Saskatchewan has raised its provincial beef checkoff levy to match those in　Alberta, Manitoba and Ontario.

The Saskatchewan Cattlemen's Association recently passed a resolution to raise the provincial checkoff levy from $1 to $2 per head.

The last levy increase occurred in 1987, when the rate went from 50 cents to $1 per head.　

"Now, Saskatchewan producers can carry our share of the load in helping open new markets, research new technologies, educate people on the value of beef and provide the services this industry needs," says Bob Ivey, past chair of SCA.

It will be late spring or summer before the additional $1 checkoff is deducted from cattle sales.

"We haven't increased it yet," says Keith Robertson, SCA chief executive officer. "We have a bit of a process internally that we have to go through which will probably take three or four months."

The SCA became responsible for the administration and collection of the provincial and national levies　in August 2010.

The new provincial levy will generate an additional $1.3 million dollars for SCA. The money will ease the SCA's financial situation, which includes a projected deficit for the　current fiscal year ending July 31.　

About one-quarter of the provincial levy -- $638,000 --　is earmarked for the Canadian Cattlemen's Association. The CCA is at the forefront of several trade issues and　keeps the lines of communication open between governments and producer groups.

SCA priorities include environmental issues, animal health issues, traceability, education and research. Specific focus areas include water management, lobbying for additional forage research dollars　and　involvement in the　future relocation of the University of Saskatchewan Beef Cattle Research and Teaching Unit.

Increasing the provincial levy comes at a time of very high feeder cattle prices, which makes it a little easier on the cattle producer's bottom line.

"With us being the second largest cow herd, (only behind Alberta) I think producers took a look at that and decided to make this move," Robertson says.

The national levy will　remain unchanged at $1 per head.　The majority of the money -- 80 per cent -- is spent on domestic and international market development, through the newly established Canada Beef Inc. The remainder goes　directly to research through the Beef Cattle Research Council.

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With allocation of first-phase funding of $2.7 million from the federal/provincial AgriFlex fund, the Okanagan Tree Fruit Co-operative will embark on a $44 million infrastructure modernization, beginning with its Winfield plant.

This first project will cost $5.25 million to engineer and install a state-of-the-art brine chilling and cooler system for the controlled atmosphere storage facilities.

It's the first such system to be put into use in Canada, but there are a couple in the Eastern United States and others in European apple-producing regions.

OTFC operations manager Rod Vint says the innovative system "quickly and efficiently puts apples to sleep."

It chills much faster than the current ammonia system, is more environmentally-friendly and uses less energy, he says. It's estimated the system will provide annual savings of $340,000, as well as increasing the quality of apples that are stored there, so that more will get into the marketplace.

"There's more accurate control of the temperature in each room," he explains. "Consumers want the perfect apple."

About a quarter of the co-op's storage in the valley is at the Winfield plant, which contains some of the most modern equipment in the valley.

"We want to become a lean manufacturing company. We're looking to the future," Vint says.

B.C. agriculture minister Don McRae notes that a recently released report from B.C.'s Tree Fruit Working Group concluded that modern packinghouses will result in more efficient operations and better position B.C. apple growers to compete in domestic and international markets.

Grain-based ethanol production is held as an important emerging market for Canadian grain farmers, who have traditionally been stymied by limited opportunities and low prices. But in a new report, the Guelph-based George Morris Centre says Canadian ethanol production is hurting livestock farmers.

In a study funded by the Canadian Cattlemen's Association, Canadian Pork Council and Canadian Meat Council, the centre says ethanol production has cut livestock feeding margins and increased losses for Canadian producers, amounting to about $130 million per year.

Expanded use of ethanol to a 10 per cent mandate will result in a serious reduction in feed availability in Eastern Canada, the centre says, causing a dramatic reduction of cattle and hog feeding in Eastern Canada.

Already, the centre blames ethanol for increasing the price of feed grains in eastern and western Canada by about $15-20 a tonne and $5-10 a tonne respectively.

Canadian Cattlemen’s Association President Travis Toews says the research shows the negative effects of ethanol production mandates on the profitability and production of Canada's livestock and meat industries. He says his organization is not against high grain prices.

"The cattle industry fully appreciates how important a vibrant Canadian grain industry is to our sustainability," he says. But, he adds, the industry "wants to compete on a level playing field."

The Grain Farmers of Ontario disagree that ethanol has caused so many problems. In fact, they say, it's actually helped prevent a "glut" of corn, as well as providing environmental benefits.

Organization president Don Kenny says corn yields in Ontario are growing at a rapid rate.

"Without the ethanol industry to take the corn, there would be a significant glut in the market with a detrimental impact on corn farmer income," he says. "The increase in corn production since 2000 is almost equivalent to the increased amount of corn going for ethanol production."

As well, he says, ethanol should be looked at from the big picture in Canada, not through the single lens of livestock production. Even at the current five per cent ethanol mandate, greenhouse gas emissions are being reduced by more than two million tonnes each year, the equivalent to taking 440,000 cars off the road.

Besides, says Kenny, one-third of the corn used for ethanol becomes livestock feed through an ethanol byproduct called distillers grains.

"The effect of the ethanol industry in Ontario on our feed supply is negligible," he says.

The British Columbia Agriculture Council is asking B.C. consumers and businesses to use Cowpower to electrify their homes and businesses.

Officially launched at the Pacific Agri-Energy Forum last week, Cowpower is intended to allow B.C. farmers to build economically viable anaerobic digesters (ADs). To date, there are only two ADs in the province. One is a large plant producing biomethane, which is injected into the Fortis B.C. natural gas pipeline. The other is a small demonstration project producing electricity at the Bakerview Eco-Dairy.

"ADs are something we want to have widely adopted on B.C. farms," says Matt Dickson, Cowpower program manager.

However, uptake has been limited because of B.C.’s low electricity rates. Consumers pay as little as 6.67 cents a kilowatt hour and business rates can be even less. Although B.C. Hydro’s standing offer program provides a simple process for producers to supply electricity to the grid, it pays only 10 cents a kilowatt hour -- still not enough to make digesters economically viable.

Enter Cowpower!

Under the program, residential and commercial electricity consumers voluntarily sign up to pay an additional four cents a kilowatt hour for 25, 50 or 100 per cent of the electricity they consume. Residential consumers may sign up for as little as one month, although commercial customers must sign a three year contract.

The additional fee is for the AD’s environmental attributes -- the additional environmental benefits that result from the production of that electricity. These include reduced greenhouse gas emissions and odour from waste management systems, increased water and food safety, environmental protection and nutrient recovery and support of stronger, local farms.

Producers who put in an AD will receive the additional Cowpower funding for five years, meaning they will receive between 13 and 13.5 cents a kilowatt hour for the electricity they generate.

Ethan Warner of CH4 Biogas believes this should be enough to make some projects move forward, although he suspects livestock farmers will need at least 500 cows and at least 25 per cent non-manure waste to make the ADs viable.

If the electricity generated through ADs does not meet the demand, excess Cowpower funds will be put in a development fund to provide farmers with additional incentives.

"With Cowpower, we’re providing electricity users with an affordable and effective way to directly support local, sustainable agriculture while also improving their own environmental sustainability. It’s truly a win-win situation," Dickson says.

"We’re aiming for 0.5 per cent of B.C. Hydro customers," he says, noting that would support 500 or more AD projects.

Manitoba's general farm organization is preparing for financial challenges as it faces a sharp drop in its 2012 membership numbers without changes to a levy which collects membership fees.

"I wouldn't be surprised to see 25 per cent of our membership decline," said Doug Chorney, Keystone Agricultural Producers president, following KAP's annual meeting in Winnipeg last week.

Chorney partly blames widespread spring flooding in 2011 which rendered roughly three million acres of Manitoba's annual cropland unproductive. Grain companies are required by law to deduct a percentage of the value of each delivery at the point of sale and apply it towards a farmer's annual KAP membership fee, currently $200 plus GST. Some flooded farmers have little grain to deliver and no fee to contribute as a result.

But a bigger reason for KAP's membership problem is a long-standing difficulty in collecting the checkoff levy through grain companies, Chorney says.

The checkoff was legislated 24 years ago. Membership in KAP is supposed to be mandatory for Manitoba farmers, although fees can be refunded upon request.

Sometimes farmers pay their memberships directly or through marketing boards. But some grain companies do not deduct the levy from the value of deliveries as they're supposed to, KAP maintains.

As a result, KAP's membership numbers are less than half of what they might be. KAP ended 2011 with 4,189 paid members. Manitoba has over 10,000 farm family operations, according to census figures.

"There's a lot of slippage in the system," says Chorney, who was re-elected to a second one-year term as president during the annual meeting.

Chorney says KAP has raised the issue with non-compliant companies, the government and a provincial farm organization certification agency, but with little success.

He says KAP wants the province to institute a new checkoff system to ensure "stable funding" for the organization.

That could involve applying the KAP membership fee to the cost of farm vehicle licence plates or enrolment in crop insurance and safety net programs.

"We want to have a system that's failsafe and captures funding from people who farm," Chorney says.

Any new system would require changes to provincial legislation governing funding for farm organizations.

Chorney says former Manitoba agriculture minister Stan Struthers was open to the idea and appeared willing to introduce amending legislation this spring.

But Struthers moved to the finance portfolio in a January cabinet shuffle. His successor, Ron Kostyshyn, says he is waiting for KAP to submit possible stable funding models for consideration.

The United States Department of Agriculture (USDA) released its biannual cattle report last week, confirming numbers that were actually lower than expected.

The report shows a total of 90.8 million head at Jan. 1, 2012, two per cent below the 92.7 million for Jan. 1, 2011 and the lowest Jan. 1 inventory since the 88.1 million on hand in 1952.

This is the fifth consecutive year of U.S. inventory declines and the 14th of the last 16 years showing lower numbers, according to Brenna Grant, a research analyst with CanFax.

Grant says this has been partially offset by increased production efficiencies in the industry as carcass weight per animal increases. Commercial beef production is actually up three per cent as packers get more beef from fewer animals.

Overcapacity, however, continues to impact U.S. packers and feeders who need to fill pens to maintain utilization rates.

The drop in numbers has been fuelled by devastating drought conditions in the southern part of the country, particularly Texas, which traditionally supplies the most cattle. Texas numbers were almost 11 per cent lower from 2011 levels as ranchers were forced to sell off herds they couldn't feed.

Although Canada traditionally exports 50 per cent of its total production (80 per cent of which goes to the U.S.), Grant says the current trend indicates Canadian producers are filling excess feeder and slaughter capacity in Canada.

With barley prices now lower than corn, the positive economics of feeding in Canada led to lower U.S. exports in 2011. In fact, Grant notes, exports were down 61 per cent to 76,000 head, the first decline below 100,000 since the mid-1990s.

Canadian producers are showing cautious optimism after being "crunched" by eight years of high costs and export restrictions. With the first signs of stabilization and positive returns in 2011, producers are trying to recover lost equity. Statistics Canada reports from July 2011 confirmed increased heifer retention, indicating farmers are taking a careful approach to expansion in a volatile market.

Grant says continuing upward price pressure in the U.S. is good news for Canadian producers since higher prices south of the border will pull prices up in Canada as well.

Agriculture is a complex, diverse and dynamic industry.

The potential impacts of economic news on profitability are not always clear, especially at the fast pace the world is evolving. There are so many connections between economic trends and agriculture that it can be hard to identify the most relevant factors to monitor in today’s marketplace. This is why it is always useful to stop and think about those economic drivers that are most likely to affect profitability in Canadian agri-food markets.

What are the top five economic drivers agri-business owners should monitor in 2012?

1. Global economic growth

Global economic growth would certainly come at the top of many lists.

Income growth and the emergence of a more affluent middle class in less advanced countries has had a positive impact on world food demand for the last few years.

Consider the case of China. Chinese officials recently revealed that the growth rate in gross domestic product (GDP) in the last quarter of 2011 was 8.9 per cent, down from the previous period’s growth of 9.1 per cent. While the estimate suggests decelerating income growth in China, it is also reassuring that inflation is falling at the same time.

In the opposite scenario, growth in the neighbourhood of 10 per cent accompanied by high inflation could be unsustainable and could ultimately have a negative impact on agri-food markets.

The European debt crisis continues to represent a significant risk to the global economy.

There are two main channels through which the crisis impacts Canadian agri-food markets: trade and financial spillovers. The impacts on trade are somewhat minimal; but a further fall in the value of the euro against the Canadian dollar would make Canadian products less competitive against goods sold by European businesses.

The impacts of a full-blown crisis triggered by Greece abandoning the euro or other countries threatening to default on their debt payments are harder to predict. The Bank of Canada estimates that the annual costs to the Canadian economy already amount to $10 billion, or 0.6 per cent of our GDP.

2. The changing policy environment

A second important driver of Canadian agri-food markets in 2012 is the policy environment.

We already know that the removal of the Canadian Wheat Board’s exclusive marketing rights will change how producers in Western Canada market their grain. Canada is currently engaged in different trade negotiations and has expressed the desire to expand the scope of countries it's negotiating with. Should a trade agreement with Europe be finalized in 2012, it would open up markets for crop and cattle producers, and perhaps be accompanied by higher dairy imports into Canada.

Trade negotiations with South Korea and within the Trans-Pacific Partnership could also generate new opportunities and challenges.

Discussions about the next American Farm Bill are also worth monitoring because it impacts the relative strength of Canadian producers in the North American marketplace. Budget pressures on the U.S. federal government may force lawmakers to abandon direct payments to producers, a saving of $5 billion per year.

What, if anything, will replace these payments? Introducing a shallow loss program, in which revenue losses of five or 10 per cent may be covered, could be seen as favourable from a budget perspective given strong crop receipt prospects in the short term. This, however, could evolve into significant payments following a downturn in the markets and again confer some sort of advantage to U.S. producers.

The U.S. government may also choose to revise its country of origin labelling policy as part of the next Farm Bill discussions.

Environmental policies, food safety initiatives, labelling regulations, etc. are other policies that could significantly impact profitability in 2012.

3. Production outlooks

The production outlook in major agriculture-producing regions is another important driver.

Drought worries in some parts of South America have caused concerns for corn and soybean crops. Existing wheat inventories are currently at the second-highest level on record, so weather worries offer less support to wheat prices.

Weather conditions also impact the livestock sector. A drought in Texas caused excessive culling of animals and will undoubtedly have a negative impact on cattle numbers for years to come. This will support North American beef prices because it will delay any potential American herd expansion.

4. Canadian dollar

A fourth driver of profitability is the value of the Canadian dollar. Half of Canadian agri-food production is exported and a strong dollar hurts the competitiveness of Canadian businesses.

Given that Canada produces and exports many natural resources and commodities, the value of our dollar tends to be tied to prices of these commodities, especially oil. At current oil prices, the historical relationship between the value of our currency and oil suggests that our dollar should be slightly above parity with the U.S. dollar. But current uncertainty in the global economy slightly pushes down the value of the loonie. Hence, the dollar is expected to fluctuate around parity in the near future.

5. Farm input prices

Finally, farm input prices round out our top five list of economic drivers to watch in 2012.

The farm input price index of Statistics Canada climbed almost 10 per cent in the last year. Given income growth prospects and increased food demand, cost components of agriculture production such as fertilizer, land and energy will remain elevated in 2012.

Fertilizer demand is expected to increase given pressures to increase yield and production globally. High energy prices are supported by economic growth, as well as the result of unpredictable turmoil in the Middle East. Interest rates are expected to remain unchanged for most of 2012. The low interest rate environment coupled with strong crop receipts support elevated farmland prices.

There is a great deal of optimism in Canadian agriculture. Weather or unpredictable economic conditions make it challenging for agribusiness owners to establish definite year-long business plans. Understanding economic drivers is one way to help you plan more strategically in an economic marketplace that is uncertain, but which contains many opportunities. In the coming year, we are committed to checking back in on these issues and monitoring other trends that may impact your bottom line.

Global oilseed markets have been held in a range-bound state over the past month, though with some notable price volatility along the way. Winnipeg canola and Chicago soybean futures have slowly recovered a portion of their sizeable losses registered in the immediate aftermath of a bearish round of United States Department of Agriculture report data released Jan. 12.

Oilseed markets started under heavy pressure Monday on reports of better-than-expected rains hitting parched soybean growing areas of Argentina and southern Brazil. But by midweek, that issue had faded a bit in terms of its importance as markets recovered at the time of writing on Feb. 1. Recovery was supported by continued commercial buying and renewed selling interest in the United States dollar index, which lifted all commodity boats.

Overseas headlines at this time are hinting at a deal being done concerning Greek debt (again), pushing the euro higher and supporting European stocks.

South American weather updates will continue to influence immediate price action in the soybean market as the bulk crop there is at or near its key pod-filling stage. South American weather is also an important driver of action in the corn market. But as that crop has already suffered irreversible damage, recent rains are not as market burdensome for corn.

Still firm soybean cash basis levels in the U.S. Gulf and American interior locations are helping offset pressure, which points to an increase in export demand and/or less supply availability than USDA’s most recent grain stocks report indicated.

And Winnipeg canola futures are attempting to turn higher on spillover buying momentum from the Chicago Board of Trade soy complex and the outside equity/commodity markets.

But canola remains choppily traded with key support and resistance points holding the sideways band intact. On the nearby March canola contract, trading remains bound by key support down at the $500 a tonne level, with notable overhead resistance in the area of $530 to $540 a tonne. Bulls need a close above recent highs of $530 a tonne to turn the short‐term outlook more positive.

Also worthy of note is the widening price spread between the nearby March and May canola contracts. This could be a possible indicator of slowing commercial demand. End-user demand for canola remains strong, but may be waning a bit here.

Positive, though, are reports this week that China will boost imports of canola and canola meal from Canada after banning Indian rapeseed meal after tests showed it contained a toxic chemical.

Chinese buyers say they will look into Canadian meal to see if quotations are attractive. But meal from domestic Chinese crushers is reportedly ample and prices are cheaper.

Nonetheless, the export pace of Canadian canola remains record large so far this marketing year. According to the Canadian Grain Commission, exports from Aug. 1, 2011 to Jan. 22, 2012 amounted to 4.5 million tonnes, well up from 3.5 million tonnes for the same period last year and remain on pace to attain well over eight million tonnes. Given available supplies, this blistering export pace cannot be maintained.

This week, a more positive macro-economic view is so far pressuring the U.S. dollar and enabled a more "risk on" attitude across the spectrum of commodity markets as a whole. But this view has demonstrated an ability to shift on a daily basis. So no consensus view for the longer term yet established.

So then, while the canola market has worked to regain some of its lost upward momentum, my gut keeps telling me the market is not entering a new leg higher adventure, rather near-term upside should be viewed as a selling opportunity. But again, that’s just the hunch.　

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.