake guard is now an option in the new standard. It can stay in place for most operations but in unique situations, it can be retracted and alternative safety precautions implemented. The new standard also references all recent standards that relate to guarding auger drivelines and PTO’s.

Statistics from Canadian Agricultural Injury Reporting show that augers are second only to tractors in their involvement in machinery-related injuries on the farm.

"That alarming statistic triggered the Canadian Agricultural Safety Association to support the development of a new CSA safety standard for portable agricultural augers," Wassermann says.

Editor's note: While this article suggests ideas you may want to consider at tax time, rules and taxes vary across the country. FCC Express recommends working with an accountant when planning for retirement.

There are many levels of complexity to retiring, and experts advise farmers to plan ahead. Short-term thinking of saving pennies to survive year-to-year can cost a lot of dollars in the long term, they say.

Don Forbes of Don Forbes & Associates in Carberry, Man. recalls a client who deferred throughout his farming career to avoid paying income tax and, at retirement, sold his land and other assets the same year.

At tax time, his accountant gave him the bad news: he would have to pay $500,000 in taxes over the next three years.

"Most farmers don't have that kind of money to pay for the tax bill and still retire," Forbes says.

Forbes encourages his Manitoba clients to take a more proactive approach and declare, say, $30,000-$40,000 as taxable income each year. That way, they build up Canada Pension Plan and Registered Savings Plan entitlement, and, in Manitoba, pay taxes at the lower 26 per cent rate.

Optional inventory is one solution, Forbes says. It's an averaging tool for Manitoba farmers used in lower income years whereby unsold inventory can be included in income one year, and deducted the year it's sold.

One advantage is that if Manitoba farmers still have unsold grain inventory at retirement, its sale will be tax-free as the farmer already pre-sold it through tax returns.

Liquidating assets can be tricky, especially land sales. Although non-incorporated farms have a land tax credit of $750,000 in Manitoba, there are other taxes farmers must consider.

Old Age Security in Manitoba is calculated before that credit is applied, and by using the net income that includes the land sale capital gains, the government may claw back your OAS benefits, notes Shawn Friesen of the BDO Dunwoody in MacGregor, Man.

Another less obvious tax is the Alternate Minimum Tax, which kicks in once $40,000 of income tax payable is owed. Notwithstanding the land credit, the government can still assess a provincial and federal AMT tax based on income -- including the land sale, says Friesen.

Retiring farmers couple explore the option of buying RSPs to reduce and/or spread out their overall tax requirements.

The oil market has far-reaching impacts on Canadian agribusinesses. Increases in crude oil prices result in higher fuel and fertilizer prices, which raise production costs in agriculture.

Elevated oil prices also increase the demand for alternative fuels and agricultural feedstocks, a positive for crop producers, but not the livestock industry. Oil prices affect transportation costs and influence the competitiveness of Canadian agri-food exporters in world markets. Oil also plays a central role in Canadian financial markets because of its impact on the value of the Canadian dollar.

Looking back at 2011, we observed monthly average prices that ranged from $85 to $110 US per barrel for West Texas Intermediate crude oil. As with any commodity, these movements in oil prices can be traced to supply and demand factors. Rapid economic growth in developing countries and the emergence of a growing middle class have positively impacted world demand for oil in the last five years.

China now consumes about 10 per cent of the world's oil production. Between 2005 and 2010, Chinese consumption increased by 2.5 million barrels a day. This increased demand comes from both businesses and households. For example, growing consumer affluence implies strong growth in the demand for vehicles. The Chinese vehicle fleet has grown at an annual rate of over 20 per cent from 2005 to 2009. In contrast, per capita oil consumption is decreasing in many developed economies, like the United States and Japan.

Since growth in oil demand from the developing world is unlikely to slow, broad implications for the global economy need to be considered. Oil production climbed by 2.2 million barrels a day between 2005 and 2010. This is clearly not enough to cover China's increased demand, let alone the needs of other emerging markets like Russia and Brazil. For this reason, other countries must meet their energy needs by turning to alternatives -- such as using more natural gas and biofuels. Competition for available supplies keeps oil prices elevated.

What is the outlook of the oil market in 2012?

On the one hand, a number of factors support a theory of lower oil prices. Despite recent progress made towards finding a solution to the European debt crisis, financial markets still appear sceptical that the European countries' debt woes are behind them. Economic forecasters are rushing to revise predictions of 2012 economic growth in Europe to reflect a more negative outlook and the possibility of a significant European recession. Financial spill-over from the European crisis would lower world economic growth and dampen upward pressures on oil prices.

Despite uncertain demand, and perhaps because of limited potential to increase supply, many forecasts suggest oil prices will average above $100 US a barrel in 2012. The investment banking firm Goldman Sachs predicts that oil prices will range between $102 US in early 2012 to $120 US towards the end of the year. While this prediction seems reasonable, no forecast can take into account future geopolitical events. For example, the eruption of a conflict in the Strait of Hormuz could result in a price spike.

Setting geopolitical risks aside, what do the oil price forecasts suggest for the value of the Canadian dollar in 2012?

An analysis of the relationship between 2011 oil prices and the Canadian dollar can provide a rough estimate. Oil prices at $102 a barrel should imply a Canadian dollar worth approximately $1.02 US. In the event the price of oil rises to $120 a barrel, the value of the Canadian dollar could climb to $1.05 US. But other factors need to be accounted for. Even if current oil prices are elevated, the uncertainty regarding world economic growth prospects is holding down the value of the loonie below parity.

The continuation of high oil prices in the coming year should increase energy supplies. Why? High prices give an incentive for businesses to ramp up production, encourage further development and refinement of non-traditional oil extraction technology, and support continued development of alternative energy sources, including biofuels and algae. However, there is always considerable lag between the moment production decisions are made and when additional energy supplies actually become available.

The global oil market impacts agriculture through many different channels. Energy prices can impact the value of the Canadian dollar, input costs, crop and feed prices and even labour availability in oil-producing regions. Increasing demand from the developing world and tight supplies in the oil market indicate strong oil prices. Possible supply disruptions and the downside risk of the European situation worsening could make 2012 a more volatile year than 2011.

Last week in this space, I expressed some grave concerns regarding South American weather uncertainty, a looming United States Department of Agriculture report set for release on Jan. 12 and the global macro-economic malaise, particularly from the Eurozone debt crisis.

I wanted to be a seller of grains and oilseeds the first week of January, fearing the bounce from the December market lows was not sustainable.

On Thursday morning, with the markets just opening up following the USDA barrage of new supply/demand data, grain markets are now under significant price pressure -- 30 to 40 cent a bushel declines in corn and soybean markets. And, as of late morning on Thursday, $10 to $11 a tonne declines for Winnipeg canola futures.

All the key data that came through the January USDA report came in above traders' expectations, resulting in a very bearish market reaction.

The USDA lowered 2011-12 corn carryover by just two million bushels from last month, but that was well above expectations of a 95 million bushel decline from last month. U.S. soybean carryover at 275 million bushels came in 45 million bushels above last month and also well above expectations. U.S. wheat carryover at 870 million bushels was down eight million bushels from last month, but traders expected a much steeper drop.

The USDA lowered its Argentina corn and soybean production numbers, but not enough to significantly raise American usage estimates. USDA's global 2011-12 corn and wheat carryover estimates are up from last month, now the highest wheat stocks figure in history. Global soybean carryover was reduced by one million tonnes, though it remains market comfortable and still near enough to all-time highs.

The January USDA report has a history of rattling the grain markets -- and it seems this year is no exception.

The link below summarizes Thursday’s USDA January winter wheat seedings, crop production, grain stocks and supply/demand report. The United States estimates are in billions of bushels except soyoil, which is in billions of pounds. World crop forecasts are in millions of tonnes.

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.