The British Columbia government is giving a $2 million dollar boost to the promotion of provincial food products.

B.C. Minister of Agriculture Don McRae announced the "buy local" program at the Pacific National Exhibition last week.

"There is not a better place to eat local than B.C.," McRae says, noting the province has the most diverse agricultural sector in the country, producing over 250 different commodities.

The program will provide matching funding for local businesses and organizations to launch or expand their own marketing campaigns.

About a decade ago, the province had a "Buy BC" program which supported provincial product promotion but required users to incorporate a logo. Ever since that program was cancelled, industry has clamoured for it to be reintroduced. This program goes beyond the previous program by not requiring all promotion programs to be identical.

"This program gives us a lot more than we expected," BC Agriculture Council past president Garnet Etsell says with McRae noting it gives local producers of foods and food products "the freedom to promote their products as they see best, without the restrictions of a one-size-fits-all Buy BC-type program."

McRae calls it "a license for creativity," pointing out farmers markets have different needs than large retailers.

Etsell says the program will help producers and processors better identify B.C. products to take advantage of consumers’ interest in buying local.

"More British Columbians want to access local food but part of our problem is identifying B.C. products," he says.

Funding is available to small and large agriculture and seafood processors, farmers markets, restaurants, wineries and industry associations. It's expected to support about 50 different campaigns. Those projects may include in-store promotions, social media or web campaigns, smartphone apps, traditional advertising, product labeling and food-tourism maps.

Building the local market is a component of the B.C.’s Agrifoods Strategy, intended to turn the sector into a $14-billion-a-year industry by 2017.

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The hail fell hard in western Canada in the last two weeks of August, damaging crops and pushing up insurance claims.

The Canadian Crop Hail Association is reporting an increase of 2,000 hail claims in Saskatchewan between the middle and end of August.

In Alberta, hailstorms continue to make this the busiest year in a decade for claims. The total number of claims is roughly 4,650 – an increase of 700 between mid to late August. These are straight hail claims, not including Crop Insurance endorsements.

About 250 hail claims were registered between mid and late August from Manitoba. The total number of claims in the province is about 3,100.

Saskatchewan claims now add up to 11,600. The most significant storms, says the association in a news release, were on Aug. 22 and 24. Claims from the earlier storm come from the Colonsay, Humboldt and Kenaston areas, while the Aug. 24 claims are from the Coleville, Dodsland and Plenty areas, as well as around Outlook, Conquest and Kenaston. The LeRoy area also saw claims and again there was damage around Kindersley, which has been hit with multiple storms this year, the association says.

In Alberta, areas hit by hail include the Peace area on Aug. 21 and a heavy storm around Calmar, Leduc and Fort Saskatchewan on Aug. 23. Severe damage in the middle of this storm was caused from golf ball-sized hail.

Camrose, Lamont, Vegreville and Vermilion had hail claims filed as well. Another storm travelled from south of Red Deer to Delburne, north to Alix and on to Daysland. In the Daysland area, there were reports of numerous storms hitting some of the same crop land.

A number of smaller storms occurred throughout the southern part of the province on Aug. 24.

In Manitoba, there were several small scattered hailstorms in southeast and central regions, resulting in minimal damage and claim numbers. The majority of new claims occurred in the southwest and northwest parts of the province as a result of storms on Aug. 24. Areas hit by hail that date include Nesbit, Wawanesa, Kenton, Grandview, The Pas and Swan River.

Swathed canola was the crop most impacted by the recent storms as many of the cereal crops had been harvested.

The Canadian Food Inspection Agency has announced that as of 2013, it will no longer regulate the efficacy of fertilizers and supplements.

The CFIA says it will focus its resources on verifying the safety of products for humans, plants, animals and the environment and ensuring they are properly labelled to avoid misrepresentation.

The new process means anyone who wants to sell fertilizers or crop supplements to farmers can market them without CFIA involvement.

Under the new streamlined registration process, fertilizers and supplements that have been deemed safe by the CFIA and have met a minimum level of evidence of efficacy (such as foreign trial data or scientific literature) can be registered for sale in Canada. Labels must clearly identify the limited extent of the evidence used in the assessment.

Ross McKenzie, an agronomy research scientist with Alberta Agriculture, recommends farmers use critical thinking when assessing product claims. He suggests farmers ask sales representatives about the testing that has been completed and seek products tested in Canada by reliable groups like Agriculture and Agri-Food Canada, a university research team or a provincial agricultural department.

The CFIA notes that applicants who do not want to include the disclaimer on their label can still choose to have a full efficacy assessment. This could include a detailed analysis of field trail data from the regions in Canada where the product will be sold.

For more information on the new process, visit the CFIA website at www.inspection.gc.ca/plants/fertilizers/registration-requirements/2012-08-28/eng/1346094411835/1346094657408.

A Manitoba agricultural company has acquired Canada’s largest sunflower processor with a view to expanding market opportunities at home and abroad.

Legumex Walker Inc. announced last week it had signed a letter of intent to purchase all outstanding shares of Keystone Grain Ltd., located in Winkler, Man.

Keystone is the biggest processor and marketer of sunflowers and sunflower products in Canada.

"Joining forces with Legumex Walker will allow us to take advantage of currently available growth opportunities we could not pursue on our own," says Don Falk, Keystone president.

Legumex Walker is a publicly traded company based in Winnipeg. The company processes and sells pulses and other special crops. It has 11 processing facilities in Western Canada, the United States and China.

"Keystone is a highly strategic addition to our U.S.-based sunflower processing assets and significantly enhances our ability to serve the growing demand for sunflower and flax products in the bakery ingredients market," says Joel Horn, president and CEO of Legumex Walker.

Manitoba is by far the largest sunflower-producing province in Canada, with about 90 per cent of the national acreage. Manitoba growers this year seeded 90,000 acres of sunflowers, split roughly 50-50 between confection and oilseed varieties.

Sunflower producers say that, while the announced company merger is positive news, the challenge for their industry is developing good quality varieties that perform well consistently.

Weather and plant diseases can take a huge toll on sunflower crops, depending on conditions. As a result, yields and acreage vary widely from year to year.

Kelly Dobson, who farms near Fairfax in western Manitoba, says some years sunflowers are the biggest grossing crop on his farm. But in other years, they may be written off to crop insurance.

"From a grower’s standpoint, the major deterrent to growing sunflowers is the fact that you just don’t know what you’re going to get. Some years you’re either a hero or a zero," says Dobson, who heads the 640-member National Sunflower Association of Canada.

The variation in quality also makes it difficult for Canada to compete in the international confection seed market, he says.

Growers hope a recent $1.1 million grant to NSAC from Agriculture and Agri-Food Canada will change that. The money will fund a three-year project to develop and market new sunflower seed varieties.

"It’s going to be the start of where we can have improved varieties that the export market can prefer," Dobson says.

Sclerotinia, aster yellows and bertha armyworms have all combined to challenge this year's canola crop in Saskatchewan. Later seeded crops, however, appear to be holding their own.

"I think 25 to 30 bushels an acre is most common for canola in this area," says Rob Stone, a farmer in the Davidson area, between Saskatoon and Regina. "There is the occasional field that spikes up a little bit, but there is also the occasional field in that 15 bushel range."

Plenty of spring moisture produced canola plants with shallow root systems -- an issue when the July heat arrived.

"You see a lot of plants that only have half the pods on them from eight to 10 days of heat at the wrong time of flowering. We had a lot of flower abortions as well," he says.

Saskatchewan canola yields vary greatly depending on disease and insect damage, as well as heat stress.

"Some heavily infected sclerotinia fields ran as low as six bushels an acre," says David Vanthuyne, an area agronomist with DuPont Pioneer. "The highest yields I have heard of are in the mid-40s to the low 50s."

On the positive side, Vanthuyne says later-seeded canola is looking better and he expects those crops to produce some better yields.

Northeast Saskatchewan has also had a challenging growing season.

Areas north and east of Tisdale received 625 millimetres of rain between April and August. As a result, early-seeded canola has brought in yields of only 15 to 25 bushels an acre.

"The crop struggled and drowned three times during the growing season," says Pat Brown, the manager of the Parrish & Heimbecker elevator at Tisdale. "It has had a rough life and we are seeing less than expected yields."

Brown says the major grading issue for hard red spring wheat is fusarium. Ergot is only a minor problem at this point of the harvest, which is about 20 per cent complete in the northeast. Wheat yields vary from 30 to 45 bushels an acre.

Saskatchewan Agriculture's weekly crop report released on Thursday says 38 per cent of the 2012 crop has been combined and 33 per cent swathed or ready to straight combine. That compares to the five-year average of 26 per cent combined and 32 per cent swathed or ready to straight combine.

Here's the combining progress by region:

Southwest: 69 per cent
Southeast: 56 per cent
West central: 23 per cent
East central: 28 per cent
Northeast: 14 per cent
Northwest: 12 per cent.

Topsoil moisture on cropland is rated as six per cent surplus, 64 per cent adequate, 25 per cent short and five per cent very short.

Effective fertilizer application and shared water use between agriculture and urban Ontario is central to a new partnership involving public and private interests.

The partnership, funded by the Canadian Fertilizer Institute and the Ontario Centres of Excellence Social Innovation Program, will provide farmers and other stakeholders with online access to pertinent information and expert networks.

This, says the organizers, will help farmers share best management practices associated with what's called the "4R Nutrient Stewardship Program" -- guiding farmers in using the right fertilizer source, at the right rate, at the right time and in the right place.

Conservation leaders, scientists, farm leaders, fertilizer industry representatives and provincial officials came together in Cambridge, Ont. recently to launch the initiative, designed to protect the important Grand River Watershed.

Comprising one million residents, the Grand River Watershed serves nearly 40 Ontario municipalities including Cambridge. It also underpins some of Ontario's most established farmland, making shared water use and what the organizers call "sustainable intensification" a vital concern for this area where agriculture is under the public microscope.

"Long-standing agricultural practices are difficult to change," says the University of Waterloo Water Institute's David Rudolph. "Recent research conducted at institutions such as the [institute] have provided new insights into land use and water quality."

He says improved collaboration techniques "should encourage greater uptake of [best management practices] that, over time, enhance crop production, save farmers money and minimize water quality impacts."

Norman Beug, chair of the Canadian Fertilizer Institute, says 4R offers farmers a framework to implement management practices that optimize fertilizer efficiency, reducing nutrient loss and leakage into the air and water.

"The 4R approach maximizes farmer returns for every tonne of fertilizer used and allows farmers to quantify their practices to receive credits for ecological goods and services," he says.

Drought in the American Midwest is capturing media attention worldwide. The focus is largely on the short-term implications, namely, reduced yields and high crop prices.

Although the immediate impacts to producers are obvious –- positive for crop producers and negative for livestock producers –- what’s less clear is the effect the drought will have on Canadian agriculture over the longer term. A long-term view of the U.S. drought’s impacts on your industry can help you position your business for future success.

This year’s U.S. drought is often compared to 1988, when corn production was 36 per cent below initial expectations. What’s significantly different this year is that stocks are notably lower than their historical average.

One way to gauge the extent of production shortfalls and tightness of supply is to look at available stocks at the end of the year versus total purchases throughout the year. This is known as the stock-to-use ratio. The lower it is, the tighter the supply and higher the price.

The most recent projection by the United States Department of Agriculture indicates a soybean stock-to-use ratio of 4.2 per cent at the end of the 2012-13 marketing year -– the lowest stock-to-use ratio for U.S. soybeans since 1965.

Growing demand for grains and oilseeds also contributes to low stock-to-use ratios. The expansion of U.S. ethanol production over the last 10 years is a prime example. However, a recent Iowa State University study revealed that a change in U.S. government ethanol policy would offer little feed cost relief to livestock producers, due to relatively high gasoline and low ethanol prices.

Given the importance of the U.S. in world corn and soybean production, the expected shortfall in supply has caused prices to climb. The U.S. price of corn for September delivery went from US$5.12 on June 15 to US$8.10 on Aug. 30.

This price jump signalled buyers to look beyond corn and soybeans to secure demand for feed grains and other uses. In turn, buyers are looking at markets like barley, wheat and canola, putting upward pressures on the prices of these commodities.

The drought will support high crop prices for some time, perhaps even past harvest next year, when stocks can start to rebuild.

The South American crop won’t be able to replenish world supplies and higher prices will need to be tamed by large American corn and soybean crops.

It is also expected that in 2013, near record amounts of corn and soybeans will be planted in Canada. The removal of acreage from the U.S. Conservation Reserve Program and the conversion of hay and pasture land to cash crops is expected to continue. This will push up demand for fertilizer, so producers should monitor prices over the next several months to help determine the best time to purchase inputs.

The hog sector is feeling the pain of high feed costs. This situation could well extend into next year, compounded by a higher Canadian dollar and struggling world economy.

It’s critical for producers to manage costs by locking in prices whenever favourable conditions present themselves. Hog producers should re-examine feed rations to determine if a more affordable option is available. Foreign demand for pork may keep prices from falling further, as Canadian exports to countries like Russia, South Korea and China continue to climb. Futures markets indicate that profit margins in the hog sector may not see relief until next spring.

Liquidation of the U.S. cattle herd is lowering prices because of an increase in the number of marketed cattle.

Current U.S. feed prices and pasture conditions will delay herd expansion. This may be good for Canadian cattle producers over the medium and long term, creating an opportunity to increase heifer retention and capitalize on higher prices over the next three to four years. As the effects of the drought conditions dissipate next year, there will be strong demand for cattle and an upward push in cattle prices, as American producers attempt to rebuild.

Will your business be affected by this drought more over the long or short term?

Continued strong agricultural commodity prices will allow crop producers to either pay down debt or invest in productive assets. Hog and cattle producers need to continue looking for efficiencies in diet formulations and farm equipment. The current environment of high crop prices and volatility makes it imperative for producers to manage input and output price risks. Developing a marketing plan and sticking to it can help you navigate a volatile environment.

For more information on developing a marking plan, visit http://www.fcc.ca/en/LearningCentre/multimedia/farm_management/
marketing_risk_plan_e.asp.

Pushed along by what we now know as the worst drought in American agricultural production in over 50 years, oilseed markets have rallied sharply this summer.

Chicago soybeans futures have soared $5 a bushel since the beginning of June, while Winnipeg canola futures have jumped $78 a tonne.

The shock of lower than expected production on both oilseed fronts is likely incorporated into current prices. Moreover, it appears the process of finding a price level high enough to curb demand within the context of the reduced North American oilseed supply is still at work.

That said, as soybeans and canola prices stretch into contract highs, there can at least, at times, be periods of corrective selling to address technically overbought conditions.

Canola

Winnipeg canola futures currently trade near contract highs. They do, though, struggle to keep up with the soy complex and remain seemingly undervalued relative to beans.

While high priced, the canola market remains broadly range-bound since peaking initially around mid-July. November canola futures briefly tested the upper end of the range near $645 earlier this week, but faded back from those lofty levels.

There's still no conclusive indication for the canola market's inevitable breakout direction -- up or down -- from the $600 to $645 a tonne trading-range the November contract has been caught in over the past seven weeks.

The market bias is currently upward, but November canola obviously needs to prove itself with a confirmed break above overhead chart resistance to suggest the next leg will indeed be higher.

Canola will not be able to do that on its own, though. Continued bullish leadership from the Chicago Board of Trade soy complex will be required. If realized, such a move upward through resistance could be just what it takes to inspire fresh speculative fund buying interest.

Macro Issues

A little caution here. Yes, the American bean crop is short and will likely be confirmed again in the Sept. 12 United States Department of Agriculture production and supply/demand report. Yes, the Canadian canola crop is not yielding particularly well this year, suggesting overall crop size will be fall below 15 million tonnes in 2012. That's well short of industry expectations earlier on in the growing season. And of course, demand for oilseeds remains strong. All oilseeds remain fundamentally bullish.

But we are into the month of September, and the seasonality of the broader financial markets tends to be bearish. In fact in most years, September and October are the most likely time for financial markets to break down.

No one really knows for sure why that is. Some figure that it's because portfolio managers sell out of losing equity market positions ahead of their year ends in October. Some also blame analysts, who have a habit of downsizing their annual estimates for companies this month now that first-half results are in.

As a seasonal indicator, it's been pretty reliable. And this September, there are some other issues to fret about. Technical indicators suggest the S&P 500 Stock Index is overbought and vulnerable to a pullback.

Meanwhile, equities have a history of moving lower in the run-up to an American presidential race, especially a tight one like what we currently see taking shape.

Now, the ag markets this summer seem to have broken ranks with its once fairly close trend relationship with the outside commodity (energy/metals) and financial markets. And fundamentally, that bullishness in the ag sector certainly is justifiable in lieu of the 2012 U.S. drought. But if we do see a period of speculative fund long liquidation develop in capital markets -- even if for only a brief period of time -- ag markets are likely to be negatively affected.

But then again, if financial markets can even just hold steady during this period of seasonal weakness, then the ag market will be better positioned to have their own fundamentals dictate price direction.

CWB Canola PROs

Something new for the canola market: In addition to marketing canola through the traditional open market channels, Prairie farmers who contract their canola through the CWB's new Harvest Pool program can expect initial payments of $475 for No. 1 Canada grade canola and $462 for No. 2 Canada grade.

The initial payments are a portion of the return farmers can expect to gain from selling their canola through CWB during the entire year. Payments may be adjusted due to market condition or sale progress fluctuations.

CWB's Pool Return Outlook is an early prediction of what farmers could receive as their overall return for the year. PROs for canola were reported as $640 for No. 1 Canada grade and $627 for No. 2 Canada grade.

Farmers still have the opportunity to sign up to be a part of the Harvest Pool program. The deadline to sign up is Oct. 31. The marketing period is between the start of harvest until June 30, 2013.

CWB is not offering an Early Delivery Pool for canola in 2012-13 as it is downing for wheat and durum, mainly due to the timing of its program launch. CWB is also not offering canola cash contracts to farmers at this time. Instead, CWB may purchase cash canola through various grain handling companies.

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.