EASTERN EDITION
country-guide.ca
September 2013 $3.50
OUR ANNUAL MARKET ISSUE
SHAWN SHULTZ’S PATH TO VALUE PG.22
+PLUS DID YOU GET YOURS FROM LAST THREE YEARS? BROTHERS BUY BACK FARM THANKS TO CRAFT BREWERY THESE TWO FARM FRIENDS BUILD CITY BUSINESS Publications Mail Agreement Number 40069240
AdvAnce
your yield.
Genuity® Roundup Ready 2 Yield® soybeans have built-in yield potential to outperform original Roundup Ready® Soybeans, with farmers seeing more 3,4 and 5 bean pods For more beans per pod and more bushels per acre, be sure your soybeans have the trait technology that’s advancing the yield of soybean growers across Canada. Ask for the 2.
Genuity® BecAuse every BeAn mAtters. visit your seed rep or genuitytraits.ca ALWAYS FOLLOW GRAIN MARKETING AND ALL OTHER STEWARDSHIP AND PESTICIDE LABEL DIRECTIONS. Details of these requirements can be found in the Trait Stewardship Responsibilities Notice to Farmers printed in this publication. ©2013 Monsanto Company
SEPTEMBER 2013
PG. 22 GROWING DIFFERENT Alberta’s Shultz family has adapted a success strategy for tying production and marketing together in order to diversify their operation and create added value. Could it work on your farm?
BUSINESS BRAZIL
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A HEAD FOR BUSINESS
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THERE’S WORK TO BE DONE
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DID YOU GET YOURS?
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PRODUCTION CONTRACTS Buyers say pre-selling grains and oilseeds is a no-brainer. Our Gerald Pilger begs to differ.
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EVERY ISSUE 6
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HANSON ACRES It took 15 minutes for hail to destroy two-thirds of the Hansons’ crop. How long will it take to recover?
MAKING IT WORK Can a farmer save the Canadian International Grains Institute? We look at the case of Earl Geddes.
MACHINERY GUIDE Engineers have been building tractors on tracks for a century. But not like this year’s new designs.
FRIENDS FIRST Here’s how two farm friends built a city business, and preserved both their friendship and their profits.
GUIDE LIFE — A VACATION THAT PAYS Helen Lammers Helps brings you tips on how to have a better, more rewarding vacation this winter.
It’s time to honestly ask if you got your share from the historic three-year bull market.
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GUIDE HR — WHEN WORRY TAKES OVER Worry is good. You couldn’t plant a crop without it. But excessive worry drains the life from your farm.
Is it really farmers’ fault that agriculture is short 30,000 workers?
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TOUGH FARM CHOICE AGCO and John Deere each say they’ve got an ideal solution to how you combine all your electronics.
Microbrewed beer is helping the Warwaruk brothers buy back the family farm.
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ORGANIC OUTLOOK High grain prices have been tough on the organic sector, but it’s ready to roar back.
Brazil is seeding seven million new acres this year. If they’d built 7,000 miles of railway, we’d worry more.
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GUIDE HEALTH If you don’t tackle your weight now, your challenge will only be bigger in future. Marie Berry can help.
50 Our commitment to your privacy At Farm Business Communications we have a firm commitment to protecting your privacy and security as our customer. Farm Business Communications will only collect personal information if it is required for the proper functioning of our business. As part of our commitment to enhance customer service, we may share this personal information with other strategic business partners. For more information regarding our Customer Information Privacy Policy, write to: Information Protection Officer, Farm Business Communications, 1666 Dublin Avenue, Winnipeg, MB R3H 0H1. Occasionally we make our list of subscribers available to other reputable firms whose products and services might be of interest to you. If you would prefer not to receive such offers, please contact us at the address in the preceding paragraph, or call 1-800-665-1362.
SEPTEMBER 2013
PETUNIA VALLEY Considering human psychology, it’s a wonder any of us are still alive, especially in the Valley.
CONTENTS
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desk EDITORIAL STAFF Editor: Tom Button 12827 Klondyke Line, Ridgetown, ON N0P 2C0 (519) 674-1449 Fax (519) 674-5229 Email: tom.button@fbcpublishing.com Associate Editors: Maggie Van Camp Fax (905) 986-9991 (905) 986-5342 Email: bmvancamp@fbcpublishing.com Gord Gilmour (204) 453-7624 Fax (204) 942-8463 Email: gord.gilmour@fbcpublishing.com Production Editor: Ralph Pearce (226) 448-4351 Email: ralph.pearce@fbcpublishing.com ADVERTISING SALES Lillie Ann Morris (905) 838-2826 Email: lamorris@xplornet.com Cory Bourdeaud’hui Cell (204) 227-5274 (204) 954-1414 Email: cory@fbcpublishing.com Head Office: 1666 Dublin Ave., Winnipeg, MB R3H 0H1 (204) 944-5765 Fax (204) 944-5562
Tom Button is editor of Country Guide magazine
What if they get theirs? I was schooled to believe the longterm average price of a farm commodity is always slightly less than its average cost of production. Efficient farmers on productive soils would make enough profit to form a firm foundation for the market, but there would also be enough occasional profit to keep less-efficient farms in the game. Then, as farmers got more productive with better genetics, sharper agronomics and superior machinery, the inflationadjusted per-bushel price would slowly ratchet downwards. But the end effect would still be the same. Over the course of a career, there would be enough profit to coax the biggest possible yields out of the most productive farmers, and there’d be a measure of hope for the others. Obviously, though, we’ve all done some rethinking in the last three years. Associate editor Maggie Van Camp talked with market analysts from across the country in preparation for her story, which we admit to rather provocatively calling “Did you get yours?” The analysts that Maggie interviewed for the final piece ended up giving farmers a score of about 3.25 out of five for their marketing over the last three years. Before the objections and qualifications start boiling, however, take a closer look. Our analysts were rating farmers based on their strategies and on their use of marketing tools, not on the actual average prices they received. 4 country-guide.ca
It’s an important distinction, not only because it’s impossible to figure out who actually got what. Every farmer is reluctant to believe that their neighbours suffered as much bad luck as they did, missing the peaks and hitting the lows. I also want to quickly agree that Gerald Pilger makes a series of excellent points in his article “Production Contracts” in this issue. There are flaws and limitations in every marketing alternative. That said, it’s undeniable that change is underway. Over the last three years, prices have been high enough that farmers who scored less than that 3.25 were also able to hold their heads high. But if we’re entering a couple years of stingier pricing, the difference between average versus excellent marketing will come back to the fore. I don’t mean that farms will sell up overnight. Not by a long shot. But we will see more sifting out of who is growing and who can’t. My sense is — and I suspect it’s yours as well — marketing will never be more important to the shape of our agriculture than it will over the next three years. More will be won and lost over the phone than in the field, and the law of the averages will return, this time more with respect to marketing skill, not production. The future begins with honest benchmarking of where you are today. We hope Maggie’s story helps. Are we getting it right? I’m at tom.button@fbcpublishing.com.
Advertising Services Co-ordinator: Sharon Komoski (204) 944-5758 Fax (204) 944-5562 Email: ads@fbcpublishing.com Designer: Jenelle Jensen Publisher: Lynda Tityk Email: lynda.tityk@fbcpublishing.com Associate Publisher/Editorial Director: John Morriss Email: john.morriss@fbcpublishing.com Production Director: Shawna Gibson Email: shawna@fbcpublishing.com Circulation Manager: Heather Anderson Email: heather@fbcpublishing.com President: Bob Willcox Glacier Media Agricultural Information Group Email: bwillcox@glaciermedia.ca Contents of this publication are copyrighted and may be reproduced only with the permission of the editor. Country Guide, incorporating the Nor’West Farmer and Farm & Home, is published by Farm Business Communications. Head office: Winnipeg, Manitoba. Printed by Transcontinental LGMC. Country Guide is published 12 times per year by Farm Business Communications. Subscription rates in Canada — Farmer $36.75 for one year, $55 for 2 years, $79 for 3 years. Non-farmer $79 for one year. (Prices include GST) U.S. subscription rate — $35 (U.S. funds). Subscription rate outside Canada and U.S. — $50 per year. Single copies: $3.50.. Publications Mail Agreement Number 40069240. We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage.
Canadian Postmaster: Return undeliverable Canadian addresses (covers only) to: Circulation Dept., PO Box 9800, Winnipeg, Manitoba R3C 3K7. U.S. Postmaster: Send address changes and undeliverable addresses (covers only) to: Circulation Dept., PO Box 9800, Winnipeg, Manitoba R3C 3K7. Subscription inquiries:
Call toll-free 1-800-665-1362 or email: subscription@fbcpublishing.com U.S. subscribers call 1-204-944-5766 Country Guide is printed with linseed oil-based inks PRINTED IN CANADA Vol. 132 No. 10 Internet address: www.agcanada.com
ISSN 1915-8491 The editors and journalists who write, contribute and provide opinions to Country Guide and Farm Business Communications attempt to provide accurate and useful opinions, information and analysis. However, the editors, journalists, Country Guide and Farm Business Communications, cannot and do not guarantee the accuracy of the information contained in this publication and the editors as well as Country Guide and Farm Business Communications assume no responsibility for any actions or decisions taken by any reader for this publication based on any and all information provided.
September 2013
The Ultimate in Flexibility!
Newmac Manufacturing has been building exceptional quality furnaces and boilers for over 35 years and are widely regarded as having one of the best products available in the marketplace today. Our product offering includes wood, oil, and wood/oil combination furnaces and boilers and with the addition of a wood pellet burner system we have you covered. More options equals more savings. Newmac Manufacturing Inc Debert, Nova Scotia, Canada Ph: (902) 662-3840 Fax: (902) 662-2581 www.newmacfurnaces.com
Visit the at the Newmac Trailernal io at Intern Plowing Match-21 17 September fire and see a live our of demonstration llet pe d new woo . burning system
With the Newmac Pellet Burner System you simply remove the door from your Newmac wood or wood/oil combination unit and replace it with the Pellet Burner door and just like that you are burning pellets! Want to go back to burning some wood? Simply reverse the process. The NPB is operated by a 2 stage thermostat which regulates the amount of pellets which are fed into the burner and the self-cleaning feature keeps the unit operating at peak efficiency. The hopper holds 400 lbs. of pellets saving constant refilling.
Wood
Pellets
Oil
Newmac. Where Tradition Meets Innovation.
Machinery
By Ralph Pearce, CG Production Editor
Tractor manufacturers are really “making tracks” these days. It isn’t a new development in tractor technology. Tracks are as old as tractors, and the newest round of track design goes back at least 20 years, including a series of key tests comparing tracks versus tires two decades ago in Alberta and Montana. Still, more companies are rolling out new tractor designs featuring tracks, and there’s a growing belief that tracks provide better pull and drawbar horsepower. Now the manufacturers are adapting tracks to more of their largest tractors, from 325 horsepower on up. That’s not to say that tracks are the automatic winner, however, especially in small fields and tight yards, but their increasing popularity is hard to deny. As Alberta Agriculture and Rural Development (AARD) concluded as far back as the early 1990s, there are definite advantages to tracks. But there are also advantages for tires, including steering and cost. The long and the short, though, is that it’s no longer as safe to assume you know whether tracks or tires are better for your farm. Like so much else in today’s farming, it takes a sharp mind and some dedicated research.
challenger mt700d series track tractors With its links to Caterpillar and with that company’s history of working with tracks since 1890, it’s little surprise that Challenger was the first major manufacturer to go big with a tractor with tracks. Now, Challenger introduces its MT765D and the MT755D, each equipped with an 8.4L diesel engine. The company says the new releases deliver low operating costs, reduced vibration and low noise levels, all without compromising power and torque. The MT765D boasts engine horsepower of 350 (285 PTO) while the MT755D provides 327 engine horsepower (260 PTO). Both models are also outfitted with Challenger’s exclusive Mobil-trac design. The engine design on the AGCO POWER 8.4L diesel is unique. It’s a single-piece, cast-iron block featuring wet cylinder liners. That means the engine is capable of handling high-horsepower loads without
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the concern of overheating, which in turn means extended life for the engine and the tractor. The engine is also compliant with the Tier 4i emissions standards, combined with AGCO’s e3 clean-air technology. The Mobil-trac track feature is based on Challenger’s unique fiveaxle undercarriage system, which provides oscillating mid-wheels that simultaneously reduce compaction yet also maximize traction and pulling power. No matter the conditions or the environment, the company says, you get greater operating efficiency while doing less damage to the soil. The MT765D and the MT755D also carry a variety of Challenger standards, including polyurethane mid-wheels and a range of gauge settings from 72 to 160 inches. And finally, in keeping with an industry focus on enhanced operator comfort, the MT700D series tractors offer 110 cubic feet of operator space, superior visibility and comfort.
www.challenger-ag.us
S eptember 2 0 1 3
versatile deltatrack tractors 2013 marks a first for Versatile in Canada. The company is introducing its first tractor design featuring a four-track system, complete with industry-leading technology, and all with the Versatile name on it. The DeltaTrack is unique on several different fronts. First, Versatile has engineered this tractor as a dedicated track machine, not a wheeled design that’s had track assemblies added to the existing framework. The DeltaTrack will be available in widths of 30 and 36 inches. Another unique quality with the Versatile line is that the track undercarriage mounting system is reinforced to the tractor’s frame. That means the frame absorbs load, which reduces stress on both the undercarriage and the track components. Its one-piece cast drive sprocket also provides leading drive-bar engagement, delivering better torque transfer and long life. The 8.5-inch drive lugs are not only big, they’re the biggest in the industry, and they do a lot to reduce track slippage. Idler wheels and mid-rollers are polyurethane coated, and the company says these provide longer life compared to rubber-coated mid-wheels. No matter whether field conditions are wet or dry, the company also says, the idler wheels offer an exceptional approach angle plus a gradual wrap angle, refinements that minimize track stress and improve the machine’s performance. With the Versatile name you also get the Cummins QSX, 15-litre engine that meets Tier 4i emissions standards. That’s coupled to a CAT TA-22, 16-speed powershift transmission, capable of providing smoother shifting with superior durability. As for the track itself, Versatile is working together with Camoplast, an industry leader in track manufacturing. The DeltraTrack has been
designed with reliability, durability and easy servicing and maintenance in mind. In fact, the design principles allow for quick servicing in field. Next on Versatile’s list is the DeltaTrack, which will begin full production in fall 2013 on three larger-horsepower designs, including 450-, 500- and 550-horsepower models.
www.versatile-ag.com
THE STRAIGHT STORY ON CATTLE SINCE wAY bACk. The voice of the Canadian Cattlemen since 1938. No other publication brings you the in-depth coverage and insight into the livestock industry that we do. Every issue features new information from a wide range of topics, including: nutrition, research, vet advice, holistic ranching, markets, sales and events as well as feature interviews with regional producers. Canadian Cattlemen has been informing Canadian ranchers for seventy-five years… rely on our expertise, trust our experience.
Canadian Cattlemen invites you to subscribe to our free enews service. Stay up to date on the latest news from the livestock industry, from your region and across the nation. Visit our website for details.
www.canadiancattlemen.ca September 2013
country-guide.ca 7
world
Brazil Brazil has brought seven million new acres of cropland into production this year. Now, the bulldozers are firing up again By Gord Gilmour, CG Associate Editor
magine you’re standing in the midst of new farmland in the central belt of Brazil, in the state of Mato Grosso, for example. Everywhere you look is evidence of Brazil’s enormous agriculture industry. Corn and soybeans are getting planted in field after field, and cattle fill paddock after paddock, not to mention all the other commodities that Brazil produces such enormous quantities of, including sugar. It’s a sight that most of us in North American agriculture talk about. Some of us even go there to see it. But talk to any Brazilian, and you’ll soon learn that it’s a source of national pride, and something that even the locals can’t help by marvel at. That includes Fabio Mattos, a transplanted Brazilian who recently was an associate professor of agricultural economics at the University of Manitoba. These days he’s a bit farther south at the University of Nebraska-Lincoln. Mattos recently spoke to Country Guide about his home country’s transformational effect on global grain production. He also talks about where Brazil currently finds itself, and what the future might hold. Mattos begins by describing how, on a recent trip home, he had a visit with a friend who works in the area. The friend had a very clear picture of the region and its new-found agricultural prominence. “He told me, ‘It looks like one big farm as far as the eye can see,’” Mattos says. “It’s a region of field and pasture, and just a very few, very small, cities.” In this new farming heartland, it’s hard to overstate just how quickly the corn and soy sector has grown. “It all started with government investments decades ago, in the 1970s,” Mattos says. “They wanted to encourage soybean production in the mid-west, outside of the traditional growing areas in the south.” By the mid-1980s the government-funded plant breeders had succeeded, and Brazil suddenly appeared on the radar of the global grain trade in a big way. It was touted as the emerging agriculture powerhouse that would change everything — and in many ways it has. 8 country-guide.ca
Probably the greatest measure of just how profound the impact has been is the amount of land devoted to arable crops, and just how rapidly that number has been growing. As the Brazilian rainforest and savannah lands have been converted to agriculture production, they’ve added astounding acres every year, says Bruce Burnett, a weather and crops specialist with the Canadian Wheat Board, based in Winnipeg. “Last year they added somewhere right around three million hectares of arable land,” Burnett says. “And that’s slower than the pace has been for a number of years.” The Ag-Chieve grain-marketing advisory service based in Winnipeg observed in a recent research note that in 2014 Brazil is expected to surpass the U.S. as the largest exporter of soybeans. However, they also noted that it’s not all sunshine and lollipops for the Brazilian grain industry. “The U.S. still remains the most reliable source for soybeans, as Brazil’s infrastructure has not kept pace with production,” Ag-Chieve said. “There is no short-term fix to this issue.” When asked about the infrastructure deficit, Mattos agrees with this assessment. “It’s been a problem for the past 50 years — more than that, since the country began really,” Mattos says. “The highways are in very poor condition, there are really no railways, and there are no waterways suitable for navigation.” Mattos also points out that Brazilian soybean September 2013
world
growers share a challenge with western Canadian grain growers — they’re a long way from both saltwater and major population centres, making shipping to markets a huge expense for them as well. “It’s not uncommon for farmers in these mid-western areas to lose between 10 and 15 per cent of the value of their crops through transportation costs,” Mattos says. It all boils down to a lack of infrastructure from start to finish. Burnett agrees the roads are simply terrible, even by the standards of Western Canada, where complaining about the state of the grid roads is a favourite pastime. “I’ve been on some pretty terrible roads over the years throughout Manitoba and Saskatchewan,” Burnett says with a chuckle. “But they’re nothing compared to what I’ve seen in Brazil.” Then, after the crops have bounced over many miles of bad country roads and potholed highways, they arrive at port, where the mother of all infrastructure bottlenecks exist — and the majority of costs are added for farmers, Mattos says. “It’s not uncommon for a truck to sit at port in a lineup for a week, two weeks, or even a bit more,” Mattos says. While that truck sits, the meter is running and costs are accruing. One of the major problems is lack of port terminal facilities, Burnett says. Unlike the Port of Vancouver, in Brazil most of the trucks are emptied directly onto ships, which is more clumsy and takes more time. The Brazilian government is taking steps to try to ease this infrastructure deficit, Burnett says, but it will take many years to catch up, since the industry has grown so fast and in such previously undeveloped areas. “If you look at Western Canada, by comparison, it was the railways that led the settlement and brought the settlers out, and 100 years later you look at that and say, ‘How convenient,’” Burnett says. “Brazil, on the other hand, is now in the unenviable position of trying to build a road network after the fact.” Looking at just this aspect of the Brazilian industry, it might be tempting to think it a bit of a backwater — but Mattos says that doesn’t take in the whole picture, especially the advanced nature of the farms that are growing crops for export. “These are highly technically advanced farms — and interestingly, September 2013
many of them are run by Americans and Canadians who have realized there’s no more land at home and have come down to Brazil,” Mattos says. “They’ve brought this production model with them.” When these operators arrive in Brazil, they do find land that’s much cheaper than at home, but in a raw state requiring clearing and breaking. In a country with a large population, that kind of unskilled labour is easy to find and cheap, Mattos says. It’s once the operation is up and running that reality sets in. “Unskilled labour is easy to find and cheap, but skilled labour is much harder to find and much more expensive, especially if they’re bringing it in,” Mattos says. “It’s once the operation is established and running that costs can begin to increase exponentially.” Mattos also says the level of red tape is often confounding for farmers, especially those used to North American governments that attempt to get out of the way of business. He cited a recent study that suggested it took somewhere between a week and 10 days to set up
a business in North America or Europe and about a month in other parts of Latin America. “In Brazil, it took over 100 days,” Mattos says. Despite these barriers, however, there’s still tremendous potential for the agriculture industry to develop in Brazil, Mattos says. Estimates vary, but even the lowest suggest there’s still about 150 million acres that could be converted to arable crops, and the most reliable numbers suggest that only about 50 to 60 per cent of the country’s potential acreage has been tapped. “It’s pretty amazing when you think Brazil has only just over half of its farmland in grain production,” Mattos says. So will the breakneck pace of conversion continue? Likely not, Mattos says. “What’s beginning to happen now is that there are other uses — cattle production and sugar cane production mainly — that are competing for the land,” Mattos says. “I think future development is going to be much more tightly linked to the price of commodities than it has been in the past.” CG
The picture tells it all. Thousands of acres of forest and farmland, and not an elevator in sight
country-guide.ca 9
Doing more. using less.
A series on being ready for the farming challenges ahead
patriot sprayers: Application Without Compromise By Mark Burns Marketing Manager, Case IH Application Equipment
A
griculture is an industry where so much is out of our hands; the best we can do is put our resources into optimizing the things we can control wherever possible. So while we can’t influence or predict either the weather or the markets, we can do a great deal to make chemical application predictable, accurate and precise. That can help optimize both yield potential and return on investment. When we look at application quality, there are six drivers that determine the value returned for every tankful that is sprayed: • Accurate rate for the job • Optimal droplet size for the chemicals being used • Consistent crop coverage • Reducing overlaps and skips • Timeliness of application • Drift control
The Drive for improveD YielDs The first driver, accuracy, begins with the basics, making sure the boom suspension provides a solid, stable ride for the boom as it goes over the changing terrain of the field. Ultimately, maintaining a constant height is key to getting a consistent spray pattern and even coverage from the spray tips. In addition, automatic boom height control using ultrasonic sensors on each boom can automatically adjust to maintain consistent boom height. Additional boom sensors and gauge wheels can provide added stability. Achieving and maintaining the proper droplet size is another critical driver of application quality. Depending on the 1 2
chemicals being applied, the correct droplet size can greatly influence how effective its action is. Since droplet size is largely dependent on pressure, the challenge is to maintain a constant pressure while allowing variations in application rate. Rate control is important; underapplication of chemicals hampers its effectiveness in controlling pests, weeds or fungus, while over-application can damage the crop itself. In either case, yield is reduced and return on investment is suboptimal. Today’s Patriot® sprayers offer automatic section control – available technology to turn the spray system off when crossing a previously sprayed area. Additionally, the exclusive AIM Command system uses pulse-width modulation technology to control application without changing system pressure. That means droplet size and application rate are completely independent. The latest refinement available for the Case IH sprayers is AIM Command PRO, which provides individual nozzle control to offer the ultimate in consistent application rates, even compensating for wide variations in boom speed in tight-radius turns without under- or over-application. The next critical driver, timeliness of application, is one of the most important. Often, optimum yield potential depends on taking advantage of quite narrow windows, making sure the sprayer can get into the field at the right agronomic moment. This is where the Patriot cab-forward design gives users an agronomic edge. Because
Source: Ag Professional Feb. 2012 “Early Season Weed Control Pays Off in Corn.” Source: Bob Hartzler, extension weed specialist, Iowa State University.
caseih.com
the product tank is centered between the cab and the rear-mounted engine, Patriot sprayers exhibit a better-balanced load, distributing weight more evenly for less rutting and compaction, even as the tank empties. Plus, the engine is as far from the cab as possible, providing the operator with a cool, quiet ride that makes longer, more productive days possible. Drift control is made simpler with the consistent droplet size offered by pulsewidth rate control. And when weather conditions or drift-sensitive locations increase the need for drift control, Patriot spray technology makes it easy to switch to a preset lower pressure while maintain the same application rate.
The KeYs To success How important are these six drivers of quality application? Simply put, timely, high-quality application is key to the success of any chemical program. Some university and company research shows that if weeds are allowed to emerge with corn and are left uncontrolled while the corn is growing from the V2 to V4 stage, the yield loss is usually more than one bushel per acre per day.1 Similarly, once weeds begin to impact soybean yield, each additional day they are allowed to compete can result in yield losses of up to 1 percent per day.2 So accurate, timely application can be crucial to yield … and profit. To learn more about the Case IH agronomic design and how Patriot sprayers offer application without compromise, visit www.CaseIH.com/AgronomicDesign.
With our proven, industry-leading SCR engine technology, Case IH gives you more power while still meeting tough Tier 4 B/Final regulations. In fact, the SteigerÂŽ 620 has more horsepower than any tractor on the market. Ever. And all Case IH equipment is agronomically designed to help you maximize your yield potential and your profits, with fully integrated AFS precision farming technology and 24/7/365 support. The world of farming is changing. Be ready with the proven leader in efficient power. To learn more, visit your local Case IH dealer or www.caseih.com/efficientpowerctg913.
BE READY.
Š2013 CNH America LLC. All rights reserved. Case IH is a registered trademark of CNH America LLC. www.caseih.com
business
A head for
business With shrewd marketing, Chris (l), and Lawrence Warwaruk have bought back the farm their family had lost to the bank
he first step seemed big enough. It was the gruelling mid-1990s. Grain prices had been in the tank more or less continuously for 15 years when, like many others, the Warwaruk family at Erickson, an hour north of Brandon, Man., lost their farm. Through the turmoil, the four Warwaruk brothers — Chris, Eric, Eugene and Lawrence — knew they would always love the farm, but it was time to tackle reality. They needed a future, hopefully one that would let them stay together while they individually got their bearings back. That’s when the idea came up to start Lux Sole, a Winnipeg restaurant they opened in 1999, operating it as a family business with the competitive advantage of having the four highly dedicated and energetic brothers all working together. As first steps go, it was a significant success, earning stellar reviews and a solid place in Winnipeg’s restaurant community while giving the brothers time to sort out their own priorities. Step two, however, has even more surprises, including the biggest surprise of all — buying back the farm that their father had lost, and growing the ingredients they need for their new craft beer on the old family place. The idea to make beer came up when the brothers opted to expand their restaurant business in 2008 to include a pub, called the Luxalune Gastropub, two doors down for their original restaurant location. By then, Eric and Eugene had already left the business to return to school. Again, it was a strong entrepreneurial streak that drove the process, with Lawrence and Chris creating the gastropub with the objective of tapping into Winnipeg’s evening market. However, this was at a time when there was a limited selection of beer at the Manitoba Liquor Control Commission (MLCC), and it became clear to the brothers that if they wanted to be successful in the pub market, they would need to offer a more diverse selection than simply domestic brands.
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Photography: khammy photographY
By Rebeca Kuropatwa
September 2013
business
The brothers began by ordering every kind of beer the MLCC had listed in its stores. Then they honed in on what the MLCC selection was lacking, focusing on the many beers that MLCC didn’t carry. The Warwaruks started special ordering beer from the Yukon, Victoria, the East Coast, and small U.S. craft breweries. Since opening Luxalune, the brothers have gone from offering 50 kinds of beer to boasting Manitoba’s largest selection of beers — over 170 — most of them by the bottle or by the can. In hindsight, now, the next step seems almost inevitable. Having come to know the beer market so well, the brothers’ wheels began to turn again, this time with the concept of creating their own craft beer, for which they would grow their own ingredients and thereby not only tap into the local food and the specialty beer trends, but also breathe life into their dream of someday buying back the home farm. Thus the origin of Farm Estate Brewery. Chris and Lawrence started the brewery two years ago, and since then have eliminated 99 per cent of all the domestic brands and even some of the well-known import brands from Luxalune. Of the $320 million of beer sold in Manitoba in 2012, less than 10 per cent was craft beer (and an even a smaller percentage of that is craft beers from within Manitoba). Market experts believe there is huge potential for growth in this industry, yet most Manitobans still drink domestic beer. “We want to support the craft beer industry — we don’t see it as a competition,” says Chris. “Although the craft beer industry is growing quickly, it’s still very small on the grand scheme of beer sales in Canada.” Historically, this has been the case in most U.S. states and Canadian provinces, but there are signs of change. Today, in the Yukon, craft brewers command a 35 per cent market share. In other growing markets, consumers have begun supporting the craft beer industry too. This was enough proof for the Warwaruks to expand their beer market here, and now they plan to expand Luxalune into a second or third location before competitors open up their own copies. It hasn’t all been easy, including dealing with the regulatory environment. When the Warwaruks first opened Luxalune, the MLCC didn’t allow businesspeople to have more than one liquor licence. “Because we already had the lounge licence, the MLCC wouldn’t let us also have a manufacturing licence,” Chris recalls. Subsequent changes to provincial liquor laws, however, now allow businesses like theirs to hold two licences — one for manufacturing and a second making it possible for one location to supply another location with its product. “This wasn’t allowed in the past, because post-prohibition, they were scared that big, domestic companies would buy hotels and chain stores, and have their own beer exclusive for their patrons — having a monopoly on beer,” Chris explains. “The irony is today these big, domestic brands don’t own restaurants or hotels, but they do have a monopoly on those licensees. So, the laws were changed to spur growth.” The Warwaruks took a leap of faith, going after the consumer who appreciates beer and who probably travels — thus Continued on page 14 September 2013
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business
Continued from page 13 having some familiarity with non-domestic, unique beers — and that market segmentation is paying off in spades. Now the Warwaruks have customers requesting craft beers. “There’s a demographic of customers wanting to be exposed to something a little bit more premium and unique, and who are willing to pay for it,” says Chris. “Although there’s definitely a higher cost for it, it’s really the consumer who’s driving the change,” Chris continues. “We were lucky enough to be in the neighbourhood while also successful with our previous restaurant — with a strong customer base wanting to experiment.” But this success story began at a very low point for the Warwaruk family, dating back to the early 1980s, when their dad owned the family’s mixed farm and went broke. “He hung on to the farmland and homestead by his fingernails for 20 years,” says Chris. The brothers watched their dad struggle, no different than many farms in Western Canada that saw their own ups and downs. In 1997, they actually lost the farm when the bank took it from them. At the time, Eugene and Eric had just begun going to university on student loans. “In the fall of 1997, the bank gave us walking papers, saying we had two weeks to vacate the property,” Chris remembers. Lawrence and Chris moved into the city, broke, and into the one-bedroom apartment that their two younger brothers were already renting with student loans while going to school. Eugene and Eric slept on two single beds in the bedroom, while Chris and Lawrence shared the living room couch. “Lawrence would take off the cushions for me to sleep on, on the floor, and he would sleep on the couch,” says Chris. “That was our first six months living in Winnipeg.” Lawrence saw an ad in the newspaper for a restaurant for sale on Osborne Street. The brothers already had some experience, having worked in the summer selling fries at a concession stand. Lawrence called the owner of the restaurant and asked him to show them around. The restaurant was fully furnished, but had gone broke three times in two years. The brothers levelled with the owner, telling him they had no money to pay him for it, but that once they got it off the ground, they would pay him, and until then, they would pay rent. The owner said, “With four brothers working together, you can’t go wrong.” The Warwaruk brothers opened Lux Sole on Osborne Street in 1999, and started, wherever possible, to buy beef, bison, and pork directly from the farmer, understanding people wanted local product. With their customers getting used to their locally sourced, quality products, it became a natural 14 country-guide.ca
course for the Warwaruks to branch out into beer — offering something different and high quality that improves the customer experience. After about the first six months of operation, Marion Warhoff, from the Winnipeg Free Press, reviewed the restaurant, giving it a four-star review. Since starting up that restaurant, Eric and Eugene moved on — one going into film studies and the other into law. Meanwhile, Chris and Lawrence made a living with the restaurant. In their second year, with the equity they built up from the restaurant, they convinced a bank to lend them the money to buy their original family farm back from the bank. Over the years, Chris says, “We farmed to the best of our ability, but it still never made money. It was always money from the restaurant being sunk into the farm.” Like a light bulb switching on, Lawrence and Chris came up with the idea of going back to the farm to grow the barley, wheat, and hops and create what they believe was North America’s first estate brewery. For the last three years, they have been growing barley and experimenting with hops. “We’re growing five different varieties of hops to see how they contribute differently to the beer, and if they can be grown sustainably in Manitoba,” says Chris. Lawrence and Chris bought some familiar and affordable used farm equipment — a smaller 1972 combine and some old tractors — and, together, they work the 160-acre farm, about 60 of which is bush. “Being in the city, it was such a joy for us to go back to the farm, to the fresh air of rural Manitoba,” says Chris. “We didn’t leave the farm because we wanted to. We were forced to. “Our dad couldn’t afford to keep the farm, but it wasn’t his fault. You can blame commodity prices, the weather, or farming smarts, but really it was just being in the wrong place at the wrong time.” Chris is a strong believer that it’s important to learn how the farm that had been sustainable for generations had lost that sustainability. “Farmers started growing grain for the wholesale market and shipping it out of country, rather than adding value to it,” he now says. “There’s no food processing on the Canadian Prairies, and that’s unique. “We just need to think outside the box. Instead of us farmers trying to buy and farm 1,000 acres of barley, only to ship that barley elsewhere to be produced, and then consumers paying millions of dollars for the beer, why not just do it all here with as little as 100 acres of barley?” The Warwaruk brothers believe they are on stride to make farming make sense again. And while they don’t have a chip on their shoulder, it’s undeniable that they also want to prove to the bankers that they didn’t lose the farm because they were bad farmers. “The future is us, having tourists come here to September 2013
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It’s an exciting industry, says Chris. “If we’re successful, there will be many more cropping up after us September 2013
our farm estates to tour the estates and taste the beer, just like they’ve done (with the wine industry) in Kelowna,” says Chris. The craft beer industry is undergoing an evolution, with increasing consumer demand. “We’re filling a niche that’s there already,” said Chris. “These are very exciting times in Manitoba.” Producing their own ingredients and offering ingredients to other breweries, the Warwaruk brothers are able to market their beer as a premium beer, a success that is filtering down to the rural community because it is sustainable. “If we’re successful, there will be many more cropping up after us,” says Chris. Expanding and implementing the business has come with some surprises. “Some things we thought would be easy ended up being hard and vice versa,” said Chris. The brothers’ main focus now is on getting their beer into the marketplace through the MLCC store chains and distributing it through hotel venues and licensees. “We’re already in every MLCC, province-wide, and in almost 300 locations of beer vendors and restaurants,” said Chris, noting they are receiving requests for their craft beer from Calgary, Saskatchewan, and Edmonton. “Even though we don’t have the brewery up and running yet, we’re focusing on finalizing the recipe, getting it cold brewed (right now with a company in Muskoka, Ont.), and then finishing the financing with the banks to build the brewery and facilities.” The Warwaruks plan on doing everything possible to be sustainable on their farm, but even if they have to buy more barley from their neighbour, that is good too, as it adds to the neighbour’s sustainability. Meanwhile, family continues to focus on the value of being a family. After all, it’s that family approach that enabled them to tap into the beer opportunity. Lawrence and wife, Erin, have three small kids and Chris and wife, Lisa, have two, all close in age. “The cousins play together as often as they can now that Lawrence and family have moved out to the farm,” says Chris. “We’re thankful to have taken this road together, working through the tough times and enjoying the good times.” CG country-guide.ca 15
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There’s work to be done Is it really farmers’ fault that Canada is short 30,000 farm employees? ette Jean Crews noticed a lack of farm labour while still a neophyte member of the Ontario Federation of Agriculture, a group she’d eventually lead. “At that time our farm had sufficient full-time help, but over the years, that even changed for us,” Crews says. “Economics of the 1980s prevented us from paying appropriate wages. Existing workers aged. They retired.” Since then, the shortfalls have grown worse. The need now is for 30,000 extra employees, in jobs all the way from picking seasonal fruit to operating and maintaining farm machinery. And, says Mark Wales, current federation president, “That shortage is only going to get greater in the future.” It’s a stubborn problem, no matter where you look. Bill Brown, an agribusiness management professor at the University of Saskatchewan, says labour is by far the scarcest resource in Western Canada’s ag industry. Farm economics have forced farms to evolve away from mixed farms. It means there are more acres needing seasonal harvest help, but fewer farms that have enough livestock to offer employment through the winter. Independent consultant Terry Betker, president and CEO of Backswath Management in Manitoba, is finding more farmers are pencilling out the cost of trying to keep someone employed year round. Levi Wood, who farms with his father on a fifth-generation farm at Pense, Sask. is one such farmer. “We made the decision to keep more people through the winter when there’s a lot less to do, just so we can maintain our workforce and skill set and we’re not continually hiring people,” Wood says. “There are some costs associated with that, but also the benefit of having experienced people who can do the job when you need it.” Other farmers diversify by taking on another enterprise in order to create year-round work. But that can backfire, taking the farmer’s eye off the main enterprise, Betker says. Besides, seasonality isn’t the only chal16 country-guide.ca
By Richard Kamchen
lenge. Wages are another. In Saskatchewan, for example, farm wages might have advanced to $20 to $25 an hour, but a worker can travel a couple hundred miles northwest and get $35 an hour on an earth mover, or go a bit farther north and haul in $45 per hour in the tarsands. To make up that shortfall, farmers bring in offshore labourers, either through the Seasonal Agricultural Worker Program or the Temporary Foreign Worker Program. Wood’s proximity to Regina has given him access to a larger pool of labour than many others, but even he has had to fill spots on his farms with foreign workers. The shortages could be a detriment to expansion in some cases, he says.
All across the country, labour is rapidly emerging as the biggest threat to farm growth “Labour is probably one of the single biggest issues these days,” Wood says. “People make decisions based on not necessarily whether they can capitalize it — which oftentimes they can — it’s about can they get the people to operate, and can they do it profitably.” Among the ways to compete with higher wages is to offer free housing, which can be particularly appealing to potential employees if it’s close to home, versus expensive rents in isolated areas. “For some of our employees, we’ve had bonus plans, a share in the business, and comprehensive medical/dental benefits,” says Wood. “That stuff was pretty rare 10 years ago.” Another challenge is finding workers with the necessary skill set to competently operate machinery that’s becoming evermore advanced. But Betker suspects that the shortage may not be so problematic in
certain cases: “They’re (farmers) quite prepared to invest in the people and provide them with the training that they need.” “On our farm, it’s a lot of hands-on training and working with people,” agrees Wood. “We try to hire a little bit based on personality, and what I look to do is try to train them into operating some of our more sophisticated equipment.” Wales says opportunities for advancement exist for those who choose to go work on a farm. A farmer close to retirement wanting to give young people a chance could take them on in a managerial role at first, and then they decide how to ease them deeper into the operation if they don’t have kids of their own who want to take over the farm. “With the average age of farmers being 58, if there’s no next generation to come along within that family, there’s an opportunity for younger people to be taken on, as a manager, and work their way to ownership,” says Wales. “Those kinds of opportunities are going to become more frequent, because with the cost of land and the capital cost, just going out and buying a farm and starting is going to be more difficult.” Betker, who works with farmers in Manitoba, Saskatchewan and Alberta, says awareness about the importance of managing human resources is different now than it was 10 or 15 years ago. The farm operators he sees best able to attract and retain employees do a better job of focusing on the HR of their business. So, whether or not it’s farmers’ fault that there’s such a large labour shortage, it looks like farmers are the ones who will have to fix it. Heather Watson, executive director of Farm Management Canada (FMC), encourages farmers to adopt human resource practices and recognize the importance of that aspect of farming. She says HR tools actually do work in farm contexts. “HR continues to be potentially the biggest issue on farms, and yet it easily becomes the lowest priority,” Watson says. “There’s a lot of work we can do here — a lot of opportunity.” CG September 2013
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Did you get yours? With the bears circling, the burning question is, how good has your marketing strategy been over the last three years? By Maggie Van Camp, CG Associate Editor
The three-year weekly charts tell an amazing tale of crop prosperity. Up, up, up our prices went in 2011. Then, yes, they eased back going into the 2012 cropping season, only to get pushed to unbelievable heights by last year’s U.S. drought. In areas not hit by bad weather, farmers shook their heads, smiled quietly and took the cheques to the bank. The bull was so overpowering that virtually every farmer who had any crop to sell was feeling good, and making plans to reinvest the profits to make their farms’ productivity. But how many billions did we leave on the table? Or did we scoop up all that was to be had? More to the point, if we’re heading into leaner times, are you as an individual farmer emerging from the bull market with similar resources to your neighbours? Or did they market their crops better, and are they stronger today because of it? We’re always tempted to think our neighbours didn’t make the same mistakes we did. But did they actually do better? Whatever way you cut it, crop incomes have been unprecedented. Farm cash receipts for the first quarter of 2013 were up 7.5 per cent from the same period in 2012, and crop receipts led the way with a rise of over $1 billion in the last quarter of 2012 and the first of 2013. Even the toughest, most careful marketers are excited. But more and more of us are also a little fearful, wondering whether we are better poised for future success. Have these spikes and this incredible volatility really changed how we market for the better?
Statistics Canada Farm Cash Receipts (x1000) Type of cash receipts
2012
2013
Q1
Q2
Q3
Q4
Q1
Total farm cash receipts
14,338,686
11,725,823
12,822,302
14,801,535
15,412,023
Total crops receipts
8,044,920
6,010,417
7,037,058
8,169,577
9,109,441
We asked traders and market advisers Morley Wittman of Trumax, Paul Cassidy of Mitcon and Frank Backx of Hensall District Cooperative to weigh in with how well farmers have done on this rollercoaster ride, and whether they believe the high prices have changed the emotions of marketing. They rated farmers’ skills from 1 to 5, with 1 being the worst and 5 being a market genius. Of course, every farmer and every farm is different. So keep that in mind, and then read what our experts say. Continued on page 18 September 2013
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Continued from page 17
“ More disciplined” 3+ out of 5 Paul Cassidy Mitcon, Lethbridge, Alta.
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o one deserves a 5 from recent markets, believes Paul Cassidy, seasoned grain trader, adviser and marketing instructor in Alberta. That’s true whether you’re talking about grain producers or market advisers. We were all in uncharted territory, and no one made the right call all the time. Even so, Cassidy is convinced that farmers overall did a good job in volatile markets, and they have emerged with marketing skills that are better than ever. Cassidy gives the majority of farmers a better than passing grade over the past three years. He’s impressed with how most farmers have stepped up to the marketing plate and at how they’re doing a better job more often. Under huge market volatility and large production risk issues (too wet in Manitoba and eastern Saskatchewan, and the U.S. drought-driven rally of this past year) farmers have become more disciplined, he says, and they have a greater understanding of how to hedge and sell direct. Cassidy has traded grain and byproducts for decades, and trained and helped farmers market commodities, and he knows that every year brings different challenges. Still, being armed with proper cost-of-production numbers and with astute analyses of market fundamentals, the job becomes a whole lot easier. That kind of preparation allows farmers to manage risk and produce a marketing plan that aligns with their needs. “Many producers have become more disciplined in their marketing,” says Cassidy. Cassidy finds farmers are much better at making and sticking to a marketing plan. “Many still do not have a marketing plan, but do have target objectives that are realistic within the context of the market, and they’re disciplined enough to pull the trigger when realized,” Cassidy says. “These farmers take advantage of target price contracts offered by the grain companies.” They’ve also become better at using the cash contracts offered by grain companies, in particular their target price and minimum price contracts, Cassidy says. The companies have trained farmers to take advantage of spot delivery specials when they have needed extra grain to top off a unit train. Producers are quick to reply with sales. 18 country-guide.ca
The changes to the CWB have forced many to rework their marketing strategies, and overall they’ve fared well in marketing wheat under the open system. “Record 2012 spring wheat values to the farmer due to U.S. drought implications provided a dramatic introduction to the free market,” says Cassidy. Wheat protein levels were high, and due to broad availability of that high protein, premiums were non-existent. “Last year’s wheat crop was the highest in overall quality I’ve experienced in my 35 years of trading grain in Western Canada,” Cassidy says. In other words, there wasn’t a lot to be gained by aggressively marketing quality. In other years, the farm-to-farm spread may therefore have been greater, and in another year, protein may need to be a larger factor in marketing plans. As well, last summer’s drought rally made many farmers hesitant to be aggressive with forward selling this coming wheat crop. “I think the disappointing yields with canola overall and the lateness to this year’s (wheat) crop had more to do with that,” says Cassidy. The funds tend to push markets around at times despite fundamentals, and the large margin call risk is very unappealing to farmers and other small hedgers in all the commodities. “Futures in general are less attractive to most producers, especially in light of the huge volatility,” Cassidy says. Alternatively, producers have turned to forward pricing contracts or deferred delivery and options to manage price risk. Also, some companies have offered minimum price contract specials. They were well used by many, says Cassidy, and they worked. Many have also taken advantage of the good forward prices despite the large inverses, he says. However, Cassidy finds that both course participants and his own risk management clientele will use call and put options to hedge market risk. “Using puts to price protect without having to commit to delivery of product is a good production risk tool,” Cassidy says. “Use calls as a cash replacement or to create a minimum price contract when shared with a DDC where situations warranted.” September 2013
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The better returns from wheat have shifted crop plans away from producing barley, especially malt. As a result, the farms best suited to producing malt barley seem to be the ones left in this market, creating a core group of specialized malt barley growers. Last year, despite the odd dry-weather situation of protein being too high, the remaining malt barley growers were able to market their production. The maltsters have also shown a willingness to work with producers where possible, Cassidy says. During the past three years when commodity prices have been generally above cost of production, it has been relatively easy to link COP to gross earnings but some areas with weather challenges had COPs relatively higher than average. Although many more farmers have learned to link input costs to market prices, some farmers have gotten stuck in the watch-and-hold mode, waiting for grain and oilseed prices to go higher without taking advantage of capturing returns over their COP along the way. Others will take it to an extreme, holding out for the peak, and Cassidy says that’s usually to their detriment, as prices eventually fall or the crop deteriorates. “That’s just taking on too much risk.” Both cash and paper sales have been effective over the past three years, as long as a dose of discipline was included. “Combining the two (cash, paper and cash plus paper) has been the most effective but requires a bit more management time,” says Cassidy. Instead, more farmers are pre-booking contracts to counter the volatility of the markets. One of the pitfalls of this marketing tool is that farmers do not necessarily have to be cognizant of their production risk, warns Cassidy. The more aggressive marketers at pre-booking use crop insurance and options to offset the more aggressive forward sales. Also, many farmers have hired the help of market and risk management coaches, like Cassidy. “It’s all about operating within the individual’s comfort zone,” Cassidy says. September 2013
“ More watch the global weather patterns” 3 out of 5 Frank Backx Hensall District Cooperative
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ast summer’s extreme weather and market reaction has created a lot of interest in the markets, says Frank Backx, assistant marketing manager at Hensall District Cooperative in southwestern Ontario. “There were good opportunities in the market, and most people took advantage of them to a certain extent.” The higher harvest prices last year have also depressed the desire to pre-sell this year’s crop. More farmers are shy to presell, including the most connected, market-savvy producers. Last year about half of Backx’s customers had sold varying amounts of crop before harvest. This year only about a third have sold ahead. “It’s made farmers a little more wary and that’s why the forward booking is down substantially,” says Backx. Also, factoring in is the large discount for new crop. “Farmers got shown $8 corn and all of a sudden $5 wasn’t looking so great. But now that new-crop corn is at $4.40 bushel, $5 corn looks pretty good,” says Backx. Pre-booking contracts left a bad taste last year and many farmers have backed away from pre-booking. A lot of people locked in at what seemed a decent price, but then they missed the market peak at harvest. In fact, in the last two years, wheat made its peak right when Ontario farmers were combining. This of course was after the 2012 early-spring predictions that corn would be going back down to $3 to $4 per bushel. Then the 2012 drought hit and corn went to $8.75. However, a lot of corn was sold in the $5-per-bushel range with most producers moving at least a portion of their crop in that neighbourhood, says Backx. At the time, it was prudent to take some risk off the table. “A lot of farmers think that all their neighbours sold all their corn at $7 but, that’s not close to the truth,” says Backx. “At $5 to $5.50 we bought a lot of corn before the drought really took hold.” As a result of this weather market, more farmers watch the global weather patterns more closely, especially in the Midwest. With the Internet and social networks, it’s information that’s accessible to everyone and after last year farmers now realize the significant impact it can have on the market. “The markets are as variable as the weather,” says Backx. More farmers are incrementally selling, with cash sales and forward booking. “Most farmers know that we’ve been through a lot of good times the last five or six years and maybe those high prices are not totally sustainable.” Continued on page 20 country-guide.ca 19
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Continued from page 19 Few or no options are being purchased, as their premiums have escalated with the market variability. The spread was just too great to cover the extra premiums. The market would have had to move $1 to $1.50 per bushel within three months or they were going to lose their money, says Backx. “For most farm marketing plans, options have not been a good fit.” Backx hasn’t found that many of his customers link inputs to market pricing. It used to be that nitrogen was based on natural gas but since 2008, nitrogen is based on grain prices, corn in particular. It’s more common for farmers to forward buy inputs to avoid paying income taxes and do it year after year regardless, says Backx. Some of his livestock-farming clients, who also grow some crops, will sell a load of soybeans and at the same time buy soybean meal. Most are using only cash sales and cash purchase, not options. The funds have been liquidating out of the agricultural commodity markets since last year’s August and September peak. Those funds are now short corn and wheat 35,000 contracts each and they rarely go short on corn. He feels that might be positive for corn prices going ahead. “They (funds) usually don’t stay short very long,” says Backx. With this factor looming behind the scenes and an ambitious USDA production estimate, Backx feels there could be some upward movement again this year, so he’s keeping a close eye on Iowa where the corn crop has struggled. “I’m the only bull around,” he admits. In Ontario, the current soybean/corn ratio is 2.95:1. Ratios above 2.5:1 tend to favour more soybeans the next year, says Backx. Backx is also seeing a trend toward larger farmers growing Identity-Preserved soybeans (Hensall deals with speciality beans). With a $2.50-per-bushel premium, clean fields and stronger varieties, IP beans are getting a second look. Last year Hensall didn’t get enough acres to cover the demand for IP soybeans. 20 country-guide.ca
“ Forward pricing more popular” 3-3.5 out of 5 Morley Wittman Trumax Commodities Ltd.
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orley Wittman has been helping farmers in Saskatchewan and Alberta with crop marketing and business planning since 2001. “Our experience has shown a dramatic change in how farm managers operate compared to five, 10 or even three years ago,” Wittman says. “Farms are treated more as a business now and less as a career.” In particular, he has seen a significant improvement in their marketing skills over the last three years. Farm managers are devoting more time to marketing. They’re beginning to understand what markets are available, what factors influence their prices and how to react to those factors such as supply/demand, government policies, weather, currency exchange rates, and investor money flow. Farm managers should be adjusting their marketing plan continually, says Wittman. Outside factors are always changing and this has created an environment where incremental selling has become the norm as it can limit exposure to large price variances over a marketing year. With that being said, he has previously recommended selling 100 per cent of a crop at one time. Wittman finds most farm managers understand the local markets but many need assistance with monitoring and evaluating outside influences and what they can mean to their profitability. “Each farm is unique in its ability to develop and implement a marketing plan suited for their operation,” he says. In general, he says farmers have faired well in marketing under the open-market system. Often crop is priced with immediate delivery. However, the introduction of the open-market system in Western Canada has allowed farm managers to book more crops with deferred premiums, says Wittman. Wittman has also been training his clients to understand how futures and basis levels can be used to capture premiums over flat prices. “Many farmers in the Canadian Prairies hear the term futures, basis or options and don’t realize they’ve been booking these for years. What is important to most is what is their net price today,” he says. Wittman says that at least 95 per cent of grain farmers in Western Canada do not use options to price their production. Reasons for not using them vary but the most common is not understanding how they work. He teaches classes explaining how options work and their role in a marketing plan and follows up with those who attended. Nearly all have not contacted a broker to set up an account to trade options. Their reasons are that it takes too much time to monitor these pricing options. Although comparatively low in number, more paper sales are occurring today than three years ago due to a better understanding of marketing choices. Some global crop prospects are better September 2013
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Marketing courses Getting comfortable with the complexities of commodity marketing means more than simply listening to market outlooks. Proactively learning how to use the tools and set a marketing plan will give you more options for pricing out production. Although many courses aren’t set in stone yet, each province’s Ministry of Agriculture and producer associations usually offer educational opportunities in the fall and winter. More information will be available on their websites after harvest. Also, Growing Forward 2 has funding for training and many of these courses will be listed on the Canadian Agriculture Human Resources Council’s website at www.agritalent.com. As of August, there was already a strong lineup of commodity marketing courses offered across the country. Some cover the basics, others use computer simulations and there are some courses covering more complicated marketing tools.
known ahead of our seeding while others are not. Some cash sales have performed better than paper sales but some paper sales have performed better than cash sales. “Each commodity market should be looked at independently and incorporated into the farm’s cash flow plans,” says Wittman. He has noticed that forward pricing has become more popular as prices climbed. He chalks this up to a burgeoning understanding that pricing crops is about more than absolute price. Farmers are considering price, profitability and risk when marketing, and forward pricing can address all three of those components. Commodity prices at last year’s harvest were historic but many increased during the year due to factors unique to the commodity type. This trend can fool many into believing prices will remain high. The USDA, Statistics Canada and many private-sector forecasts suggest prices for most crops should be below last year’s prices, but will remain above the 10-year average. In reality, you must continually monitor factors that affect each commodity price, says Wittman. “We believe there is pent-up selling pressure for most commodities as many farm managers do not like to price crops before they are in the bin,” he says. “This is a personal risk preference and must be adjusted for when developing an individual marketing plan.” CG September 2013
Fundamentals and Mastering FCC is offering free learning events throughout the fall and winter, including the following seminars on commodity marketing planned for later this year. For more information and to register go to www.fcc.ca/ learning. The Fundamentals of Commodity Marketing is on December 10 in Wadena, Sask., January 10 in Lethbridge and on January 14 in Listowel, Ont. How to Master Commodity Marketing is on November 27 in Carman, Manitoba, December 12 in Saskatoon and on January 15 in Chatham, Ont. Introduction to Futures and Options Larry Martin and Heather Broughton have formed Agri-Food Management Excellence. Basically they’ve taken the education portion of George Morris Centre and created a new company to run the CTEAM and other educational courses. The Agri-Food Management Excellence’s Introduction to Futures and Options course will be November 12 to 14, 2013 in Red Deer, Alberta and in Guelph, Ontario from January 28 to 30, 2014. The brochure for this course and online registration is available at www.agrifoodtraining.com. In Alberta... Keep an eye out for some marketing courses that will be scheduled and sponsored by the Alberta Canola Producers Commission. Lee Melvill, farm marketing adviser from MNP is planning to teach two six-day courses with the likely locations at Strathmore and Medicine Hat. One will likely start in mid-November and the other will likely start in mid- or late January. Option Hedging and More RBC Dominion Securities will be hosting courses on a weekly basis for this coming fall, winter and spring. Topics covered include (but are not limited too) why marketing matters, advanced option hedging, options selling, feed hedging, currency hedging, and how to use gross feed margins. Workshops will be in Waterloo and more information about them can be found on their website at www.kevinsimpson.ca.
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Here with Doran, eight, and Emma, 11, Tina and Shawn Shultz are consistently building markets that add value to the farm.
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Growing different Their shrewd diversification strategy helps Alberta’s Shultz family steadily climb the value ladder
Photography: erin falk photography
By Maggie Van Camp, CG Associate Editor
he Rocky Mountains are in the distance, majestic and silent, tumbling across the western horizon in true Alberta fashion. Yet the contrast with the farmyard is intense, with everything churning in a constant stream of activity. Here the air seeder is pulled out, and over there, cattle noisily wait sorting in holding pens. Dusty pickup trucks jostle for spots along the lane, sparks fly in the shop, and even the children get caught up in the sense of perpetual motion, propping their bikes and running into the house. We’re just off the Red Deer corridor north of Calgary, in the midst of cattle and crops and mixed-farming country. Not far from the highway, the Shultzes’ farm at Didsbury is a multi-generational, multi-enterprise operation with 350 beef cows, 2,500 acres of canola, wheat, peas, barley and hay and about the same again in custom work. The Shultzes also produce and sell horse hay, and have recently ventured into the seed business. Although Canada’s farms are bigger and more specialized than ever, they are still amazingly diversified, especially in some sectors. Farm Credit Corporation estimates over half of its customers have a secondary enterprise, including 77 per cent of their dairy customers, 65 per cent of grain and oilseed farmers and 50 per cent of beef farmers.
In FCC’s 2011 national vision panel survey, 58 per cent of farmers said they plan to expand or diversify their operations within the next five years. That’s actually up about five per cent from three years ago, and includes 31 per cent of farmers who say diversification is on their agenda. Traditionally, diversification has been used as a risk management tool. If one enterprise didn’t do well, the farm had other enterprises on which to rely. Returns were generally not as high as with specialization, but year-to-year variability was less. However, sometimes the cost savings with economies of scale more than offset the benefits of diversification. Successful business isn’t always about growing larger and faster. It’s about timing market opportunities and making the most of your assets and people. For younger farmers like Shawn and Tina Shultz, expanding by diversification allows them to leverage their incredible determination, energy and marketing skills, plus their ability to learn and change quickly. “If you don’t stay proactive, you don’t grow and soon you’re falling behind,” says 38-year-old Shawn. Along with his parents, Louis and Shirley, the Shultzes have created offshoots from their commercial crop and beef production. By adding enterprises that complement the core business, diversification is less risky.
Continued on page 24 September 2013
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Continued from page 23 The Shultzes start small and focus on improving quality first, and then expand quantities. After years of successful production, they move up the value chain, all the time hiring quality staff, acquiring land and livestock, and carefully adding to their equipment line with lower-priced used pieces. However, the opportunities don’t drop out of the sky. Shawn does research — lots of research — and he is dedicated to it. In the winter, he spends about four hours a day researching markets, potential sales, and looking for opportunities. He also asks questions, lots of questions. Shawn takes marketing courses, and he communicates with his banker monthly. “I try to pull information from other people — people who are smarter than I am,” he says. He also hires an arm’s length farm financial expert to annually analyze their position and isolate weaknesses and strengths. Shawn believes that success happens more often when the expansion is thoroughly planned and when there’s an over24 country-guide.ca
For Louis and Shawn, succession planning has helped the farm continue to grow all vision guiding the choices. The family also learned how important business planning and communication was during succession planning. Now they have a flexible five-year plan that focuses on paying down debt and being able to jump on opportunities that pop up. “Keep moving forward,” says Shawn. “But you gotta roll with it.” Fundamentally the Shultzes are just not afraid to try new things, but they also measure and monitor their progress, and keep an eye on enterprise analyses. “We have a no-regret policy,” says Tina. “This is our moral value, our code. If you make a mistake, you learn from the experience and move on.” For example, when the BSE crisis took the bottom line out of the auction sales, Shawn learned how to market directly to the feedlots. “BSE was a great learning curve for us,” he says. “It taught me how
to sell my cattle directly to the feedlots and get that extra $0.05.” But, warns Shawn, don’t get in too deep, too fast. He won’t let growth limit cash flow, or sell land to finance equipment. “Know you made a mistake and get out quickly,” he says. “Large mistakes can be crippling.” Managing the pace and scale of investments is key to the success, agrees John Anderson, an agribusiness consultant with Collins Barrow in Kingston, Ont. “Management diligence is needed to size the operation appropriate to core farm size, so you don’t put the core business at risk,” Anderson says. “Then make adjustments as needed.” Also, the investment needs to be timed according to market demands and cash flow, says Anderson. Continued on page 26 September 2013
Spotlight on Crop AdvAnCeS
Crop Advances is an annual report that summarizes applied research projects involving the OMAFRA Field Crop team, in partnership with commodity groups, industry and the OSCIA. www.ontariosoilcrop.org/en/resources/cropadvances.htm
Cover Crop optionS after winter wheat and into standing corn By Lilian Schaer
A two year research project underway in southwestern Ontario is evaluating various cover crops, including when and where to plant and how to manage them to achieve the best results. They’re being planted either after winter wheat harvest or into standing corn. “About five to 10 per cent of field crop growers use them on a regular basis, but there’s a lot of interest in the benefit they can provide,” says project lead Adam Hayes, Soil Management Specialist with the Ontario Ministry of Agriculture and Food (OMAF). “A cover crop can improve the soil, take up or provide nitrogen, help suppress weeds or reduce a nematode population. What you want it to do influences the crop you choose.” How is the research being conducted? Post-winter wheat harvest: two cover crop mixtures - TillageMax DoverTM (tillage radish and seed oats) and TillageMax DaytonaTM (tillage radish and crimson clover) – plus feed oats were seeded at seven sites in southwestern Ontario. Into standing grain: Four cover crops – common annual rye grass, Tillage RootMaxTM annual rye grass, feed oats and TillageMax DaytonaTM blend (Tillage radish and crimson clover) were hand seeded into standing grain corn at four sites from the last week of August to the middle of September. One plot was seeded after silage harvest. What has the project found to date? Cover crops were harvested in the third and fourth weeks of October last year, and again in November. Those planted post-wheat harvest produced significant growth, with the Dover mixture averaging 3,900 kg per hectare and the Daytona plus oats averaging
3,600 kg/hectare. The cover crops planted into standing corn grew sparsely with annual rye grass showing the best growth and establishment. Cover crops planted after corn silage had reasonable growth. “Seeding depth is one of the challenges with mixes. Planting at the correct depth is important to ensure the cover crop germinates rapidly or even germinates at all,” says Hayes. “In a few instances, cover crop seed was planted one inch or deeper, and although the oats emerged without difficulty, the tillage radish was delayed and often had a reduced stand.” Chatham-area beef farmer Mike Buis is a participant in the project and although he hasn’t had much success with cover crops in standing corn, he says there are a lot of options after winter wheat. On fields where he can’t graze his cattle, he prefers to use red clover, letting it grow to the top of the wheat stubble before cutting and baling it, and then spraying the regrowth just before freezing. “Red clover is one that works well year after year. Even after burning the clover off, it gives you good root mass and will hold the soil in place for the winter without a heavy mat lying on top,” he explains. In grazing fields, Buis avoids clover due to the risk of bloat in his cattle and uses an oats and rye combination instead. The seed is spread on the wheat stubble and disced in with a bit of manure, providing cattle feed for fall or winter and early spring. “If you use two to three crops in your mix, at least one will always do the job and survive,” he says, adding that he will be including radish in his mix this year to address some soil compaction issues. “If you mix radish with oats and rye and then put cattle out to graze, the radish will break up compaction
ontArio SoiL AnD Crop iMproveMent ASSoCiAtion
areas and the rye oats will give you fine roots and cover on top to keep the soil in place.” Buis has also been involved in the development of a cover crop selector tool with information specific to Ontario conditions, which can be accessed at http://bit.ly/foiG9Y. Where can I get more information? The project is being repeated again in 2013, but more information about results to date can be found in the Crop Advances section of the OSCIA website at http://bit.ly/1513N11. How was the research funded? Funding for this project was provided by the Ontario Soil and Crop Improvement Association regional partner grant in cooperation with the Ontario Ministry of Agriculture and Food and the Southwest Agricultural Conference grant. OSCIA assisted with communication of research results.
Adam’s cover crop tips • Prepare your cover crop plan and order seed early. • Decide what you want the cover crop to do and what crop diseases are present in your fields before you choose what to plant. • Consider how you will manage the crop after it’s done – whether frost will kill it off or whether some tillage or herbicide will be needed. • Make sure you plant your seeds at proper depths. If smaller seeds in your mixture are planted too deep, they won’t come up or may result in a thinner stand or delayed emergence.
Mission: Facilitate responsible economic management of soil, water, air and crops through development and communication of innovative farming practices
www.ontariosoilcrop.org/default.htm
business Continued from page 24 In 1993, Shawn bought his first quarter and started farming with his father, Louis. At the time, Louis operated a business in calgary, and kept 50 cows, and a 50-sow farrow-to-finish barn on 400 acres of cropland. Shawn took over managing the hog barn and was able to make his land payments with money he made from pigs. Seven years later, the barn was starting to wear, and it didn’t make sense to continue on with the pig operation so he sold them three years later. The barn was worn out and he didn’t want to take care of pigs anymore, and they were able to use the well-timed sale of assets to buy more land.
“I’ve always tried to put earned equity back into the farm, toward something that will pay, that has cash flow equity,” Shawn says. Now, Shawn tracks and maintains a strong current ratio (total current farm assets to total current liabilities ratio) of 75/30. When purchase opportunities come up, the family can jump at them. According to David Kohl, professor emeritus at Virginia Tech, and travelling farm economist, current ratio should be over one and good over 1.5. The Shultzes rent about a half of their pasture land and a third of their cropping acres. Last winter, they bought another half section but are waiting to replace or update equipment.
Summer finds Shawn in field or pasture. In winter, though, he devotes four hours a day to researching markets.
26 country-guide.ca
Right now everyone’s buying new machinery so there will still be a huge inventory of used equipment on the lots, especially when commodity prices go down, says Shawn. That’s when he’ll want to replace their equipment line. Five years ago, they made a major investment in equipment with a 55-foot air seeder, combine and trucks. This allowed them to move into the custom cropping business and improve their cash flow and risk position. “It’s straight cash, you can’t lose,” says Shawn. “There’s no risk.” They pool labour for each enterprise and try to match production cycles with seasonal workloads. One of the pitfalls of farm diversification is that it can stretch the human resources too far. To operate and fix their cropping equipment, they’ve hired young, skilled staff including a mechanic and welder. “Time management becomes huge,” says Shawn. “It helps that anything I can do, Dad can do.” The Shultzes’ overall strategy is to strive for quality first, then expand and and eventually become a supplier. For example, at first they were just growing hay for their own cattle and horses. Then they started selling to the export plant, and next they developed a horse hay business. Similarly, now they are producing and selling their own seed after years of improvements and proactively learning crop production methods. Quality can be improved by leveraging knowledge and with better equipment and technology, such as variable-rate technology and yield mapping. Then comes the paperwork to prove your quality and begin marketing. It’s true that the extra work of logistics, marketing, delivery, invoicing, really adds up, says Tina, who does the marketing for the farm and works part time at a local school. But they’ve found that quality sells, and it helps that they were both raised in the community. They telephone potential customers, fax and distribute flyers, and advertise in the local paper. Louis does the deliveries and is the farm’s best advocate. Tina created a website (http://www.lscattleco.com) for the farm. Over the years, the Shultzes have taught themselves how to market and leverage a reputation for quality. “Developing a market takes time and patience,” says Tina. “But once they’re your customer, farmers are loyal.” CG September 2013
CORN SEPTEMBER 2013
SET THE DIAL FOR 300 BUSHELS GERRY GREENFIELD
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N FIXATION GETS REAL IN CANADIAN CORN ARE SOIL TESTS KEEPING UP WITH YIELDS? SHAW SAYS: WATCH MARKET DEMAND NUMBERS
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Money from soil Soil test quandary Today’s split N The road to 300-bushel corn 14 Watch those demand numbers 16 Free nitrogen 19 Stopped at the border 22 #PestPatrol CORNGUIDE
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ALL EYES ON FUTURE As market analyst Philip Shaw writes on page 14, there’s no surprise that the bears are finding their way back to Chicago this fall. Also as he writes, however, the bull may be taking a breather, but it hasn’t given up. Corn is too valuable in today’s world. Will we test $8 again in 2013, or even in 2014? That’s impossible to say, but Shaw is confident — and we are too — that such prices will return at some point. With strong demand, and uncertain production, it’s hardly a wild hope. Prices, however, are only half the story. As production editor Ralph Pearce writes, corn yields have passed the merely unbelievable and now are on the verge of the truly astronomic. Is a yield of 300 bushels too big to chase? Not a chance. The hunt is on. Tom Button, CG Editor, tom.button@fbcpublishing.com
Cornguide
It makes sense to pay farmers to lock carbon in their soils. But getting there is going to take a leap By Ralph Pearce, CG Production Editor
Money from soil I f Don McCabe and others who share his vision have their way, the next specialized farm product for Ontario growers may be carbon, with farmers getting paid to sequester that increasingly valuable commodity in their soils. Late in 2012, McCabe was part of a special roundtable discussion organized and hosted by Gord Miller, the environmental commissioner of Ontario. The overall platform for the one-day forum was to explore the relationship between soil health, water pollution, the depletion of resources and the impacts of climate change. The meeting’s final report is a useful primer on why carbon is such a hot topic in political and scientific circles. Called Investing in Soils for a Sustainable Future, it’s available at www.eco.on.ca. The science is still incomplete. Some of the sessions attempted to link soil carbon to modern farming practices, partic-
”The public is ready,“says Gord Miller, Ontario environment commissioner. ”Show us that you‘re establishing long-term, high-quality farmland.”
ularly with respect to cover crops and longer rotations. The University of Guelph presentation highlighted the links between climate change, soil health and agricultural productivity, with carbon at the centre of all three, and one contributor argued that conservation tillage, although important for other agronomic reasons, does not sequester carbon. Other presentations made a case for establishing markets or financial vehicles for soil carbon sequestration as an incentive to farmers. Ian Campbell of Agriculture and Agri-Food Canada (AAFC) noted the variability in pricing for carbon, from a low of $7 per tonne in New Zealand to about $30 per tonne in British Columbia. There were also questions of how to establish a market or an incentive; is it through a cap-and-trade mechanism, or via offsets or some type of carbon or consumer tax?
Not a new issue From McCabe’s perspective, more needs to be done to entice farmers to be part of the solution, especially since it’s their land that is likely to become central to this process. During the roundtable discussion, he disagreed with the final report’s contention that conservation tillage does not sequester carbon, and he Continued on page 4
Corn Guide, September 2013
3
Continued from page 3
stated that “Ontario can either choose to lead or choose to delay another 10 years.” Farmers can sequester carbon, McCabe believes, but they require a market value and the right policies in place to succeed. Carbon sequestration has been a hot topic for the better part of a decade. Yet it isn’t an easy topic for farmers to grapple with. Farmers are used to pricing real, tangible commodities that you truck away from the farm, like corn or beef. So how do you build a market for something less tangible, like soil carbon? According to McCabe, it starts with recognizing a key fact. Some farm practices simply aren’t sustainable, especially practices that reduce soil health. “The biggest issue for our soils is the loss of organic matter, worldwide,” says McCabe, who farms near Inwood, Ont. and is also vice-president of the Ontario Federation of Agriculture. “If agriculture is to rebuild, retool or re-establish itself, it needs to have a much better understanding of what it’s doing to its own resources. The issue then is, how do I get organic matter back into these soils to build soil health, to build soil resiliency, and to build a stronger resource for the future?” Good news comes on two fronts. First, there’s a growing interest in the relatively new bioeconomy. Sarnia, Ont., once known as the Petro-chemical Valley, is now attracting investment as the Biochemical Valley. There’s growing interest in plant-based plastics, composites and resins. Second, there’s a shift in demographics, says McCabe. Younger farmers are coming to the industry, and by and large, they are more technologically savvy than their parents and grandparents. “But it still means we need to look at farming in much more of a systems approach,” McCabe says. “The issue is one of ensuring that the soil surface is never left bare. It should always be growing something.” That also coincides with a renewed interest in cover crops, which was already occurring prior to the drought of 2012 but was certainly bolstered following that event. Yet cover crops are still just one element of an overall carbon plan. And while “doing what’s right” is a nice inducement, as McCabe is quick to note, a market means more. “The world is now in a global race for where to locate things (such as bio-based refining and processing plants), and we 4
“There‘s no way I want issues such as sustainability to be determined by the government,” McCabe says. “Nobody understands your farm like you do.” have to be able to illustrate that we are in the best position to be able to do this,” McCabe says, adding that the best way to drive farmers to a cause is to show there’s a market opportunity. A government program may not even be necessary. “There’s no way that I want issues such as sustainability to be determined by the government. Nobody understands your farm like you do, and nobody else in this province farms exactly like anybody else does. And that’s because everybody who’s out there knows their farms, knows what their current actions are and what their abilities are to maximize their own opportunities.” It may seem a tall order to ask governments to fund the creation of a carbon sequestration model and then stand aside while the market takes shape. But essentially, that’s what McCabe is advocating. “You have to start somewhere, and the voluntary markets that were sought have helped influence the other things we’re doing now,” says McCabe, referring to the eventual failure of those platforms. “What happened to the voluntary market in Chicago (which was linked through the CBOT) and what happened to the voluntary market in Europe will have an influence.” Farming is 10 per cent of the problem, McCabe says But it’s also 20 per cent of the solution. That means Canada can emerge a carbon winner as a direct result of having one of the most inexpensive and productive food systems in the world. No question of popularity To Gord Miller, the environmental commissioner of Ontario, the time is right for agriculture to act on what has already been taking shape on several fronts, and take advantage of a societal desire for clean air, clean water and more productive farmland. One barrier, however, is agriculture’s current focus on commodity-based production. Most of the cropland in Ontario is dedicated to corn, soybeans, wheat and forages, states Miller, and in that environment, government support is likely necessary. Miller points out that there are two dis-
tinct paradigms in agriculture today: There’s the true “Steward of the Land,” a grower who’s not only focused on the financial aspect of producing food, fibre and fuel but on soil health and diversity. They are also concerned with public perception that they are doing what’s right to and for the land. Then there are the large-scale land buyers, some of whom are farmers but some of whom are developers. “There’s a whole school of thought out there that sees the land as only their private property and they’ll maximize the return and do what they want to do to it,” says Miller. “Show us that you’re establishing long-term, high-quality farmland with good organic matter, and in exchange for that, we’ll make sure that you’re compensated for that.” As for concerns from the farmer’s side that there’s an urgency to develop a framework against the spectre of some government authority that will otherwise impose its own standards, Miller isn’t convinced of that, either. He’d like to see farming take that “first step,” but the end product will be a new market opportunity. “In the end, there’s going to be a carbon market, so you have to work with everybody else, you have to work within the terms of the market that’s been laid out,” Miller says, pointing to similar conditions taking shape in Europe and Australia. Miller also echoes McCabe’s statement from the roundtable, that Ontario can be welcomed as a leader in the development of a carbon market. Despite the establishment of a voluntary market, the U.S. and its anti-climate change political structure is effectively spinning its collective wheels on establishing any form of incentive for improving carbon soil levels, be it through cap-and-trade or a carbon tax. “It’s wide open,” says Miller. “We can bring to market a salable carbon sequestration product, if we define it properly and stand by it and put in the necessary testing, and we can do that and we can compete with that, because nobody else has done that in our portion of the world.” Says Miller, “The public is ready to support such things.” CG Corn Guide, September 2013
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Cornguide
Soil test quandary Have soil test standards dropped too far behind today’s yields? By Ralph Pearce, CG Production Editor
I
n the face of increasing yields, particularly in corn, there’s growing debate about soil test standards across Canada. The question continues to pop up at trade shows, conferences, annual meetings and breakfast gatherings. Are our soil test recommendations too old, given today’s yield expectations? The question often gets asked in the hopes of receiving a simple answer. But just like finding the balance between soil health and high yields, there’s nothing simple about this subject. Nor does this surprise anyone with a farm background. Ask 100 different growers, researchers, advisers or extension personnel and you’re likely to hear 100 different responses. Some of the complications depend on cropping practices, some hinge on whether there’s a livestock operation involved and others turn on rotations, tillage or weather. Still, more experts are taking a fresh cr ack at tr y ing to sor t out some answers. The root of the issue is simple: increasing yield. The popular logic is that since yield is generally on the rise across the board, then farmers should be applying higher levels of phosphorus (P) and potassium (K). Yet in this case, perception doesn’t always equal reality. Again, the “it depends” phrase creeps into the discussion. For Dale Cowan, the concern isn’t that methodologies or soil test levels are somehow outdated or ineffective, it’s that soil test levels themselves are declining, and they’re declining in two ways — yield and rates. “Fertilizer rates have not been keeping pace with where the yields have been,” says Cowan, senior agronomist with Southern Crop Services in Chatham, Ont. “The rates have not been keeping pace… so we’re going to have soil test declines, and when they decline, the soil’s supplying power also declines. So when you get the chance to tack on an extra 20 or 30 bushels of corn due to 6
the environment, you run out of nutrients. In an average year, we’re average, but in an above-average year, maybe we’re missing the top 20 bushels, so we could have had 260 when we had 240, or 180 when we had 160.” As simple as that might sound, however, there’s more to boosting yields than just applying more P and K, or rejigging the test levels. Cowan notes just two properties — depth of topsoil and drainage — as factors that will affect the ability of the soil to produce those higher yields, but not as a reflection of anything the grower does directly. “You could be a farmer and say, ‘I’d like to get 200 bushels (of corn), so I’m going to set a yield goal for 200 and I’m going to put my N, P and K on for 200,’” says Cowan. “But you may be farming 160-bushel corn ground because it’s a shallow topsoil or because it’s randomly drained. So we also need to be realistic about our expectations.” Even so, should most farmers be adjusting their fertility rates, since the soil test levels of the 1950s and ’60s were based on corn crops of 120 bu./ac.? Cowan says it’s a good controversial topic that needs to be discussed. “We have higher crop removal rates, so should we be looking at a program that takes into account where the soil test levels should be?” poses Cowan. “That is, setting a “build” consideration, then adding in the crop so that we have a build and maintenance approach to fertility instead of a sufficiency approach, which may or may not get you top yield in high-yield environments because you might be nutrient limiting?” Another school of thought begins by trying to identify which one of a possible three questions is actually being asked: • Should growers be applying fertilizer at higher soil test levels than are currently recommended, simply because high-yielding crops need more nutrients in the soil? • Or, should growers be applying more
fertilizer at a given soil test level, because the soil can’t provide nutrients to a highyielding crop fast enough? • Or should growers be applying more fertilizer because high-yielding crops are removing more than farmers are applying, eventually leading to declining soil test levels? They’re closely related questions, yet one school of thought suggests those who claim the standards are outdated don’t realize there are three separate scenarios. And then there were two For Greg Stewart, it can be helpful to think of the following two examples. Farmer A likes to follow the deficiency approach of the Ministry of Agriculture and Foods (OMAF), putting on fertilizer at rates that do not necessarily take into account yield or the notion of trying to build the soil test levels. So this farmer runs modest soil test levels, but applies P and K as required. Farmer B has been piling on P and K for years (likely because he has a livestock operation on his farm or has access to manure), and has very elevated soil test levels. Do those two side-by-side farms actually have much difference in their yield potential? “I pose that question at our industry Corn Guide, September 2013
fact that if we’re talking a corn-wheatsoybean rotation, I might be able to preach a pretty good story about modest soil tests and soil bands,” Stewart says. “But it might not relate nearly as well to the next two crops in the rotation.”
meeting, where there are some fertilizer industry representatives and farmers, and I guarantee that the overwhelming response is that big yields can only come from elevated soil tests,” says Stewart, the corn specialist for OMAF. He readily acknowledges that yields have increased, but that doesn’t mean test levels have to jump as a result. “Of course, farmers such as Francis Childs have promoted the idea that soil tests have to be through the roof if you’re going to have big yields. If you ratchet that down a little to just two growers where one has a 13 soiltest P and the other has a 38 soil test P, the grower with 13 is applying 50 or 75 pounds of MAP (mono ammonium phosphate) and his neighbour with a 38, despite an OMAF recommendation for zero, he’s still running 6-24-6 and broadcasting in the fall. So is he at a whole different plateau? That’s a question that we have just a marginal ability to answer.” Another front on which people have criticized the OMAF recommendations is, how low does the soil test number need to get before the recommendations are applying what the crop is removing? If the soil test shows 18 ppm of P and 110 ppm of K, those are fairly high levels and the recommendations reflect that [a soil test of 18 ppm of P warrants a recommendation of 20 kg/ha of P205 (or 18 lbs. per Corn Guide, September 2013
acre) while 110 ppm of K calls for 30 kg per hectare of K20 (or 27 lbs. per acre)]. “We’re struggling with that, and yet there are lots of trials where the OMAF recommended rate is pretty much in the game in terms of that particular year’s optimum net return,” says Stewart. “If you keep the argument relatively simple, and I would suggest that simple in most cases means asking ‘are the soil tests outdated for yields that are double what they were when these recommendations were put down?’ I think you can keep things simple by just talking about yield.” So Stewart stays with the two-farmer scenario — one who’s on a program to pound P and K on to his field to elevate his soil test levels because he believes that’s the key to high yield. And the farmer beside him, who’s quite happy to live with moderate soil tests but is willing to apply starter bands as needed. Another factor that Stewart says doesn’t get much consideration is the timing and application options for P and K in a threecrop rotation. He notes there’s a wider application window for P and K on corn ground compared to wheat and soybean fields where the row widths are seven-anda-half inches and soybean planters or wheat drills are not equipped for banding any sort of fertilizer. “You wouldn’t want to lose sight of the
A little of both Like Cowan and Stewart, John Lauzon acknowledges the increases in yields that have occurred in the past 20 years, and he says that as crop yield and nitrogen uptake increase, so does the fertilizer requirement for corn. Lauzon, professor in the School of Environmental Sciences at the University of Guelph, points out that phosphorus, relative to nitrogen, is not a fast mover in the rooting zone, migrating only one or two millimetres in the soil during a growing season. “With the rooting system of corn occupying one per cent or less of the soil volume, even where the roots are thickest in the top 20 centimetres (eight inches) of soil, the total amount of P that’s within range of a root to be used is small,” sayss Lauzon. “As crop yield increases, so does rooting density and as such, the plant can make use of more of the P that’s there and/or applied.” Lauzon worked on a study published in 1997 by Murray Miller of the University of Guelph and Ken Stevenson with Ridgetown College of Agricultural Technology, as it was known then. Keith Reid, then with OMAF, was also part of the team. The study evaluated phosphorus and potassium soil testing and fertilizer recommendations in Ontario (www.
omafra.gov.on.ca/english/crops/ facts/97-005.htm). According to Lauzon,
the results showed that recommendations based on a soil test from past results actually continued to work with new higheryielding hybrids and varieties. “The results indicated that for nearly all of the sites evaluated, the recommendation based on the soil test level was adequate, and in most cases, exceeded the most economic rate of application,” says Lauzon. The higher yield will result in more crop P removal but the soil test can account for that, potentially resulting in greater application rates in the soil test decreased. “Long story short" Lauzon says, "just because yields have gone up does not mean the old soil test calibration is incorrect.” CG 7
Cornguide
Today’s split N This grower is intent on using the Y-Drop unit — and making it better
Y
esterday’s hopes for a one-pass applicamachine, and come back and put the rest of tion that would solve all your problems the nitrogen on with the Y-Drop.” with a single pass across the field are Strang comes from a background of side rapidly fading away, especially on farms that dressing anhydrous. For as long as he can are driving higher yields. With herbicide resisremember, his dad and his uncle always side tance in more weed species, the days of the dressed. But once he started farming, he single-pass, single-formulation weed managefound it caused too much soil disturbance ment system have practically vanished. And in a minimum-till system, and it was diffithe same thing is beginning to happen, howcult to vary or cut rates in the field. ever slowly, with nitrogen. “The other thing that happened in dry Last year saw the introduction of the years is that we’re putting this band of nitroY-Drop application unit in Ontario, and gen right between the corn rows. We’re 15 Good Crop Services, near New Hamburg, inches away from the corn, and we’ve seen in Ont., and The Farm Office, based in dry years where we get the nitrogen in but we Tavistock were two of the dealers involved. don’t get any rain and the nitrogen doesn’t Buyers included corn grower Mike Strang, move,” says Strang. “And we’d see nitrogen who farms 1,500 acres just north of Exeter, deficiency in corn until we got a shot of rain. Ont. In the past few years, Strang has invested The idea of using the Y-Drop and putting the in a strip till unit called a SoilWarrior, plus an nitrogen really close to the base of the stems RTK GPS unit for auto steer. seemed like a better approach. Now, Strang is learning more about how to “We’d love to be able to throw the nitrogen use the Y-Drop while wearing two hats — one on and be done with it,” says Strang. “But if as a farmer, and the other as a service provider. you were to take the adviser’s hat off and not The Y-Drop is arriving at the same time have to worry about the logistics and just look that interest is growing around split nitroat pure agronomics, then late-season side gen applications. There’s plenty of chatter at dressing has to be the way to go.” farm shows, but according to Strang, there’s There are days when he says he’s tempted been little happening in the field, partly by the allure of doing other things in the because of the lack of suitable hardware. middle of summer rather than splitting his Now with the Y-Drop applying nitrogen nitrogen applications. But he knows the to the base of the corn plants – and espeadvantages of doing things the way they cially when the Y-Drop is used in conjuncshould be done versus the easy way. tion with the available GreenSeeker To say it’s been an easy process to adapt technology — that hurdle may be being the Y-Drop isn’t quite true. The applicator cleared, and a trend may be taking shape. works very well on flat ground, but Strang “The idea of late-season nitrogen goes found on his rolling hills there was a little hand in hand with GreenSeeker technology too much bounce in the arm. His sprayer very nicely because the GreenSeeker works “Late season side dressing has to be the hydraulics also strained to lift the unit. much better when you have more biomass way to go,” says grower Mike Strang. Fortunately, Mike’s brother Geoff, an there,” says Strang. “So if you can leave the engineer by trade, has returned to the corn to grow later, it gets nice and big and tall, and you can get a farm, adding metal tubing at the end of the hoses to weigh them better reading for late-season nitrogen.” down and prevent them from swaying or swinging in the rows. For Strang, one of the drivers for using a Y-Drop is his goal, Geoff also added some rubber hosing, as a sleeve at the top of wherever possible, of getting multiple uses from each piece of the unit where it connects to the boom, again, to limit any machinery. So he has a sprayer, which he says consists of a tank, a bouncing of the unit. And together, they’ve added a second pump and a rate control. And from his perspective, a side-dress hydraulic unit, to ensure there’s enough lift. applicator is mainly a tank, a pump and a rate controller, so he set “We are changing the things we do,” Strang says. “It’s first of all about attaching Y-Drop booms to his sprayer to see how best to get an economic thing, but it’s also an environmental thing, too. I his nitrogen on the ground. don’t want to be putting nitrogen out there that’s going to end up “This late-season nitrogen is based on a lot of things, but one of in the waterways. So if we can find a way to increase the efficiency them for me is planting efficiency,” says Strang, who strip tills his of the plant using it, then that’s where the variable rate comes in corn. “We’ve taken fertilizer off the planter other than a little bit of and where spoon feeding comes in and late season. It’s all about liquid starter, and then we put a dry starter on with the strip-till increasing the efficiency.” CG
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Corn Guide, September 2013
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Cornguide
No one says it’s going to be easy, but growers like Gerry Greenfield already have their sights set By Ralph Pearce, CG Production Editor
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ow that it seems a safe bet every year that corn somewhere in Ontario will top 200 bushels per acre, more eyes are turning to the next milestone. If 200 bushels seemed a dream just a decade ago, why should 300 bushels seem beyond our reach now? Maybe it isn’t. Yet while plant breeders and agronomists have done an outstanding job of advancing recent corn yields, they may also have created a perception that we can pin our hopes on genetics and some quick-fix practices for continuous, astronomic yield hikes. Gerry Greenfield is just one grower who believes it’s going to take a co-ordinated approach to break today’s yield barriers. Greenfield, who farms some 750
acres with a standard corn-wheat-soybean rotation just west of Hagersville, Ont. believes 300 bushels per acre is something he’ll see in his lifetime. At 52, Greenfield remembers that as a child, yield hopes in his area hovered around 100 bushels. “Then I went to Ridgetown College, and it was 150,” says Greenfield, who farms with his parents and his son Steve, the fourth generation on the farm. “Now 150-bushel corn for us is a pretty decent crop, one we’ve been hitting pretty consistently.” So, what about 300? “It’s reachable,” Greenfield says, adding a qualifier, “maybe not consistently in Haldimand County.” Greenfield is very much a farmer’s farmer: he believes in taking care of the land and making incremental enhancements from year to year. His ground Corn Guide, September 2013
Photo credit: DEW Imagery
The road to 300-bushel corn
includes some clay soils, and some clay loams as well, so his yield strategy is focused first and foremost on taking care of the soil, and when he gets a chance, he does a little more tiling of his fields. “We don’t rent very much land, so instead of buying another farm at a higher cost, it’s just better to tile what you have and stay closer to home,” says Greenfield, who refuses to go up and down county roads in search of land. “Just keep your costs down because the price of rent and land are unbelievable.” When asked if he thinks 300-bushel corn is more a matter of genetics or management, Greenfield calls it a draw. “Genetics is probably 50 per cent of it, and the rest is the farm and the weather, nutrition, drainage… and luck?” he says. “We can compete with anybody on soybeans now,” Greenfield adds. “Corn, maybe not so much with the better soils in Ontario, but we’ve had 200-bushel corn.” In 2012, most of Haldimand had 35 consecutive days of droug ht, yet Greenfield still saw farms in his area with 50-bushel soybean yields. His corn crop, on the other hand, ranged from a low of 130 bushels to his best field which yielded 180. The field with 130 bu./ac. was planted June 8 in 2012 because he’d tiled it before planting. In 2013, Greenfield is working again with tillage radish, the fourth year he’s been using it as an all-purpose cover crop and supplementary drainage source. “The fields that we had radish in last year had more consistent corn in the nontiled fields compared to the tiled fields, and the suppression of the weeds was much different — hardly any weeds in it,” Greenfield says. “With the radish in it, I think it helps aerate the soil and lets the water get away. So to get 300-bushel corn, cover crops are going to have to be part of the equation.” Cover crops, he adds, can also help with nematode suppression and assist with long-term soil health and drainage, and they also help store nitrogen. Add to that the fact that Greenfield can supplement more of his soil’s nitrogen by applying his own chicken manure, and he’s seeing some substantial savings on nitrogen costs alone. Greenfield also believes cover crops will be a big part of the future for many more corn growers. “They’re going to become very important in the next 10 or 15 years, just like fungicides were 20 or 25 years ago in wheat,” says Greenfield.
A systems approach
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y 1982, Huron County farmer Don Lobb had been a co-operator in countless farm trials on his operation, and he wanted to come with a visual depiction of the complexities he had
learned that were involved in farming. “I always liked working with the researchers,” says Lobb. “I learned more from a lot of the grad students doing projects on my farm than I would any other way.” That’s when he came up with the ‘Adopt-a-System’ approach (Figure 1). Lobb’s initial design was composed of 11 “spokes.” But there’s a rule that had to go with it: each component carries equal weight or impact. Or make that two rules. Because each spoke is also connected to every other spoke. If you change one, one way or another you change everything. If you shorten the rotation, for instance, it could affect weeds or diseases, fertility or pests. “If you’re pushing for a 300-bushel corn crop,” says Lobb, “you’d better spend a lot of time analyzing how your crop system works.” The Best Management Practices manual on Field Crop Production used a modified form of Lobb’s, and also offered some different scenarios in which changes were introduced to the system and the impacts on different aspects were suggested. “I guess a lot of people tried to copy it and add their own interpretations,” says Lobb. “But it’s really something I intended as a framework... Crop production is complex and if you want the most out of it, you’d better consider all of the complexities.” No Till: The Basics, which was published in the 1980s as part of the Soil and Water and Environmental Enhance Program (SWEEP), also uses a version of the Lobb diagram, along with insights from other farmers of the day, and is actually quite interesting to read, given its date of publication. (http://agrienvarchive.ca/download/no-till_basics.pdf.) This may not be new research yielding innovative ideas. Maybe it doesn’t need to be. More than 30 years of experience are showing that soil health, drainage, fertility and cover crops are just as important as hybrid selection, weed management and tillage. As Shawn McRae, a dedicated no-till farmer from Bainsville, Ont. likes to put it, “Genetics is the horse we’re going to ride to get to 300 bushels per acre in corn, but we need to follow the right path to get there.”
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Corn Guide, September 2013
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Continued from page 11
But Greenfield believes as well that there won’t be a simple recipe for always achieving the very best yields. “Every field is different, so what you might try this year might not work next year. You have to roll with the punches and some of it’s luck,” he says, and then adds, “but a lot of it is management.” Within the next five years, Greenfield says he can see hitting 200 bu./ac. on a consistent basis. Beyond that, he reiterates that 300 bushels is also doable in his lifetime. He’s using the best genetics, he’s a proponent of foliar fertilizers, and he also does a lot more scouting and tweaking of his management practices. Almost a religion Shawn McRae, who farms a five-crop rotation on 450 acres near Bainsville, Ont., is as quick as Greenfield to give the seed and trait companies plenty of credit in the race to provide the best genetics to growers. And just like Greenfield, he believes that reaching 300 will require a careful balance between the genetics and the management practices put in place by the grower.
In the early 1980s, McRae accompanied his parents and grandparents on a trip to Illinois to visit Herman Warsaw’s farm. In 1985, Warsaw would set a record with a corn yield of 369 bu./ac., a feat that remained unmatched until Francis Childs pushed his yield to 393 bu./ac. some 14 years later. Meeting Warsaw left an impression on McRae, who saw Warsaw as a generous and humble individual who never sought fame or notoriety but followed his own natural scientific curiosity. McRae also values the lessons taught to him by his father as he chases his own 300 mark. His father was also interested in attaining 300 bushels with his corn, and worked a system in the late 1960s and into the ’70s that favoured continuous corn. He plowed in the fall, tilled in the spring, incorporated atrazine and provided a total crop supply of nitrogen via anhydrous ammonia. Then he’d plant the field, go back to work as a tile drainage contractor, and forget about the crop for five months. McRae calls it a simple recipe that worked for a while. Over time, however, too much tillage and too much reliance on one herbicide forced his father to adapt.
“Unfortunately in a lot of cases, it takes a long time to come back from that, once you get lulled into a straightforward recipe,” says McRae, who acknowledges that at least his father and grandfather were open to change and willing to adjust. McRae points out many farmers’ sons have returned from Guelph or Ridgetown, saying, “Dad, this is what the best science says we should be doing,” only to be rebuffed or rejected for the familiar or what’s easier. Pushing corn yields to 300 will require more focused management, McRae says. With a growing interest in cover crops, and more farmers expressing their determination to stick with their rotations, it’s possible that we’ve seen a peak in continuous corn. Part of that is the realization that in order to make a practice such as continuous corn work and drive yields consistently higher, there’s an even larger commitment to monitoring diseases in year three, four and beyond, or increasing plant populations. Generally speaking, it requires more tweaking and twisting than working with a standard rotation. “What you’re after is that complexity,” poses McRae. “Every farmer has different
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Getting to 300 bushels will take a systems approach and years of effort, says Shawn McRae. But it’s worth pursuing.
fertilizers and pesticides, deep tillage and high plant densities.” In his travels and sharing what he knows, McRae has become familiar with the quick fix or silver bullet mentality that many farmers seem to be looking for. He’s become a student of soil health, building earthworm populations, balancing nutrient levels and garnering a better understanding of phenomenon such as mycorrhizae fungi. Yet he’s had questions about fast-tracking or purchasing a supplement that would help speed the establishment of such fungi, when no such shortcut exists.
“I believe the proper path is that which is much less attractive,” McRae says. It will takes years of wrestling with soils, rotations and cover crops. He believes he must also keep his eye on total farm health. “If I thought that achieving 300-bushel corn would necessitate a system that would require me to transgress my oath and make my farm more prone to soil erosion, nutrient leaching and debt risk, I’d take a pass.” But he’s convinced that he won’t be asked to make that trade-off. Says McRae: “The one is the proper path to the other.” CG
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ideas of what’s important when it comes to driving productivity. One might be big on bulk spreading P and K in the fall, getting cover crops established or trying to trap and cycle nutrients. Another might be into RTK and banding it so that he can tap into it for a couple of consecutive crops. And then you get another grower who believes corn is the big money-maker because there’s an advantage with volume or the drying end of the business, so in his mind, continuous corn is the way to go because the cash flow is bigger.” Yet McRae believes there’s another valuable lesson to be learned from the likes of U.S. farmers Ray Rawson and Francis Childs. They didn’t make it to their recordbreaking yields in one year or two. “Those star farmers will tell you, ‘This is the result of 30 years of dedicated system development; don’t expect a miracle because you’ve copied and pasted part of the puzzle,’” says McRae. “To achieve extraordinary yields in their day, these farmers had to be adept students of their game and gradually implement extraordinary measures, including vigilant study of cause and effect, excessive nutrient applications, repetitive foliar applications of
Cornguide
Watch those demand numbers Corn producers need to adjust to the long road ahead. But be ready. Some year, somehow, we’ll get back to last year’s highs By Philip Shaw
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or corn producers, it is so different from a year ago. With the world’s largest supplier of corn suffering a devastating drought, corn markets went through the roof in 2012, with futures prices reaching $8.49 a bushel as heat sizzled throughout the American Midwest. One year later, the weather has been much more benign, and American farmers are set to harvest one of the largest corn crops in U.S. history. Corn prices to Canadian producers are less than half what they were a year ago. This is a major challenge to Canadian corn producers as they look ahead to 2014. New-crop Canadian cash prices have approached the cost of production for many corn producers, and this will certainly weigh on planting intentions in 2014 as many farmers may decide the higher cost of planting corn may sway them toward other crops. Let’s remember, though, that we got here with our eyes wide open. We knew $8 corn has its pitfalls. With many Ontario farmers having a huge crop in 2012, selling it for close to $7.70 a bushel “off the combine” was a great economic payoff. Unfortunately, not everybody else felt that way. The common refrain last year was,
how high would prices need to go to ration demand? Over the period of the last 18 months, corn demand has dropped about 1.3 billion bushels as endusers avoided paying those high prices. The refrain now is, how low do prices have to sink to get that demand back? Destroying demand happens much faster than building it up, and corn producers need to adjust to the long road ahead. The August 2013 USDA report gave us the latest indication of U.S. crop size. In this report the market had been leaning on the bearish side as U.S. crop weather in 2013 has been cooler with much more rainfall in production areas. New-crop prices had dropped over the last few months in step with that sentiment. Earlier in March, the USDA had pegged U.S. corn planted acreage at 97.4 million acres with harvested acreage at 89.1 million bushels. This was in comparison to last year where 97.2 million acres were planted and 87.4 million acres were harvested. In the August 2013 report, USDA pegged total U.S. corn production at 13.763 billion bushels with a yield of 154.4 bushels per acre. This compares to the drought-ravaged year last year of 10.780 billion bushels with a yield of 123.4 bushels/acre. Corn Guide, September 2013
It is quite a difference from a year ago on the supply side. Going into autumn, the Americans look set to produce a huge corn crop. It might not be as big as earlier expected, but it still is one of the biggest of all time. Price expectations have dropped with the USDA expecting average cash prices to be in the upper-$4 range. Demand surely will hold the key to higher prices in the futures market. Once we had a demand-driven market in corn, where we needed supplies to satisfy that demand. It has now come to an end. Not only have American farmers rebounded by producing more feed grains, but so have farmers around the world. South America as well as the Black Sea region have increased their production of corn and taken much of the slack in the global export market once filled by the Americans. Price will become the lowest common denominator to clear out that supply and build demand back again. Canadian cash prices are much lower, reflecting our own particular market structure of too much corn and too few end-users. In Ontario, corn acres are approximately 2.15 million acres, about the same as in 2012. Ontario production levels have been increasing over the last few years. If we assume a top provincial yield of 160 bushels per acre, that puts approximately 344 million bushels of corn on the ground this fall. It is not unusual with this much production to export this corn into the United States. The only way to do that is to reduce basis levels, driving cash prices lower. Aside from a September frost Corn Guide, September 2013
changing the entire scenario, corn producers should suffer from very low cash prices this fall in order to get into the U.S. market, because farmers in border states are also harvesting a very good crop. This does not bode well for Canadian cash corn prices. It definitely is a new day for the corn market for those who are recent entries into agriculture. Supplies have risen to satisfy demand, but now we are there. The American drought of 2012 accentuated that shift, but now we must deal with the fallout. What does the future hold? Key questions about future demand for corn have to do with the ethanol mandate in the United States and competition from foreign suppliers. Ethanol pricing is always dependent on gasoline and oil demand. Lately, this has been fairly buoyant, putting a bottom under ethanol prices. However, the ethanol mandate in the U.S. is always a political football. Any change in that mandate that lessens the requirement for ethanol in U.S. gasoline will reduce corn demand. Currently, ethanol producers there are facing the “blend wall,� almost at capacity for the ethanol required for U.S. gasoline demand. These concerns are paramount for corn producers looking forward. The question is, what should corn producers do in this current price environment? Is it simply back to the future, where we cut costs and switch over to soybeans? Do we use new technology to produce corn even more efficiently than we have before? Are there marketing options available to us to reduce carrying costs to cap-
ture price rallies on unexpected market moves? Or, will corn hybrids themselves bail us all out with increased productivity? The good news is that last point. Corn hybrids have been increasing in yield at almost an exponential rate in Ontario. As price has retreated, corn productivity has increased. All farmers, like myself, like to see higher prices. However, increased productivity per acre can translate into higher profits even with lower cash prices. The great marketing outlier with regard to corn prices will be the value of the Canadian dollar. While soybean prices are much more sensitive to Canadian dollar movement than Canadian corn prices, it still makes quite a difference. While the Canadian dollar has spent much time over the last two years near par with the U.S. dollar, it has slinked back to 96 cents U.S. as of mid-August 2013. This has been helpful to Canadian cash prices. If the loonie continues to retreat, it will always be helpful to Canadian cash prices as well as export markets. When hedging grain, the value of the Canadian dollar always needs to be considered. It has the potential to be the lightning rod for Canadian cash corn prices into the future. The challenge for Canadian corn producers is to adapt to the new corn market of greater supply and building demand. Bringing these two economic components together at a price level to satisfy everyone will surely be the test. It will be a long and winding road. However, someday, that $8.49-bushel record for corn will be broken. We need to be positioned to see it coming. CG 15
Cornguide
Free nitrogen Nitrogen-fixing corn is a matter of ‘when,’ not ‘if,’ and the when may be as early as 2015 By Ralph Pearce, CG Production Editor
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oybeans long ago figured out how to feed themselves with nitrogen pulled right out of thin air. So how great would it be if corn plants could fix their own N too? It’s been a dream for generations. Now it may be on the verge of becoming true. Science has already broken other impossible barriers. North American breeders have produced corn hybrids that manufacture their own built-in pesticides. Even drought tolerance is making inroads in the marketplace. But N fixation has always seemed a bridge too far. Now, enter Azotic Technologies. Within the next two years, the U.K.-based company is poised to introduce a biological seed treatment that will enable corn plants to fix their own nitrogen, in much the same manner as soybeans and other legumes. Company representatives have been frequent visitors to Guelph, Ont. in the past year, with designs on establishing a North American manufacturing and distribution centre for its N-Fix technology. Last April, David Dent, Azotic Technologies’ technical director, made a presentation to the annual meeting of Ontario Agri-Food Technologies, unveiling the goals and directions for N-Fix. Then this past May, a trial plot was planted near Guelph with corn seed treated with the technology. And since that time, Peter Blezard, chief executive of Azotic Technologies, has been back to speak with investors and other potential participants. Much of the history of nitrogen fixation in corn dates back to 1960, when Edward Cocking at the University of Nottingham, developed an enzymatic process to use cellulases to break down plant-cell walls. Such “wall-less” plant cells could then be examined with the goal of determining how they might be colonized by bacteria or other micro-organisms. It may seem a long way from any practical result, but it opened a door. Then in 1988, scientists learned sugar cane contains about 500 bacterial strains in its phloem, and among that group there is a particularly exciting non-nodulating, non-rhizobial bacterium called Gluconacetobacter diazotrophicus (or G.d., for short). G.d. thrives in the intercellular environment of the sugar cane plant, and more importantly, it showed it could supply up to 50 per cent of the plant’s nitrogen requirement. “The bacterium loves sucrose and it can live inside the plant,” says Azotic’s Blezard. “It can’t live outside the plant, hence it has never migrated to more crops, but when they tested it, they realized that this bacterium was giving nitrogen back to the crop.” The sugar cane bacterium is intercellular, meaning it lives outside the cells of the sugar cane plant. Now, however, researchers have succeeded in using technology so the bacterium can nibble its way through a cell wall, so it can fix nitrogen from the inside.
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A game changer The process is a little more complicated, but the implications for this technology are massive, and Blezard is quick to point out the obvious cost savings, particularly in terms of reducing the amount of nitrogen currently applied on corn. Studies on such applications have set the nitrogen loss to the environment as low as 30 per cent and as high as 70, either through volatilization or leaching into the soil. Then there are the almost annual reports of excessive use of nitrogen in the U.S. Corn Belt, and a corresponding “dead zone” in the Gulf of Mexico at the mouth of the Mississippi River. Blame for this has long been assigned to modern farming practices (including corn-soybean rotations, lack of cover crops and heavy tillage) and some projections for the N-Fix technology cite reductions in nitrogen losses of up to 50 per cent. Blezard also refers to California among other jurisdictions where class-action lawsuits have been brought against various authorities and individuals for allowing nitrogen contamination of groundwater and other watercourses. So there’s also the potential for farming as an industry to regain some of its lustre as protectors of the environment or stewards of the land. “We have proven categorically that the technology works in grass — we have been growing grass for more than seven months now with no nitrogen applied, in a sterile environment,” says Blezard. “That’s a world first, and we are in the fields now (midsummer, 2013) demonstrating that the grass is richer in chlorophyll with our technology, and it’s definitely got the G.d inside it and it’s working.” The focus was first on grass because it’s the fastest road to the N-Fix Nitrogen Fixation Rhizobia
Rhizobium inoculated seed
N-Fix
Rhizobium bacteria fix nitrogen only in Nitrogen the root nodules fixation from the atmosphere
Provides every cell with ability to fix its own nitrogen
N-Fix (Nitrogenfixing bacteria) coated seed
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Corn Guide, September 2013
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Continued from page 16
market. Azotic has been working with the world’s largest grass seed company, and its representatives have told Azotic that if they can prove the technology works on grass, they can get it into the market quickly, particularly with such heavy use of grass for golf courses, parks, roadways and sports fields. Blezard is optimisitc, saying the effects of N-Fix on grass are visually apparent, with more tillers and lush growth. From an agricultural perspective, Blezard notes grass is also the world’s largest crop, accounting for 30 per cent of the agri-food sector. China, for instance, is growing more grass for livestock in order to feed its rapidly expanding middle-income sector, so the potential is large, and getting larger. How it works N-Fix with G.d. is applied as a seed treatment, but the challenge is very different from rhizobium inoculation in legumes. Blezard says N-Fix is a highly specific bacterial formulation and that the key to its success is ensuring there are fewer than 50 bacteria per seed. Rhizobia in soybeans and other legumes have bacterial counts into the hundreds of thousands but the N-Fix technology has been precisely formulated. If there are fewer than five or more than 50 bacteria per seed, it won’t work. “As they’re on the seed, they’re motile — they’re ‘talking to the seed,’” says Blezard, referring to the bacteria and the way they employ a form of signalling technology that Azotic is also researching. “The bacteria move to the root and go through the root wall and then into the cell. And then the cell goes through what’s called invagination — it circles the bacterium as though it’s come to kill it because it’s a foreign body. But it realizes the bacterium is ‘friendly,’ it keeps it, vaginates (surrounds), and then the bacterium is giving nitrogen for sugar. “It’s a true enabling technology,” says Blezard. “We’re mainly focused on grass but we’re also working on wheat and corn in Canada and canola — and they’re all in trials.” It’s a complicated and technologically advanced process to grasp, but it comes down to a shift in fundamentals. Early patented research on the N-Fix, some of which was conducted in Guelph, focused on an intercellular process. But the intracellular Gd Elongating root
Meristematic cell Plasma Membrane
Epidermal cells
Vesicle G. diazotrophicus cells G. diazotrophicus cells
Root cap
Epidermal layer
Representation of the interaction of G. diazotrophicus (G.d.) with roots: (a) Meristematic zone of the elongating root (b) G.d. penetrates the epidermal cell wall by secretion of the cellulose enzymes (c) the plasma membrane pinched off via endocytosis forms a membrane surrounding vesicles containing G.d. (d) vesicles with G.d. are surrounded by a membrane analogous to the symbiosome membrane of rhizobia
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work was the real game changer and has shown the most benefit in terms of the bacteria’s ability to colonize the plant cells and fix nitrogen. That shift has made all the difference. In addition to providing substantial savings in nitrogen costs, the N-Fix technology is also based on this naturally occurring bacterium, which is a non-GMO, food-grade development. And the market for this — and the intent of Azotic Technologies — has a worldwide potential, not just for North American corn production. “It will help farmers in the developed world because it will help them lower their nitrogen costs,” says Blezard, adding that farmers will still have to apply some supplemental nitrogen: N-Fix can’t do it all. “We’re claiming up to 50 per cent, and why do we say that? Because in the natural environment, nitrogen fixation in sugar cane is about 60 per cent.” For 2013, the field trials near Guelph offer a glimpse of the potential for N-Fix, although Blezard is quick to point out that this is still a one-year trial. Even so, it is getting noticed, and it has also garnered the attention — and so-called “seed money” — from Canadian interests, including Engage Agro and Ontario Agri-Food Technologies, both based in Guelph. “There are no registration issues worldwide, and every other country has promised to fast-track this, because it is a very safe bacteria,” says Blezard. “Canada is probably one of the most stringent and it could take up to two years because it could be considered a new species for the country. But we have full technology and backup data going back 10 to 12 years, and we’ve built a technological dossier, and the regulatory staff at Engage Agro have told us that the work we’ve done will help expedite registration.” Ray Chyc, president of Engage Agro believes in the N-Fix process to the extent that the company has invested in research to help determine its viability. If he didn’t believe it to be a sound proposition, Chyc says, he wouldn’t be putting that money forward. “My logic is that sugar cane has been grown for years without nitrogen fertilizer to any significant degree,” Chyc explains. “I did my due diligence on the bacteria and the benefits, and they all seem to be there.” Chyc’s focus now is on commercialization. Can N-Fix be made in large quantities, and can it be delivered to the farm, either on the seed or in a form that can be applied on farm? The answers to those questions, Chyc says, are what will determine its success. “In all of the trials and all of the crops that I’ve seen, the N-Fix has provided around a 50 per cent savings (in nitrogen applications),” says Chyc. “Ideally, the best benefit you’re going to get is from the start of the plant itself. As soon as that root comes out, it’s somewhat similar to rhizobia in pulses, but with some significant differences — it gets right into the plant, except that it gets into every cell in the plant, up and down as the plant grows, and you’re drawing in nitrogen from the air right away. As new tissue grows, it almost ‘self-infects’ with the G.d, and the ability for N fixation within the plant grows as the plant grows.” Another positive selling point, at least where the Canadian Food Inspection Agency (CFIA) and the Pest Management Regulatory Agency (PMRA) are concerned, is that N-Fix is classified as a biological. And Chyc notes, from a food perspective, its food-grade property is a positive as well. From his company’s standpoint, the plan is to take this one trial this year (2013), then “blow it up” from a production perspective for 2014 and conduct further testing in U.S. and Canadian trials. Early commercial sales could be available in the U.S. in 2014. For Canadian growers, Chyc believes 2015 is an aggressive but hopeful target date. CG Corn Guide, September 2013
Cornguide
Stopped at the border L
The aflatoxin fungus needs the heat and drought it finds
in the U.S., not here. But watch imported crop By Ralph Pearce, CG Production Editor
Corn Guide, September 2013
iving next door to the world’s most intensive corn producer as we do, it often seems a safe bet that any weed, pest or disease that threatens growers in the U.S. is inevitably going to threaten Canadian growers too. In the case of aflatoxin in corn, it just isn’t happening. Indeed, aflatoxin seems to be bucking the trend. We’re hearing more about herbicide resistance, for instance, as well as the spread of Palmer amaranth across the border and the return of zone till. But it appears there are diseases, as well as weeds and pests, which are not an issue in Canada — east or west. And aflatoxin in corn is one of these. Late last year, reports from various sources in the U.S. cited heightened fears of aflatoxin, a mould that develops in hot,
dry conditions and that can grow to worrisome levels before or even after harvest. Given the severity of drought in the U.S. Midwest and across to the Great Plains, it came as little surprise that aflatoxin was a problem in some states. In fact, Iowa, Illinois and Nebraska, the top three corn-producing states, were granted a temporary measure to allow the blending of corn containing aflatoxin to other grains to be fed to livestock. Under U.S. Food and Drug Administration (FDA) regulations, aflatoxin levels must be 20 parts per billion (ppb) or less for feeding to immature or dairy animals. Food bound for human consumption must also contain less than 20 ppb, with milk required to contain less than 0.5 ppb. Continued on page 20
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Cornguide Continued from page 19
The Reuters news agency helped to fan the flames, circulating several reports of aflatoxin in corn, with some pertaining to pet food, others coming from the European Union, and one warning of a continuation of the disease in 2013. A U.S.-based news story linked one company’s hybrids together with a brand-name biocontrol agent as an effective tandem in reducing the aflatoxin levels. But according to Art Schaafsma, professor of field crop pest management with the University of Guelph’s Ridgetown Campus, the point that has to be made — emphatically — is that growers in Ontario don’t need to worry about aflatoxin in corn grown in the province. Schaafsma says this is just one more misunderstanding about a disease that affects corn in parts of North America, but not Canada. “Aflatoxin is not and has never been a problem in corn originating from Ontario,” says Schaafsma, stressing the point. “It’s simply not hot and droughty enough. Aflatoxin occurs mainly in the Gulf States in corn, moving up as far north as southern Indiana and Illinois last year because of the extreme heat and drought.” What’s also confusing is the way in which many people, including some of Schaafsma’s students, interchange the term “mycotoxin” with “aflatoxin.” Aflatoxin is a mycotoxin, Schaafsma points out, but not all mycotoxins are aflatoxin, in much the same way that all soybeans are legumes but not all legumes are soybeans. A vulture of a disease The aflatoxin that’s a problem in corn is caused primarily by Aspergillus flavus, which isn’t actually a disease-causing pathogen. Instead, it’s a saprophyte, meaning it lives off dead or decayed organic matter. There are 13 species of fungi that can produce aflatoxin, but 11 of those have nothing to do with agriculture. The Aspergillus flavus fungus was identified as the cause of aflatoxicosis in domestic animals as far back as the 1960s, and has become the largest issue in terms of corn contaminants. Another species, Aspergillus parasiticus, is the primary cause of aflatoxin in peanuts, although there were isolated cases where it infected corn in the Midwest in the early 2000s. “Somehow, aflatoxin keeps getting coverage in the context of Ontario corn,” says Schaafsma, adding that he’d be cautious 20
“This is another case of a major agricultural woe that‘s happening in the U.S. that doesn’t exist in Canada.” — Art Schaafsma about importing old-crop corn from the U.S. Midwest. He suggests the corn trade will be trying to dump a lot of contaminated corn in advance of the U.S. harvest. “This is another case of a major agricultural woe that’s happening in the U.S. that doesn’t exist in Canada,” Schaafsma says. “It creates confusion. It was a huge problem in the U.S. central Corn Belt last year, but absolutely not in corn from the Great Lakes region, despite the drought.” That’s not to downplay the seriousness of aflatoxin. It is by far the worst and most difficult mycotoxin to deal with. It’s just that aflatoxin isn’t an issue in Ontario, regardless of how dry it might have been last year. That’s the message that Schaafsma is anxious to share with growers in Canada, and Albert Tenuta echoes it, as well. No concern here “Based on the environmental conditions that we generally get in Ontario, and the lack of buildup of inoculum, it’s not an issue that we are concerned about,” says Tenuta, field crops pathologist with Ontario’s Ministry of Agriculture and Food. “Aspergillus fungi are pretty ubiquitous — they’re out there — but we don’t get the proper environmental conditions in most cases for it to develop and flourish. The base isn’t there to start with, as you would have in the mid- to southern U.S. In Ontario, we have gibberella, fusarium, and diplodia that are already established and taking up the space, based on inoculum load.” Just as weeds compete with each other and with the crops in the field, fungi —
whether they’re pathogenic or saprophytic — compete with each other for space and nutrients. Tenuta says different fungi can compartmentalize or adjust their development to conform to certain factors, be it temperature or moisture levels or overall plant health. These fungi will adapt and become microscopic opportunists, always trying to outcompete other soil fungi. In the case of Aspergillus flavus, it’s almost a case of it being displaced by the other infectious agents. If the specific conditions for infection ever arise (which they seldom or never do), there’s no place for the fungus to develop and flourish. “There’s only so much space for these organisms to colonize,” says Tenuta. “So whether they’re going to colonize or cause a disease pathogenically or just be there saprophytically, there’s always competition, directly or indirectly.” The bottom line The research conclusion is that there is no aflatoxin in Ontario corn. Tenuta also echoes Schaafsma’s comments about the confusion that comes out of monitoring conditions and diseases in the U.S. He also sees aflatoxinfree corn from Ontario as a definite advantage from a marketing perspective. “We always concentrate on where we find things or on worse-case scenarios,” says Tenuta. “But sometimes it’s good to know that we don’t have something, especially when it comes to markets and marketability, and ultimately the bottom line for producers.” CG Corn Guide, September 2013
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2013-08-07 4:39 PM
Cornguide
#PestPatrol with Mike Cowbrough, OMAFRA
Is it actually lamb’s quarters? 1
By Michelle Arsenault
I 2
3
n a survey of Ontario crop input retailers, lamb’s quarters has been identified as one of the most troublesome weeds affecting corn and soybean crops. This is due to its abundance in the province, but also because herbicide control has sometimes been less than acceptable. What are the reasons for this poor herbicide performance? Could the cause be herbicide resistance, weed size, or lessthan-optimal environmental conditions? All are plausible, but it could also be that the weed isn’t actually lamb’s quarters. It could be a close relative instead. Let’s compare lamb’s quarter to these look-alikes. The plant shape and powdery leaves of lamb’s quarters are similar to those of spreading atriplex and fig-leaved goosefoot. These are all members of the goosefoot family. The key to identifying each species is the leaf shape. Lamb’s quarters leaves vary from being broadly triangular to triangular oval. The width tapers to the pointed tip. The perimeter of the leaf has irregular, wavy teeth. (Photos 1 and 2)
Spreading atriplex leaves are elongated triangular, being narrower than lamb’s quarters. At the base of the leaf, two large teeth extend prominently outward on each side. The perimeter of the leaf may have irregular, small teeth. (Photo 3) Fig-leaved goosefoot leaves are elongated. The leaf base is wide, but a prominent lobe on each side indents the leaf, after which the shape is narrow to the tip. The perimeter of the leaf has irregular teeth. (Photo 4) The next time you scout your fields before and after spraying, pay attention to the plant characteristics to be certain that what you have is lamb’s quarters. CG Michelle Arsenault is an undergraduate student at the University of Guelph and works with Dr. Francois Tardif and Mike Cowbrough as part of the undergraduate experiential learning program through the Ontario Agricultural College and the Agricultural Development Branch of OMAF and MRA.
Have a question you want answered? Hashtag #PestPatrol on twitter.com to @cowbrough or email Mike at mike.cowbrough@ontario.ca
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Corn Guide, September 2013
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management
Production contracts Grain buyers complain if farmers don’t sign contracts. Instead, they should look at the terms through our eyes By Gerald Pilger hile production contracts can reduce price and delivery risks, simply signing a contract doesn’t guarantee that your returns will exceed your cost of production. Nor does it guarantee that you will harvest the volume or quality needed to meet the contract. Indeed, a reduction in price-delivery risk may actually increase other risks to a business. Not everyone understands this, it seems, especially on the grain company side. Like many of you, in late July of this year I attended a grain company meeting where they were promoting production contracts. Given the topic, it wasn’t surprising that one of the first things a speaker did was to ask how many of the farmers in attendance had contracted at least some of their 2013 crop. Fewer than half put up a hand. As you might also expect in light of the falling grain prices, that led the speaker to chastise farmers for not contracting their crops for the higher prices which were available earlier in the year. When asked why they had not contracted, a number of reasons came up. The majority of farmers who had not contracted anything cited the risk of not being able to deliver on the contract due to possible production shortfalls. Some farmers also dislike contracts that insist all inputs for the contracted crop be purchased from the buyer of the crop, meaning the farmers may then find those inputs are priced higher than at a competitive retailer. Or, the contract may call for additional or higher-priced inputs than these farmers would normally opt to use. Others feared they may not be able to deliver on the contract when they needed cash flow. That would put them in a box because, with their grain already contracted, they could not sell it elsewhere. Many producers felt too, that contracts favour the buyers, giving them too much power in setting grades and prices, and too much power to make other changes. And, of course, many producers were simply worried that commodity prices might rise, and that they would be locked into a lower price than would be available later in the year. While at the time of this writing, 2013 looks like the year when a spring signed contract in most crops will provide returns well above what a proSeptember 2013
ducer may get post-harvest, many farmers remember signing contracts for what they thought were good prices in the spring of 2012, only to be locked into the poorest prices of the crop year. Contracts are touted as a risk management tool. Without question, a well-written contract can reduce the risk of price fluctuation for producers and ensure delivery opportunities. It can also be a simpler way of selling than following the futures or even the cash markets. But at the same time, signing a contract opens up a number of other risks, some of which producers themselves identified, as I just listed. However, there are many more potential pitfalls of production contracts that farmers need to be aware of. In a 2003 booklet entitled A Farmer’s Guide to Production Contracts in Saskatchewan, lawyer Craig Zawada of WMCZ Lawyers and Mediators, Saskatoon, listed six dangerous clauses that occasionally appear in contracts and which he feels farmers should watch out for. These are by no means all of the pitfalls farmers face when negotiating contracts. In fact, when I asked him recently by email if there were additional pitfalls farmers should consider before signing a production contract, Zawada replied: “In a word, yes, there are probably too many to easily list here” (in the email). Zawada went on to recommend a second paper he wrote in 2004 entitled “Grain and Seed Contracts for Farmers” that just focuses on grain production contracts. Here are the six common traps which Zawada says may increase risk more than reduce it. • Evergreen clause which renews a contract or obligation automatically unless notice is given. • Unilateral changes whereby the buyer can change terms in a contract without the producer’s consent. • Hidden security interest that gives the buyer interest in more than just the contracted portion of the crop. • Unilateral grading clauses that give the buyer the sole determination of grade and/or dockage. • Unreasonable sampling clauses that detail how sampling is done. • Illegal terms. Signing a contract you know is illegal could result in a fine or even jail. Furthermore, an illegal contract is unenforceable and a fraudulent buyer could end up with both your grain and the money you expected to receive for it. Continued on page 28 country-guide.ca 27
management Continued from page 27 According to Zawada, there are four basic rules you need to follow before entering into any contract: • Get it in writing. A contract should list all the terms agreed upon by both parties and include any and all changes or amendments. • Ensure accuracy. Read the contract completely before signing. If something is missing or if it requires changes, have the contract amended before signing. • Consult experts when necessary. Contracts can be confusing. Even if the language appears clear and straightforward, a third-party review can point out hidden risks. • K eep the channels of communication open. If problems arise, talk to the other party as soon as possible. Many problems can be solved by early communication. Zawada also stresses that when producers sign production contracts in which a grower agrees to supply a buyer with particular crop characteristics or quality, they should pay careful attention to how pricing is arrived at, including how the crop is graded and the time when payment is made. Producers should also be clear on when delivery is to be made, and whether there is an obligation on the part of the buyer to accept full delivery at this time. Finally, producers should also know under what circumstances a production contract can be terminated. And if it is terminated, is the producer able to sell the crop to a third party. Zawada’s first booklet, available at www.saskmustard.ca/grower/pdfs/contracts-guide01.pdf, also presents a number of standard contracts in which clauses that favour the buyer are highlighted and then rewritten in language that is more producer friendly. Zawada points out no contract is set in stone. Producers need to weigh the risk/reward and if a producer deems the risk of signing the contract is too great, the contract should either be amended to reduce the risk to the producer or the producer should walk away. Additional comparisons are available in his second booklet which is available at www.saskmustard.ca/grower/pdfs/contracts-guide02.pdf. “Every contract needs to balance risk and reward,” Zawada writes. “Expect that an advantage in one area will mean getting less in another. Contracts are a complex blend of variables, and it is up to the contracts to determine which are the most important to them.”
Who’s in charge? Zawada isn’t the only person who warns farmers about the risks in production contracting. Susan Stokes, executive director of the Farmers Legal Action Group, St Paul, Minn., detailed her contracting concerns in a paper entitled “The Dilemma of Contracting: Risk Management or Risky Business?” While Stokes writes that contracts are an essential part of vertically integrated, large-scale agriculture, 28 country-guide.ca
and that they can ensure delivery and quality and reduce costs, she also warns that overreliance on contracts may enable buyers to restrict entry of competitors by locking up supply. This could lead to price manipulation in the marketplace. The USDA Economic Research Service examined Farmers’ Use of Marketing and Production Contracts and in the paper wrote: “Not all aspects of contract arrangements are viewed positively. The loss of entrepreneurial capacity is perhaps the largest disadvantage to the farmer. Under contracts, many of the production practices are specified in order to bring a uniform product to market. Practices specified may include schedules of chemical application or of feeding, and the types of inputs used. Farmers become providers of management services for a fee. “Farmers must judge for themselves whether the trade-off of income stability and a confirmed market is a fair exchange for the loss of independence,” the USDA paper continues. “Care must be taken to ensure that the contract shares risks between the farmer and contractor, rather than shifts them away from the contractor to the farmer. Contracts should specify who owns the product and holds the risk of loss in the crop or livestock, and when ownership passes from one party to another, if at all.” In 2000, Joan Fulton, associate professor at Purdue University, surveyed 2,300 crop producers in Indiana. Only 15 per cent of the surveyed growers were growing specialty crops under contract. Of those producers who did not grow specialty crops under contract, 56 per cent said the reason was because there was no opportunity to deliver the specialty crop in their area. Some 40 per cent were opposed to the additional investment required for growing the crop, and 36 per cent thought specialty crops required too much managerial time. As well, 25 per cent felt the variable production costs of specialty crops were too high. Of the 15 per cent who did grow specialty crops under contract, 92 per cent did so because of the potential for additional revenue. However, Fulton found that this additional revenue was not always realized. Her study found the returns for growers of specialty soybeans over returns of commercial beans ranged from $25 more to $27.80 less per acre than commercial growers received. Specialty corn growers fared somewhat better with a range of -$26.75 to a +$97 per acre. Most important to this discussion was the list of the terms that specialty crop growers felt were the least desirable aspects of specialty contracts, including uncertain delivery dates and loss of flexibility in how the producers could manage their own operations. Without question, production contracts can reduce risk and add value to a farm business, but only if they share risk and rewards equally between both buyer and seller. If a bad contract cannot be amended, in other words, it may be better for farmers to walk than to increase their risk. CG September 2013
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BUSINESS
30 country-guide.ca
SEPTEMBER 2013
BUSINESS
PHOTOGRAPHY: CAREY SHAW
How two farm friends built a thriving business in the city andace Ippolito and April Nichol have known for a long time that they wanted to go into business together. Both raised on Saskatchewan farms, they met at the University of Saskatchewan in the 1990s, became friends and maintained their friendship as the years went by. “We always knew what we wanted,” says Nichol. “We knew there was an opportunity to educate people about where food comes from and somehow, some way, we were going to build a business around it.” Exactly what that business would be wasn’t immediately clear. They looked at several options including restaurants, bars and even a bed and breakfast. Over many evenings and many bottles of cheap, red wine they discussed their future venture, noodled about what it might look like, and tweaked out their business philosophy. Then, when opportunity came in the shape of an ad in the WESTERN PRODUCER they were ready, and in January, 2011, along with two investors, Kevin Blair and Darren Blair, they purchased SaskMade, a retail store in Saskatoon that dealt solely in Saskatchewan products. At that time the business operated as a venue for members of SFPA (Saskatchewan Food Processors Association) to market their products. As private entrepreneurs, however, Nichol and Ippolito kept the name SaskMade but created a different business model. Two and a half years later, the two boast that a customer can buy everything from soup to nuts in their store, and all of it is grown, manufactured or produced in Saskatchewan. A shopping basket might include a selection of
SEPTEMBER 2013
By Shirley Byers
in-season veggies, roma tomato hummus, Saskatchewan-made mustard, and sour cherry chocolate bars, as well as frozen beef, lamb and bison, Lake Diefenbaker trout and non-food products such as organic laundry detergent, bath products and choices from a wide selection of books and art. “We felt that it was like a house that had great bones and structure,” says Ippolito. “It just needed some TLC, some vision and a little hard work to make it become what it is today.” Some of that hard work included building a comprehensive website, says Nichol. Customers can buy up to 80 per cent of SaskMade products online, including the full lineup of the corporate gift baskets that make up a vigorous and growing part of their sales. Sensing untapped potential in web sales, they especially encourage browsing, shopping and paying online. Currently web sales comprise less than 10 per cent of total sales but they’re confident they can increase that percentage. Hiring good people and doing the right thing is a given, but it’s kind of funny, says Nichol. “When you have a business concept that people want to be part of, they come to you. And that’s been the case, with even our part-time and casual workers. We’ve been able to attract people who are comfortable talking about why we do the things we do and it’s been really important to have that type of person within the store, so the customer experience when you walk through the door is very pleasant and warm and inviting. Someone should take you by the hand Continued on page 32
country-guide.ca 31
business
Ippolito: “We want to be known as the go-to place for anything Saskatchewan.”
Nichol: “We watch each other’s back. We always say, ‘Friends first.’” Continued from page 31 and explain what you’re purchasing and where that product came from and who the producer of that product is so that you fully understand. You should really have an emotional tie to that product that triggers rebuying and another visit.”
First things first Rebranding was the biggest task. Ippolito and Nichol wanted to get the message out that their store was the go-to place for high-quality Saskatchewan products. They chose a logo and made sure all of their letterheads were polished, professional and unique. They made a conscious effort to establish consistency and look. The website, their postcards, business cards, the store itself all have the same style, the same feel. 32 country-guide.ca
A friend Ippolito had known for years — they had grown up showing cattle together — now had a marketing firm. She helped them build their marketing program and create their brand. According to a marketing expert and instructor at SIAST (Saskatchewan Institute of Applied Science and Technology) in Regina, it was a job well done. He told Ippolito and Nichol that he now uses SaskMade in his classes as an example of how a small business can do an exceptional job of marketing. The next item on their to-do list was to establish criteria for their vendors. Being made, grown or manufactured in Saskatchewan might get a product through the door, but a bit more would be required to get it on the shelves.
Making the grade To get on their shelves, a potential seller must first of all verify that his or her food products meet government regulations for retail sale, and the product must complement the SaskMade vision and business model. All products are reviewed by the SaskMade management team to make sure the partnership and the products are a good fit and have good sales potential. If a vendor can tick those boxes they can apply to become a producer/artisan partner. When the product is approved, invoices must be supplied for inventory tracking and vendors must also supply some information about themselves, their company and their product. More and more, people want to know where their food came from, and they want to know the people who produced it. September 2013
BUSINESS In the beginning, Ippolito and Nichol were working with 30 vendors. They’ve now increased that to over 120 vendors and over 3,000 skews. (A skew is a version of a basic product. Fresh red peppers are a product. Red pepper jelly is a skew.) They took a look at the product mix to see what was needed and set about finding vendors. “When new people come, we want to understand their brand awareness, their distribution and their product,” Nichol explains. “We need to ask ourselves, ‘Do we need that product on the shelf?’” Their goals are clear. “We want to be the link from farm to fork, we want to be known as the go-to place for anything Saskatchewan,” says Ippolito. “We want to be educational, where people can come and ask about the different health properties of beef and pork, the difference between organic and non-organic products and so on. We want to be known as a place of unique gourmet food where we feature anything made, manufactured, value added, grown or produced here in Saskatchewan.”
TELLING THE STORY It’s said that luck happens when hard work meets opportunity. About the same time that the buy-local trend hit, SaskMade was rebranded, retweaked and ready with a wide variety of local products from local vendors. Just as importantly, its owners say, each vendor’s story was available to customers. “Telling the story is in our approach,” says Ippolito. “Every product has a story, meaning where it came from, who produced it, and the vision of the person or persons who created it. Part of staff training is passing on that story to the customers.” Results over their 2-1/2 years are encouraging. In the first year they grew the business by 165 per cent. In year two profits increased by 170 per cent, and halfway through year three they’re on track for an additional 30 per cent growth. Nevertheless, there have been challenges. One is location. The store is in Saskatoon. Nichol lives on a farm at Qu’Appelle; Ippolito lives in Regina, putting them 2-1/2 hours from the store. “It’s very challenging to manage a business from afar,” says Nichol. “We’ve had to become good at communicating with our people, online, over the phone or by email.” Although it was never their intent to be in the store every day — they always knew they would focus on the larger picture — both are hands on by nature. “In my personal life I’m an agrology consultant so I’m very hands on with that business every day,” says Nichol. “On the farm you’re there every day. My husband and I make decisions based on what’s in front of us and looking to that future, whereas at SaskMade, we have to put a plan into place and trust other people to execute it. And then we have to go back and say: Did we do it? Didn’t we do it? Why not?” Ippolito also has more than a full-time career. She’s a livestock nutritionist, and a stakeholder in the family cattle operation at Kisbey, Sask. Being off-site owners has meant planning their trips to Saskatoon so that they could have a list of objectives to accomplish during their limited time. It’s meant organizing a couple of intensive work bees. When they bought the store, they shut the door for two days while they stripped the shelves down, had the floors cleaned, brought new shelves in, put the product back on the shelves, decorated the store and got the cash register up and running. Two years later they pulled all the product off the shelves again and in four days, did a rigorous renovation which included having new shelves built, new flooring installed and everything painted. SEPTEMBER 2013
It’s meant knowing when to ask for help. “We called in our friends and family, anybody we could bribe with pizza and beer. ‘Come help us do this!’” says Nichol.
LEARNING EXPERIENCES As in any business, and as in life, there have been plans that just didn’t work, Nichol says. “We would run recipe competitions and things like that on FaceBook and then be so terribly disappointed when they didn’t work out, but the reality is you have to walk before you run and you need to plan very specifically what your activities are going to be and stick to the plan.” They’d been in business six months when they held their first tasting event at the store, expecting around 50 people. Only 10 showed up. It was too soon. Not enough groundwork had been done. But they learned, so today they still hold tasting events — one every month — but now they bring in a vendor and a chef and advertise the event at least 30 days in advance. Nichol and Ippolito have developed a reputation of thinking things through and making decisions — fast. “We’re very intuitive,” says Nichol. “We can finish each other’s sentences.” Through it all, the single, most important thing has remained their friendship. That was where it began and it’s what it always comes back to. “We keep each other on course,” says Nichol. “We watch each other’s back. We always say, ‘Friends first, business partners second.’ If there comes a day when this business is going to interfere with our friendship, that’ll be the day you see the ‘For sale’ sign. Both of us mean that, wholeheartedly.” CG
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Making it work Can a farmer save the Canadian International Grains Institute? By Gord Gilmour, CG Associate Editor
In the fallout of the CWB battles, Cigi could have been collateral damage. Instead, it may be stronger than ever.
Geddes admits pursuing the Cigi job. He’d wanted it from the first day he walked through the doors working with international customers in its pilot milling, baking and noodle plants, showcasing and promoting Canadian wheat, durum and barley, and he was amazed at what he saw. “My first thought was, ‘Holy cow, so this is what they do with my crops after they leave the farm,’” he admits. “The second thing I thought was, ‘How the heck do I get this job?’” Geddes still had a farm to run, however, plus a farm organization he was deeply committed to, so he put the thought aside and kept busy farming until the late 1990s when health problems related to the sudden onset of a serious grain dust allergy sidelined his farming career. Geddes subsequently reinvented himself as a member of the Canadian Wheat Board’s management team, arriving during a time of turmoil for that organization as it too struggled to reinvent itself under a new farmer-controlled board of directors. His focus was building a new farmer relations strategy, a role he held until moving on to become
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September 2013
Photography: Charles Lumsden
arl Geddes can remember with crystal clarity the first time he visited the Canadian International Grains Institute (Cigi) more than 30 years ago. Then a young grain and cattle farmer from near Pilot Mound, Man., Geddes had become engaged in farm politics and was president of the province’s general farm organization, the Keystone Agricultural Producers. In that role he arrived at the institute, called “Cigi” in grain circles, to meet with the organization’s senior managers. Geddes doesn’t mince words about his first impression of Cigi. He watched the organization
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head of the organization’s market development department, where he worked closely with Cigi to cultivate new markets for western Canadian wheat and barley. Then in 2009, Geddes heard Cigi was going to be looking for a new CEO, and he instantly knew he was interested in the job. During a recent conversation with Country Guide, he cheerfully admitted to pursuing the job vigorously. He was in his late 50s, and the job he dreamt of 30 years earlier would be the capstone to a long and successful career. But he also realized full well that it wasn’t likely to just be a cosy sinecure where he could quietly put in his time waiting for his pension. Instead he was stepping into another organization that was staring down the barrel at radical changes.
Staring down the barrel For decades Cigi had essentially acted as a joint venture of the federal government and the Canadian Wheat Board. The organization was jointly funded September 2013
by both, with the feds picking up roughly two-thirds of the tab and the CWB the remainder. Since 2006, however, the future of the Canadian Wheat Board had gotten murkier, with a federal government that was philosophically hostile towards the organization’s single-desk marketing mandate and was promising to deregulate that portion of the industry. If that happened, the entire funding model for Cigi would be up in the air, Geddes knew. He also firmly believed that for farmers and the Canadian grain industry as a whole, keeping the organization intact, with its nucleus of world-renowned experts and important customer relationships, was vital. Just a few months into his new role, the writing appeared on the wall in the form of a majority mandate for the governing Conservatives, something Geddes took as a sign the organization needed to move proactively to position itself to survive and thrive in the new reality. Widely viewed in the business as Continued on page 36 country-guide.ca 35
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If Western Canada’s grain industry needs a leader with friends on all sides, Geddes believes it’s got to be Cigi.
Continued from page 35 both politically astute and pragmatic, Geddes quickly turned the organization toward evaluating the key issues that would need to be addressed when and if the CWB’s marketing mandate changed. “We knew if the marketing system changed, the CWB would no longer likely have the incentive or
Unique institution Sitting in the lobby of Cigi, waiting for Earl Geddes to arrive, a wandering eye soon fastens on a few mementos and emblems that represent just what sort of organization this is. In one direction, there’s a wall-to-ceiling map of the world. In another there’s an Asian vase of fine craftsmanship, clearly a gift from an international customer. And around the corner in Geddes’s office, a finely carved wooden staff hangs on the wall, reminiscent of a Haida totem pole — except it’s made from a type of wood only indigenous to Malaysia. It underlines the international nature of Cigi’s mission to promote Canadian grain and develop new markets for it, to act as a resource for customers and to build and foster closer relationships with them. A few minutes later Geddes arrives, with a group of Mexican grain millers in tow. They’ve been in town for the past few days at the behest of one of the grain companies, and they’re a last-minute addition to the day at Cigi, because they’ve got some very specific technical issues. He begs a few more minutes’ indulgence to get them settled and make introductions to the technical staff, disappearing down a long hallway with them. Returning a couple minutes later he apologizes and says with a broad smile, “All in a day’s work.” Then it’s quickly down to the business at hand.
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the mandate to fund Cigi,” Geddes said. “So what we did was we identified a list of about 20 key areas — everything from funding and governance to a few key operational pieces — that depended on our relationship with the CWB.” From this framework, Cigi began calculating a path through the minefield of deregulation, an approach that wasn’t always welcomed a few blocks down Winnipeg’s Main Street at CWB headquarters, where they’d been expecting a faithful ally in the fight to maintain the CWB. Geddes admits from time to time he still encounters former colleagues who think he played a role in enabling the CWB’s demise. “Sometimes people will ask me, ‘Did they tip you off?’” Geddes says. “Once the federal Conservatives got a majority mandate, nobody needed to tip me off. They had been very clear about what was going to happen with the CWB if they got a majority.”
The right person In a lot of ways Geddes is the ideal person for the job, says one observer with a keen eye on the evolution of the Canadian grain industry. Brian Hayward headed the United Grain Growers line elevator company, later merging it with Agricore (the former Manitoba and Alberta Pools) to form Agricore-United. He suggests a more dogmatic supporter of the CWB might have steered the organization into, rather than around, trouble. At the same time, Geddes’s background with the organization also lent his actions credibility in the eyes of the farm community. Anyone who was surprised Geddes took a pragmatic approach hasn’t been paying attention, he says. September 2013
business “Over the years, I’ve worked with a lot of people from the CWB, and I’d basically say they fell into two camps,” Hayward says. “There were the people who’d clearly drunk the Kool-Aid, and believed every word of it, and there were the people who understood the mandate and their job, and they were going to do their best — but they still were pragmatic about it. I always found Earl to be in the pragmatic group.” Another surprising source of praise for Geddes is a man he has publicly sparred with for years, Blair Rutter, executive director of the avowedly open market Western Canadian Wheat Growers. The two were feature players — on opposite teams — for more than 15 years of intense struggle over the fate of the CWB, yet today Rutter says Geddes has done a good job of redirecting Cigi and helping the organization begin to find its footing in a brave new world. “I think Earl has demonstrated real leadership in this situation, and in no small part Cigi is only as far down this road as it is because he’s been there,” Rutter says. Key achievements have been wrangling a five-year producer checkoff of 15 cents a tonne, which will fund Cigi to the tune of $2 million a year while growers grapple with the challenge of setting up provincial wheat councils, which are then expected to partially fund the organization, provided they feel Cigi has demonstrated its value. Cigi has likewise gotten a commitment from the federal government for an additional $4 million, broadly recreating the one-third — two-thirds funding model of past years. In addition Geddes says there’s growing interest from grower groups that aren’t within Cigi’s traditional wheat and barley mandate, such as pulse crops groups, to explore programming and technical work, as well as some interest from the private grain trade to work with their customers. When the next four years are past, and the checkoff and the federal funding agreement expire, that’s when the rubber will hit the road.
Challenges remain Early successes aside, it remains a bumpy road. One big bump will be the “demonstrating value” part, says one Manitoba farmer who’s on the executive of the Wheat Growers’. Rolf Penner farms near
Grains U Brian Hayward says there’s little doubt in anyone’s mind that Cigi offers some unique training opportunities. After all, he has personally been the beneficiary of some earlier in his career. “I studied economics at McGill (Montreal’s English-language university) so when I arrived out here, I knew the theory of trading — but I didn’t know much about the practical business of grain trading,” Hayward says. “Early on I attended one of Cigi’s grain industry programs, and I learned a lot.” In fact, he’s convinced that there’s a natural fit here, in the heart of Canada’s grain trade, for Cigi to pursue the opportunity of educating the next generation of grain industry employees. “If you look at the universities, there’s not really anyone else doing it,” he says. “You go there and you learn about the theory, but there’s nowhere to go to learn about the practical things like how the inspection system works, how grain cars are allocated, all that sort of thing.” Hayward describes it as “an opportunity that’s being missed” and said he suspects Cigi will likely ultimately find a role meeting this demand. Says Hayward: “I think anyone who works in the grain industry — even if you’re not a trader and you’re working in HR or accounting — would benefit from being able to get that sort of practical training.”
Morris, Man., and is the Manitoba VP of the WCWGA. He says a key piece is going to be bringing the private grain trade on board as funders, rather than depending on farmers entirely. “If there is value in Cigi — and many believe there is — it doesn’t accrue solely to farmers,” Penner says. “The grain companies would certainly benefit from it too, so they should probably pay for it as well.” Geddes agrees that the grain trade needs to be brought on board, but also says he’s convinced that this is already beginning to happen. Companies are starting to approach Cigi to provide market development services for their customers, he says, although because of commercial confidentiality he declines to cite any specific examples. Brian Hayward says it’s going to be an extremely fine line for Cigi to tread, cultivating closer relations with various players in the grain industry while always remaining impartial and above the fray. But Geddes sees it as a core strength, and he maintains that progress is being made, slowly but surely. The phone, he explains, is starting to ring and on the other end of the line might be a representative of a grain company with a group of Latin American millers who are already in town, and they have some specific technical questions. “We’re seeing that more and more, and when that happens, I think that’s acknowledgment of the value Cigi has, the knowledge that Cigi has,” Geddes says.
Either way, he’s finally got his dream job, and he confirms, with a quick grin, that this will be the ultimate — and likely final — challenge of a long and successful career. CG
Trait Stewardship Responsibilities Notice to Farmers Monsanto Company is a member of Excellence Through Stewardship® (ETS). Monsanto products are commercialized in accordance with ETS Product Launch Stewardship Guidance, and in compliance with Monsanto’s Policy for Commercialization of Biotechnology-Derived Plant Products in Commodity Crops. This product has been approved for import into key export markets with functioning regulatory systems. Any crop or material produced from this product can only be exported to, or used, processed or sold in countries where all necessary regulatory approvals have been granted. It is a violation of national and international law to move material containing biotech traits across boundaries into nations where import is not permitted. Growers should talk to their grain handler or product purchaser to confirm their buying position for this product. Excellence Through Stewardship® is a registered trademark of Excellence Through Stewardship. ALWAYS READ AND FOLLOW PESTICIDE LABEL DIRECTIONS. Roundup Ready® crops contain genes that confer tolerance to glyphosate, the active ingredient in Roundup® brand agricultural herbicides. Roundup® brand agricultural herbicides will kill crops that are not tolerant to glyphosate. Acceleron® seed treatment technology for corn is a combination of four separate individually-registered products, which together contain the active ingredients metalaxyl, trifloxystrobin, ipconazole, and clothianidin. Acceleron® seed treatment technology for canola is a combination of two separate individually-registered products, which together contain the active ingredients difenoconazole, metalaxyl (M and S isomers), fludioxonil, thiamethoxam, and bacillus subtilis. Acceleron and Design®, Acceleron®, DEKALB and Design®, DEKALB®, Genuity and Design®, Genuity Icons, Genuity®, RIB Complete and Design®, RIB Complete®, Roundup Ready 2 Technology and Design®, Roundup Ready 2 Yield®, Roundup Ready®, Roundup Transorb®, Roundup WeatherMAX®, Roundup®, SmartStax and Design®, SmartStax®, Transorb®, TruFlex™, VT Double PRO®, YieldGard VT Rootworm/RR2®, YieldGard Corn Borer and Design and YieldGard VT Triple® are trademarks of Monsanto Technology LLC. Used under license. LibertyLink® and the Water Droplet Design are trademarks of Bayer. Used under license. Herculex® is a registered trademark of Dow AgroSciences LLC. Used under license. Respect the Refuge and Design is a registered trademark of the Canadian Seed Trade Association. Used under license. ©2013 Monsanto Canada Inc.
September 2013
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Organic outlook Organic pricing is beginning to catch up with the jump in conventional commodities By Amy Petherick rganic agriculture suffers its share of stereotypes and can’t always count on the general farm community to take it seriously. That can make a close look at the sector’s financials a bit of a wake-up. With 3,713 certified operations in the 2011 Canadian census, organic farming is on the rise, and stronger prices may help drive that growth. Clearly, organic is still a niche compared to conventional farms, accounting for just under two per cent of all farms across the country. Yet there’s no denying organic is a growth category, with its numbers up 66.5 per cent over 2001. The growth isn’t uniform. Saskatchewan for instance has seen a 14.1 per cent decline in organic production in the last five years because of strong conventional crop prices. Even so, the province still leads the country with the highest number of certified operations, and it is a big contributor in the production of the country’s leading certified organic products — field crops and hay. Meanwhile, organic production in Quebec has surged, with the province reporting the largest increase in organic farms, led by certified organic maple operations. The bigger surprise, however, may be the size of Canada’s organic farms. The stereotype says that organic farms are hippie operations, scratching meagre volumes from a handful of acres. Instead, the census shows most organic farms generate gross annual farm receipts between $50,000 and $250,000. When you consider that 49.9 per cent of the general farm population reported gross receipts under $50,000, the implication is that organic’s financials aren’t all that different from conventional farms, and may in some ways be better. One front-line believer in organic’s economic strength is Andrew Hammermeister, director of the Organic Agriculture 38 country-guide.ca
Centre of Canada at Dalhousie University in Nova Scotia. His mandate is to boost organic research and transfer the knowledge back to farmers. Hammermeister points out that even though there are only about 5,000 certified and transitional organic farms across Canada, there are 17,000 subscribers to the centre’s monthly newsletter. Some of those excess subscribers may be researchers, Hammermeister agrees, but he believes there’s also a growing number of subscribers who are looking at organic as a business opportunity. In other words, new farmers are coming from a wider pool, not just the counterculture. That’s building on other trends. “Ten years ago when grain prices were considerably lower and input costs were increasing rapidly, some farmers were to the point where they couldn’t afford to buy fertilizers, pesticides and genetically modified seed,” says Hammermeister. “A number of farmers would say they switched to organic because they wanted to get away from the high-input costs and the risks associated with it.” For such farmers, the difficulty can be to get a clear picture of organic’s profitability compared to conventional systems. Apples-to-apples comparisons are hard to come by, and can falter once you start asking questions. Hammermeister points to Statistics Canada as the place to start, especially since standardized certifications were mandated in 2009. However, he sympathizes with the difficulty economists face in trying to analyze the sector. Diversity is integral to organic farming, Hammermeister says, and there is so much variability between farms that it’s nearly impossible to classify operations in the same way that you categorize conventional farms. “Having diversity on the farm helps reduce the pressure from diseases and
insects, but also diversifies your farm income and helps you manage risk and capture other market opportunities,” Hammermeister says. Rather than look at organic versus conventional as a whole, Hammermeister says some ag economists have broken their analyses down to product comparisons in the few regions where even this can be done, such as in the western Prairies. Organic agriculture’s extensive crop rotations require extra years of study and there’s such a small amount of funding available for organic research that the number of published papers available can be counted on one hand. Even so, existing research does support Statistics Canada’s suggestion that there are significant financial opportunities in the organic sector — if there are premiums. Elwin Smith, a bioeconomist with Agriculture and Agri-Food Canada in Alberta, was part of a study published in 2004 which evaluated the net returns and risks of organic versus conventional crop rotations. He found that the best organic rotation of wheat, peas, canola, and sweet clover required high-price premiums to match the best conventional alternatives, which in this case turned out to be continuous wheat. “There may be individual growers out there who are capable of marketing and getting a better premium than others,” says Smith. “For others who are growing it (organic) and looking at it from almost a bulk commodity-type production, their premiums are probably less and profitability would be less.” Smith adds that because the organic market lacks marketing tools that are available to conventional farmers, including futures and options, marketing costs and risks can be higher for organic growers. Smith’s report notes another risk consideration too. Crop insurance programs generally don’t meet the needs of organic producers. It’s one more reason why, in order to successfully farm organically, Smith believes attention to market development is critical. Marion McBride, president of the Organic Association and an organic farmer since 1991, says that isn’t bad news. “We can’t meet our market demand,” McBride says, and she sees even more growth ahead. “There are lots of things that we can grow that we haven’t necessarily zeroed in on because there hasn’t been the distribution system or the awareness.” CG september 2013
www.ifao.com
Top Ten Benefits of Conservation Tillage Conservation tillage is any method of soil cultivation that leaves the previous year's crop residue (such as corn stalks or wheat stubble) on fields before and after planting the next crop, to reduce soil erosion and runoff. To provide these conservation benefits, at least 30% of the soil surface must be covered with residue after planting the next crop. Conservation tillage systems offer numerous benefits that intensive or conventional tillage simply can’t match: 1. Reduces soil erosion. Crop residues on the soil surface reduce erosion by water and wind. Depending on the amount of residues present, soil erosion can be reduced by up to 90% compared to an unprotected, intensively tilled field. 2. Reduces labor, saves time. As little as one trip for planting compared to two or more tillage operations means fewer hours on a tractor and fewer labour hours to pay ... or more acres to farm. For instance, on 500 acres the time savings can be as much as 225 hours per year. That’s almost four 60-hour weeks. 3. Saves fuel. Save an average 13 litres an acre or 6,500 litres on a 500-acre farm. 4. Reduces machinery wear. Fewer trips save an estimated $5 per acre on machinery wear and maintenance costs—a $2,500 savings on a 500-acre farm. 5. Improves soil tilth. A continuous no-till system increases soil particle aggregation (small soil clumps) making it easier for plants to establish roots. Improved soil tilth also can minimize compaction. Of course, compaction is also reduced by reducing trips across the field. 6. Increases organic matter. The latest research shows the more soil is tilled, the more carbon is released to the air and the less carbon is available to build organic matter for future crops. In fact, carbon accounts for about half of organic matter. 7. Traps soil moisture to improve water availability. Keeping crop residue on the surface traps water in the soil by providing shade. The shade reduces water evaporation. In addition, residue acts as tiny dams slowing runoff and increasing the opportunity for water to soak into the soil. Another way infiltration increases is by the channels (macropores) created by earthworms and old plant roots. In fact, continuous no-till can result in as much as two additional inches of water available to plants in late summer. 8. Improves water quality. Crop residue helps hold soil along with associated nutrients (particularly phosphorous) and pesticides on the field to reduce runoff into surface water. In fact, residue can cut herbicide runoff rates in half. Additionally, microbes that live in carbon-rich soils quickly degrade pesticides and utilize nutrients to protect groundwater quality. 9. Increases wildlife. Crop residues provide shelter and food for game birds and small animals.
10. Improves air quality. Crop residue left on the surface improves air quality because it: Reduces
wind erosion, thus it reduces the amount of dust in the air; Reduces fossil fuel emissions from tractors by making fewer trips across the field; and Reduces the release of carbon dioxide into the atmosphere by tying up more carbon in organic matter. from the Purdue University – Conservation Technology Information Center at www.ctic.purdue.edu
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Tough farm choice John Deere and AGCO will offer digital infrastructure capable of integrating data from a range of farm management software. But their strategies and the structure of their offerings differ significantly By Scott Garvey, CG Machinery Editor bout a year ago, I was having lunch in a quaint German restaurant near Frankfurt with three executives from DLG, the German Agricultural Society. One of them was Roland Hörner, DLG’s head of agricultural technology. His favourite topic that day — and his continuing passion — was the need to seamlessly integrate all the software and digital systems farmers now use. That would allow for quick and easy transfer of data between programs, thereby improving management productivity. At that time John Deere had already announced its FarmSight digital strategy, which aims to do something like that.
AGCO’s new digital strategy is its effort to compete with Deere’s FarmSight. Which is right for you? Complete digital integration was, and still is, only just beginning to evolve, but crucial decisions are already being taken. The need to standardize farm software so programs can communicate easily with each other in the way Hörner envisions has been an ongoing focus within agricultural engineering circles for some time. It’s exactly that effort which led to the formation of AEF, the Agricultural Electronics Foundation, one of the driving forces behind international standardization of all agricultural electronics. Because of that group’s efforts, and those of others, digital systems in the ag industry are now moving closer to a common operating standard. This is crucial if full integration is ever to be achieved. Until that happens, Deere’s FarmSight is one of the few market-ready platforms offering one option 40 country-guide.ca
for a significantly heightened level of farm-scale integration. In July, however, another player stepped forward. AGCO has now become the second major equipment brand to announce that it too is working on an all-encompassing digital strategy, called Fuse Technologies, which is intended to rival John Deere’s FarmSight and give farmers looking for systems integration one more option. The way AGCO introduced Fuse Technologies was reminiscent of how Deere announced FarmSight back in 2011. Unlike most industry press releases, neither of these had new products to talk about. Instead, they simply outlined the companies’ visions and intentions. “The message, initially, is AGCO takes this very seriously and we have a strategy we’re implementing now to ensure customers can believe we’re on the right path, and they can start to see where we’re going and our focus on this type of technology,” says Matt Rushing, AGCO vice-president of product management Global ATS and Electronics Functional Group. “It’s to let them know what’s coming down the pipe.” Although Deere and AGCO broke the news of their digital intentions in a similar way, their approaches to integration are very different. Both brands will use Internet-based cloud computing, but the key difference will be the software that the systems are designed to integrate. “A lot of the same technologies will be used for both,” explains Rushing. “But for us it’s a little different. We’re focused more on the mixed fleet.” That’s what separates the Deere and AGCO approaches. AGCO wants its platform to be universally compatible, whereas Deere is building its infrastructure to perform best on all-green farms. Even though Deere made it clear it will work with third parties to develop software and products, and it will incorporate some common systems features, executives there want FarmSight to generate more September 2013
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revenue for the company. Of course, AGCO does too, but Deere believes the best way to do this is by creating and offering a full suite of its own proprietary software products that meet all — or at least most — of farm managers’ needs. Then Deere would use those expensive-to-develop digital products to drive sales of its iron. “What we discovered is the accumulated value (of digital technology) is really about selling more equipment,” said David Everitt, former president of Deere’s Ag and Turf Division, during a technology summit in Des Moines, Iowa, in 2012. “When we had it (digital technology) as a single business unit, we were trying to create products to justify the investments for building this infrastructure, and it didn’t pencil out for that specific business. The real value to us is selling more equipment. Another three points of market share is worth much more to us than the value of this (digital) business.” Providing additional insight into the rationale behind the all-green strategy at that same event, Everitt recalled a conversation he had with a farmer at a roundtable meeting. The farmer had just purchased a John Deere tractor but wasn’t happy he had to do so. He preferred the brand of machine he traded in. Everitt asked the farmer why he went ahead with that purchase under those conditions. “He said simply, ‘It has to be part of the (digital telematics) system. The value of the system is greater than its individual parts.’ It was the first time I ever had a customer tell me that.” If that becomes the prevailing attitude among the majority of medium- and large-scale producers, then the implications are enormous. It changes the entire face of farm machinery marketing. It also means all the major brands need to adapt, and the minor players in the industry could face a new impediment to growing sales. But if Fuse Technologies delivers on its promise of universal compatibility, the existence of those popular short-line brands may actually help drive the sale of AGCO equipment, particularly its tractors — and, ironically, at the same time AGCO would be boosting the appeal of short-line competitors’ implements as well. Everitt explained that each machine category gets a different benefit from the inclusion of digital technology options. Tractors benefit the most, followed by combines, then sprayers. If AGCO’s universalcompatibility system concept proves popular, the company may achieve as much growth in market share for its iron as Deere, but with a completely opposite strategy. “A lot of customers out there have been pretty candid with us,” says Rushing. “They want to keep their options open. They don’t want to be limited to what September 2013
they can buy… they don’t want to be channelled into buying one brand or one colour. “We want to make sure the farmer out there who uses our (digital) product or services still has the ability to connect with people or products they trust,” Rushing adds. “I think that’s a key element of what we’re trying to do.” But even with electronic standardization gaining momentum, there seems to be a lot of ground to cover before AGCO can achieve its goal of wideranging digital compatibility.
Say goodbye to yesterday. Technology is rapidly evolving, and today’s tractor electronics are a key battleground. “It seems like a tall order until you start to look at what’s being done in the industry and what’s being done in technology development,” says Rushing. “They (industry organizations) are developing ways and standards that we can use to do this that aren’t going to make it so hard for individual OEMs and manufacturers.” Back at that 2012 technology summit, Everitt went out on a limb and made predictions about the future importance of digital technology in the ag equipment marketplace. “We believe this is a hinge point that is critical for modern agriculture,” he said. A year later, those words are starting to seem prophetic. Whether it will be the exclusive or inclusive digital strategy that prevails over the long term can’t yet be predicted. Odds are there will be ample room for both. One thing is clear, though. It will likely be impossible for manufacturers to hold the attention of professional farmers without an integrated digital strategy of some kind. CG country-guide.ca 41
hr
When worry takes over Excessive caution can paralyze your farm. Here’s help to gain the upper hand By Pierrette Desrosiers, work psychologist, business coach, and author
nxious people spend a lot of energy worrying, which makes them unhappy and unproductive. A farmer confided in me that, for nearly 10 years, he had been afraid to leave the farm, even for a few hours. “What if the barn burns down while I’m gone?” he asked, so his wife runs all the errands and he rarely goes out anymore. Another farmer told me he was so worried about having to speak in public that he avoided going to meetings, and another farmer was very concerned about his retirement… at only 24 years of age! We all go through periods of anxiety. To a certain extent, worrying helps us to prevent, face or avoid certain dangers. However, some people suffer from what is called “generalized anxiety disorder” (GAD). People with this disorder worry excessively about anything and everything. They cannot tolerate uncertainty. Their disorder interferes to a great extent with their personal and professional lives. People who are anxious worry about a variety of issues such as health, money, work, family and interpersonal relationships. People prone to anxiety entertain catastrophic scenarios that will most likely never occur, but they also don’t do anything to avoid them. They become hyper-vigilant and are almost constantly on guard. They spend a considerable amount of energy worrying, which exhausts them and makes them both miserable and unproductive, adding an extra burden to those around them. Anxiety is associated with a specific idea that makes a person either overestimate the probability of danger or underestimate their ability to cope with situations. People suffering from anxiety excel at identifying potential problems, but they are much less able to solve real situations. Do you have GAD? Symptoms include experiencing and having difficulty controlling anxiety and excessive worry most of the time, for a period of at least six months, regarding at least two issues, such as money, insecurity, relationships, work, health and family. Symptoms also include exeriencing at least three of the following: • Agitation, or feeling at the end of your rope. • Fatigue. • Difficulty concentrating or a frequent sensation of drawing a blank. • Irritability. • Muscle tension. • Sleep disturbances. 42 country-guide.ca
In my practice, I have met many entrepreneurs who have been unaware that they are anxious and that their anxiety is at the root of negative emotions such as irritability, perfectionism, and an urge to control. They often said to me, “Me, anxious?” What can you do about it? Challenge your anxiety by asking these questions: • Is it possible to be certain about everything in life? • What are the advantages of requiring certainty, versus the disadvantages? • What is the likelihood of positive or neutral outcomes? • Do you distinguish between solvable and unsolvable worries? • Can you do something about the problem or prepare for it, or is it out of your control? Then, stop worry by questioning the worried thought: • What actual evidence is your concern based on? • Is there a more positive, realistic way of looking at the situation? • What’s the probability that what I’m scared of will actually happen? • How will worrying about it help me, and how will it hurt me? • What would I say to a friend who had this worry? Finally, learn more about worry-busting relaxation techniques. If you’re a chronic worrier, relaxation techniques such as mindfulness, deep breathing, and meditation can help. Anxiety not only has a very negative effect on a person’s quality of life in general, but it can also lead to depression. Individuals are not forced to live with this problem. It is possible to regain control. Approximately seven per cent of women and four per cent of men suffer from an anxiety disorder. Therapy or coaching provided by a psychologist may help you control the beliefs that create anxiety. These beliefs include the need for love and recognition from everyone, to perform at all costs, to be the best, to control everything, and so on. If anxiety is out of control, professional help is an excellent solution. Taking action is anxiety’s worst enemy. CG Pierrette Desrosiers, MPS, CRHA is a work psychologist, professional speaker, coach and author who specializes in the agricultural industry. She comes from a family of farmers and she and her husband have farmed for more than 25 years. ( www.pierrettedesrosiers.com ) Contact her at pierrette@pierrettedesrosiers.com. september 2013
w e at h e r MILDER THAN NORMAL
Sca tte Rainred Fro st
C Fro ool Sh st ow y ers
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NEAR-NORMAL TEMPERATURES AND RAINFALL
m ar et W W t. p Se
le ab y e ng wer a Ch Sho
Wa We rm Sp t ell s
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NE WA AR RM -N E R O T RM H AL AN RA US IN UA FA L LL
NEAR NORMAL
September 22 to October 26, 2013 September 22
ONTARIO
Sept. 22-28: Sunny weather interchanges with some rain this week. Seasonal to occasionally warm. Windy at times. Frost in many central and northern regions. Sept. 29-Oct. 5: Often fair with seasonal to warm temperatures. Risk of heavier rain on a couple of days. Cooler central and north. Two or three frosty nights in all but southernmost areas. Oct. 6-12: Warm and cool days alternate bringing fair skies and then blustery, wet days. Chance of heavy rain in places. Frost in several areas on a couple of nights. Oct. 13-19: Fair overall apart from rain on a couple of occasions, possibly heavy in places. Frost on many nights. Chance of snow in the north. Windy at times. Oct. 20-26: Fair skies dominate but look for rain on two or three days, becoming mixed with wet snow in the north. Frost risk south, more widespread central and north.
QUEBEC Sept. 22-28: Seasonal to occasionally warm but frost pockets in central and northern areas. Generally sunny but rain falls on a couple of blustery days this week. Sept. 29-Oct. 5: Frost occurs on a couple of clear, cool nights, otherwise seasonal to warm. Fair but some rain on two or three occasions, chance heavy in a few localities. Oct. 6-12: Changeable as fair, mild days interchange with cooler, wet days. Windy. September 2013
Risk of heavy rain in places. Frost in many areas on a couple of clear, cool nights. Oct. 13-19: Frosty nights otherwise seasonal to mild temperatures. Unsettled with heavier rain and gusty winds on two or three days. Cool in the north with some rain or wet snow. Oct. 20-26: Variable weather as fair, mild days are followed by cooler air, strong winds and rain. Occasional snow north. Chance of heavy precipitation in places.
ATLANTIC PROVINCES Sept. 22-28: Expect a few windy, wet days this week with a chance of heavy rain in some areas. Seasonal to warm but frost threatens western and northern areas. Sept. 29-Oct. 5: Highs frequently in the teens with one or two frosty nights inland. Sunny overall but a storm threatens on a couple of days with heavier rain and gusty winds. Oct. 6-12: Conditions vary as fair, mild days alternate with cooler, wet weather. Chance of heavy rain in some regions. Windy at times. Frost patches inland. Oct. 13-19: Generally settled with seasonal to mild temperatures although a disturbance moves by with occasional rain and strong winds. Frost pockets on a couple of nights. Oct. 20-26: Unsettled and windy this week as fair, mild conditions interchange with heavier rain. Frosty nights in several areas. Occasional wet snow and cooler north.
to October 26, 2013 NATIONAL HIGHLIGHTS Typical autumn weather is anticipated over western and central parts of the country where frost and intermittent cool spells will mark the beginning of a general cooling trend. In some far-northern areas and at higher mountain elevations, snow will make its first appearance of the season. Warmer-than-usual temperatures are expected to embrace much of Eastern Canada through the period. The warmth over most of Quebec and the Atlantic provinces, however, is likely to be accompanied by a few stormy sessions from time to time. This will result in occasional wet, windy conditions, particularly across the Maritimes and Newfoundland. As well, some computer models indicate similar warm, wet spells for portions of southern British Columbia and southern Alberta.
Prepared by meteorologist Larry Romaniuk of Weatherite Services. Forecasts should be 80 per cent accurate for your area; expect variations by a day or two due to changeable speed of weather systems. country-guide.ca 43
ACRES
By Leeann Minogue
Gone in a minute “This was going to be our year,” said Jeff. “I had so many plans.” eff came crashing into the house, soaked and dripping on the linoleum. “Where are you guys? Are you safe?” “Down here!” his wife called from the basement. “Good,” Jeff said, thumping down the stairs, still wearing his wet boots. “Anything could happen out there. Grandpa thought he could see the start of a funnel cloud.” “Is he inside?” “He went to Mom and Dad’s basement,” Jeff said. “At least that’s where he said he was going. But then he went to get his camera out of his truck, so I’m not sure.” “Oh no,” Elaine said. “Not that camera again.” “I didn’t want to leave an old man out in a tornado, but I thought I’d better check on my own family.” Jeff and Elaine managed to keep Conner down in the basement for a good 15 minutes, until the howling of the wind died down and they couldn’t hear hail on the roof anymore. Jeff went up the stairs first; his wife and young son followed behind. 44 country-guide.ca
“Wow! Snow!” Conner shouted, wide eyed when he looked out the living room window and saw the hailstones littering the lawn. “Go sledding!” “I don’t think so, kid,” Jeff said. “But let’s go take a look.” By the time Elaine and Jeff got Conner’s shoes and jacket on, Jeff’s dad, Dale, was at the door. “Did you see that? In all my years living on this farm, I’ve never seen anything like that. I mean, I’ve seen hail. Don’t get me wrong. But that stuff was the size of tennis balls.” Sure enough, one of the tennis ball-sized stones was melting in Dale’s outstretched hand. “Go sledding!” Conner shouted again. Then Ed, Jeff’s grandfather came to the door, dripping wet, holding his camera in one hand and massaging his head with the other. “Hit by a damn hailstone,” he said. “Who’s ever heard of that? You’d better come out and see this.” After a short walk around the yard and a quick crop tour, all of the Hansons gathered in Elaine’s kitchen. Elaine brought out towels so they could dry off, then put on fresh coffee. Jeff kept one eye SEPTEMBER 2013
acres
on his smartphone, looking at Twitter photos of the storm. Dale paced the room, using his cellphone to make calls to a few neighbours. “Geez,” he said when he hung up. “Guess it could be worse. The Jamesons lost that big picture window in their living room. Fred says there’s glass all over the floor. Wondered if we have a piece of plywood he could use to keep the rain out until he gets a new pane of glass.” “I’ll run one right over,” Jeff said, leaving his just-started coffee abandoned on the table. “Want me to come with you?” his dad called after him. “No, that’s OK,” Jeff said as he shut the door behind him. Jeff wrestled a sheet of plywood into the truck and took it to the neighbour’s house, where he took time to help Fred secure it in place. “Doesn’t look too pretty, but it should do the trick,” Jeff said. “Hope so,” Fred said. “Should be a lot of business at the glass store. Might be a while before I get a real replacement.” Then Jeff was on his way home, alone for a few minutes, surveying the damage again. The durum north of the Hansons’ yard looked like someone had gone over it with a lawn mower. And done a pretty efficient job of it, too. Jeff got out of his truck for a closer look. Not a head of durum left that he could see. This was only Jeff’s second year back at the farm full time, since he’d quit his job and moved home with his wife. He’d run up a lot of debt in a short time. Bought a new tractor. Built a new house. Bought Elaine a new SUV. And now Elaine was pregnant again — one more person to look after. The crop had looked good. Real good. And prices were high. Jeff had talked with Elaine and his parents about how much they should invest. “Better keep spraying,” Jeff had decided, before he called the dealer to order more fungicide. “If we can get an extra five bushels an acre, the chemical cost will be well worth it.” And it wasn’t just the money. Jeff had spent countless hours in the sprayer. He’d missed a friend’s wedding and a family reunion. He hadn’t even had time to take Conner to the river to try out his new Buzz Lightyear fishing rod. september 2013
“ In all my years living on this farm, I’ve never seen anything like that.” All the money and all the hours had been an investment. Jeff had poured over the numbers in spreadsheets. With this crop, Jeff would be able to make all the payments, put some money away for the future and even take Elaine and Conner and the new baby on a pretty decent winter vacation. This crop was going to be the one that set him up for the long run. Now, as Jeff looked out the window at his flattened fields, he slowed the truck and considered skipping the turn into his own driveway — just heading on down the road, driving away into the distance. Leaving this mess behind. Of course he didn’t do that. But after he parked in front of the house, he turned off the key and just sat there. Thinking. Finally, Elaine and Conner came out of the house. Elaine opened the passenger door and got into the truck, pulling the toddler up onto her lap. “Guess you should’ve married an accountant,” Jeff said. “This isn’t really working out too well for you.” “It’s not your fault,” Elaine said. “This was going to be our year. I had so many plans. Now, instead of buying a new swather, I’m going to be shelling out to fix the roof on the damn house… Elaine, there’s almost nothing left of two-thirds of our crops.” “I know,” Elaine said. “Maybe we should’ve kept our jobs a few more years,” Jeff said, staring out the window. Elaine could see that his eyes were filling with tears. “Too late now,” Elaine said. “We’re in this. Besides, it could be worse.” “How?” “We could’ve had a tornado. One of us could’ve been hurt.” “Grandpa’s got a bruise,” Jeff said. “He should’ve thought of that before he went out in a storm to take pictures. He needs a hobby, but I told you your grandpa joining that camera club was going to be trouble.” This almost made Jeff smile. Then Elaine said, “There’s all kinds
of ways this could’ve been worse. The new SUV could’ve been parked outside, getting all banged up. It could be us putting plywood in our living room window. Or, heck, you could’ve been an accountant.” Now Jeff really did smile. “And I didn’t tell you the good news,” Elaine said. “What’s that?” “Most of the garden was sheltered from the hail. The lettuce is gone, but I think there’s still going to be lots of zucchini!” Jeff groaned and rolled his eyes. Then he leaned over and kissed his wife. “You’re right. We’ll be OK.” “Now we can go sledding?” Conner asked. CG
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country-guide.ca 45
life
A vacation that pays These tips will help you get more enjoyment from your travels this winter, and return to find the farm in great shape By Helen Lammers-Helps
armers often feel like they can’t possibly take a vacation. It’s especially true of livestock farmers, but there isn’t a farmer of any type across the country who doesn’t feel the farm is safest when its owner is there. And when farmers do take a vacation, they often have trouble disconnecting from what’s going on back at the farm, so they may be on vacation in body, but not in mind, keeping an eye on markets, for instance, or spending the afternoon on the phone tracking down a replacement part for a tractor, or some new tool for the shop. Unfortunately, if you’re skipping vacation time, both your farm and your health may be suffering. Recent studies show that vacations are essential to physical and mental well-being. Research at the State University of New York found that men aged 35 to 57 who don’t take at least a week’s vacation annually increase their risk of dying of heart disease by 30 per cent. They also have an increased risk of having high blood pressure, Type 2 diabetes and obesity. Vacations strengthen family bonds. Sharing adventures and memories is good for relationships, says Saskatoon productivity consultant, Pat Katz. With the stress of running a farm 24/7, building cohesion with your spouse and children is especially important. Not having downtime is not only bad for you on a personal level, it’s also bad for business. Our productivity suffers when we don’t take a break, says stress and wellness expert Beverley Beuremann-King from Little Britain, Ont. When you get a chance to relax, you come back more engaged, says Beuremann-King, who grew up on a dairy farm in southwestern Ontario. Relaxation improves mental clarity, creativity and decision-making abilities. But not every vacation will leave us rejuvenated. Some people plan a vacation without asking themselves what it is they really need, says Katz. Do 46 country-guide.ca
you need time on your own? Time to connect with friends and family? Rest? Spiritual renewal with some time spent in nature? The excitement and adventure of seeing new places and meeting new people? Or do you just need time to catch up on jobs around the house? If you ask yourself these questions, you’ll have a more satisfying vacation with less resentment. Plus, there will be a greater chance of renewal for all involved, says Katz. “The right choice starts with honouring what you need from the inside out and not simply responding to the expectations of others,” she says. And if the usual family traditions are no longer working, you shouldn’t be afraid to change them. “What you need may be different at different stages of life,” Katz adds. Be forewarned, though. A vacation is not a magic cure. If you are seriously overworked, a vacation will not prevent burnout, says Pam Paquet, a psychologist and business coach in Port Coquitlam, B.C. Vacations are part of a bigger picture, she insists. If your vacation involves other people, it will probably have to involve some compromise, continues Katz. If one spouse thinks a road trip is the ultimate vacation while the other prefers to stay in one place, maybe combining a road trip with several days spent in one place, would meet everyone’s needs. Think “yes/and” rather than “either/or,” says Katz. One clue to figuring out what kind of vacation September 2013
business
works best is to reflect on your last one. What did you like and what didn’t you like? Different people get relaxation from different things, says Katz. For some people a vacation that involves a lot of planning and go-go-go may not be relaxing. Beuremann-King agrees. If you hate crowds, don’t go to Disney World, or if you do, put some research into finding ways to minimize the amount of time spent in lineups, such as finding out when Disney is the least busy. How long does a vacation need to be to leave a person re-energized? It really depends on the person, says Katz. “There’s no one size fits all,” she says. Beuremann-King agrees. While she thinks seven to 10 days is ideal for many people, some people can unwind completely in a long weekend. If you haven’t been away in years, Beuremann-King recommends starting with three to four days. There are lots of options for vacations, and the right choice for you will depend on your operation, your stage of life, your personality and the availability of skilled backup management to take over when you are away. September 2013
A lot of entrepreneurs are Type A personalities who have a hard time slowing down, says Paquet. A seven-day cruise can be a good fit for this type of person because they can do as much or as little as they want on the cruise while also accommodating the needs of different family members, says Paquet. For some, going on an international farm tour to New Zealand or South America is their dream vacation. Beuremann-King says that her dairy-farming parents went on these trips about every five years and enjoyed being able to socialize with other farmers while on the trip. To find out about tours, check out Agricultural Tour Operators International (www.atoi.org), a group of professional tour operators with agribusiness expertise offering agricultural tours. For some, clearing the mind by attending a retreat is the best way to find renewal. Individuals often gain a new perspective after attending a retreat. A retreat offers an opportunity for deep rest and relaxation. There are many different types of retreats, one for every different type of person, from yoga, meditation and spiritual retreats to silent structured and unstructured retreats. A comprehensive list of retreat centres around the world is available at www.retreatsonline.com. If you do it right, even a staycation can work, says Katz. If you plan day trips and eat dinners out, staying at home can feel like a vacation, she asserts. However, if you don’t unplug and if people are still knocking on your door, then the benefits will be minimal. And if getting away really isn’t possible, then shorter periods of relaxation can help you balance your life. Researchers at the University of Alabama recommend regular outings such as golfing, a day at the beach, or an evening out with friends as good ways to combat stress. Beuremann-King knows one dairy farmer who put in a pool so he could enjoy time with his family without leaving the farm. To gain the full restorative benefits of time away from the farm, the experts agree that ideally we should be leaving the laptop at home. If we’re checking email we’re physically away, but not mentally away, says Katz. However, Katz says that if you absolutely must check in, set boundaries. “Don’t let a 15-minute session turn into three hours.” Leaving clear instructions for your
employees when you’re gone will help you relax while you’re away and reduce the stress of returning to find problems at the farm. Paquet recommends leaving a list of jobs that must be done, those that would be nice to get done and those that are simply on the wish list. Making a list will mean fewer surprises and misunderstandings, she says. Paquet also stresses that every business owner should have an Operating Manual for when they are on vacation or in case they get sick, are injured, or die suddenly. While it can be hard to step back from the farm for a vacation, if you can find a way to do it that fits your operation and temperament, you’ll be rewarded with a fresh outlook and more energy. CG
Vacation planning tips • Practice patience. Don’t let flight delays, construction, or crowds frustrate you. Be flexible and don’t sweat the small stuff. • Don’t cram too many activities into your trip. Plan some relaxation time. • Do a mid-vacation check to see if the trip is meeting your needs. If not, adjust your plans. • While on vacation, de-stress with leisurely walks, evening swims, time spent in nature or reading for pleasure. • Plan for a day at the end of your vacation so you can ease back into your schedule. Don’t return home from a flight at 2 a.m. and then jump back into work the following morning. Doing so will negate the benefits of the vacation. • Create out-of-office voice and email messages. Direct people elsewhere or ask them to contact you again after you get back. • If there are too many emails in your inbox when you get home, consider a bold move. Delete all of the messages and only respond to new ones. If it’s important, people will contact you again. • To extend the vacation feeling, share photos, add a vacation photo as your screen saver, bring a memento to the office and plan for a shortened work week when you get back.
country-guide.ca 47
h e a lt h
Let’s lose those pounds By Marie Berry 2004 survey found that 36 per cent of Canadians were overweight and another 23 per cent were obese, which means that well over half of Canadians were above their ideal weight. It’s safe to assume that in the intervening years, the problem has grown along with the waistlines of Canadians. A variety of reasons have been given for these dramatic numbers. You’ve heard and read many of these explanations, including a decreased amount of physical activity, a more sedentary lifestyle, a dependency on convenience foods, poor nutrition, larger portion sizes, and even the availability of more high-calorie foods. However, the basic problem is that many of us are eating more than we are “burning off” with physical activity. The problems of being overweight go far beyond just being unable to find clothes in your size! You probably are aware of the increased cardiovascular risks such as heart disease, increased blood pressure, increased cholesterol levels, heart attacks, and stroke. The extra pounds also seem to increase your risk for some cancers, for example colon and breast cancer. Sleep apnea and breathing problems are more common when you are overweight as well, as are liver and gallbladder disease. And, if you are overweight and have osteoarthritis, you are putting extra stress on your affected joints, causing complications. You probably have a good sense of whether you are overweight just by looking in the mirror or getting on a bathroom scale. However, there are several tools that can help you gauge what your healthy weight should be. The body mass index, often seen abbreviated as BMI, is a standard measurement. It is calculated as your weight in kilograms divided by your height in metres squared. The good news is that there are numerous web-based BMI calculators, so all you Next month we’ll tackle the embarrassing problem of diarrhea. No one really likes talking about it, but you should especially if it is an ongoing problem. Bowel health is something we all take for granted, but when we do have a problem, we’d rather ignore it than have it assessed and treated. 48 country-guide.ca
have to do is plug in your numbers in your choice of imperial or metric units. Ideally, you want to fall somewhere between 18.5 and 24.9. A number of 25 to 29.9 means you are overweight and 30 or higher means you are obese. Your waist measurement is also a good indicator in that carrying a lot of weight around your middle is associated with a greater risk for diabetes and heart disease. The aim is 94 centimetres or 37 inches for men and 80 centimetres or 32 inches for women. Changing your eating habits can be difficult, but by changing just a few, you may be able to shed some of those pounds. Add more fibre to your diet by opting for whole grain products whenever possible. Aim for five to 10 fruits and vegetables each day. It isn’t as hard as it sounds if you keep in mind that a serving size is half a cup of juice or one piece of fruit. Choose more fish and chicken than red meat, and cut down on your consumption of saturated fats. Watch your sugar and salt intake, as well, especially the content in processed foods. Drink lots of water, aiming for six to eight glasses daily, and of course don’t skip breakfast. Getting off the couch may be the start of a more active lifestyle. Your goal should be 20 to 30 minutes of physical activity most days of the week, which can be something as simple as a brisk walk. Keeping a diary of your diet and daily activities will help you identify any pitfalls and could give you some ideas on foods or activities that you enjoy. Weight loss usually means a change in your lifestyle, which can be difficult and will certainly take time. Your aim should be to lose one to two pounds per week. Becoming involved with a support group, perhaps a group of your friends or even an organization like Weight Watchers, will help with your motivation. A great idea is to read food labels, so that before you put any food in your mouth, you know exactly what you are eating including calories, fat, sugar, and salt content. You may decide to not eat that bag of potato chips, but rather have an apple. Remember, the saying, “A moment on the lips, forever on the hips” is true if you do not change your habits! Marie Berry is a lawyer/pharmacist interested in health and education. September 2013
In John Updike’s novel, Rabbit Run, Harry Angstrom comes home to discover his drunken wife has accidentally allowed their baby to drown in the bathtub. Heartbroken, Harry goes into the bathroom, kneels by the tub, and effortlessly pulls the stopper out. He groans, “How easy it was, yet in all his strength, God did nothing. Just that little stopper to lift.” Desperate situations evoke a deep groan in our soul. Floods in Alberta and Ontario, and a train mishap in Lac Megantic, Quebec, have wrought destruction and death. While we believe with our heads that God is not to blame, with our hearts we lament that God did nothing to prevent the tragedy. Last autumn I wrote about a horseback riding adventure in the southwest corner of Alberta with Hugh Simon, a retired RCMP staff sergeant. Hugh and I were planning to ride again this summer when I received word he had been bucked off his favourite horse. He was in hospital with six broken ribs and a punctured lung. He died a week later. A memorial gathering for Hugh was held in a saloon on a guest ranch in the foothills of the Rockies, a part of the world he loved deeply. It was a gathering of ranchers, cowboys, poets, writers and retired Mounties. We recalled songs he sang with his guitar and stories he told around the campfire after a day of riding. Hugh had a big heart under his big hat, a love of people and animals. His dog Shelagh, an Australian shepherd, was always at his side. A few months ago I phoned Hugh and asked how he was. “I am heartbroken,” he replied. I wondered if he had fallen in and out of another romantic relationship but he explained that Shelagh had disappeared. He had spent hours searching for her. “If she is gone and a bear or a cougar got her, I hope it was quick and she did not suffer.” The next day his wayward dog returned. Hugh seemed miffed that Shelagh would leave home for no obvious reason! On the way home from the memorial my wife Jacqueline and I stopped for supper in Nanton, a town south of High River. The conversation, easily overheard, was about flooding. The restaurant was filled with refugees from the enormous flood that destroyed hundreds of homes, caused millions of dollars of property damage and left four people dead. The trauma of the sudden flood, and the huge disruption in their lives, obviously went very deep. As we prepared to leave, people gathered around us. They told stories and showed us pictures. Some were left with nothing, yet were grateful to be alive. One lady said, “It is only stuff. It can be replaced.” Some situations can be managed. Others are beyond human control. A man was on his way home from market with his camel. Sales had been good so he decided to stop at a mosque and pray. He left his camel outside, went in with his prayer mat and spent several hours offering thanks to Allah, praying and promising to be a good Muslim. He vowed to help the poor and be an upstanding pillar of his community. When he emerged it was dark and his camel was gone! He flew into a violent rage and shook his fist at the sky, yelling: “You traitor, Allah! How could you do this to me? I put my trust in you.” A passing Sufi master heard the man yelling and chuckled to himself. “Trust God but tether your camel.” Suggested Scripture: Genesis 24:10-33, James 3:1-5 Rod Andrews is a retired Anglican bishop. He lives in Saskatoon. September 2013
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Va l l e y
The Pelzman Effect
hen I was growing up on the farm, the old guys put a huge effort into explaining to me just how many ways there were to kill yourself on a working farm. They taught by example, which is to say they showed me a whole lot of bad examples until it dawned on me that trying to outrun a hay wagon downhill with a free-wheeling Pony tractor was not a good idea. Over the years I absorbed certain basic principles. A body in motion tends to stay in motion until it hits an unrelenting hard surface. Using a chainsaw over your head is the rural equivalent of running with scissors. Just because you can pry 37 times your weight if the pry is long enough, still doesn’t make it a good idea. But the old guys taught me something else. It began to dawn on me that certain people are more comfortable with risk than others and it is difficult, if not impossible, to protect them with safety equipment. Hockey players with helmets and faceguards hit each other harder. Skiers ski faster. Some time ago, this theory was codified as the Pelzman Effect, which states that people will adjust their behaviour in response to perceived levels of risk. A driver who finds that anti-lock brakes will stop his car in half the time and distance he needed for conventional brakes will now drive faster and follow the vehicle in front of him more closely. The number of crashes stays constant. In fact, with ABS the number of run-off crashes went up by more than a third. Booth’s Rule No. 2 tells us, “The safer skydiving gear becomes, the more chances skydivers will take, in order to keep the fatality rate constant.” It’s the sort of thing that makes farm equipment safety people tear their hair 50 country-guide.ca
ILLUSTRATION: RICK KURKOWSKI
Dan Needles is the author of “Wingfield Farm” stage plays. His column is a regular feature in Country Guide
out in frustration. Now they draw little pictures of stick figures taking terrible risks and paste them on the dashboards and fenders of their machines. Just like the old guys they are just trying to keep me out of trouble. Do the pictures help? For a small portion of the population the answer is, and always will be, “No.” In fact, some of the pictures actually look like fun. Who would have known you could play catch with your front-end loader? Behaviour that seems foolhardy to most of us is actually hard-wired into our species. How else did we discover that the world wasn’t flat? How else did we learn how to fly or drink cow’s milk or eat mushrooms? Human innovation moves in a bell curve. Marketers long ago figured out how we approach something new and scary and they learned to lump us into different categories. A small number of us are Pioneers or Early Adopters who must own the latest gadget no matter what the cost or how questionable the utility. Later arrivals have different attitudes about social standing and value and are classified as Early Majority or Late Majority Adopters. A few, like myself, are Laggards, who finally break down and buy a DVD player in disgust
because no movies are being released on tape anymore. Risk-takers and novelty seekers are almost always wrong. They buy VHS and find that the market settles on Beta. But by taking that leap they have cut a path for the rest of us. As the saying goes, “The pioneers get the arrows and the settlers get the land.” But without someone who is willing to take a deep breath, step into space and trust that things will turn out all right, the human race would not move forward. This is a scientific fact that was recently captured by the Canadian business guru Bruce Philp in his famous Theorem of Risk Perception in Rural Males. That is: Safety Choices = Effort Saved x Bragging Rights ÷ Probability of Public Humiliation. I see my teenage son go by on the riding mower. He leans down to grab a twig off the lawn, like a gaucho cowboy, one toe in the steering wheel and one hand on the seat to keep the safety shut-off switch from activating. In that brief moment, I see human evolution as nothing more than a series of bar bets. “If I can do this, then why can’t I do this?” His mother sighs and says, “He’ll be fine… if he’s allowed to live.” September 2013
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