EASTERN EDITION
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October 2013 $3.50
IS IT TIME TO PUT ON THE BRAKES?
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TAKE CHARGE OF YOUR KEY FARM RATIOS FIVE STEPS TO A BETTER RETIREMENT PLAN THESE INVENTORY CONTROLS REALLY PAY
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Visit SyngentaFarm.ca or contact our Customer Resource Centre at 1-87-SYNGENTA (1-877-964-3682). Always read and follow label directions. Cruiser Maxx® Vibrance® Beans, Rooting PowerTM, Vigor Trigger ®, the Alliance Frame, the Purpose Icon and the Syngenta logo are trademarks of a Syngenta Group Company. © 2013 Syngenta.
OCTOBER 2013 MONEY MANAGEMENT 2013 With the bears trying to grab control of commodity markets, this will be among the most important winters in Canadian farm history for wise financial management. Our writers have searched out an issue full of expert help, all adapted to today’s farms.
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RATIO AND REWARD
FIVE STEPS TO YOUR RETIREMENT PLAN
SPOUSAL RRSPS
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WRONG CHOICE What if your son or daughter doesn’t have the aptitude or attitude they’ll need to take over?
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GUIDE LIFE — MAKE ROOM FOR ‘WHY’ You can help your kids grow into high-creativity business leaders, even if you don’t feel creative yourself.
EVERY ISSUE 9
MACHINERY GUIDE Manufacturers are redefining the 120- to 220-horsepower category with tons of new designs.
MAKE IT THE RIGHT NAME Here’s how to work your way to a farm or a business name that really works.
ARGENTINA AT THE CROSSROADS Its farmers are world class, but can they survive those erratic governments in Buenos Aires?
The right way to use spousal RRSPs on your farm isn’t as obvious as you’ve always thought.
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GUIDE HR — WHEN SMARTPHONES MAKE US STUPID It turns out you can get just as addicted to smartphones as to booze, with similar results.
Follow this path to the security and lifestyle options you’ll be happy to have.
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HAS RIDING THE BULL CHANGED OUR MARKETING PSYCHOLOGY? Errol Anderson analyzes the market, and finds that farm overconfidence sets the stage for losses.
The first misconception is that financial ratios are hard to compute. The second is they’re only for nerds.
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EXECUTIVE ACTION Can leadership style make a difference to a farm or a machinery manufacturer? Meet Abe Hughes II.
INVENTORY CONTROLS THAT EARN MORE Gaining insights from the fertilizer industry on how to manage on-farm inventories for better margins.
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TIME TO HIT THE BRAKES? It’s the toughest question. Is land overpriced, or will you regret not stretching to buy every acre you can?
FERTILIZER PARADOX Our Gerald Pilger learns that Canada’s new fertilizer plants may make a bad situation even worse.
THE NOVEL APPROACH TO FARMING Our Anne Lazurko’s novel DOLLYBIRD is earning critical praise and acclaim from farm readers.
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HANSON ACRES Maybe Dale should put some blinds on the truck windshield.
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.
OCTOBER 2013
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GUIDE HEALTH Maybe in a perfect world you wouldn’t have to think about bowel health. In this world, you definitely do.
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PETUNIA VALLEY Dan learns that you only need to save one word for a successful day at a farm show. The word? “Five.”
CONTENTS
BUSINESS
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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
Some people... The further I go, the more I’m convinced that the most important things in anyone’s business are their core beliefs. Other buzzwords and phrases can be important too. Even the word “innovation” — a word that gets thrown about far too easily — can sometimes be a word with real meat in it. I had to look it up in the files. It was six years ago this month that Country Guide decided to focus on the business side of farming. Here’s the first paragraph of the first editorial I wrote for what we wanted to be a new magazine: “Some people do it by climbing mountains. Some others do it by climbing corporate ladders. You do it by farming, and in the process, we believe you’ve learned something that we need to learn too.” We had taken a hard look at ourselves, and we liked a lot of what we saw. Country Guide had been an institution, especially in the West. I still get occasional letters from women of a certain age, typically with the very finest penmanship, taking me to task. “What kind of magazine do you think you’re running?” one wrote recently. “I learned to cook and sew from the pages of Country Guide when it was still worth reading.” Country Guide had also had a history of impressive editors dedicated to their craft, including several I could not hope to match. But what I wanted to say is that when we looked at what we were 4 country-guide.ca
doing, page by page and article by article, we saw that we were in danger of becoming the kind of publication that goes out and quotes all the experts on how farmers must become more innovative, without ever asking ourselves whether we are innovative too. Here’s how I described what happened next. “We talked to some people. Like you. What emerged is what we call our core belief. It’s that the transformative power that’s growing in agriculture today comes straight from the entrepreneurial energy and the management capability of Canada’s farmers. Agriculture isn’t thriving because of technology. It’s thriving because of farmers. So we decided to set a business direction for G uide , and that we’d aim to become a national publication for farmers. You’ll never hear me say that we achieved everything we set out to do. Every dream gets roughed up a bit when it meets the real world. Besides, as you’ll see in coming months, we’re still changing, innovating and adapting. Six years later, though, I still think I got it right. If I can be forgiven for bending the language, I’d say it’s the corest of our core beliefs: “Some people do it by climbing mountains. Some others do it by climbing corporate ladders. You do it by farming.” Every day, I wish consumers could get to see what I see. Let me know what you think. 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.
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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. 11 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.
october 2013
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Cream cheese, feta, brie, and curds. The den Haans saw the market for soft cheese as anything but soft.
Scott and Steacy den Haan run a small dairy operation. With the objective of growing their business, they decided to do more than milk cows. Looking at the market, they saw an opportunity in soft cheese. So, they spent four years in research and business planning. And now, they proudly operate an on-farm artisan cheese plant. That’s the kind of entrepreneurial spirit needed to stay competitive in farming. And the kind that Scotiabank supports and fosters. With innovative products and lending advice that give you access to the funds you need, together we can take your business further. To learn more, contact your branch or visit scotiabank.com/agriculturalservices
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BUSINESS
The novel approach Or, learning how to be a woman who farms, and write an acclaimed novel too
to farming
he’s a straight shooter whose ease with self makes her immediately accessible. And, she’s not shy about sharing her own farm experiences, or her personal grappling to define herself on the farm. “I am a farm woman,” Anne Lazurko tells me, pausing. “No, a woman who farms. And I am a writer.” The definition demands accuracy, and the utmost honesty. If it sounds easy, you haven’t asked a woman. Ask a man in agriculture how he defines himself professionally and he generally won’t miss a beat: he’s a farmer. Of course he does everything from mechanics to marketing to agronomy, but he’s very solidly and comfortably sure of himself as “farmer.” Turn to a woman, and the chances are she’ll hesitate. She sees herself as many or all of a long list of roles, including farmer/farmwife/mother/bookkeeper and business administrator/family chauffeur/chef to armies of farm workers/possibly an off-farm employee or business owner, and more, often much more. But in her mind, the roles don’t seem to package themselves so neatly into any one word or concept. As today’s equal-opportunity reality struggles to meet centuries of agricultural tradition, many farm women feel like
By Madeleine Baerg
they have one foot on the combine but the other still “in the kitchen,” managing the hundreds of tasks that go into keeping a family and a farm together. Countless farm women have pondered the same question: Is it possible to find self and real balance when you spend your life juggling? Anne Lazurko would say yes. But there’s a “but” that merits a lot of exploration. As a repeat winner in the Canadian Farm Writers’ Federation competitions for her writing in COUNTRY GUIDE, where she is a contributing editor and regular writer, and as an accomplished creative writer (her new novel DOLLYBIRD has received excellent reviews since its release in August), Lazurko has “made it” as a writer by any standard. Even more impressively, her success has been forged in the rare quiet moments found between farming 2,000 acres of grain in small-town Saskatchewan and parenting four kids. “Even if you don’t start as a farmer yourself, when you marry a farmer, by virtue of necessity you take on farm roles. You become a farmer in the process. It used to make me crazy because I’d be out there slogging it out in our dairy, raising the kids, and doing all the other things that needed to happen, barely keeping it together, and I’d still be considered ‘the farmwife.’” When you hear of someone who is successful in any capacity — be it sports or celebrity or business or, in this Continued on page 8
“It’s about finding joy in and through circumstances that we don’t necessarily want to be in,” Lazurko says. “It’s about the small mercies that happen in life.”
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Photo: kari fortune
business
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business Continued from page 6 case, writing — it’s easy to think that they are somehow different than the rest of us. That their natural inclination makes their success come easy. That they don’t wake up in the morning wishing for more hours in the day, a shorter task list, better balance, more energy. The reality is, however, Lazurko isn’t different at all. She has lived exhaustion, and known the loss of self that comes from being inundated by to-dos. “I married into a dairy farm with little concept of what that meant. We had four kids fairly soon, and having the dairy farm and the four kids was more than a little overwhelming. We had a hard time getting hired help, so there was a lot of lone parenting, a lot of me sharing the farming load,” she says. “There wasn’t a lot of time for anything else.” Today, 24 years into her farming career and with just one child still at home, Lazurko is finally able to find the time for a fuller writing career. She’s got a small office in town. (“It’s hot as hell in the summer and freezing cold in the winter, but it’s mine.”) She makes time for ongoing professional development opportunities, and she commits about five hours a day to writing during farming’s quieter months. The office, the writing workshops and retreats, and the work hours are more than insignificant details: they are evidence of Lazurko’s commitment to making her writing passion real.
Lazurko’s Dollybird is winning praise as a novel of early life on the Prairies, a life in many ways still lived on every farm today “It’s really important to cultivate your non-farming sides. You get so drawn into farming, but I would hate to start to resent it. You have to make that thing — whatever it is that you are passionate about — important at least to yourself. If it’s not important to anyone else, at least it has to be important to you,” she says. Moira Burns is a Prairie farmer too, 25 years younger than Lazurko and brand new to the farming game. In case starting out in agriculture isn’t daunting enough, she’s also expecting her first baby, and she’s a part-time rural doctor. Her combination of roles may be unique, but her struggle to figure out priorities, to determine what she is willing to give up to be successful as a mother, farmer, and/or doctor, is very familiar. This Moira is fictitious — she’s the main character in Lazurko’s debut novel, Dollybird — but it makes her struggle no less authentic. “Dollybird is a coming-of-age story that happens to take place on the prairie 100 years ago,” 8 country-guide.ca
explains Lazurko. “But the challenges Moira faces in defining herself are still there for women, especially farm women today. I’ve talked to a lot of really intelligent farm women who have some inner turmoil about their role and their definition of self.” The novel is a complicated study of what it means to find balance and contentment in life. As described on the novel’s jacket, “A saga of birth, death, and the violent potential of both man and the elements, Dollybird explores the small mercies that mean more than they should under a prairie sky that waits, not so quietly, for people to fail.” The unfathomably difficult process of getting started in farming in the early 1900s and the violence of the prairie backdrop are gripping. However, it’s the realness of the brave, resourceful, compellingly flawed characters that will ultimately linger with readers. “It’s about finding joy in and through circumstances that we don’t necessarily want to be in. It’s about the small mercies that happen in life; the ways that we choose to handle circumstances and people that make us come out the other end more whole,” says Lazurko. The publishing of Dollybird, nine years after Lazurko’s ideas for the novel first started hitting paper, proves that, while balance takes time, it is possible to achieve off-farm success and pursue your passions alongside a farming and family life. The trick, says Lazurko, is both simple and — at times — impossibly difficult. Regardless of whether you are writing a novel, running a home-based business, pursuing a profession, following a passion, or looking to fit in any other personal priority, you’ve got to make the time. “As a farm woman, I think it is sometimes very difficult to carve out time for yourself. It was for me. Finding time to invest in yourself is a challenge for all women: our stuff is always second,” she says. “If I’ve learned anything, it’s the rear-end in the chair thing. In the case of writing, you have to sit down and write even if you are frustrated, even if it isn’t coming easily. If you don’t sit there and do it, nothing is going to happen. You can say you wait for inspiration, but if you don’t actually sit down and slog it out, it won’t happen. That’s what I made my mantra. The first step to doing that is making the time.” It’s easy to think that becoming “more” of something will, by definition, mean you have to be “less” elsewhere. However, Lazurko’s increasing commitment to and success as an author has ultimately connected her more to her on-farm role. “According to my dad, I always said I’d marry a farmer and write a book. I don’t recall saying that; I wouldn’t have thought I would end up in a small town or on a farm,” she says. “But, the other day I was walking across the yard thinking about where people end up, and I realized that I wouldn’t want to give this up.” Dollybird is available in stores and online now Coteau books (www.coteaubooks.com). CG October 2013
Machinery
By Ralph Pearce, CG Production Editor
Today’s tractors in the vibrant 120- to 220-horsepower segment demonstrate just how diverse machinery can get. Some manufacturers are focused on pushing the upper limits on size and horsepower. Others are squeezing more functionality out of smaller designs. Of course, most of the mainline companies are trying to do both, because every manufacturer knows that this is a category where farmers are looking for exactly the right machine to fit their specific farm operations. With that in mind, we bring you tractors from four different manufacturers who have followed these and other trends in ways that redefine what a tractor can really mean to overall farm success. Remember, these are thumbnail sketches, so get ready to do your homework. The hours you put into choosing the right small tractor for your farm may be among the most profitable hours that you work all year.
CASE IH PUMA SERIES
CHALLENGER MT400D SERIES
Doing more by emitting less is one way of looking at the launch of Case IH machines re-engineered to meet Tier 4B/final emissions standards. In all, 18 product lines will feature this technology, which the company claims to be the first to employ Selective Catalytic Reduction (SCR) technology alone, without sacrificing power or efficiency. The SCR-only system treats exhaust flow after the combustion process, meaning noxious emissions are reduced by 95 per cent without affecting engine performance anywhere in the field or the yard. Added to that are six new Puma models with enhanced cab interiors, including continuous variable transmission (CVT) or Powershift transmission options, and updated ergonomically designed controls. There’s even an available Bluetooth radio option.
Combining the power of higher-horsepower models into a manoeuvrable yet hard-working package is the goal of Challenger’s new MT400D Series tractor, featuring three models in the 120- to 220-horsepower range. The 4.9-litre AGCO Power engine is available on all three models, with a design that reduces engine temperatures and maintenance costs. Choose from three different transmissions that offer 16 forward and 16 reverse speeds, 24 forward and 24 reverse speeds or AGCO’s TechStar continuously variable transmission (CVT), with an infinite number of work and travel speeds. Plus there are option packages from Classic to Deluxe to Premium that provide enhanced suspension and hydraulics, as well as improved in-cab performance and comfort standards.
www.caseih.com
www.challenger-ag.us
NEW HOLLAND T7 SERIES
MASSEY FERGUSON 6600 SERIES
With seven different models, all of them compliant with Tier 4B/ Final emissions standards, New Holland’s T7 Series tractors come complete with the company’s ECOBlue Hi-eSCR technology and the pledge that it maintains efficiency and productivity in any product with 120 engine horsepower and higher. In keeping with the Tier 4B/Final compliance standards, the company claims a reduction in emissions of 95 per cent, while maintaining New Holland’s reliable performance. There are also three standard wheel-base configurations in the 140- to 165-horsepower class, and four longer wheelbase models in the 180- to 240-horsepower range. The T7 also features a new comprehensive Headland Turn Sequence (HTS II) function, providing the capacity to record, edit and store complex end-of-row operations.
Whether you need power and agility for harvesting hay, loading, pulling or planting, Massey Ferguson believes it has the tractor for your farm. The manufacturer is launching the 6600 Series tractors with three models, all featuring the newly refined 4.9-litre, four-cylinder AGCO Power engine. Ranging from 130 horsepower for the 6614, to 135 and 140 for the 6615, and 150 engine horsepower for the 6616, Massey provides smooth operation, outstanding performance and low fuel consumption. There are also three different transmission options, including the Dyna-4, Dyna-6 and the Dyna-VT, with its continuously variable transmission (CVT) and fewer parts, meaning less power loss and longer life. The 6600 Series also features a cab that’s the same size as the Massey Ferguson 7600 Series tractors, offering better visibility plus a range of options that will improve comfort and reduce fatigue.
www.newholland.na
www.masseyferguson.com
OCTOBER 2013
country-guide.ca 9
DoIng More. uSIng leSS.
A series on being ready for the farming challenges ahead
Case IH enhances lineup for livestock, Hay & Forage uses By ZaCH HetterICk Case IH Livestock Equipment Marketing Manager
t
he new models and significant redesigns across the entire lineup of hay and forage tools and compact and utility tractors are all based on customer feedback. To further support livestock and hay producers, Case IH has hired nine new hay specialists to work side by side with dealers and producers. Here are the newest Case IH products:
WD3 II SerIeS WInDroWerS Redesigned Case IH WD3 series windrowers are the first launched in the industry to offer a factory-installed autoguidance system managed through the Case IH AFS Pro 700 control center to increase productivity and reduce operator fatigue. Windrowers are one of the hardest pieces of equipment to drive. However, Case IH has made it much easier with AFS autoguidance and a new hydraulic steering system with fewer linkages and pivot joints. Operators will appreciate the improved drivability in the field, as well as the great steering responsiveness on the road, which creates the ability to operate at higher road speeds. WD3 series windrowers can now top out at 24 mph road speed – the fastest in the industry – so operators can get to one more field before calling it a day.
DH3 SerIeS Draper HeaDerS Case IH DH3 series draper headers for windrowers help producers cover more acres faster and more efficiently with an all-new 40-foot header. A shallow, angled top section offers higher throughput capacity, crop feeding and crop flow. Crop quality also is protected through the draper heads’ agronomic design. A two-circuit hydraulic system offers more consistent flow and power across the header, so producers get more even crop feed, resulting in more consistent, well-formed windrows. Improved crop feeding also is assisted by an all-new, heavy-duty frame design with larger reel arms and increased strength. The rugged Case IH cutterbar offers additional protection, even in harsh conditions.
DC3 SerIeS DISC MoWer ConDItIonerS Case IH DC3 series disc mower conditioners simplify the path to high-
quality hay with a new cutterbar design with wide discs for a closer, cleaner cut. That puts more hay into windrows. The modular cutterbar design provides superior lubrication compared to competitive systems and eliminates crosscontamination if a disc breaks. Designed to improve dry down for better hay quality, these mower conditioners enhance crop flow and windrow consistency, while new shielding minimizes material buildup during use. DC3 series disc mower conditioners are built tough for longtime use, with larger gears, bearings and interconnecting shafts. Lightweight, impact-resistant plastic access doors provide easy access for adjustments in the field. A shock protection system saves time and money when obstacles are encountered, while the simplified drive system helps minimize horsepower consumption and maintenance needs.
rB565 rounD Baler The new RB565 provides 20 percent more capacity than previous models. The new overshot feeder between the pick-up and bale chamber creates a quick and even feed of material into the bale chamber. The new roller windguard and five bar pick-up comb the crop off the ground for fast and even feeding. The new RB565 is built to last. It features a total redesigned pick-up that has been strengthened from the inside out. Some of the new enhancements include double spider gears, solid line bars, and rubber mounted teeth that provide five times the wear life of the previous generation teeth. Belt tracking and durability has never been better using all-new premium belts available in a laced or endless design. The baler also has been made easier to operate with the Case IH ISOBUS-compliant control system. You can now run the baler thorough the AFS Pro 700 display in your tractor, giving you a simple layout with the large touch screen monitor. In the past 12 months, Case IH has added several other new products to the Case IH livestock/hay/forage product lines to better meet livestock producers’ unique needs, including Farmall® C, U and B CVT tractors, and the LB4 large square baler. To learn more about these models, visit www.CaseIH.com.
1. Yield impact statistics based upon Purdue University Department of Agronomy Publication AGRY-91-01 "Stand Establishment Variability in Corn" 2. Yield impact statistics based upon Purdue University Department of Agronomy Publication AGRY-91-01 "Stand Establishment Variability in Corn." Based on a 200-bushel yield potential and 26,000 to 30,000 seeds per acre with spacing variability with standard deviation of about 2 inches.
caseih.com
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 is the highest horsepower tractor to ever come off the assembly line. 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/efficientpowerctg1013.
BE READY.
Š2013 CNH America LLC. All rights reserved. Case IH is a registered trademark of CNH America LLC. www.caseih.com
business
Time to hit the brakes? Probably not. But the land boom needs more science, less emotion By Maggie Van Camp, CG Associate Editor f you look south toward Indiana this fall and catch sight of those big yellow flags waving, it will be Purdue University’s renowned agricultural economists trying to get their farmers to slow down. For the last three years, farm country has been like a NASCAR track, with farmers pushing the pedal on land prices and burning rubber to be the first to get to the bank. Although they shy away from predicting there’s a big wreck around the next corner, the Purdue team is telling farmers it’s time to ease up on the gas, and maybe even hit the brakes. “Is now the time to double down?” asks Brent Gloy, director of the Centre for Commercial Agriculture at Purdue University. Gloy leaves no doubt what he thinks. Over the past couple years, Purdue’s economists had already been issuing warnings to farmers to price land according to its long-term productive value and to run some sensitivity analyses by plugging in higher interest rates. Now, the economists are raising their volume, and they’re trying to get their message out every way then can. Gloy and a team of professors at Purdue have been taking their cautionary tale to farmers and agricultural bankers. They’ve spoken at meetings, 12 country-guide.ca
they’ve written a research paper, they’ve gone on radio programs, and now they’ve loaded more advice onto their website (https://www.agecon.purdue. edu/commercialag/resources/finance/farmland.html). Their message is simple: There are big risks to taking on variable-rate debt based on earnings from the last five years and current land equity values. Amid all the grain market volatility, it’s imperative to crunch some conservative numbers, they say. And always take the attitude that you are buying assets for what they will produce in the future. In other words, don’t bank on land continuing to increase in value. “Buy assets based on their future earning potential,” says Gloy, adding, “Income growth going forward appears limited for the first time in five to six years.” For farmers, however, evaluating land purchases based on market and production predictions can be like throwing a dart in the dark. In our current environment, supply and demand for agricultural commodities oscillate in great waves. Markets spike and fall on unexpected weather, population projections, news of production acres and capacity, and the push and pull of biofuel policies. The fundamentals have undergone dramatic changes, agrees Gloy. Increased demand, reduced October 2013
business
interest rates and supply shocks make it difficult to estimate future incomes. Even so, he says, farmers should calculate a framework and a range as a guide when developing their asset ownership strategy. Plus, we need to understand the impact that even small changes to these fundamentals will have on farmland and on net farm income. How much would you pay for an asset today that would provide a steady stream of payments into the future?
Rent capitalization Gloy suggests farmers start their land valuation process by using the capitalization of rent model instead of traditional income capitalization formulas or the default of comparing market values. Start by dividing current farmland cash rent by the current capitalization rate, i.e. the rate of return that could be earned on other investments. Often the minimum rate is the earnings on a savings account, and the maximum rate is bank interest rate on loans. The calculation should yield the value of land per acre. Almost 40 per cent of the farmland in Canada is rented, as is half the land in the Midwestern U.S. Both countries have seen some pretty significant increases in rental rates, but they’ve been small relative to the increases in farm real estate market values. Currently, cash rents in Indiana average $229/ acre, compared to $120/acre a decade ago. The current rent-to-value ratio is three per cent. October 2013
In their trade policy brief about farmland in March 2011, University of Guelph economists Alfons Weersink, James Deaton, James Bryan and Karl Meilke looked at the factors around farmland values and rent. They had surveyed Ontario farmers in the summer of 2010 and found the weighted average cash rent was $90 per acre for Bruce county, $136 for Huron county, and $200 for Middlesex. These are averages with maximum values up to $300 per acre. Next, the Guelph team plunked those numbers into the rent capitalization formula and came up with an estimate of the value of land under different assumptions of the rental value of land and the interest rate. Middlesex county’s $200 land rent with a four per cent interest rate suggested the appropriate value of farmland is $5,000 per acre. However, a slight drop in the interest rate from four per cent to two per cent would see the land’s value rise to $10,000 per acre. It shows that small increases in interest rates have a huge impact on land price in this valuation model. The interest rate that results in a calculated land value that was equal to the actual average selling price of land at the time was about 3.25 per cent for all three counties. The team then compared those numbers to the sales data from FCC’s Farmland Values Online in 2010 and found land sold for averages of $2,600/acre in Bruce, $5,000/acre in Huron and $6,000/acre in Middlesex, with highs of $8,000 and lows of $2,000.
Table 1. Value of farmland ($/acre) Interest rate
Land rent ($/acre) 2 per cent
4 per cent
8 per cent
50
2,500
1,250
625
100
5,000
2,500
1,250
150
8,750
4,375
2,188
200
10,000
5,000
2,500
250
12,500
6,250
3,125
Overall the Guelph researchers concluded that higher land rents and lower interest rates place upward pressure on land prices. They warned that any land buyer needs to account for a potential downturn in crop prices and an uptick in interest rates in making cash flow estimates for repayment. Neither of which has happened, until now. This valuation method also assumes the current return from renting land will continue far into the future and is not just temporary. Farmland rents, which are for the use of the land for a year, have increased along with farmland values, which reflect Continued on page 14 country-guide.ca 13
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Banks supply a lot of the fuel. When assets are going up, they add more fuel. When assets are headed down, they starve the market Continued from page 13 the value of ownership. “Rents and selling prices should move together as they both are tied to the returns that a farmer can derive from the land,” says University of Guelph economist Alfons Weersink. Rent plus profit since 2007 has been exceptionally high and rental rates are creeping up. This speaks volumes as to why land purchase prices are being bid up — reinvestment of profits. The rental value should correspond to the amount a farmer can expect to earn from growing a given crop on that property for a single year. The selling price should reflect the returns over the entire period the farmer expects to operate plus any growth in the value of the property, says Weersink. However, Gloy is concerned the link between rental values and land prices has become unhitched. In the last five years land values increased much faster than rent. According to the U.S. Department of Agriculture, U.S. cropland values have soared more than 40 per cent since 2004, outstripping the 17 per cent gains in cash rents. The Federal Reserve Bank of Kansas City reported near the end of 2010 that land values were rising at twice the rate of cash rents. The average value of Canadian farmland increased 10 per cent during the second half of
Profit/loss and cash rent for high-quality farmland 1991-2013 Price per acre for average-quality Indiana Farmland, 1975 to 2010 from Gloy, Purdue University 5,000 4,500 4,000
Price per Acre ($’)
3,500 3,000 2,500 2,000 1,500 1,000
Market value The most common critique that Gloy gets about his approach to land valuation is from people who argue that farmland is only worth what someone else will pay for it. Why worry about fundamentals when we have real data from actual sales to establish a value? The approach of establishing value based on recent market transactions is widely used in practice and essentially reflects the comparable-sales approach to appraisal. However, this comparable-sales approach to valuation tends to lag the market and accentuate trends. If long-term grain market conditions change, past prices do not matter. “Nobody will care what the previous owner or neighbour paid for a farm,” says Gloy. “New buyers will focus on what they might expect to gain by owning the asset in the future.” Also, there’s an ownership disconnect to pricing real estate. While most people will eventually agree that fundamentals such as income and interest rates are a critical factor in the value of farmland, Gloy says many people frequently do not make this connection when valuing their own farmland. When Purdue researchers conducted an Internet survey last spring seeking the views of farmland investors on future farmland, cash rents and crop prices, they found no relationship between the perception of current farmland values and expected corn prices. “Emotions are a huge part of it,” says Gloy. Banks supply a lot of fuel to the asset markets.
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
0
1975
500
2012, following average increases of 8.6 per cent and 6.9 per cent in the previous two six-month reporting periods. This is the highest since FCC began reporting on farmland values in 1985. The second-highest increase occurred in the first half of 2012, at 8.6 per cent. The last time the average value decreased was by 0.6 per cent in 2000. Land market values tend to adjust more quickly than rent, says Gloy. Many rental agreements are set for longer terms, so survey information doesn’t show year-to-year variability as much as land selling prices. Besides landlords may pull out if other farmers are still willing to pay more. There’s also less risk factored into the pricing of rent than buying. “Rent tends to be sticky on the way down,” says Gloy.
Continued on page 16 14 country-guide.ca
October 2013
FCC Credit Line Cash flow when you need it Need short-term credit? Waiting for a sale to go through? When it comes to bridging the cash flow gap, it’s nice to know you have pre-approved financing that you can use anywhere. 1-888-332-3301 | fcc.ca/CreditLine
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Continued from page 14 When assets are going up in value, the banks tend to put more fuel on the fire. When returns fall, the number of loans decrease, which tends to exacerbate the pullback. Tightened credit means less demand, which results in lower values. Of course, borrowers are still pulling the trigger but generally there’s more credit available when the assets are increasing in value. Eventually, however, asset markets are efficient, says Gloy. Assets will only be valued where the consensus of buyers feel they can be supported by future earnings. “That’s 90 per cent of transactions” There’s five per cent who buy when prices are cheap, but this takes courage and a good financial position. In Canada, as mentioned above, the last time the average value decreased was in 2000 at -0.6 per cent. There’s also five per cent who buy when prices are at their peak.
Historically, land demand stays strong long after crop prices sink, based on built-up equity Today some farmland buyers are only asking: “What does it take to buy it?” instead of crunching what the land is going to earn on average over the next 20 years. Then they’ll go through the numbers to see if they can afford it and buy it on the hope that values are maintained or increase over time. When earnings are of little consideration to buyers, farmers need to be cautious in using the comparable sales approach to valuation, says Gloy. In these situations, buyers are simply making purchases based on speculative logic about what the next person will think about prices rather than the earnings of the asset. “At some point earnings will come back into focus,” says Gloy. Retirement-aged farmers are holding on to land longer, getting safer and in some cases better returns than GICs or equities. Seen as an alternative investment, these retirees have limited the supply of farms for sale. The big land value driver has been farm cash flow. Farmers have reinvested in their businesses — in the form of land and equipment. Although the press has talked a lot about the fund managers buying land, they aren’t the ones who have been setting the top prices at auctions, says Gloy. In fact, there’s still money sitting in the funds waiting to purchase land, but it’s new territory as to how long these investors will support the farmland market in a lower return situation. Has $8/bushel corn warped people’s view of the 16 country-guide.ca
future and shifted perspectives? At a young farmers meeting this winter, Gloy bluntly told the audience to not bank on the returns we’ve seen in the last five years. “It’s almost unprecedented in the U.S. In real terms (farm) incomes are as high as any in the last 100 years,” he says.
The wealth effect Has the spending flurry subsided? In late August a number of analysts, including UBS, Barclays and William Blair, cut their outlooks and share-price targets for Deere, citing concerns that farmers will slash capital spending as grain prices retreat. On the other hand, however, having extra working capital and letting it sit in non-farm investments seems counterintuitive to many farmers. Pulling it down the balance sheet now limits buying opportunities later, says Gloy. Tying up all your extra liquidity may leave you unable to buy land when and if land prices ease off. Just how quickly land prices decrease after grain prices fall is variable and up for debate. Will the bubble burst? Or will there be a slow slide down? Or have land prices been set to a new level? Historically, as farm booms matured and profits faded, farm capital investments didn’t slow. Farmers kept buying during these less profitable times, and tapped into their existing wealth to finance and maintain capital investments near previous levels. Lenders also contribute to the wealth effect by being more willing to lend to farms that have greater levels of equity to use as loan collateral. In 1972 after grain prices peaked (remember the Russian grain deal), farm incomes were plumped up to almost double of the previous year. However, when prices dropped, farmers kept buying capital assets for six years after this income spike. For every one per cent increase in their equity value, those farmers spent 0.9 per cent more. For land it was 1.1 per cent, and for other capital expenditures such as machinery it was 0.8 per cent increase until 1979. The 1970s run-up of land values ended in the early 1980s with double-digit interest rates and a collapse of American farmland prices. The resulting shrapnel hit those carrying big mortgages throughout the Midwest and Prairies. Since that pullback in farmland values, however, land has been appreciating, i.e. for 25 years. Although every region has its own mix of different factors affecting farmland prices, if grain settles in a long-term pattern set by $4-per-bushel corn, what will this mean for land markets? How about if interest rates rise two per cent? Plunk that scenario into your sensitivity analysis, these advisers recommend Then watch the numbers. CG October 2013
Precision Cropping Workshops Review Approximately two years ago, the IFAO Board of directors identified that many Ontario farms had adopted GPS technology primarily for machine guidance and yield mapping. On the other hand, they also identified that these systems had the capacity to do far more than making straight rows, measuring fields, and making colourful yield maps. They have the capacity to variable rate apply fertilizer, seed, or to monitor and control machine function. The burning question was: “If a grower was to spend the next dollar on their system, what would they have this technology control?” We applied for funding through the Agricultural Adaptation Council to conduct research and conduct the workshops. We also had partners for the project, namely Pioneer Hi-Bred and the Grain Farmers of Ontario. We wish to thank these partners for their help in trying to identify the “low hanging fruit” out of the vast number of tasks that these displays and field computers are capable of. We also need to thank the Ontario precision industry representatives (vendors and consultants) that attended these workshops, as they were great resources when asked to speak or participate in the discussion -formally or informally. What did we learn? There are some elements of the technology that are easier to place a value on than others. For example, if a GPS Autosteer system can potentially replace a set of markers on a large planter or air-seeder, then there is an immediate cash savings to offset the cost of adopting the technology. Likewise with foam markers on a sprayer vs. automated section control. As soon as we begin dealing with any of the technologies that deal with the biological side of the business, such as variable rate fertilizer or variable seeding rates, the decision matrix becomes exponentially more complex. For example, if we were to variable rate a soil nutrient (N, P or K) to maximize yield in an area of high potential, or to address a perceived deficiency, while considering water availability is frequently the limiting factor to crop yield, then the technology’s value is a lot harder to calculate. Funding for this project was provided by:
Marketing Meeting
Thursday, December 12, 2013 9 am to 3 pm Holiday Inn, Guelph $60 includes lunch
Registration Deadline – Dec 4th
Steve Kell, Parrish & Heimbecker Finding Market Opportunities in a Well Supplied Market
Insights on setting realistic goals and identifying the factors which will drive prices.
How To Manage Cash Flow and Understanding Ratios Farmer Panel on Marketing Strategies Producer with No Storage Options Producer with Grain Storage Facilities Producer/Licensed Elevator
For more details or to register go to our website at www.ifao.com Frankly, this is the reason we struggled to identify the technologies that would provide the quickest payback and ongoing return-on-investment. When dealing in a biological system and an uncontrolled environment (outdoors), the ability to manage enough variables that allow a particular technology to be accurately and assessed is difficult. We can also appreciate that if a consultant or equipment provider has done this research and feels they have the answer, they are keeping this as proprietary information. In the meantime, other facets of the project are being completed including assessing variable rates of corn starter fertilizer and active planter down pressure systems. Final results of the full project will be communicated through our OMAF Extension personnel and at the IFAO Annual Conference to be held February 25-26, 2014 in London Ontario. Ken Nixon, IFAO Past President Administered
in Ontario by:
…IFAO 2014 Annual Conference...Feb 25 & 26, 2014
Mark Your Calendars
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Inventory controls that earn more Can farmers learn from the fertilizer industry how to control inventory costs? By Maggie Van Camp, CG Associate Editor n sheds, shops, fields, bins and barns all across this country, farm inventory lies waiting. We have machinery and we have feed, not to mention grain, fertilizer, and chemicals. In fact, as farms get larger and our farms get more intensively managed, and as the amount of bin space explodes and the amount of pre-buying balloons, there has never been so much potential inventory, adding up to billions of dollars from coast to coast. But on most farms, that inventory sits silently, largely unaccounted for and often ignored until balance statements and government program forms stare blankly back at year-end. Inventory control, however, may be the new black of farm business management. To be fair, some farmers are already good at extracting value out of knowing what’s in their bins. They take grain samples to buyers and they know exactly how much and what quality they have to sell. However, staying on top of both input and output inventory is not only about marketing. It’s also about risk management. For that, few businesses may have more to teach farmers than fertilizer outlets. Like farmers, independent input retailers such as Parkland Fertilizer in Alberta buy, sell and store commodities, and also have a tight timing window to extract margins. They must deal as well with shrink, price volatility, storage and handling costs, just like farmers. Parkland Fertilizer stores about 70 per cent of the products it sells, so carrying costs and inventory flow have a huge impact on their success. “We track every bit of inventory,” says Barry Schultz, sales manager and one of the owners of Parkland Fertilizer in Wetaskiwin and Lacombe. “Just by 18 country-guide.ca
His margins demand an integrated network of inventory controls and accounting, Schultz says. Soon, he predicts, yours will too
October 2013
Photo: Jasper's Studio
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October 2013
thinking about it, we know more about our business.” Traditionally the fertilizer business was built on buying and storing in the summer and fall, then selling in the spring at a higher price. “In this business, delivery in an untimely fashion helps capture market premiums,” says Schultz. When the growing season starts, everything has to be ready to go precisely when it’s needed. Ag retailers only get one turn a year from the fertilizer shed, and possibly six to eight times for the chemical shed. Overall, 65 per cent of Parkland Fertilizer’s gross revenues come from dry fertilizer, 20 per cent crop protection products, 10 per cent seed and five per cent from custom services. “The more I study our inventory numbers, the more it keeps me focused on what’s really happening here,” says Schultz.
Tracking inventory is so important to their business that Schultz uses multiple spreadsheets, including an accounting program called Agre from Tronia Systems which tracks inventory on purchase orders and receivables. By using an online version of this software all the data can be stored off site and backed up at more than one site. They simply can’t afford to lose this information. Even though more fertilizer is being stored on farms, Schultz doesn’t think it has reached a value where farmers will pay for an outside source of data management for this inventory. However, he has been impressed with the inventorytracking program Agri-Data Solution (www.agri-data.net). This is a web-based spreadsheet/mapping program accessed from any computer connected to the Internet and updated in real-time.
The business link
The role of pre-buying
Schultz believes managing inventory starts with planning, and with knowing your basic business objectives. For Parkland, key objectives are to provide quality service, especially during their intensely busy spring season, and to blend prescriptions. It’s also a priority for the owner/ operators at Parkland to ensure that their staff gets paid, and to maintain their relationship with their customers. “It’s important to think about how you want to handle inventory and how that will match your business plan,” says Schultz. On fertilizer, Schultz estimates inventory costs are at least 15 per cent of their gross margins. “If we do inventory well, we can gain 15 per cent, and if we don’t pay attention to it, we can lose 15 per cent and then there’s 30 per cent we could have had,” he says. “That’s why we have redundant systems for tracking.” The staff constantly track inventory at point of sale, with visual audits, and on a separate overall business spreadsheet. This allows Schultz to ensure they’ve bought correctly, catch mistakes right away, and make changes on the go. It’s also a checkpoint to make sure they don’t have oversupply on June 1. “Inventory tracking is critical to our business,” says Schultz. Basically, Parkland weighs or counts what comes in, and they weigh or count what goes out, and they write it down on a spreadsheet in both instances.
For the fertilizer business, pre-buying happens months in advance, so knowing exactly what they have and what they need at any given moment helps them manage their cash flow position. However, in this business, even the smartest inventory controls and the best customer service can be all too easily erased by buying at the wrong time. Margins are low in commodities: a small movement in prices can completely erase net income. “I do better if I have cash to buy product at the right time,” says Schultz. “There’s an opportunity cost of buying at the right time.” Although fertilizer prices are often lowest in late summer or fall, market volatility has created some unpredictable and devastating price lurches. Many of us are still stinging after we bought fertilizer in the fall of 2008, and paid twice as much as those who waited until the spring. Conversely, in spring 2012, prices shot up more than 50 per cent in three weeks at seeding. Pre-buying fertilizer has become standard practice for many growers. “Pre-buying is increasing every year,” says Schultz. “Farmers are buying all year round. Now they’re buying from July throughout the winter.” More farmers are taking their prebuying a step further and matching their Continued on page 20 country-guide.ca 19
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Continued from page 19 cost of inputs with a marketing position. “It’s all about risk management,” says Schultz. “If they’re locking in a crop price in the future, they lock in their fertilizer. That hedge just makes sense.” Similarly, retailers use back-to-back sales to hedge, basically buying based on sales contracts. This is important to their business as there’s no way to hedge here, says Schultz. In the U.S., some retailers use a SWAPS market system, but there’s no easy way to access that in Canada. Since they don’t have a way to hedge their fertilizer purchases, it’s important to try to buy “right” in small increments. Schultz makes buying decisions weekly, all year, based on what the company has projected for gross sales, so it’s important to be on top of inventory. “Fertilizer plants want to ship every day. You can’t turn down a fertilizer plant,” he says. “We try to hit singles instead of going for the fence.”
Budgeted Profit/Loss and Cash Rent for High-quality Indiana Farmland, 1991-2013 Profit and loss Cash Rent Rent + Profit
$ 500
$487 $444
$422 $430
$ 400 Dollars per Acre
$332 $286
$ 300
$185
$ 200 $ 100
$177 $104 $111
$143
$135 $92
$169
$112
$119
$122
$114 $123 $140
$94 $96
$98
$ -
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$ (100) Source: Derived from Purdue Crop Budgets, ID-166, Corn Soybean Rotation
The fertilizer cycle Generally, September to November is the lowest point of the fertilizer cycle so that’s when many retailers and farmers try to build up inventory supplies. Is it a good time to buy? What you really should be asking is if ag retailers are buying. Until 2005, natural gas futures could be used as a proxy for nitrogen fertilizer hedging, since natural gas represents 80 per cent of the cost of producing nitrogen. Now, however, fertilizer prices are more based on grain prices, and for nitrogen, that’s mostly midwest corn demand. To get a sense of this demand, Schultz pays close attention to the buying behaviour of the market drivers. He even attends a mid-winter agricultural retailer conference in the 20 country-guide.ca
U.S., even though the topics are generally about corn and soybeans, crops that aren’t grown in his area of Alberta. So much of the volatility in nitrogen prices in 2012 had to do with the action of the masses, particularly the U.S. farmer. “Last year most farmers waited until February to buy and everyone went to the trough at once,” says Schultz. “Understand your risk strategy and how that fits into your business plan,” says Schultz. “Know your risk tolerance and make a purchase plan based on that risk.” Don’t just put off the decision to buy or not, and then react to need situations. And, oh yes, Schultz has another piece of fertilizer-buying advice: “Listen to the U.S., and keep your credit accountant up to date with your plan.”
Carrying costs Schultz’s buying decisions are based on calculations that include carrying costs, infrastructure, handling, spoilage, and clumping losses and shrink. These are often overlooked in on-farm storage costs. For dry fertilizer Schultz estimates that shrink accounts for a loss of 0.5 per cent. To put that in perspective, he says it’s like losing two Super-Bs of fertilizer for every 20,000 tonnes. There’s also the cost of moving fertilizer. “Every time you move inventory, it costs in labour and equipment time,” says Schultz. Bin costs can be calculated using depreciation, on a cost basis per tonne, lost interest or directly as grain bag costs which have become more popular in Western Canada. A few years ago, Morley Ayars, regional farm business management specialist for Saskatchewan Agriculture, compared total average bin cost per bushel for various storage systems, including required unloaders, augers and carts. At that time, used and new bins averaged about $3.83/bu. for hopper bottoms, $2.45/bu. for flat bottoms and $0.94/bu. for grain bags. In addition, grain bags cost about $0.34 per bushel annually. Parkland also carries insurance to cover inventory in case of natural disasters. This adds to carrying cost, but any kind of storage carries risk, both physical and market risks. After the West Texas fertilizer plant exploded in April, safety has jumped to the forefront when handling fertilizer. Parkland uses only dry fertilizer which is fairly inert. Again inventory management drives Parkland’s business in certain directions. If farmers track inventory and link it back to the farm’s business plan, they gain a powerful marketing and purchasing tool, Schultz says. Besides, it’s also a way to manage product quality and environmental risk, he believes. “Tracking grain inventory and what you do to the land will become increasingly important.” CG October 2013
CHRISTIAN FARMERS FEDERATION OF ONTARIO 7660 Mill Rd. RR4, Guelph ON N1H 6J1 Voice: (519) 837-1620 Fax: (519) 824-1835 Email: cffomail@christianfarmers.org Web site: www.christianfarmers.org
Christian Farmers Federation of Ontario 2013 Annual Convention & Banquet
F
arming in the World of Tomorrow” is the theme of the 2013 Convention for the Christian Farmers Federation of Ontario, (CFFO). On November 13, 2013 representatives and members of the CFFO will meet in Waterloo’s St. George Banquet Hall doing what all farmers do, looking ahead. The day will feature two speakers who will inform the attendees to what farming may be like in a few years’ time. Jean-Philippe Gervais from Farm Credit Canada will inform us about the use and values of market trends and in the afternoon session Dr. Nelson Kloosterman who has taught internationally on the topic of ethics will look into the issue of animal welfare that is affecting livestock production to a greater extent than ever before. Following a delicious evening banquet the audience will be entertained by well-known personality, Dan Needles, who will bring us his charming wit for our enjoyment. Farmers of every generation have always been optimistic about the future, that’s how they keep going, during this convention we hope to encourage them to be determined to keep on producing food for the global population. Recently CFFO President Lorne Small wrote in
“
J.P. Gervais
Dr. Nelson Kloosterman
Dan Needles
his president’s comments, “In my father’s and grandfather’s time the approach to risk management was to be diversified. They grew a variety of crops and raised a variety of livestock. Thus, if there was a problem with one commodity, there were other parts of the farm business that could compensate.” In today’s specialized industry we need to continue to meet the challenges that farmers
Long Term Thinking for Today’s Issues
face and find solutions that are profitable and sustainable for all involved. We look forward to seeing many friends and acquaintances on Nov. 13 as we celebrate another year of farming. A day that we can use to remind ourselves that there is lots to look forward to and that all things are in a sovereign’s control. The CFFO executive board and staff look forward to this annual event.
• 22 District Associations Across Ontario • Supporting our members since 1954 • A Professional Organization of Entrepreneurial Farming Families
www.christianfarmers.org
A professional organization of entrepreneurial farming families
business
Ratio and reward Getting more out of your financial statements starts with better analysis. In turn, that begins with the powerful and easy-to-use tools known as ratios By Gord Gilmour, CG Associate Editor very winter, farmers across the country engage in an annual ritual. They painstakingly pull together bills, receipts, cheque stubs, income statements, ledger books, computer files, and all manner of other records, and ferry them into their accountant’s offices. There the staff pore over these records and produce annual financial statements — usually for the operation’s lender — and tax returns for the Canada Revenue Agency. But there it often stops. Except, it really shouldn’t stop there. And it certainly doesn’t need to. Those reports from your accountant are a gateway to myriad insights into your operation’s health and its outlook. They can throw up red flags, but they just as easily point out opportunities that you’d never have spotted otherwise. It’s a golden opportunity, and it all starts with ratios. Besides, wouldn’t it feel great to learn something more for your accounting fees than just the size of the cheque you have to write to Ottawa?
Ratio analysis measures your strengths and weaknesses, and finds new opportunities Ultimately, ratios can even be used to chart a course for the farm towards a clear end goal, be it expansion, generational transfer or retirement, just to name a few. Even better, they can help you measure your progress toward such goals, instead of leaving you guessing. Jordan Domm, a member of Canadian Association of Farm Advisors and accounting associate with Allied Associates LLP, based in Stratford, Ont., puts it this way: unless you’re sitting down and delving into the numbers at the end of this exercise, it’s like taking a still photo from one frame of a movie, and thinking you’ve seen the whole thing. “The further analysis, that’s really where you have an opportunity to gain a clearer picture of your farm 22 country-guide.ca
and a greater understanding of how it’s performing and what its strengths and weaknesses are,” Domm says. Financial ratios are relatively simple calculations that clear out the noise that can come with year-to-year fluctuations such as in inventory levels, and they can provide a solid basis to judge a farm’s financial performance. At their best, ratios can also be used to benchmark your farm’s performance against similar operations, giving you apples-to-apples comparisons against real working farms. Probably you’re doing better than you think. Probably too, you could be doing even better by tracking and responding to your ratios. So why are such simple and powerful tools being so consistently overlooked? One well-known farm financial adviser suggests there are a number of reasons. Terry Betker is president and CEO of Backswath Management. He is a former partner at the accounting firm Meyers Norris Penny, and his is a familiar and well-regarded face on the farm speaking circuit in Western Canada, where he’s known for his ability to approach complex financial topics with wit and humour. Speaking to C ountry G uide recently, Betker suggested one likely explanation is that nobody on either side of the transaction recommends that you look at your ratios. Accountants provide what they’re asked for — financial statements and tax returns — during a very busy season. When they’re up to their armpits in alligators, so to speak, they’re keeping their head down and doing the job at hand. Meantime farmers — like small business people in general — frequently aren’t all that interested in finance, viewing it as a necessary evil that has to be got through before getting back to the real work of farming. “So you have this situation where there just isn’t anyone taking responsibility for this, for making sure this further strategic discussion is happening,” Betker says. Betker also suggests that some accountants might be hesitant to start the discussion because it moves them outside their comfort zone. “The typical accountant is very comfortable with the numbers, with financial statements, with what’s historiOctober 2013
business
cally happened,” Betker says. “But when you start looking at ratios, and at building a strategic plan and setting goals and benchmarks — many of them likely aren’t going to be as comfortable with that.” Over in Regina, a leading farm lender says he has always encouraged farmers to get more comfortable with their numbers and look for the story behind the numbers. Rémi Lemoine, Farm Credit Canada’s chief operating officer, said that ultimately it’s the farmer’s business that’s going to benefit from this better information, and it’s easier now than ever before. “There is the ability now to analyze financial information in ways we’ve never been able to previously,” Lemoine says. “With spreadsheets and databases you can run scenarios and examine trends like never before.” While Lemoine says there are a number of farmers who have an excellent grasp of financial matters, for others it’s not necessarily an area of interest. They may instead have excellent production or marketing skills, for example. But as a finance person himself, he’s quick to say that these are skills that can be learned, and not everyone needs to be at the same level of knowledge as their accountant or financial adviser. Instead they need the basic knowledge that will allow them to speak the same language and make the most of that adviser. “This is not something that is so complex the average person can’t learn it,” Lemoine says. “And good basic accounting and finance courses are available just about everywhere from local community colleges to distance and online options from universities, and farmers will even find some on our website (www.fcc-fac.ca) that we sponsor. Where they get this training isn’t as important as having this knowledge so they can have that discussion.” Betker echoes the importance of this, saying it’s not important that farmers be able to lecture on accounting standards or have intimate knowledge of the tax code. “I tell clients they need enough knowledge that they can have that discussion ‘in the now,’ when they’re sitting in their accountant or adviser’s office,” Betker says. “They don’t need to be able to pull the strategic document out and explain every detail of it to their partner or spouse a couple of months later.”
Liquidity: The ability of a business to meet financial obligations as they come due in the ordinary course of business. Liquidity relates to cash flow and short-term risk. Ratio
Formula
Explanation
Current Ratio
Current assets / Current liabilities
Can the farm meet current <2:1 obligations as they come due?
Good
1.5 : 1
Working Capital
Current assets / Current liabilities
If current liabilities are retired as they come due what > 50% current assets will be left? (% of annual expense)
20 – 30% < 10 %
Debt Structure
Current debt / Total debt
What % of total debt is due within the next 12 months?
25%
< 20%
Average Poor >1:1
> 35%
Solvency: Measure the amount of business debt relative to the amount of owner’s capital invested in the business. Solvency relates to longer-term risk and how the business is financed. Ratio
Formula
Explanation
Good
Average Poor
Leverage Ratio*
Total liabilities / Total equity
For every $1 in equity, how many dollars of debt are there?
<4:1
0.65 : 1
Equity Ratio*
Total equity / Total assets
What proportion of farm assets are financed by the owners?
> 70%
50 – 70% < 50%
Debt Servicing
(Net income + Amortization + Can the farm come up Interest – Family Wages**) with enough income to pay / (Annual Principal & the debt requirements? Interest Paid)
>2:1
1.5 : 1
>1:1
< 1.1: 1
* Industry standards based on assets at market value. ** If not already included in expenses (i.e. non-corporate farms).
Profitability: The extent to which a business is able to generate profit (income) from the utilization of business assets. Profitability rates investment decisions based on their ability to generate net income. Ratio
Formula
Explanation
Good
Average Poor
Return on Assets*
Net income / Total assets
What return is the farm generating as a % of capital assets?
> 4%
2%
< 0%
Return on Equity*
Net income / Owners equity
What return is the farm generating as a % of equity?
> 10%
6%
< 2%
Capital Turnover*
Gross income / Capital assets
How efficiently are assets (capital) being utilized?
> 40%
20%
< 10%
* Industry standards based on assets at market value.
Financial Efficiency: The extent to which a business is able to utilize its resources (inputs) efficiently. Financial efficiency rates the annual operating cost decisions on their ability to generate gross revenue. Ratio
Formula
Explanation
Good
Average Poor
Gross Margin
Gross margin / Total revenue
Is the farm generating acceptable margin as a % of revenue?
> 65%
55%
< 50%
Contribution Margin
Contribution margin / Total revenue
Is the farm generating acceptable margin as a % of revenue?
> 50%
45%
<40%
Net Profit Margin
Net profit / Total revenue
Is the farm generating acceptable margin as a % of revenue?
> 20%
10%
<5%
Interest Expense
Interest / Gross revenue
How much of the gross revenue generated by the farm going to pay interest?
<10%
15%
>20%
Amortization Expense
Amortization / Gross revenue
How much of the gross revenue generated by the farm going to pay interest?
<10%
15%
>20%
Source: Backswath Management Inc.
Continued on page 24 October 2013
country-guide.ca 23
business
So what is a ratio? How is it calculated and what can it tell you? In simplest terms a financial ratio is a calculation used to reveal a relationship on your financial statement that tells you something about the financial performance of your operation. There are a significant number of them (see sidebar) and each reveals a particular truth about a business’s financial health and performance. While he supports using them, Jordan Domm does caution that ratios aren’t the be-all and end-all of financial analysis and planning for a farm. Instead they’re a great tool, but need to be used in the appropriate circumstances. “They’re a simple way to assess past performance and find the areas where you’re doing well and the areas where maybe you could improve, as well as compare your operation’s performance to other similar operations in your sector,” Domm says. “But they do not assess future performance.”
says the ratios in the first two categories are likely going to be more important to younger farmers at the early stages of their careers. Generally later in life there’s less debt and more equity, making these numbers less critical. The profitability category measures exactly what you might expect — how much profit the operation can generate through the use of business assets. Again there are three key measures Betker uses in this category: return on assets, return on equity and capital turnover. Once again, they’re relatively simple calculations, but what they tell you is important. For example return on equity can give you some sense of whether you’d be better off selling out and putting your money in the bank, or if you’re getting an adequate return every year for all that risk you’re assuming. Betker’s final category is financial efficiency, which is a bit more advanced than the other three categories, measuring how a farm takes inputs like operating money, for example, and generates gross revenue with them. Key ratios in this category include gross margin, contribution margin, net profit margin, interest expense and amortization expense.
What can you learn?
Getting started
So what will a little number crunching reveal? Almost anything. Just pick your formula. Betker divides the formulas into four key categories: liquidity, solvency, profitability and financial efficiency. So let’s look at the liquidity category. Betker puts three key formulas in this category: current ratio, working capital and debt structure. All speak to the business’s ability to meet financial obligations as they come due during the ordinary course of business. All are also simple formulas that examine the relationship between two key figures on the balance sheet. For example, current ratio is calculated by dividing current assets by current liabilities. A good ratio would be 2.0 or less, average 1.5 to 1.0 and anything below 1.0 is considered poor. In the solvency category, Betker says the key question is the measure of how much business debt there is relative to the owner’s invested capital. These ratios relate to longer-term risk and how the business is financed. Again there are three key formulas: leverage ratio, equity ratio and debt servicing. Let’s take a look at the equity ratio, which is total equity divided by total assets, producing a percentage value. Anything higher than 70 per cent reflects a farm with no solvency issues. A farm coming in between 70 and 50 per cent is considered stable, and anything below 50 is considered at risk. And while this number considered on its own won’t tell much of a story, Betker stresses that a series of these calculations taken from year to year can be extremely revealing. “When you can see that trend line, that’s when you can really see where you are headed,” Betker says. “You can use a ratio like this to both set a goal, and to also set a lower limit. If it falls below a certain level, that’s when you want to take action.” While there are no hard and fast rules, Betker
To really get the most out of ratios, you need to gather together your last three to five years of financial statements from your accountant, and calculate the various ratios contained in the sidebar to this article, examining the trend in each category, with an eye to whether your farm’s performance is improving or weakening, which could be a sign of real trouble. “Using ratios can really help you see where the ditch is,” Domm says. Even better, do this in consultation with an accountant who’s comfortable with this sort of work, or a farm financial adviser, Betker says. They’ll be able to guide a discussion and help you formulate an action plan that you can then revisit annually to chart progress or flag looming problems. “That way you’re not leaving your farm’s financial health to chance,” Betker says. “I think it’s more important now than it’s ever been, as farms have gotten larger and the dollars involved have grown.” And lest you think that’s just a financial adviser trying to drum up business, FCC’s Lemoine seconds the motion, saying that after making such a large annual investment in number crunching it would be pennywise and pound-foolish to not take that extra step. “When you think about how much you’re already spending, the incremental cost of doing some of this work — really, it’s almost negligible,” Lemoine says. Allied Associates’ Jordan Domm also says he doesn’t think accountants and other financial professionals should fear raising the topic with their farm clients. He and his colleagues in Stratford have found their customers are increasingly identifying that the financial aspect of their farms is as important as any other facet. Says Domm: “We’re finding that people are really quite receptive when we raise this topic.” CG
Continued from page 23
Where it begins
24 country-guide.ca
October 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
Non-traditional crops may present health market opportunities for growers By Lilian Schaer There may be opportunities for Ontario farmers to grow medicinal and culinary herbs, as well as other non-traditional crops, for the health market. The first step is determining whether it’s possible to grow these crops in Ontario, which was the basis of an Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA)-led project at the research station in Simcoe.
growers might face with pests or with our winter climate.” What did the research find? Many herbs survived the Canadian winter without difficulty, but Westerveld says they weren’t surprised to find some of the non-native varieties weren’t able to handle the climate, showing it’s not possible to grow everything here even if some of the conditions, like soil, are suitable.
“We knew there were a lot of questions about different herbs that people might want to grow, but there’s not a lot of information available,” says Sean Westerveld, Ginseng and Medical Herbs Specialist with OMAFRA. “We wanted to showcase the challenges and opportunities and show different principles of herb production through this project.”
They were able to successfully grow plants like eucalyptus and lemon verbena, but others, like Stevia, which has garnered a lot of interest as a natural low-calorie sweetener, were not shown to be a viable crop. Pests were also a challenge and with the exception of some culinary herbs, there are currently no products registered for pest control use on these crops.
How was the research conducted? A plot of 117 non-traditional crops (140 including different varieties of the same herb) for the health market, including culinary and medicinal herbs, and berry crops was established in spring and early summer 2010. The goal was to illustrate different principles of herb production for both field and forest herbs, and both culinary and medicinal herbs.
“There was no real shining star that emerged from our project and the industry is still small. There are perhaps local niche market opportunities for some of these crops, but no studies have been done yet on this,” says Westerveld, adding that interest in the project has been strong with several hundred people touring the plots at the research station over the last two years, including a large turnout out at a grower open house day in 2011.
The plot features herbs native to every continent except Antarctica, including traditional Chinese, Indian, North American, and European herbs. Several old English cottage herbs that are no longer frequently used were also included to illustrate the importance of identifying a market before growing any new crop. “Our goal was not to promote one crop or variety over another but to provide a showcase of different options,” says Westerveld, explaining that although it was a one-year project, the herbs are still in the ground and observation is ongoing. “This includes looking at what kind of challenges
One grower who has visited the plots is Tom Benner. He owns Heritage Line Herbs near Aylmer, where his family grows culinary herbs such as parsley, sage, rosemary, thyme, basil and oregano. They sell live plants in the spring as well as grow herbs in-field that are dried and processed into seasoning blends and sold across Canada. “There is a lot of consumer interest in locally grown herbs, especially with respect to their quality and freshness,” says Tom, whose farm’s production is certified organic. “People are always asking us about whether we can grow different things,
oNtArio Soil ANd Crop iMproveMeNt ASSoCiAtioN
so we’re always on the lookout for new opportunities. And there are production issues, like pest management, that we need help in addressing too.” Where can I get more information? More information on this project can be found in Crop Advances at http://bit.ly/ TYMiqv. OMAFRA is also working on a new interactive online resource that will provide crop profiles and pest issue information on over 100 speciality crops including fruits, vegetables and grain. How was the research funded? Funding for this project was provided by Norfolk Soil and Crop Improvement Association. Additional project support was provided by OSCIA, OMAFRA, University of Guelph, Richters Herbs, Oakland Shading Co., St. Williams Forestry and Ecology Centre, and Dubois Agrinovation Inc. OSCIA assisted with communication of research results.
Top tips for farmers Not all herbs can be grown in Ontario, whether due to climate or pest issues.
Determine market potential before starting to grow new crops. Herbs have as many pest issues as conventional crops. Think about crop rotation as you do with any other crop.
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
steps
to your
retirement plan By Maggie Van Camp, CG Associate Editor
Follow this path to a retirement plan that has the security and lifestyle options you will be happy to have ith Canadian farmers now averaging 54 years of age, retirement questions are buzzing all around. When will I have enough savings to stop working? Will I outlive my money? Who will I trust with my money? What if I get sick or injured? How am I going to pass the farm on to my child? How do I avoid paying so much tax? How much should I set aside? It’s never too late or too early to plan for retirement, says Amanda Knapp, investment adviser and financial planner with RBC. Last year, an 83-yearold farmer walked into her office in Waterloo, Ont. to ask her about retirement. Although, he didn’t need to save for retirement, she helped him set up wills and a trust for his estate planning.
Holographic will On the morning of June 8, 1948, Cecil George Harris of near Rosetown, Sask. became trapped between his tractor and another piece of equipment, pinning his left leg under the rear wheel and later making legal history. He remained trapped until his wife found him at 10:30 p.m. and sadly later died in the hospital. A few days after the accident neighbours viewing the scene noticed something etched on the tractor’s fender. “In case I die in this mess, I leave all to the wife. Cecil Geo Harris.” The fender was removed from the tractor and determined by the courts to be a valid holographic or handwritten will. The knife and fender can be seen on the main floor of the Saskatchewan College of Law library.
26 country-guide.ca
For retirement planning, Knapp says it’s best to begin with the end in mind. Are you going to sell your farm, or do you plan to live there for the rest of your life, either renting it out or continuing to farm it on your own, or something in between? Or is succession an option? If this point has got you flummoxed, check out the Agriculture Management Institute’s farm succession decision maker at http://takeanewapproach. ca/farmers/choose-farm-succession.aspx . It’s a simple format that will help clarify where you want to go, and then help you identify the steps you need to take and the hurdles you need to jump to get there. The best news is that not all of the advice is mindnumbingly complicated. There are simple precepts, including to start retirement planning by getting a signed will. Fewer than half of Canadians have a signed will. Not only will it make for an easier, smoother transition in the end, but the process of creating a will is healthy because it naturally leads to talking and thinking about what you want in retirement. “Look at your will as an end point for which to plan,” agrees Knapp. “A will is a cornerstone to financial planning.” Once you’ve got a signed will, you need to move on to the next five steps: figure out what you have, what you owe, what will go out in living expenses, and what will come in as income. As the final step, sit down with your financial planner and select the right path to reach your goal.
October 2013
business Here’s how to start What do you have? For 2013, Agriculture and Agri-Food Canada pegged the average net worth of farmers at nearly $1.9 million. That might seem like enough for a satisfying retirement, but most farmers don’t want to liquidate everything as soon as they turn 65 years old. It’s important to have a list of all your current assets and investments, savings and insurance policies. Write down what’s in bank, credit union and brokerage accounts, and off-farm accounts such as tax-free savings and RRSP accounts. There are also the farm and personal assets including machinery, grain inventory, livestock, quota and, of course, land. Farm assets can also be considered an investment and be used for retirement funding. Entering into an agreement with the successor to purchase those assets over time, and then using the loan payments as income can be part of the compromise. So can liquidating a portion or all of the farm assets.
More retirement-age farmers today are keeping their land and renting it out, says Knapp. They get the income from rent and the value of the land has appreciated in value, which leads in turn to an improved net worth statement. Don’t forget to include the value of your home in your net worth statement. In the last few years many farmers have been using profits to upgrade homes. It’s not a bad strategy to invest in your house, says Knapp. “It’s a personal asset too and it needs to be maintained,” she says. “But upgrade only to market value.” Saskatoon farm adviser Don McCannell finds many of his farm clients have been building a nest egg so they have enough capital to live on and not rely on the sale of land. However, not all farmers are prepared for retirement. “Only 27 per cent of Canadians use RRSP, collectively across Canada,” says McCannell. “Farmers tend to recapitalize into the farm.”
What do you owe? The second step is to add up all your debts, including everything from auto loans and mortgages to lines of credit, term loans and lease agreements, plus revolving credit card debt, unpaid income tax and promisory notes. Your accountant should have a good handle of these liabilities. Write them down on your net worth statement and then subtract them from your assets. This is what you’re worth today. Assante Wealth Management Saskatchewan’s website has a handy checklist to make sure you gathered all the information you’re going to need for your net worth statement. It’s at http://www.theretiringfarmer.com/pdf/checklist.pdf.
What will go out in living expenses? Do you really know how much it will cost to maintain the lifestyle you want after retirement? It pays to do some research and estimate your monthly living costs, including automobile, debt payments, food, gifts and donations, insurance, medical, property maintenance, property taxes, utilities, and vacations. On McCannell Financial Group’s website you can find a slick form to learn what you’ll need (http://mfg. ca/forms/retirement_cash_flow.pdf). Often farmers forget that things they could write off as expenses when they farmed may have to be paid for with after-tax dollars, says McCannell. Also, if the annual rate of inflation is two per cent, the income you need in 10 years will be about 22 per cent higher than today. If the inflation rate is four per cent, your income needs will be about 50 per cent higher. “Inflation is the biggest corrupter of any plan,” says Knapp. “We use a three per cent inflation rate built into the calculations.” Another part that’s often forgotten is how much is paid in income taxes. For example, if you’ll need $5,000 a month or $60,000 a year, don’t forget the October 2013
$12,000 to $15,000 you’ll pay in taxes and inflation. In McCannell’s experience, folks who think they need $50,000 a year actually require $85,000 to $90,000. Generally, Knapp is impressed by her farmer clients’ knowledge of living expenses. “In my experience, most farmers have a good idea about their spending patterns, their personal budgets,” she says. “It usually ranges from $36,000 to $60,000 a year.” With thorough planning and budgeting you’ll know if you’ll have enough money to retire on. Knapp has noticed that many people don’t include getting sick or living in a nursing home in their retirement living cost budgets. “Nursing home care can cost $2,000 to $7,000 a month, stretching living costs closer to $84,000 a year,” says Knapp. Even if there’s not enough in savings, you can still develop a plan for such additional costs. Critical illness insurance pays out until you get better and can go back to work. Another option is a long-term health insurance plan designed to your specific situations and needs. Recently, many people are interested in refunder premium health insurance plan, so they can get the premiums back if they don’t use them. Continued on page 28 country-guide.ca 27
business What will come in as income? After you’ve worked through all the steps above, add up your potential retirement income, including Canada Pension Plan and Old Age Security as well as corporate and independent pension plans. Don’t forget income and draws from Registered Retirement Savings Plans, Registered Retirement Income Funds, Tax Free Savings Accounts, bank and credit union accounts, promissory notes and annuities. Old Age Security and CPP are automatically indexed for inflation each year. CPP can also provide disability and survivor benefits. However, don’t assume you’re going to get 100 per cent of these government-based pensions. OAS is a monthly benefit available to most Canadians 65 years and older although certain requirements must be met, and it’s clawed back at certain income levels. CPP is a monthly benefit paid to those who
Plan and save From 2007 to 2011, net family income (non-farm work included) averaged over $100,000 a year. Agriculture and Agri-Food Canada’s projected average net family farm income to be almost $132,000 a year in 2013. How much of this income should be set aside for retirement and off-farm investments? Knapp’s advice is that farms should keep 1.5 times the total current liabilities on hand as working capital. So for every $1 debt the farm should have $1.50 in working capital, generally enough to cover short-term needs (one to three years). Depending on how much you have in profits, she often suggests about 18 per cent could go into an RRSP and be used as a tax deduction and the remaining excess beyond working capital be put into a TFSA. A trusted certified financial planner or an accountant can help decide which investment vehicles will work best for your retirement and estate goals. Knapp says most of her farm clients have equity accounts and are used to market fluctuations. “Farmers are more tolerant to risk and are open to suggestions,” she says. Investment planning is also tax planning, so use the tools available to plan for when you contribute and take out. In the farming industry, assets have grown dramatically in the last decade, as has tax liability, but life insurance and interest have remained stable, says McCannell. “It’s not how much you make, it’s how much you keep,” he says. RRSP contributions are tax deductible and income taxes are deferred until the money’s withdrawn. The idea is to delay the payment of tax until retirement, when you’re earning less and your tax rate is lower. RRSP savings are rolled into a RRIF plan when you’re 71 years old. Then you’re required to withdraw a minimum amount each year based 28 country-guide.ca
have contributed to it and generally it’s taken right off your salary. However, if you’ve been taking dividends out of a farm corporation instead of salary, you may not have contributed much to this pension plan. “Most farmers have a good idea about managing cash flow,” says Knapp. “They know that income ebbs and flows in this business.” In fact, many Canadian farmers are already semiretired. In 2007, 23 per cent of all farms reported an average of $17,485 in pension income, including Old Age Security pension, CPP and QPP benefits, other pensions, elected split pension amounts and net federal supplements. According to Statistics Canada, in total farm operators collected $1.3 billion in pension income in 2007. “We try to get a good handle on what the income streams will be and compare that to how much we’ll need,” says Knapp. “That’s when we can start planning.”
on your age and government regulations. A RRIF is basically the taking-out account, says McCannell. You can also set up a spousal RRSP with the spouse as a benefactor. Another savings vehicle is a TFSA in which you can contribute $5,500 per year up to a total of $25,500. Although small, it’s very flexible, easy to set up and you can self-direct it. Many farmers have been putting aside money for a rainy day using an AgriInvest account. For older farmers this rainy day can mean when they are slowing down, decreasing production or, in other words, retiring. Farmers can invest one per cent of Allowable Net Sales each year into this self-directed risk management account and receive a matching government contribution. Although the limit on matching government contributions is $15,000 a year, you can contribute up to 100 per cent of ANS annually and up to 400 per cent of ANS in total. This is for nonsupply managed production only. AgriInvest wasn’t designed as a retirement investment tool, but farmers can withdraw their funds from AgriInvest at any time. Research has found no direct relationship in the program’s design with money withdrawn and income decline, and no data on how AgriInvest funds are being used. Farmers have been contributing significantly to their AgriInvest accounts in the last few years, says Knapp. Another option McCannell suggests for farms that are incorporated is for the corporation to buy a pension plan with you as the beneficiary. The cost of the IPP is deductible for the corporation. Then you set up a holding company or the pension plan and register it as an RRSP account. You can even go back 10 years of RRSP contributions, which works really well if you do it the same year you sell farm assets. The IPP funds in the holding company can either be managed by a trusted investment company or selfdirected. CG October 2013
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business
Spousal RRSPs The right way to use a spousal RRSP in your operation may not be as straightforward as you thought By Amy Petherick n older neighbour once confessed that, when his time comes, he hopes he’ll go while behind the wheel of his tractor. The truth is, he isn’t alone. For large numbers of farmers, retirement planning has basically meant planning not to retire. That’s changing now, but it’s still safe to say a registered retirement savings plan (RRSP) may be overrated for many in the business. Besides, folks who have sunk their money into land have fared well, with Farm Credit Canada reports showing farmland has done nothing but appreciate since 2000. Wayne Ryan, CEO for Allied Associates, says these land value gains blow mutual fund RRSP performance out of the water. “The returns on RRSPs in the last 10 or 20 years haven’t been all that good,” says Ryan, who then adds, “when farmers are getting out of the business in their later years, the last thing I want is for them to be withdrawing money from an RRSP and paying more tax.” With so many ways for farmers to manage their income, either by incorporating or via the incomesplitting rules that Ottawa enacted in 2007, to cite just two strategies, Ryan can only recall two general cases where RRSPs were good options. “When a client has had an unusually good year, maybe because they held over the previous year’s crop and only have the expense of one year’s crop, then we’ve had clients put a chunk in their RRSPs that year,” he says first. After a moment’s pause, he adds, “The other time we see farmers use RRSPs well is when they’re having a sale of some assets, for example not carrying on with cattle but continuing to cash crop, so a deposit in an RRSP will offset the taxes from the cattle sale.” But the best argument for using RRSPs, Ryan says, is to diversify investment. Coralee Foster, a partner with BDO Canada, wholeheartedly agrees and believes RRSPs aren’t used to their maximum potential. “If you were investing in the stock market, you wouldn’t put everything into one type of asset, and the same argument can apply to land,” Foster argues. “Diversity and liquidity are big ways to provide flexibility… and ease succession.” Because farming is so capital intensive, young farmers especially have a lot of places where their cash is needed, including servicing debt or acquiring equipment. While Foster agrees that it is always better to get even a little bit into an RRSP when you’re young, newer farmers need to balance that consideration against other 30 country-guide.ca
financial obligations. And no one should contribute money they think they might have to take out later. Liquidating an RRSP should be reserved for business catastrophes only, which is a selling feature for having a plan in the first place. “If it’s an emergency, you can cash in an RRSP tomorrow if you have to, but you’re maybe not going to sell your farm tomorrow if you have to,” Foster says. “Land has been a good investment but it’s not liquid. Somewhere along the line you’re going to need cash.” Ideally with any RRSP she says the goal is to create a scenario where farming and non-farming spouses receive similar retirement incomes. This needs to take into consideration any outside pensions, RRSP contributions, or expected inheritances. Where there are large income discrepancies, sometimes tax savings can be gained by using spousal RRSPs. “The other place a spousal RRSP can come into play is if you have a big age difference,” Foster says. If, for example, one spouse is 10 years older than the other and still has RRSP contribution room after they’ve had to turn their RRSPs into a RRIF at age 71, a spousal RRSP could be used to capture the last of that RRSP contribution allowance. “It’s not ideal trying to catch it up at the end, but it can be an opportunity if there hasn’t been much or any put in over the years for whatever reason,” Foster says. “But there’s certainly not as big a tax advantage at that point.” Gordon French of Professional Investments in Kingston, Ont., also believes the best reasons to have an RRSP — spousal or otherwise — are for diversity and liquidity attributes. “My personal view on RRSPs is that if there is a tax situation where other avenues have been taken advantage of to the point where there’s little or no tax paid at the end of the year, there’s no use in using an RRSP,” French says. “RRSPs are a good option for when you get to the end of the year and there’s still tax to be paid.” French thinks of RRSPs as a vehicle for accumulating wealth, with the help of the taxman. But that doesn’t mean there won’t be times, particularly early in a farming career, when money can be better spent elsewhere. “There are lots of other ways to get wealthy,” French says. “If you don’t need to accumulate wealth from the taxman, don’t.” Young people using their money in smart ways to grow their business shouldn’t feel guilty about skipping out on RRSP contributions. But, say these advisers, that’s “if” they’re using their money in smart ways. CG October 2013
October 2013
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Our experts are grown locally
OCTOBER 2013
page
Secrets to their success
4
New find in genetic resistance
9
Market outlook
10
Will it, or won’t it?
14
Redefine weed management
18
Hard decisions
20
Attack on seedling diseases
24
Manitoba reaches million acres
28
#Pest Patrol
30
A MORE DIFFICULT DECISION
F
or the past five years, the choice has been simple. Overall, there has been good money both in grains and oilseeds, so on most farms, ordinary rotation planning has represented a reasonable risk-management strategy. In the wake of 2013, however, acreage question will be much more difficult, no matter where you farm. Soybeans and corn are growing more decoupled than they have been for a generation, and this looks likely to continue. Heading into early winter, as Philip Shaw writes, soys have the lead. But as Shaw also says, we haven’t fully emerged from the 2012 drought market. Stocks have started to rebuild, but any hint that yields will be either above or below expectation will be enough to induce market jitters. Indeed, Shaw says he expects the market at times to be “violent,” and it’s worth paying attention to his word choice. We know he made it with some care. In this context, it continues to frustrate us that it is so difficult for farmers to evaluate the effectiveness of their own marketing. It’s bewildering, and it adds up to even more proof that farm economic research is being woefully underfunded by governments, industry, and most especially by farm groups. The fallout will prove fateful on many individual farms, even though farmers are doing their share. They’re devoting more hours than ever before to marketing, but it remains almost
Soybean Guide, October 2013
impossible for them to scientifically monitor, analyze, and improve their performance. Yes, farmers can add up the bushels they’ve sold, and the prices they’ve sold them for, and calculate their average prices. They can also compare their soybean averages against published numbers out of Chicago. Or they can compare their results against the traffic on Twitter, at the elevator or the local diner Yet if we’re heading into a prolonged bear market, as some are suggesting, we will begin to see that the most important story of the past five years hasn’t been the highs that the market has hit, but the difference among farmers in their ability to capture those highs. Land prices are amazingly democratic by comparison. They raise all boats. But crop prices have created myriad, invisible classes among farmers. Maybe everyone is driving a new pickup, but some have used their superior marketing success to climb into a much more competitive position. If margins get a little thinner, those differences will come even more to the fore. At this point, marketing research has only reached the sophistication of a weed control plot that merely compares weeded versus weedy checks. It needs to do much better, starting in soybeans. Tom Button, CG Editor tom.button@fbcpublishing.com 3
SOYGUIDE
Secrets to their success E These growers are
succeeding because of
how they’re managing their crops, not because they rely on technology to do that job for them
By Ralph Pearce, CG Production Editor
very soybean producer can agree on one thing. Corn is the crop that most Corn Belt farmers think of as king. It’s tall, it has the biggest yields, and based on the Chicago Board of Trade, it’s the barometer of agricultural success. And then there’s the soybean. In Ontario, soybeans have had a history of being the what-have-you-done-for-melately companion to corn. In the mid- to late 1990s, when corn yields took off with the launch of Bt hybrids, soybeans were basking in the commercial release of Roundup Ready. But that was a technology which initially only saved growers money and time on weed control. At least Bt corn put more bushels in the bin! Yet the soybean has come a long way in 18 years. It has had to answer to the lack of a yield boost and it has had to overcome Group 2 herbicide resistance, not to mention soybean aphids, Asian soybean rust, and soybean cyst nematode, plus a host of other issues including drought in 2012. Through it all, the genetics have improved, and with them, growers have paid more attention to their soybeans. In order to learn more about their particular on-farm practices, COUNTRY GUIDE asked three growers for their insights on how they manage soybeans on their farms. We asked them seven basic questions, from the size of their operation to their particular thoughts on early planting, seed treatments and row spacing, plus their “specialty.” As you’ll see, these growers have their own takes on how to grow a great crop.
MATT BEISCHLAG — HAGERSVILLE, ONT. At a time when corn is considered the king of crops, Matt Beischlag bucks the trend. He doesn’t grow corn at all on his farm. Instead, he grows two years of soybeans and one year of wheat, and as another hallmark of an innovator, he uses fungicides and manure extensively on his farm. Spring performance is important to Beischlag, so he gets his soybean plants off to the best start possible, including his reliance on certified seed. He also uses a full complement of seed treatments. “We’ve done side by side w ith CruiserMaxx and it pays for itself, easily,” Beischlag says. “We’ve also compared CruiserMaxx with ApronMaxx, and there’s a notable difference.” Early planting is also part of the strategy each spring, a plan that’s easier to implement without corn “getting in the way,” Beischlag says. That aids in Beischlag’s goal of getting the soybean plants to start flowering as early as possible, and to keep on flowering all the way to pod fill. A longtime air drill user, Beischlag bought a new Case IH 1240 15-inch row planter unit in 2013. Working with Kevin Van Netten of South Coast Agronomy in Simcoe, Beischlag reduced his seeding rate from 220,000 seeds per acre down to 180,000 this growing season. “And next year, Kevin thinks we can try it a little bit lower yet because the results are pretty good so far, that we’ve seen,” Beischlag adds. As for his fertility program, like Markus,
Continued on page 6
4
Soybean Guide, October 2013
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Continued from page 4
Beischlag benefits from available manure. He has a 65,000 broiler unit on his farm, with a history that dates back 50 years. It’s almost to the point where it’s all he uses. “We strictly use our own manure, with straw bedding,” says Beischlag. “Once in a while we’ll use a commercial fertilizer, for a little bit of plowdown or maybe a little bit of lime, but we’re strictly manure. And we find we don’t need any other fertilizer.” The big secret to Beischlag’s success is the use of fungicides on his soybeans, a trend that’s only recently developed, and largely in the wake of similar success in corn. Generally during the course of a growing season, he applies fungicide at flowering and again at pod fill, and he has seen sufficient success to make fungicide applications an automatic procedure on his soybeans. “We’ve been using fungicides now for seven years, and the worst we’ve ever done is that it paid for the product,” Beischlag says. “Other than that, over the past few years using the weigh wagon, we’re getting an average of 5-1/2-bushel-per-acre
increase, and six-bushel-per-acre increase is our tops. At $13 per bushel and $78 per acre, that adds up pretty quick.” Now there has been concern in the U.S. that the use of fungicides, over and above disease control and protection, is causing some level of resistance to certain diseases. Last year, soybean tissue samples in the northeastern states were found to be resistant to frog-eye leaf spot. Although the findings have been spotty, the concern regarding resistance is still there. However, Beischlag is aware of the resistance situation, and knows that Van Netten is watching any progress in resistance development. Beischlag also believes that unlike herbicides and herbicide-tolerant technologies, the lineup of fungicides in the research pipeline has a ways to go before it’s at risk of running out of new products. “On our farms, with the manure management that we’ve had on it — with producing chickens for 50 years — and the amount of manure and the health of our soils, we are using these fungicides instead of supplemental fertilizer,” says Beischlag. “Where a lot of guys put a little bit of
Beischlag‘s goal is to get his crop flowering early, and to keep it flowering all the way to pod-fill starter fertilizer with their beans, we find our money is better spent on the fungicide applications versus putting down a starter fertilizer, or an in-crop foliar fertilizer, because we don’t really need it.” Says Beischlag: “Fungicide is just the ‘next step’ as part of the total-system approach on growing beans in our area.”
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wheat rotation, and for planting soybeans, they are straight no tillers, using a Turbo Till coulter unit on the front of a Great Plains drill. In fact, it’s this drill and its coulter configuration, plus his seeding rate and row spacing (160,000 seeds per acre and 15-inch rows) and some planting dos and don’ts that he considers to be the keys to success in soybeans, yielding 66 bu./ac. in 2010, 68 in 2011 and 58 bu./ac. in 2012. “As much as possible, we only plant on warm afternoons, and never in front of cold rains,” says Markus. “We also try to plant early, at or just after the time we start planting corn. We try to end up planting corn and soybeans at the same time. This year, we started planting corn on a Friday, and didn’t get done for two weeks, and we were planting corn within a week of the time we were planting soybeans. As long as we can get the help, we’re actually towards the end of corn when we’re already planting soybeans, and I think that’s becoming more normal among more producers, pushing that planting date on soybeans forward into when you’d be planting corn.”
Corn is billed as a heavy feeder, but Markus finds carefully managed manure can drive his soy yields Markus also makes use of full seed treatments on all of his soybeans, and always selects the top indexing soybean for his farm. The focus on his selection is on maximizing yield: he is not loyal to one brand name over another. Another difference on the Markus operation is that he does on-farm trials with Headline and Headline with foliar K, along with a trial on a new product that could compete against Headline. “We do these trials on our farm, just to see if we get a response, and if we get a response this year, we could change what we do as well,” says Markus. “But that’s becoming standard in Ontario, where guys are doing small-scale trials just to see what happens on their farms.” Continued on page 8
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Jonathan Markus — Woodstock, Ont. There’s an accepted notion in Ontario agriculture that farmers can do little wrong when planting into the soils of Oxford County. Yet Jonathan Markus is unwilling to leave much to chance. Farming with his father, his uncle and his brother in a unique family setting, Markus is a student of farming. He makes full use of available manure from his father’s 600 finishing hogs, and he also takes whatever dairy manure he can from his brother’s operation and that of his uncle. They also purchase manure from three different hog operations in their general vicinity. Plus they monitor the impact on their soils, conducting active soil tests on their land every three years. “Our operation is probably somewhat different than others in Ontario, in that we have a lot of manure,” Markus says, adding that he adds commercial P and K to his soils at times. “But probably we rely more on manure, and I would say half to two-thirds of our land gets manure every time we’re going into corn.” As for soybean management, Markus and his family have a standard corn-soy-
Continued from page 7
Kevin Marriott — Petrolia, ONT. The term “management” generates enough stress even under normal circumstances in farming. Paying attention to planting dates, seeding rates, weed, pest and disease conditions, fertility and overall in-field conditions can be difficult enough. But when you’re also a delegate with the Grain Farmers of Ontario and a municipal mayor, it pushes the issue of management — especially where time is concerned — into a different realm altogether. Welcome to Kevin Marriott’s world. Marriott farms on 1,100 acres and has adopted a corn-soybean-wheat-soybean rotation, which can vary depending on the weather from year to year. Once in a while, he might get stuck with a second year of soybeans. “Soybean is my biggest crop so it always follows corn or wheat,” says Marriott, who grows IP beans as a rule. “For me, I have a few other factors, like the markets, where I try to figure out what the next year is going to be, market-wise, and I may grow less of one crop. But then in the last five years, that hasn’t been an issue.” On the subject of seed treatments, Marriott differs considerably from Markus and Beischlag. Up until 2013, he would normally treat about half of his seed. But this year, he decided to experiment, opting not to treat it at all. “My side by sides in the last two years showed no benefit,” says Marriott, adding that he attended a local Soil and Crop Improvement Association meeting in mid-August, and came away thinking he shouldn’t say much about his own on-farm practices. “But I didn’t replant a thing this past spring where a lot of people were replanting. The first year I used CruiserMaxx in April and I definitely saw a yield increase, but I’ve never seen an increase since that. So I decided to try going back to using no seed treatments.” Although Marriott agrees with those who insist that every wheat seed be treated, he’s convinced that seed treatments on soybeans are a little more hit and miss, and despite the notion that maybe he’s talking out of turn, he can’t argue with his results. The other aspect of relying on seed treatments, for better or for worse, and in spite of current research into their use, is any potential impact of neonicotinoids on bee populations. In effect, it’s as much an economic decision as it is an environmental one for Marriott. “So seed treatments on soys, for me, aren’t so cut and dried when it comes to return on investment,” Marriott says. “The biggest factor is weather, of course, and the second factor is soil types. The sandier soils have a bigger problem with cutworm and wireworm, as opposed to my heavier clay.” The only time he might reconsider opting out of seed treatments is when faced with heavy corn stover. He cites the 160-bushel-peracre mark as a tipping point of sorts, where beyond that level a farmer has to do more to manage increasing amounts of residue. “That’s when I decided I need to do something with the corn stover,” says Marriott, referring to the 180 bu./ac. mark. “It no longer allowed me to no-till beans after corn, especially once we were getting above that 200-bushel-per-acre mark in corn.” Others may be able to get by with residues of that amount, but Marriott finds it difficult to manage on his own farm, particularly when higher residue levels can lead to higher numbers of slugs. Even with chopping and incorporating, he finds it’s difficult to continue with no-till soybeans. His soil fertility program usually favours P and K levels that fall 8
into a higher rating in the medium category from his soil tests. He applies his P and K in the fall, and incorporates it into the corn stover. Instead of blending his MAP with some N and adding in his K, Marriott splits his applications, and he also never applies in the spring, given his clay soils and the risk of compaction. Planting dates can vary, again according to the weather. Marriott’s location near the southern end of Lake Huron puts him in line for late-season snowstorms from the north and earlyspring thunderstorms from southern Michigan, so those variables can slow his plans. As a rule, he won’t plant if he sees what he calls a “hard rain” coming within 24 to 36 hours, and if he can work it, he likes to have the seeds in the ground one to two days before the next rain event. In 2013, he also saw a problem regarding planting to moisture versus planting to depth. Some growers followed the latter practice, and between dry conditions coming out of the drought in 2012 and crusting issues, many had to replant because they didn’t plant to available moisture. In terms of row spacing, Marriott has run from 15-inch rows to 20, then down to 7-1/2-inch rows, and he’s back to 15s. He calls the 15-inch spacing a happy medium, one that helps him steer clear of white mould. He also points to the depth control on a unit planter as the key, particularly this past growing season where many of the soybeans planted with a drill couldn’t break through the crust that formed in a lot of fields. In fact, it’s his use of a unit planter with its seed opener and down pressure providing better seed rate accuracy compared to a drill that Marriott believes to be his secret to growing a good crop of soybeans on his farm. Although he’s found he can’t go narrower than 15 inches, he can still get a good early canopy, plus he can drop his seeding rate to 175,000. “I could go lower on population, and I have gone as low as 120,000, but I like that little extra insurance,” says Marriott. He still likes to use a drill for wheat, adding that he’s never had a problem with emergence. “But in beans, using a planter is more precise, so with the costs, I have to make sure the population is controlled.” SG Soybean Guide, October 2013
Soyguide
New find in genetic resistance With phytophthora resistance breaking down in the U.S. and Canada, this tool may be just in time By Ralph Pearce, CG Production Editor
P
hytophthora root rot is a familiar soybean disease that keeps showing up when conditions are right, with the potential to drastically affect yields. It is also slowly but surely chipping away at our current options for genetic resistance. With resistance built into soybean varieties, phytophthora has been one of those “out-of-sight, out-of-mind” diseases, much the same as soybean cyst nematode. That may be about to change. The potential threat is undeniable. In the U.S., phytophthora is capable of reducing yield by eight to 15 per cent during a normal growing season. As with any of the soil-borne seedling diseases, it is also at its worst during cool wet springs, and the disease can move up from the soil where it damages the roots and into the stem, where it can kill off the entire soybean plant. Phytophthora spores are also very long lasting, remaining dormant over winter until spring weather provides the right environment for them to grow. If identification in the field is a challenge, what makes phytophthora a greater threat is the fact that the current options for genetic resistance, including the Rps1c, Rps1k and Rps6 genes, have been around for years. In many fields, these genes are beginning to lose their efficacy. Serendipity again The good news is that Teresa Hughes and Jianxin Ma, researchers at Purdue University have identified two new genes in Indonesian soybeans that show resistance to all the predominant races of the pathogen. The two genes are tentatively called RpsUN1 and RpsUN2. “We need to transfer the genes from the landrace to elite soybean cultivars to facilitate the use of the genes for soybean protection,” says Ma, an associate professor of agronomy at Purdue. Soybean Guide, October 2013
Ma adds that it could still take a few years for that transfer, although the team knows it is working against the clock to get the genes to farmers before existing genes become ineffective. “I can see right now that RPS1c lost a lot of its efficacy about 10 years ago, although there are still some people who can plant (the cultivar) and get away with it,” adds Hughes, a plant pathologist with the U.S. Department of Agriculture and an anjunct assistant professor at Purdue. “RPS1k has been one of our better genes,” adds Hughes. “It’s been very effective for a very long time, but it’s definitely becoming ineffective now.”
and Hughes have established molecular markers to help plant breeder be sure the genes have survived in their crosses. “The process for selection can automatically shorten the time needed for soybean cultivar development,” says Ma, noting that it is a non-transgenic process in transferring the genes. “These markers also can allow rapid pairing of multiple resistance genes into a single cultivar, to boost the effectiveness of resistance and last longer.” It’s actually a simple process of transferring both genes to a cultivar — no more difficult than transferring a single gene. Ma is also finding that they can stack multiple genes into a single cultivar, thanks again to the establishment of the molecular markers.
Two new genes from Indonesian soybeans may protect Canadian crops from phytophthora, if we get them in time
Not the same old story To farmers, it can seem to take all too long to go from discovery to having the genes in commercially available varieties. But Hughes is quick to point out that the process of identifying the sources of resistance is all but complete. Now, the researchers are at the stage where they’ve established the molecular markers and are actively engaged in crossing the genes into elite soybean lines. And although the timeline is still five to seven years long to get this development into farmers’ hands, they know that what they’ve found works.
It turns out the researchers weren’t actually looking for phytophthora resistance when they made their discovery. Instead, they were looking for genetics to prevent Asian soybean rust. “When we were all worried about Asian rust coming in to the U.S. there were a lot of projects going on trying to figure out whether there’s resistance in our germplasm,” Hughes says. “This was one of those lines that had good Asian rust resistance. But at the same time, it was planted in fields that we knew had a really high phytophthora problem, and they were doing really well.” About five years later, the two genes were identified and the researchers began the work to characterize them and to start the process of crossing them into more advanced lines. Along the way, Ma
The Canadian view Albert Tenuta shares the researchers’ concerns about phytophthora root rot, and he also shares their optimism about these new sources of resistance. “Phytophthora has the ability to develop new races and to break down these genetic resistance sites,” says Tenuta, field crops pathologist with the Ontario Ministr y of Agriculture and Food (OMAF). “We’re always on the lookout for new sources of resistance.” SG 9
Soyguide
Market outlook
W Weather markets are fickle by nature, and always violent By Philip Shaw
10
hen it comes to soybeans, it can be a long and winding road. Appearances are deceptive. Sometimes the soybeans will look tremendous going into late summer, and sometimes not so much. But based on timely late-summer rains — or the absence of those rains — the tables can flip completely, with a struggling crop producing surprisingly strong yields, and the great looking crop ending up all show and no go. Timely late-summer rains usually determine soybean yields, and 2013 is no different that way. The hard part of course is getting those timely rains in the critical pod-filling timeframe. In Ontario in 2012, producers benefited from almost a perfect yield, with Statistics Canada calling the provincial average at 46.5 bushels per acre. For 2013, we can only hope that the weather is going to turn out to have been so kind. But only the combine can tell for sure. Meanwhile, the U.S. crop has also been defying easy prediction. For those of us north of the border, we’d like another taste of 2012, when our soybeans flourished while our American friends were going through one of their worst droughts in memory, pushing prices to historic levels. Yet as I’ll discuss below, 2013 is clearly a different year. In Ontario in particular, yield projections have been in flux, and are likely to continue that way until the very last fields come off. According to Statistics Canada there has been a reduction in acreage for Ontario soybeans this year down to 2.5 million acres with a projected yield of 43 bushels per acre. How accurate is that? Heavy spring rains damaged much of the soybean crop
in southwestern Ontario and the yield projections reflect some of that damage. On the other hand, different parts of the province avoided many of those problems, so the end result is hard to call. Prices, however, did retreat into the summer, falling from their all-time high of $17.89 a bushel on September 4, 2012. The 2013 soybean complex looks much different than a year ago. South American producers responded to the higher prices by planting and harvesting record crops earlier in 2013. Brazilian production was approximately 83.5 MMT (million metric tonnes) and Argentinian production was approximately 53.5 MMT. Both of these huge crops in South America contributed to prices moving lower from the record values last year. The November 2013 soybean futures had retreated to $11.94 a bushel by July 1, 2013. With the benign weather in early to mid 2013 production season in the U.S., the headlines shouted about “the biggest crop ever!” For instance, in July the U.S. corn crop was headed toward 14 billion bushels and U.S. soybean production was headed toward 3.42 billion bushels. With that as a backdrop and with the South American crop being loaded onto ships in the Southern Hemisphere, the bears were taking charge of the market. As we know, however, agriculture is never that simple. In the western Corn Belt of the United States, dry weather was creeping into production fields. By early September, the question was how dry is dry, and how much damage has the dry weather done to soybeans that were in the critical pod-filling stage? Like a rocket going off, soybean Continued on page 12
Soybean Guide, October 2013
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Continued from page 10
futures prices responded to the upside. The late-summer drought hit hard going into September. Where prices had dipped to $11.94 on the November contract on July 1st, they reached $13.86 on September 3. Hot, dry weather with no rain in the forecast always causes a lot of sizzle. The question was, how durable would those prices prove to be? By the time you read this column, you’ll know a bit more of the answer. But the big point is that you will still only know part of it. It’s all about price volatility. Weather markets that impact supply are always like that. They are fickle by nature, and always violent. For producers, that fickleness created a late-summer market opportunity, but it also created just as much or even more uncertainty. The USDA in their early September report had actually reduced the average soybean yield to 41.2 bushels per acre from their 44.5-bushel estimate in July. However, many analysts believe the U.S. soybean yield will drop below 40. This will be extremely impactful on world soybean numbers, and will make the market much more volatile-looking ahead. With the recent price spike in soybeans, the implications for South America are obvious. How many more soybeans will the South Americans plant in the fall of 2013? Interest rates have been rising in Brazil and the country’s exchange rate has been dropping, so many observers had expected no increase in planting. However, the September price spike has sent a signal to South America to plant more beans, and some analysts are expecting a rise of six per cent rise in soybean plantings. This will be the next big market factor for the soybean complex to absorb. Will South America respond with even bigger soybean crops going into the ground this fall? The focus of the market will then turn to the condition of the soybean crops in Brazil and Argentina as they
12
It may not seem right to farmers, but when you are as dominant a player as China, you get to dictate the flow of soybeans around the world
grow. Will they match last year’s yields? How will weather during the growing season impact the crop? It certainly will not be a smooth road, and it’s reasonable to expect weather scares to infuse the soybean complex with the ups and downs of the South American crop. A key factor for soybean producers here will be the value of the Canadian dollar. Ontario soybeans are bought by end-users in U.S. dollars so the foreign exchange is a huge factor in Ontario basis levels. The Canadian dollar was at par with the U.S. dollar in January of 2013. As of September 3 the Canadian dollar was valued at .9488 US. Taking into consideration the Canadian dollar, basis levels have actually become positive. If the Canadian dollar resumes a downward slope, it will be positive for Canadian cash soybean values. Producers need to keep a very close watch of this going forward. Supply is one thing, but demand is another. We are all aware of the production potential in the United States and South America. China remains the dominant importer of soybeans in this world. For 2013-14 the USDA is projecting 78.93 MMT of soybeans. This is an increase from 75.83 MMT last year and 72.07 MMT the year before. Typically, U.S. soybeans are imported after the U.S. harvest while South American soybeans get imported after the South American harvest in our early spring. With China’s demand for soybeans almost insatiable, it is a very good thing for growing supplies. Still, it is not unusual for China to cancel contracts and take advantage of lower prices. This might not seem right to farmers, but when you are as dominant a player as China, you get to dictate the flow of soybeans around the world.
Last year the South American harvest was so huge, lineups of over 40 miles were common into Brazil ports. This even backed up into China, so some U.S. beans had to be bought to replace Brazilian beans stuck in the lineup. Needless to say, South American soybeans are vital to Chinese interests. The health of the greater Chinese economy always reverberates within the soybean complex. Looking ahead it will be important for Canadian soybean producers to measure where all of these market factors fit into their marketing goals. Soybean prices are buoyant at the moment and are much higher than corn in a relative sense. Corn fundamentals have changed drastically since last year with price at a much lower level. To some extent, the big corn fundamentals have been holding soybeans back. With no particular corn supply issues, this is likely to weigh on soybeans throughout the fall and winter. We can expect harvest and winter lows, but after that, when the South American crop is planted, all bets are off. Non-commercial investment demand getting back into the soybean complex may surely add to soybean price volatility. While they grew tired of agricultural commodities in mid2013, soybeans have brought them back to some extent. This will be key to future price direction into the fall and winter. The challenge for the Canadian soybean farmer is to manage their marketing within all these market factors. It may also be a time to look at addedvalue opportunities. Demand for nonGMO soybeans remains robust. With more herbicide-resistant soybeans soon coming to market, a myriad of choices will exist. Marketing opportunities will too. SG
Soybean Guide, October 2013
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Soyguide
Will it, or won’t it? Is Palmer amaranth bound to become Canada’s biggest weed headache in decades? By Ralph Pearce, CG Production Editor
I
n 2010, Palmer amaranth was still largely unknown to producers in Ontario and across Canada. That seems about to change. A member of the pigweed family, this is a weed that as recently as three years ago was mainly confined to the southeastern and mid-south regions of the U.S. But now it is spreading, and it is also developing resistance to glyphosate, all at a rate that is a surprise to even the most seasoned weed watchers.
Each spike of a mature Palmer amaranth can spread an explosive half-million seeds.
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In July of 2010, a tour organized by Bayer CropScience gathered dozens of crop advisers, scientists and journalists in Memphis, Tennessee. Part of the tour included a visit to a farm near Widener, Arkansas for a first-hand look at this pernicious weed. In a soybean check plot on the farm, glyphosate-resistant Palmer amaranth grew to heights of four to five feet, with some plants boasting three or four branches off the main stem, each containing a seed head. According to University of Arkansas specialists and other advisers, each seed head had the potential to produce up to half a million seeds. What made the weed all the more difficult to combat was a combination of the non-sustainable use of available herbicide technologies, a lack of residue-management practices in cotton production, and the proximity of the Mississippi River and its tributaries, which were used to feed channels and ditches for rice production. All of these factors created the perfect environment for Palmer amaranth not just to survive and to adapt to the Roundup Ready soybeans and cotton grown in the area, but to spread explosively. By the end of 2011, the weed had spread through Missouri and into southern Illinois. That same year, it was found in Michigan, and in July 2013 it was confirmed in Indiana. All of those finds were confirmed as glyphosate resistant. The identification of the weed in Michigan is particularly troubling, for two reasons. It’s now that much closer to Ontario (although it was also confirmed in Ohio in 2010), and its transmission is thought to have been vectored along transportation routes, not via natural migration. Some sources suggest the weed seed entered on trucks or else accompanied northbound shipments of cotton seed or cotton residues to dairy and beef cattle producers. Regardless, its arrival means glyphosate-resistant Palmer amaranth could conceivably gain a Canadian toe-hold under favourable conditions. Cautiously optimistic For all the pessimism the weed has created on its way north, Francois Tardif isn’t automatically buying into the notion that Palmer amaranth will spread like wildfire into Ontario. Tardif, associate professor of weed science at the University of Guelph, agrees Palmer amaranth (or Palmer pigweed, as it’s also known) would be a threat if it were to establish across the province. But in Tardif’s view, that’s a big “if.” “There’s a reason why Palmer pigweed is not a big issue in Canada, and that’s because it’s not adapted to our conditions,” says Tardif. “Even if you were to take a few seeds that are resisSoybean Guide, October 2013
tant to glyphosate and plant them here, they may establish, but I’m not sure they’d be so adapted that they’d out-compete the weeds that are already present. The other weeds that are resistant to glyphosate are already well-established and they have a huge seed bank.” A similar scenario unfolded in the province in 2000 when waterhemp was found in three sites in Ontario. At the time, it was greeted with widespread concern, given waterhemp’s proven ability to spread rapidly across the U.S. Worse still, waterhemp had developed resistance, not just to glyphosate, but to four other modes of action as well, including triazines, PPO inhibitors, ALSinhibitors and 2,4-D. Yet 13 years later, waterhemp in Canada has barely spread beyond the original sites where it was found in 2000. “Whether that was because growers were able to knock it down early or because it couldn’t out-compete the other pigweeds — the green pigweed and the redroot pigweed — that are already present, I don’t know,” says Tardif. In fact, his primary concern is that the novelty of a new weed species might lead growers to take their eyes off the relatively mundane task of dealing with current weed-management issues. “If Palmer amaranth comes here,” Tardif says, “it might become localized and may attract a lot of focus and attention, and it might distract from the current weeds that are resistant.” Hear the hoofbeats? Another parallel to this situation and that of waterhemp was the arrival of Asian soybean rust spores in late 2004. The confirmation that Asian rust was riding tropical storms from Colombia late that year sparked widespread concern. Guides and brochures were hurriedly sent to printers to help growers and agronomists identify the disease and understand its ability to defoliate whole fields, and also to arm growers with recommendations for the use of the few control options that were available. Yet Asian rust has now been part of the Ontario soybean sector since 2007, and always as a late-season arrival, with little or no impact on maturing soybeans. And since the spores cannot survive Canadian winters, no matter how mild our winters may seem, and since there is no viable host plant species to harbor the disease over winter, rust is causing less and less concern. In the health-care sector, there’s a commonly used phrase that underscores the need for straightforward thinking instead of trying to diagnose exotic or rare illnesses: if you hear hoofbeats, most of the time it’s just horses, not zebras. It’s another way of saying that, all other things being equal, the correct answer is usually the simplest one. Most times, agrees Tardif, the weed species that are present are the ones that have been well-established. In Western Canada, it’s wild oats and kochia, and in Australia, it’s rye grass and wild radish. “These weeds are already very abundant, and they’re the No. 1 and No. 2 targets on the list, and they’ve become resistant,” says Tardif. “It’s hard to think of a weed that’s very low on the totem pole that becomes resistant and then suddenly takes over because of that resistance.” Just because a weed like Palmer amaranth is glyphosate resis-
By the numbers — Stratus Research
E
arly in 2013, Stratus Agri-Marketing conducted a research poll of 1,533 growers in Western Canada and 495 in the East, and
asked for their opinions about glyphosate resistance, and herbicide resistance in general. It was noted at the time that Canada fleabane, kochia, giant ragweed and volunteer canola were the four main species of concern. (Common ragweed has joined that list, although it wasn’t listed in time to be included in the survey.) In their report, the study’s authors noted that the problem in Michigan with glyphosate-resistant Palmer amaranth had reached the point where in 2012, only one per cent of farms reported finding the weed but that those farms covered four per cent of the farming area of the state. Overall, all species of glyphosateresistant weeds were a concern to 25 per cent of farms (compared to 12.5 per cent on Ontario farms). Keep in mind, this study was carried out between Feb. 1 and March 13, 2013. Conditions in Michigan and Ontario have undoubtedly changed during this growing season, but the results do provide a benchmark going forward. Some of the study’s other findings relating to Canadian conditions include: • 41.9 per cent of Canadian farmers surveyed said they are “very concerned” about glyphosate resistance in weed species. • Quebec showed the highest level of concern at 49.3 per cent. The lowest levels of concern are in the Atlantic provinces, with 23.8 per cent. • In Western Canada, kochia resistance is found on 1.3 per cent of the acres in Saskatchewan.
Continued on page 16
Soybean Guide, October 2013
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Continued from page 15
tant doesn’t mean it acquires some sort of super power, says Tardif. It won’t automatically spread prolifically. Very often, in fact, there’s a cost associated with developing resistance, so the weed may be even slower to spread, and once it arrives, it may be less of a threat. STAY IN THE HERE AND NOW As proactive as he wants to be, Tardif doesn’t want the distraction concerning Palmer amaranth to override what growers are facing today, including Canada fleabane (which now shows resistance to multiple modes of action in some counties) and giant ragweed among many others. So while Tardif has done presentations on Palmer amaranth’s potential, including dramatic photos of how one plant can occupy an entire pickup’s box, he doesn’t want farmers to be so focused on Palmer amaranth that they ignore lamb’s quarters, Eastern nightshade, green pigweed or other weed species on their farms. “And maybe I’ll be wrong (about Palmer amaranth coming into Ontario),”
Tardif says, again harkening back to the situation with waterhemp in Ontario in 2000. “I’m very careful about predicting invasions, and if it’s found, if it’s true that it’s here, we should be taking steps to make sure it doesn’t spread.” Tardif has heard comments from other weed specialists who often point to Canada’s diversity as some sort of saving grace against herbicide resistance. Much has been made by researchers from other countries of Canada’s canola industry, and how Western Canadian growers rely on four technologies (Roundup Ready, Liberty Link, InVigor/Nexera and Clearfield). But as Tardif points out, diversity is not a national or even province-wide phenomenon. It’s farm-byfarm, and for the most part, growers these days are opting for what appears to be the easiest course of action. Tardif has read of cases where a U.S. grower who has glyphosate-resistant Palmer amaranth might switch to spraying glufosinate exclusively. That’s not an example of spraying responsibly or efficiently, or with diversity. When it comes to Palmer amaranth becoming the scourge that it is in the U.S.,
Peter Sikkema agrees with Tardif’s assessment from the weed competition perspective. But through the years, and in light of the waterhemp situation in 2000 and the Asian soybean rust scare in 2005, Sikkema has also learned that expectations don’t always become reality. NEVER SAY NEVER “I’ve been at this game for a long time, and things that were predicted that were going to be devastating didn’t occur,” says Sikkema, a professor of field crop weed management at the University of Guelph’s Ridgetown Campus. “The flip side — and I’m still shocked at this — is how rapidly glyphosate-resistant Canada fleabane has spread across southwestern Ontario. So I’ve had experiences on both sides, and even after 25 years, I’ve had surprises at both ends: one where I thought it would be worse than what it turned out to be — and I’m thinking of waterhemp — and another where I didn’t think it would be as bad as it is, and I’m thinking of glyphosate-resistant Canada fleabane. And I was wrong on both counts.” For Sikkema, the important qualifier is that resistant Palmer amaranth seed
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Soybean Guide, October 2013
would have to land here and adapt to the environmental conditions that exist in Canada, including colder winters than Georgia where it was originally detected. But as Sikkema points out, the biotype in Michigan has managed to survive under conditions that are closer to those found in Ontario than in the southern U.S. “That would make me think that there’s a distinct possibility that there are biotypes that are adapted to our weather conditions in Ontario,” says Sikkema. “And if, for some unfortunate reason, it does get introduced into the province, then there is the possibility that it will become established and could be a major challenge for Ontario growers.” SLOW AND STEADY One theory says the right way to control glyphosate resistance — or resistance to any herbicide — comes from treating all weeds as though they are already herbicide resistant. Yet Sikkema doesn’t believe that such an extreme measure is necessary. Instead, he cites the need for diverse crop rotations, with diverse weed management strategies over a longer period of time. “I think they have to put more than one
herbicide mode of action on every single acre, every single year,” Sikkema. “I would tell growers, if you want to maximize farm profitability, what you want to do is start clean and stay clean all summer. The way you do that is with an excellent soil-applied herbicide that controls both the predominant grasses and broadleaves on your farm. Then if you have weed escapes, you can clean up with glyphosate. If you do that, you’re going to have excellent weed control, you’re going to maximize crop yield, you’re going to maximize profitability, and you’ll have reduced the selection intensity for glyphosate-resistant weeds dramatically.” If there’s one last message to convey about glyphosate resistance in weed species, some might compare Ontario to points in the U.S. and say we’ve done a fair job of avoiding the issues facing American growers, both in numbers and intensity. But as Sikkema points out, given how Ontario weather conditions can be an equalizer of sorts, a “better them than us” notion might not be as valid as some would like to believe. Plus, the days of the simplicity of using one-pass technology and a single mode of action herbicide have to be considered a thing of the past. “And I include myself in this, where I
think we mismanaged Roundup Ready crops,” concedes Sikkema. He adds that he believes Roundup Ready technology was a fantastic development, and remains so today. “But the reality is that we just had an overreliance on glyphosate, and I think all of us bear a portion of that responsibility. Whether it’s the herbicide manufacturers, the seed producers or the government weed scientists like myself, and the growers — I think all of us bear a portion of that responsibility.” When he looks back to 2005, Sikkema concedes that he didn’t hold that same outlook, and in retrospect, he wishes he would have been more proactive in encouraging growers to use greater diversity in their weed management programs. “In all honesty, I thought our diverse crop rotations in Ontario were going to save us, and I was simply wrong,” says Sikkema. “I thought because we have corn, soybeans and wheat, and wheat’s not a Roundup Ready crop, we had multiple herbicide modes of action over time, and that would delay or reduce the selection intensity for glyphosate-resistant weeds, and I think it has,” Sikkema says. “But that in itself is not good enough.” SG
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Soyguide
Redefine weed management There’s no guarantee that new herbicide tolerant systems will last By Ralph Pearce, CG Production Editor
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W
eed resistance is leaving soybean growers fewer weedmanagement options. Even with the pending arrival of two new herbicide-tolerant technologies, the days of “plant — spray — harvest” need to be considered a thing of the past. Growers can no longer afford to believe otherwise. That’s why it’s refreshing to hear of at least one seed company that is following that exact mindset. During recent dealer meetings, Pride Seeds sales and technical staff were urged to meet with their customers and help them develop long-term weed management programs. Dan Foster, market development agronomist with Pride Seeds, says the directive simply acknowledges how weed species are changing in the field. “As an industry, I think we did a fantastic job with corn but we’ve done a poor job with soybeans,” Foster says. “This isn’t the first time we’ve run into resistant weeds.” Foster likens the developing situation with glyphosate-resistant Canada fleabane and giant ragweed to the 1990s when Group 2 resistance began showing up. The problem is that with the advent of Xtend (dicamba-tolerant) and Enlist (2,4-D-tolerant) technologies, growers are tending to focus on what’s new instead of concerning themselves with what’s really out there. That sets up the possibility of growers getting complaisant about glyphosate resistance, not to mention the Group 2-resistant issue that remains to this day. “We have to make sure we’re not pushing ‘plant it, spray it and harvest it,’” says Foster, “We have to be doing a lot more, especially down here in Essex, Kent and Lambton, dealing with giant ragweed and fleabane just in the last five years. Our LibertyLink (glufosinate-tolerant) beans that we’ve been selling have done well to control it, but of course, you’re looking at zero control versus some control, so it’s not perfect, but it’s what’s out there right now that growers can use.”
Yet even the strategy of alternating LibertyLink and Roundup Ready is unsustainable. Xtend and Enlist are coming to market, but as many weed scientists and specialists have stated, North American growers have managed to overuse the glyphosate-resistant technology, so now they’ve moved on to the glufosinate-tolerant system. And many are predicting growers will do the same with dicambaand 2,4-D-tolerant systems once they’re available. Once those four technologies have been rendered obsolete, there’s nothing left in the research pipeline. “In Canada, using Roundup Ready corn for example, when it was launched in the U.S., growers were advised to ‘Just spray Roundup — nothing else’,” says Foster. “And Monsanto did an excellent job in Canada, saying, ‘You need to put Marksman with it, you need to put atrazine with it, you need to put PrimExtra down and come back with Roundup — and make sure you’re using two modes of action’. Whereas when we brought out soybeans, the approach (in the U.S. and Canada) was, ‘Go spray Roundup and if that doesn’t work, spray it again!’” So the dealers must adjust their approach to weed control. But for Foster, the issue is even more pressing given his location in Ontario’s extreme southwest. “It’s not nice to say, but as an industry, we’ve almost become lazy,” Foster says. “Nobody remembers how to spray something at 20 gallons that could drift on you, because we haven’t had to. With our tighter rotations and early adoption here in the southwest, we’ve helped to expedite the problems that could spread to the rest of Ontario, and this is why, as an industry, we need to work hard to provide new tools in the toolbox and train growers how to use them.” In terms of the use of glyphosate, at least, the word has to get out that it’s no longer the single solution, if it ever really was. SG Soybean Guide, October 2013
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Soy guide
Hard decisions Coaxing growers back to IP soybeans is a tough job, despite booming demand By Ralph Pearce, CG Production Editor
P
remiums for IP soybeans as high as $6.50? Does that grab your attention? It’s only anecdotal, but that’s the offer that seems to have been floated by some seed dealers during the 2013 London Farm Show. At the time, the price of soybeans was in the $12.50 to $13 range, meaning a field of identitypreserved, food-grade soybeans would have fetched you nearly $20 per bushel. Were such big premiums really there for the taking as early as the March show? Maybe not. But even if they weren’t, and even if they were more rumour than fact, they were a sign that something was brewing in the IP market. Nor were they the only sign, because dealers were also meeting stony silence when they called growers offering premiums of $2 and $3, which explains why some elevators decided to test just how much they’d have to put on the table to get growers to nibble. Even at $6.50, though, they were hearing a lot of negativity. Historically, the ability of seed dealers and processors to sell contracts for IP soybeans has been based on an indirect relationship. When soybean prices are high, the attraction for IP contracts is low. By contrast, when prices are low, contract demand trends higher. The common mind-set is that a $2 premium looks better on $8 beans than at $12. Yet something else has happened, and it’s taken shape irrespective of global and even domestic demand for food-grade soybeans. Japanese demand is stable, as is European, and now the growing demand for soy-food products across North America is pushing total needs even higher. Add to that the reputation Canadian growers have for quality in IP production, and attracting growers to take on contracts should be a simple decision to make. 20
But it isn’t, and it’s a big concern among those in the seed trade, as well as buyers, processors and manufacturers. Harder to grow It turns out the retreat from the IP market also has a lot to do with another abbreviation in soybeans: GMO. Glyphosatetolerant or Roundup Ready soybeans have brought a convenience factor that the IP trade simply can’t fight. It’s just easier to grow GMO soybeans. There’s a generational shift too. Older farmers want something less stressful to manage in their fields. Or maybe it has something to do with the coffee shop talk about IP growers not making grade, yet “being poured into the same truck as the neighbour’s soybeans that did make grade.” The move to GMO soybean varieties is likely the largest concern, be it short- or long-term, both for end-use buyers and for the dealers who offer IP contracts to growers. Martin Vanderloo, president of Huron Commodities in Clinton, Ont., says the IP sector is facing a convergence of several factors, all of which are causing a tightening of supply in spite of growing demand. For starters, the number of farmers is getting smaller, yet farms are getting bigger. That contrasting trend may be doing as much to dampen GMO’s popularity as the pricing issues. And it’s led to an evolution in dealing with farmers in an attempt to encourage them back to the IP side. “It has to be a partnership that works well for the farmer, or it won’t work longterm,” says Vanderloo, who is also a director with the Canadian Soybean Export Association. “But the biggest challenge that we face today is not the sales of IP, it’s the origination of the commodities and the varieties that we need to get to market. I want to say that we — and that’s ‘we’ as an industry — have done a good job Soybean Guide, October 2013
chasing down the markets and the end users and the people to sell to — in other words, our customers.” Yet in spite of this sales job and partnering with growers, there’s still this decline in IP contracts. The numbers from across the country bear that out. From 2010 to 2012, soybean production in Canada increased from 4.3 million tonnes to 4.9 million. That’s for Ontario, Manitoba (which will harvest about a million acres of soybeans in 2013), Quebec and P.E.I. At the same time — and as part of the same overall production picture — the numbers for IP soybeans have declined from 1.5 million tonnes in 2010 to about a million tonnes in 2012. It’s to the point now that Vanderloo is questioning the organizing of trade missions to attract overseas buyers. Any surplus the sector may have had in the past is long gone, and the trend remains down when it comes to attracting growers back to growing IP soybeans. It’s clear why the export association is questioning the value of trade shows, says Vanderloo. “We’re overbooked.” But there’s another side, he says. “The growth for non-GMO demand is not waning, that much we see. What is changing is the move from the growers’ point of view, to go to the GMO varieties and away from non-GMO varieties.” Vanderloo is reluctant to say too much that’s negative, yet at the same time, it’s hard to ignore the trends taking shape right in front of him. It’s to the point where he’s finding there’s very little down time in a year now, a point he illustrates by noting that he’s already working on planning for 2015, including new varieties and new programs, and analysis of what his end-users are looking for and the logistics to get them what they want. Demand is rising The shortage of growers and IP contracts in Canada, and particularly in Ontario, is especially troubling given some of the influences outside of this country. Vanderloo refers to the last U.S. federal election, in which California asked its voters to decide on a GMO food labelling proposition, which was ultimately defeated. Yet since that election, one of the processors he works with in Zeeland, Michigan, reports it has never been busier. It’s now processing food-grade soybean Continued on page 22
Soybean Guide, October 2013
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Continued from page 21
products for a market that wants that level of differentiation, to the point where the processor is also changing its specs for many of its products to non-GMO. “The premiums for non-GMO beans in the U.S. have basically kept in step with what we see here, and of course, the Americans are competing with us in overseas markets,” says Vanderloo. “But if they happen to realize a bigger demand domestically, that will certainly bode well for us from an export point of view, and we’ll see Americans become less of a threat to us.” Another looming shift in global demand is coming from China and its peripheral customers. According to Vanderloo, China is now showing more interest in non-GMO beans, a change that has come as part of that country’s expanding middle class and its desire to spend more of its increasing disposable income on higher-quality food. As a result, however, China has been hoarding more of its own agricultural production, and the countries that formerly purchased products from China are being pushed out onto the global market. Those are two of the short-term developments that add some further lustre to the potential for IP soybeans in Canada. And there’s more of the same to come in the years ahead. As growers in Brazil and Argentina continue to take advantage of climatic conditions to double-crop soybeans with corn (and vice-versa), it means more volume-based production will enter the world market, in addition to what’s grown in the U.S. To complicate matters further, there are estimates of as many as 80 million acres of uncultivated land in Ukraine, described by many as the best quality soil in the world, just waiting to be brought into production. The challenges in both of these regions amounts to one of infrastructure: yes, Brazil and Argentina are pushing more soybeans in to the world’s export market, but the wait times for unloading at port can reach 60 days. Bringing Ukraine’s prime agricultural land into production is also fraught with political and economic barriers, and could take as long as 10 years to solve. But those are the longer-term, developing production issues. As Martin Harry points out, Ontario — and Canada in general — simply cannot compete on a volume basis. So it only makes sense to build on that IP market potential. 22
“There is the demand, on a world basis, and there’s no question that we are looked at as the premier growers of IP soybeans,” says Harry, current chair of the Canadian Soybean Expor ters Association, and SeCan’s marketing manager for Eastern Canada. “Certainly we have a reputation in Canada which is foremost, and one that we don’t want to lose. But in a big-picture perspective, we’re nothing in terms of soybean acres and production (globally), so we have to have the value-added of IP soybeans. If we don’t specialize in something different, we’re just a commodity.” A generational shift The growing popularity of GMO soybean varieties has arguably turned this cycle into a trend, and Harry believes it might also be a generational issue, one that may be about to shift, depending on commodity prices and their direction in the next two years. If commodity prices begin to drop, and if land prices follow, some growers will undoubtedly look to find some value-added opportunities to help them pay the mortgage or just compensate for declining commodity prices. “I think that new and younger growers, who are coming back to the farm these last four or five years, they didn’t need to do anything extra,” says Harry. “Things haven’t become tight for them yet.” But as their fathers and uncles begin to look towards succeeding the family farm, some of the appeal of the ease and convenience of GMO varieties may begin to wane, especially for young, eager farmers who are looking to diversify. That diversity angle is something Sue Robert has noticed as well. In her position in sales and marketing w ith Thompson’s Ltd., in Blenheim, Ont., Robert has worked to provide as much incentive to growers and promote the benefits of the IP market, organizing presentations at seminars and meetings such as Southwest Ag Conference and FarmSmart. “We saw that there was interest from growers attending those sessions, and learning a little bit more about our market and why we place value on them,” says Robert. “And I’ve seen a few of those younger farmers come back to the farm, and say that they want to diversify. Especially where they have more than one farm and they choose to grow the easy GMO varieties on one and put IPs on another.” But change is slow, and at present, the only thing that’s going to change the
momentum towards IP soybean contracts may be the commodity market, although no one wants to see commodity prices tumble back to late-1990 levels. Robert agrees with Harry and Vanderloo about the overall demand for IP soybeans — it’s not declining. And she agrees with Harry’s assertion that overseas demand is growing over and above traditional customers. “We’re seeing a bit from other European countries looking for nonGMOs, and other Southeast Asian countries are also looking for a secure supply,” says Robert. She adds her voice to those who say pricing has had a significant impact, but that the ease and availability of GMO varieties has cemented the trend. “When I talk with growers, that’s one of the first things that they all say: ‘it’s easy.’ There’s also a geographic make-up (to the IP sector) and the Roundup Ready 2s are much stronger here in southwestern Ontario than what they are currently around Hensall, Mitchell and Granton. But that’s also a factor of variety development, maybe more so than personal choice.” Looking across the country On a national basis, Ontario growers certainly have the clear advantage when it comes to IP production. According to Harry, roughly 99 per cent of Manitoba’s soybean production relies on GMO varieties. In Ontario, 35 per cent used to be the standard for IP soybean production, but with the convenience and abundance of GMO varieties and the grading issues, that number has slipped below 25 per cent. Still, there is room for optimism: in the fall of 2013, the Grain Farmers of Ontario, the Canadian Soybean Council and the Canadian Soybean Exporters Association will gather for meetings aimed at creating an all-encompassing organization, similar to Pulse Canada or the Canola Council of Canada. Sure, Manitoba growers favour GMO varieties, and that P.E.I. growers look to soybeans more as a rotation crop for potatoes (although that is changing), but the new council will look beyond production issues to include industry stakeholders and consumers. It takes that partnership approach that Vanderloo talks about one big step further, attempting to bridge gaps and build new communications and marketing channels. That certainly has to bode well for future dealings for the IP sector and its growers. SG Soybean Guide, October 2013
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SOYGUIDE
Researchers are gaining the upper hand in a battle that is much more complex than anyone expected By Ralph Pearce, CG Production Editor
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ATTACK ON SEEDLING DISEASES W hen it comes to production problems in soybeans, growers have grown used to hearing that with soybean cyst nematode, once you’ve got it, it’s in your fields to stay. Only diverse rotations and SCNresistant varieties can reduce the damage to future crops. But nematodes are far from the only threat. Surveys in the U.S. have estimated the lost yield due to seedling diseases in American soybean fields at 37 million bushels a year. There are at least four different seedling diseases in this complex, including phytophthora, pythium, fusarium and rhizoctonia. But it’s the first two that are the focus of research now being conducted in the U.S. Times are changing for in-depth disease research, so the battle with seedling diseases can benefit from more detailed surveys as well as from new technological tools to help determine the presence of different species of phytophthora and pythium. Martin Chilvers, an assistant professor at Michigan State University, is part of a team of researchers across 12 soy-
bean-growing states and Ontario, looking to build a more detailed analysis of the disease pathogens involved, including what effect they can have on soybean seedlings and roots. The funding in the U.S. comes from the USDA’s National Institute of Food and Agriculture, with matching funds from the United Soybean Board and the Nor th Cent r al Soybean Research Program, while Canadian research was funded primarily by Agriculture and Agri-Food Canada through the Agricultural Adaptation Council and the Grain Farmers of Ontario. “Up until now, we haven’t had a national survey to figure out what species are out there, and we haven’t really had the molecular tools that we have now, either,” says Chilvers, who is originally from Australia and has studied disease pathogens around the world. “We now have a pretty good snapshot of what pythium species are actually out there and in soybeans in particular. With the isolates that we’ve collected, we’re now trying to determine which ones are pathogenic and are truly causing disease.” Soybean Guide, October 2013
It’s one thing to isolate an organism in the soil environment, and to determine whether it is infecting a plant or is associated with the disease in seedlings. It’s quite another to prove that it’s the cause of the disease. And that’s what Chilvers and others in the U.S. Midwest and Ontario are trying to understand. As with any research into plant diseases, the more they can understand about the species that are present, including their activity and their disease transmission capabilities, the more researchers can target suitable responses, be it improved seed treatments or fungicide applications, or passing along the information to plant breeders for enhanced germplasm and improved varieties. There’s also the notion that phytophthora and pythium, like soybean cyst nematode, have been a part of the soybean disease landscape in the Midwest and in Ontario for years, if not decades. And with pythium in particular, a surprise turned up when scientists tallied the number of different species that were collected in this regional survey. In 2011, 55 species of pythium were identified, plus 40 more in 2012. The same survey identified only two phytophthora species in 2011 and two more in 2012. What also turned up in the research was the possibility that environmental conditions including temperature, precipitation and soil texture might play a role in this developing story. “The study has opened our eyes to the number of pythium species that are out there,” says Chilvers, acknowledging the importance of phytophthora, which is already recognized as a significant cause of disease. “But with pythium, it’s much more difficult for these seedling diseases, in terms of identification. If you bring in a diseased seedling, it’s very difficult for me to tell you exactly what’s causing that disease because the symptoms on the plant are hard to distinguish. You often can’t differentiate pythium, phytophthora, fusarium and rhizoctonia from each other — they just produce very similar symptoms.” In addition to identifying the species, Chilvers and the other researchers are trying to develop molecular tools to speed the identification process. That way, growers will be able to get quicker diagnosis, with improved identification leading to more precise recommendations to combat the disease, Soybean Guide, October 2013
High-powered science is helping researchers plug the gaps in our disease defence.
including better targeted fungicide seed treatments. The benefit of this type of research also includes the long-term potential to build some sort of diagnostic tool that helps a plant breeder incorporate this information for the purpose of improving new or existing germplasm. Chilvers is quick to point out that although he can come up with newer diagnostic tools based on his work to identify the specific causes, incorporating this information into new soybean varieties is not an overnight development.
“That’s a difficult process, where incorporating different resistance genes is concerned, but they’re going to be able to combine different resistances much more quickly than what they have in the past,” says Chilvers. Here in Canada From Albert Tenuta’s perspective, the seedling disease complex is second only to soybean cyst nematodes in Canada. Continued on page 26
25
”We‘re seeing more of what I call nibbling… a little bit more every year.“ — Albert Tenuta
Continued from page 25
“We’re seeing the same thing in Ontario,” says Tenuta, the field crops pathologist for Ontario Ministry of Agriculture and Food (OMAF). “We’re seeing shifts in populations, particularly when you look at pythium.” Tenuta says disease watchers are also seeing pythium species with more diversity, and some are becoming better able to adapt to the changing environmental conditions. That’s a concern because, while pythium is usually considered a cool-weather, early spring problem, there’s evidence that some pythium species can tolerate warmer temperatures and hurt crops further into the season. The impact of that shift cannot be ignored, and Tenuta adds that these trends are occurring in the U.S. just as they are in Ontario, which is why he’s helping out in the survey and is part of the process of developing a regional distribution map of the pathogens that are out there. That makes it much more beneficial for public and private breeding programs as well, because there is now the capacity to target genetics to the specific issues profiled in various regions. If Ontario finds that there’s a unique situation with pythium or phytophthora, there is the opportunity to breed varieties for those specific needs in the different regions. “It’s a challenge, because we’ve been 26
breeding soybeans for how long?” says Tenuta. “And other than phytophthora, where we have good race resistance and race-specific resistance as well as partial resistance, when we think of fusarium, rhizoctonia and pythium, we don’t have the same level of genetic resistance or tolerance in a commercial variety. So we’re dependent on things such as seed treatments and management to reduce the risk to producers from these diseases. The result is that we’re seeing more of what I call ‘nibbling’ — a little bit more every year of these diseases. And some years more so than others, a lot of it will depend on the environmental conditions early on in the spring.” So in a year such as 2013, with a cool, wet spring, there was a substantial increase in pythium, phytophthora, rhizoctonia and fusarium seedling disease injury in Ontario in areas that are more prone to them, such as the heavy clay soils, or areas that had saturated soil conditions. And just as Chilvers cautions against making too many conclusions based on current research, Tenuta notes that under cur rent conditions in Ontario, there is still considerable work to be done to determine the specific capabilities of the pathogens involved. Finding and identifying a species doesn’t mean it’s the cause of the disease. “One of the evolutionary strategies of any of the best disease-causing pathogens is their ability to find a little niche
or a little opening or a crack in our wall of protection,” Tenuta says. “And when they find that little crack, they’re able to then get in and start to do their thing.” What Tenuta sees is the development of resistance by some pythium species against the current fungicide treatments that are based on metalaxyl. It isn’t that the products have lost their efficacy completely — they haven’t, says Tenuta. But using this information could lead to the incorporation of other seed treatment fungicides to compensate for these new developing soybean issues. “Now, you’re going to see at least one, maybe two new products that are targeting the oomycetes for pythium and phytophthora,” adds Tenuta. “So by combining the two actives, you’re able to manage both groups of oomycetesthat are maybe becoming less sensitive to the metalaxyl, but the new active in these new seed treatment fungicides can control them.” Again, the word of caution is that these developments take time. It’s one thing to identify the species and how they can affect your soybean crop. That’s the stage at which Chilvers and Tenuta are working. But it’s another branch of science that figures out how a new seed treatment is developed, or how a new variety is bred. And typically, that process can take between five and 10 years. Stay tuned! SG Soybean Guide, October 2013
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Soyguide
A good 2013 harvest will drive acreage even higher next spring By Angela Lovell
Manitoba reaches million acres
S
oybeans are becoming more popular with Manitoba growers, who defied early expectations and planted one million acres in 2013, up from 832,000 acres in 2012 and 580,000 in 2011. “This year there was some concern in some of the western areas of the province, which were experiencing cool, wet spring conditions, that some growers would be backing off on soybean acres,” says Dennis Lange, farm production adviser with Manitoba Agriculture, Food and Rural Initiatives. “But growers had selected the right early-maturing varieties to start with, and plantings didn’t end up changing as much as we initially thought.” Manitoba’s soybean acres have been steadily trending upwards over the last decade, and the province now accounts for between 10 and 18 per cent of Canada’s total soybean production. Importantly, it isn’t just new acres that are making the switch to soybeans. It’s new growers too.
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Between 2006 and 2011 the number of Manitoba soybean farms increased from just over 1,300 to 1,858, and those farms are spreading out from the traditional soybean-growing areas in the Red River Valley to northern and western regions of the province, largely thanks to the introduction of earlier-maturing varieties that are better suited to the shorter growing season in these areas. Strong prices and the ease of production are other factors that are driving interest in soybeans. “Soybeans are not a challenging crop to grow,” says Lange. “Once they are inoculated they don’t require additional nitrogen to be applied, which is a benefit in terms of cost and time savings.” Droughty swaths across the U.S. Midwest in August also helped end Manitoba’s 2013 on a high note, driving Chicago prices up and intensifying Manitoba’s belief that it has a role as a consistent producer of quality beans. Soybean Guide, October 2013
It isn’t just the acreage that’s increasing. There’s big growth in the number of Manitoba farmers who are planting soybeans too Success in the field is still vital to the industry’s hopes for the province. Record yields of 36 bu./ac. in 2012 played a role in encouraging more soybean acres across Manitoba this past spring. “The provincial average yield for soybeans over the last five years has been around 31 bu./ac.,” says Lange. “The higher yields that we saw last year surprised many growers, who thought the hot, dry conditions over last summer would maybe reduce yields. But we ended up at 36 bu./ac. pretty much province wide.” The outlook for 2013 is lower, but given reasonable conditions through to the end of harvest, Lange was predicting a provincial average of around 30 bu./ac., more or less on pace with long-term results. Crop stands generally looked good through August, and good yield potential seemed to be locked in, but there has been an increase in the incidence of root rot diseases such as phytophthora in some soybean fields this year, says Lange, who urges growers, especially those new to soybeans, to practice good rotation to prevent disease pressure from building. “Don’t have soybeans too often on the same field,” Lange advises. “Soybeans are such an easy crop to grow that some growers can be lulled into a false sense of security and be tempted to grow them consecutively on the same field in the first couple of years. But if they take a break from soybeans in the third year and then come back to them in the fourth year, suddenly they have grown the same crop three out of four years and that can significantly increase disease pressure.” Crop acreage in 2014 will depend largely on the outcome of this year’s harvest, says Lange. “Until we see what the quality and final yields are like after harvest it’s hard to predict acres for next year, but if everything goes well this fall and yields are decent I can see the acres increasing again next year.” Adds Lange: “It will also depend on what the prices do through the winter months, but there is certainly still room for expansion of soybean acres in Manitoba.” Soybean Guide, October 2013
The Manitoba crop is 95 per cent genetically modified, with most ending up in feed and biofuel markets, but around five per cent of the crop is non-
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soyguide
#PestPatrol with Mike Cowbrough, OMAF and MRA
Are there residual effects when I stop using residual herbicides? By Mike Cowbrough
T
hese photos are from two soybean fields on my farm. A laneway is the only thing that separates them, and both have been managed identically. Yet one is significantly weedier. Why? It’s all about last year’s corn. Normally, I’m a fan of adding residual herbicides to glyphosate in a tolerant corn crop. It can be a tough sell when glyphosate is so cheap and most residual herbi-
My much cleaner soybean field where I had applied a residual herbicide to glyphosate-tolerant corn the previous year (2012). (photos by Mike Cowbrough, OMAF/MRA).
The much weedier soybean field where last year I chose not to add a residual herbicide in the corn crop and pigweed germinated after the eight-leaf stage.
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cides cost twice as much. However, adding an effective residual herbicide will: 1. Provide better weed control and fewer weed seeds, 2. Reduce the chance of selecting for herbicide-resistant weed populations, 3. Increase grain yields by two to five per cent (due to better weed control). Yet last year in 2012, I faltered and only bought enough residual herbicide to do the one field. And with a huge list of other jobs to get done, I found it easy to justify spraying the second field without a residual herbicide, since weather conditions were perfect, weeds were small and corn was at the beginning of the critical weed-free period (three-leaf stage). Both herbicide treatments provided great weed control when I scouted at the eight-leaf stage of corn. However, a week later there was a light flush of newly germinated pigweed in the field that had been sprayed without a residual herbicide. With the crop canopy closing, and with the knowledge that these late germinators would not impact grain yield, I decided to take my chances and leave the field alone. But the new batch of pigweed did produce seed, and noticeably more pigweed germinated this spring. A friend asked what herbicide program was applied to the weedier soybean field, and they were surprised to hear that it was the same one as the clean one. Naturally the weedier field is along the road for everyone one to see, while its cleaner counterpoint is hidden. I write this story not to imply that all your fields need a residual herbicide. For me, it was my scouting, note-taking and photographs that documented the journey of my decision-making and these now provide me with experience that I can use to make better decisions for my farm. SG Have a question you want answered? Hashtag #PestPatrol on twitter.com to @cowbrough or email Mike at mike. cowbrough@ontario.ca.
Soybean Guide, October 2013
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management
Wrong choice As farming gets more complex, what if you fear your son or daughter isn’t up to the job? By Amy Petherick ne of the hardest truths about farming, like most professions, is that some people just aren’t cut out for the work. Worse, it isn’t always clear from an early age who has the makings of a good farmer and who hasn’t, which puts some farm parents in the awkward position of having built up the hopes of a child who later proves ill matched for the job. Making it even worse is that the parents find themselves in such an uncomfortable corner, they may let the situation continue unresolved for years while the costs add up, and while the opportunities for the child to act on some more reasonable expectations slip away. In short, it becomes a royal mess. Across the country, farm advisers and others are getting called to more farms where the question of whether the next generation has what it takes is coming to the fore. In fact, as farms get larger and as the pressures get more intense for farmers to excel not only in the field and in the barn but also in financial and business management, it’s likely happening on more farms than ever before. Experts say injecting the truth into these cases can be a painful process, but it’s better to address the issue of an incompetent heir sooner rather than later. The farm depends on it. Continued on page 32 OCTOBER 2013
country-guide.ca 31
management
Continued from page 31
Assess for levels of competence Parents may start with an ideal of what their successor should look like — an ideal that no child will ever grow into. No one is equally capable in every area, after all, which is another way of saying that areas of weakness will always remain. A parent’s first challenge is to objectively and honestly consider their chosen child’s competency as future owner and operator of the farm, says Gordon Colledge of Advance Communications in Lethbridge, Alta. Colledge is a succession planner with years of experience who has often encountered parents in the midst of questioning their succession choices and feeling challenged by their limited options. “Sometimes the draft pick to take over the farm is simply because the other kids have already gone,” said Colledge. Sometimes there was only ever one child born to the family, or the family tradition was to choose the only or oldest son as the successor. No matter the circumstances, most experts counsel clients to take a hard look at their chosen successor, preferably 10 to 20 years before retirement. Liz Wagner of Orr Insurance Brokers in Stratford, Ont., says some farmers are comparatively lucky, because there may be a clear reason why their child isn’t ready to take over, and the reason may not be the child’s fault at all. These situations are typically the easiest to solve, and they can also be the easiest to put back on track. “In a lot of cases, if a successor isn’t up to speed, it can be laid back at the parent’s doorstep,” Wagner explains. “Maybe it’s just a matter of some training and being allowed to do something.” But, Wagner cautions, it isn’t always that simple. It’s also possible that the child simply doesn’t have the aptitudes or attitudes needed for success.” Wagner encourages farmers to be honest with themselves about their family. Often a farmer who has a truly incompetent heir knows it deep down. That’s what makes it so challenging. Indeed, Wagner often sees a pattern, and so does Colledge. “They (the son or daughter) can be extremely nice, hardworking people,” Colledge says, “but they’re limited. “Probably the factor I look for the most is teachability,” Colledge adds. “A capable successor will recognize his or her own strengths and weaknesses, and then build strength where there is weakness.” If your successor doesn’t seek help, doesn’t spend much time reading magazines or trade papers, and doesn’t initiate their own attendance at farm conferences or relevant workshops, consider these to be red flags of incompetence. But of course, real life can be even more complicated. Sometimes, one parent has seen the signs, says 32 country-guide.ca
Robert Fuller of Brimage Law Group in Simcoe, Ont., but their spouse needs convincing. “Dad’s usually the business guy or the technical guy and he can see that the kid really doesn’t know what they’re doing or isn’t a good farmer, but Mom tends to be more forgiving and a lot of times won’t acknowledge that really the kids just can’t do it because they think somehow it means they trust them less,” says Fuller. As ever, the challenge in farming is to know when you’re being a business manager, and when you’re being a parent, and how to keep the roles clear. When parents disagree, Fuller’s first recommendation to them is to close the door and have an honest conversation with one another, bringing in an objective third party if that’s what it takes to get on the same page.
Building competence If a successor truly is incapable of becoming the owner operator of the farm, there are many options available to farm parents, depending on the level of incompetence. Sometimes inabilities are a result of immaturity, learning disabilities, or substance abuse, and these problems may not be insurmountable in the long term. In the case of immaturity or inexperience, Fuller believes farm parents are already good at providing kids with opportunities. “Generally we tend to put our kids in soft-walled rooms, but farm families tend to let their kids get dirty a little more,” observes Fuller. “Farm kids tend to be a lot more mature because they’re forced to go out and actually do things.” In fact, giving a child the opportunity to fail may be just the management lesson they need. In other cases where children are still young, Wagner says she has seen successors who are suffering from emotional baggage or a drug problem respond well to a temporary trust arrangement. “If you set up a trust structure,” Wagner says, “there can be times where that structure is reviewed because a lot of kids will grow out of it, while other ones don’t.” Colledge feels that in the case of addictions, a parent’s best bet is to call in professional help quickly. “We can close one door by requiring two or three signatures on cheques, but for a person who’s really addicted, there’s no end of resources on the farm that can be sold or exchanged for drugs or alcohol. Pack them up and take them to an addictions counsellor.” Another temporary option which Fuller has seen work for the right people is to appoint a manager and retain the successor purely as an employee, arranged as part of a trust. He says there are tax implications to discuss with an accountant in this case, “but don’t ever let the tax tail wag the dog. “Look at the practical issues first and then worry about how you’re going to save taxes from doing it,” Fuller says. OCTOBER 2013
business
Alternatively, establishing a board of advisers or directors can work, depending on the size of the operation because larger operations tend to be better able to pay directors. In smaller cases where people may be more discouraged by the liabilities that come with becoming a director, advisers can be a better fit. Fuller says it all depends on whether the successor will listen to a board which doesn’t have the power to compel action. But Wagner reminds smaller operators to consider that “especially in a farm family, there are quite often family members or close neighbours who are willing to try and help in a mentoring capacity.” In any case, she warns farmers to be prepared for these options to take longer to implement than more permanent solutions.
Permanent solutions When it’s obvious a temporary solution won’t meet the family’s needs, the options are clearer. Overcoming physical disabilities is usually straightforwardly done, and Fuller says that in his experience, the parents of individuals who have been identified with other disabilities are good at educating themselves on options such as Henson trusts which will not disqualify kids from receiving gov-
ernment assistance programs in spite of inheritances, though he finds grandparents, aunts, and uncles aren’t. But when the incapabilities fall to the extremes outlined by Colledge, his recommendation is to make the business’s objectives clear and move on if they can’t be met. “The object is to produce a very good farm leader and it should be known that if he or she doesn’t measure up in a certain period of time, that person must be replaced,” says Colledge, “and often the best replacement is outside the family.” But for many farmers, this isn’t a palatable solution. “If the successor is completely incapable, most of the time there isn’t a succession plan because the parents know it just cannot happen and it’s just a strict dispersal,” says Wagner. To avoid such an outcome, these advisers say, start working with kids at a young age, encourage their input, be open about the farm’s management practices, and allow them to evolve into the role over time. If realities must be dealt with, then deal with them. “It doesn’t mean that you love the kids less,” Fuller says, “but you have to acknowledge that everybody has weaknesses.” CG
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country-guide.ca 33
business
Make it
the right name Starting a new venture? Need a corporate name? Follow these pointers for a name you’ll be proud of By Shirley Byers aming your farm or your business can be even more difficult than naming your children, where at least you can buy a book or click on a website with all the possibilities. The potential range of business names, by contrast, is virtually as wide as you can imagine. It also doesn’t matter if it turns out there are three Michaels and two Emmas in the neighbourhood. But if there are three other farms or businesses with names almost the same as yours, that’s just going to cause a lot of angst and confusion. Besides, in some very real ways, the name of your business can hinder its growth, or help it succeed. While you’re brainstorming names, here are considerations to think about:
1. think electronically Make sure no other business entity has the same name you’ve chosen, and that you can use the name for a website. Remember that if you don’t have the time or even the desire to set up a website now, you may change your mind down the road, when you could find that the name you want is already taken. Secure a url (name for the site) now, and it will be there if and when you need it. The cost varies with the service provider, but a “dot com” name can be as little as $10 per year. Sometimes the less-in-demand suffixes such as “dot ca” or “dot org” cost even less. Once you have it registered, you can keep the name as long as you want but you have to keep registering it, which is usually as simple as paying a monthly or annual fee. You’ll find plenty of online information that can help with this, such as: http://www.dot.ca/ , www.godaddy.com and www.networksolutions.com . For a few dollars more, some may offer help in building your website. One way to provide heightened name protection is to incorporate your business at the federal level. Information and a guide to incorporation can be found at: http://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/ cs03988.html. For online application the fee is $200. 34 country-guide.ca
For non-online applications, the fee is $250. You will be required to confirm that your corporate name is not the same as or too similar to one already in use. You can use the computerized search system, NUANS to do this search. NUANS will compare your proposed corporate name or trademark with databases of existing corporate bodies and trademarks, and it will produce a list of names that are most similar. To search your corporate name go to: http://www.nuans.com/nuansinfo_en/ home-accueil_en.cgi. When incorporating, avoid names with words such as government, ministry or board, words with a royal or Crown association such as queen, and wellknown brands or names such as Olympic, as these are likely to be rejected. Once your name is approved with Corporations Canada, it is protected across Canada, except in Quebec. The Quebec Corporations Database can be searched at: Registraire des entreprises du Québec.
2. Watch the humour Back in January 2000, Canada’s Conservative party united with the newbie Reform party to create the Canadian Conservative Reform Alliance Party, or in acronym, CCRAP. One day later, the party changed its official name to the Canadian Reform Conservative Alliance, but the giggles persisted for many days. Make sure that if your name consists of more than one word, you don’t end up with an embarrassing acronym. Should you pun? It’s up to you. People tend to love or hate puns. Do the following examples make you clap or cringe? How do you think your customers would react? Bona Foodie (a market in Brighton, England), The Stalk Market (a flower shop in Seattle, Washington), Lord of the Fries (a restaurant in Melbourne, Australia).
3. Get the grammar right Be careful with the placement of apostrophes. They can easily trip us up and impart incorrect information. For example, let’s say farmer Jerry Bell calls his October 2013
BUSINESS farm Bell’s Organic Oasis. If Jerry’s wife or offspring were also owners or involved in the business, the apostrophe would move over one space to show that there was more than one Bell and become Bells’ Organic Oasis. If your name already ends in an “s” such as Burgess, the correct form is an apostrophe followed by an s, as in: Burgess’s Bovine Ranch. And for more than one Burgess — Burgess’ Bovine Ranch. This is according to THE CANADIAN PRESS STYLEBOOK. American sources might say that it’s also acceptable to add an apostrophe after names ending in s whether or not they are plural. To further confuse the issue, names ending with an iz sound often take only an apostrophe. Names ending in a silent s or x take an apostrophe and s. Example: Duplessis’s Dogwood Farm, Lacroix’s Certified Seed. If there is more than one Duplessis or Lacroix, the correct form would be: Duplessis’ Dogwood Farm and Lacroixs’ Certified Seed.
4. KEEP IT SIMPLE An obscure name may be loaded with meaning for you, but if potential customers don’t have the same associations it might be difficult for them to remember. Similarly, shorter is better than longer, and earlier in the alphabet is better than later. Think YELLOW PAGES.
Make it easy to spell. If it’s still tricky, then consider buying domain names for incorrect spellings. Those who land there can then be redirected to your website.
5. WATCH OUT FOR FADS Fads may not last, so be careful with strategies such as abandoning capitalization and writing your company’s name entirely in lower case, or omitting letters as in Flickr. It might look trendy now, but will it just look dated in a few years?
6. THINK BIG Think about word association pros and cons. Family surnames give a sense of heritage and stability. Regional place names can impart a homey, buy-local feel, but might be limiting if you plan on expanding out of the immediate area. Maybe you’re a natural, and the first name that pops into your head will be the absolute best choice. But for most of us, a bit more deliberation will yield something better than our first suggestion. Take your time. Make a list of names you like, and then try to figure out why you like them. Talk to friends and family. And don’t be afraid to take an informal poll. Hopefully, it’s a name you’ll be looking at and living with for a long, long time. CG
Plan to attend the...
2013 CFGA Conference & AGM December 9-11, 2013
POMEROY Inn and Suites at Olds College, Olds, Alberta
hosted by the: Alberta Forage Industry Network (AFIN)
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Canadian Forage & Grassland Association Association Canadienne pour les Plantes Fourragères
For more information please contact: Canadian Forage & Grassland Association Ph: (204) 726-9393
www.canadianfga.ca OCTOBER 2013
country-guide.ca 35
management
Fertilizer paradox In this special column, Gerald Pilger finds that Canada’s new fertilizer plants may make a bad situation worse By Gerald Pilger
ike many, many farmers, I have been frustrated by the high fertilizer prices of the last few years. I was irritated when I found in the 2011 CF Industries annual report that the total cost of sales of nitrogen fertilizer was just $189 per ton. Similarly, Agrium in 2011 reported their fourth quarter cost of nitrogen fertilizer at $258 per tonne. Yet the farm gate price for N for that period was around three times the manufacturer’s cost. So I cheered when a number of proposals for new fertilizer manufacturing facilities were announced over the past couple of years. Now, I’m not so sure. Two recent publications have me questioning whether additional fertilizermanufacturing capacity will actually reduce North American fertilizer prices. Even more worrisome is that instead of reducing my input costs, new fertilizer manufacturing may lead instead to lower global grain prices.
Fertilizer rates are rising in Canada, but not nearly as fast as they’re climbing in China and India In December 2012 agricultural economist Francisco Rosas of Montevideo, Uruguay, published the paper “Fertilizer Use by Crop at the Country Level (1990–2010).” This paper compares production areas around the world for their N, P and K usage in corn, cotton, rapeseed and soybeans. “The paper I wrote in 2012 is probably the most comprehensive comparison of fertilizer use,” Rosa told this columnist. “The advantage this paper has is that the years and country coverage are all provided in the same document, and with a consistent methodology.” Rosa brought together fertilizer data that farmers have never had access to in past. He looked at the use of fertilizers around the world, finding that 36 country-guide.ca
fertilizer rates varied based from country to country and from year to year based on soil quality, yield expectations, weather expectations, access to technology, access to extension services, access to agronomist services, access to irrigation, and other issues related to the country institutionally, such as access to a fertilizer market, subsidized fertilizer prices, and budget constraints. “Starting to understand the reasons why farmers apply different rates in the same crops in different parts of the world requires knowing how much they apply,” Rosas said. “This information, while basic, was not available, and moreover free to download. Usually you have to pay a lot of money to access this type of information.” It is eye-opening to compare fertilizer rates in Canada with the rates in countries that are our competitors in these crops. One of the first things you notice is that while fertilizer rates in Canada have been rising, they are not as high as in some countries. More importantly, Canadian rates are not rising nearly as quickly as they are in countries including China and India, which are major markets for our production. The actual comparisons are available for viewing on an Excel spreadsheet at http://www.card.iastate. edu/publications/synopsis.aspx?id=1178. According to Rosas, farmers who read his paper get the opportunity to compare their fertilizer rates with average rates around the world. It also shows them the evolution of fertilizer rates over a relatively long period of time. Most importantly, he said, farmers need to realize that agricultural and environmental policies are often based on data sets like the fertilizer usage that he has provided. Said Rosas, “I have received questions from all over the world and from all sorts of institutions asking about this dataset: academia, consulting firms, banks, and other people interested in forecasting world food markets at the global level.” Rosas pointed out that fertilizer use increases productivity and crop supply. Given the global marketplace for commodities, we need to be aware October 2013
management
of any increase in fertilizer usage, because it can increase global grain and oilseed output, and this is turn can impact the prices of those commodities. The other publication comes from the fertilizer industry itself. Patrick Heffer with the International Fertilizer Industry Association (IFA) headquartered in Paris, France, wrote, “Assessment of Fertilizer Use by Crop at the Global Level 2010-2010/11” in August of this year. The paper can be downloaded by searching for “Assessment of Fertilizer Use by Crop” at www.fertilizer.org. This is an update of a previous assessment done three years earlier. There are two obvious conclusions that arise in this paper. The first is Canada is a relatively minor user of fertilizer on the global stage. In fact, the IFA estimates Canada uses only 1.8 per cent of the global fertilizer supply. China is the biggest user (29 per cent) followed by India (16.3 per cent), U.S. (11.5 per cent), EU (9.4 per cent), and Brazil (5.9 per cent). Even Indonesia (2.8 per cent) and Pakistan (2.3 per cent) consume more of the world’s fertilizer supply than we do.
The other point to note is that over half of the fertilizer used globally is applied to grain crops, and the grain crop on which the most fertilizer is used is corn, followed by wheat, and then rice. This brings me back to my opening statement. If the growing demand for more fertilizer is from outside Canada, as Rosas’s dataset illustrates, and if Canada is the relatively minor fertilizer market that the IFA numbers show us to be, then can we really expect lower prices here? Or will fertilizer continue to be priced at the Black Sea, with us paying the freight differential from the major fertilizer market back to Canada, even though the fertilizer is likely produced in Canada? But my real worry is that much of the growth in fertilizer demand is by farmers in developing nations. They are seeking to increase productivity of wheat and corn, which are also our main crops. If additional fertilizer capacity means that the production of these crops increases globally, then our incomes could fall. Maybe additional fertilizer manufacturing capacity is not the golden egg many farmers are hoping for. CG
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www.canadiancattlemen.ca October 2013
country-guide.ca 37
management
Executive action By Scott Garvey, CG Machinery Editor
s I walked into the conference room of a Houston, Texas hotel in July, the first person to notice me, offer his hand and greet me by name was Abe Hughes II, North American vice-president of sales and marketing for New Holland. His company was holding a media event there to introduce its new 2014 lineup of haying equipment to farm journalists. It isn’t unusual to see brand vice-presidents at a media event, but their appearances are often fleeting. Not so with Hughes. He was a constant presence from that first handshake through to the end of the event, just like the last time I ran into him at New Holland’s 2012 new product introduction. That kind of hands-on involvement by a senior executive of a multibillion-dollar corporation is remarkable by any standard. Throughout both last year’s event and this one, several senior product reps made presentations to the group of farm writers about machines in their areas of responsibility. Often, Hughes added his comments, sometimes from the sidelines, sometimes from centre stage. But he did so in a way that didn’t seem to make his subordinates uncomfortable. Nor did it seem to suggest any lack of trust in their ability to convey the corporate message. Instead, the group, including Hughes, appeared to function as a team, supporting each other to get the job done. When I asked if he’d be willing to discuss his atypical management approach, his response was immediate. “Sure,” Hughes said. “I enjoy talking about management.” Within minutes he was describing the point of view he brought with him when he took over the corner office at New Holland North America. “I’m engaged in the business,” Hughes said. “That’s the only way to do it. My approach to business is I tend to be very entrepreneurial.” Entrepreneurial isn’t a word I expected to hear from a senior executive at one of two sister brands (New Holland and Case IH) that together make up the world’s second-largest ag equipment manufacturer under the CNH banner. “The key to our rejuvenation has been our handson approach,” Hughes added. 38 country-guide.ca
Can leadership style make a difference to a farm or a manufacturer? After meeting Abe Hughes II, it sure looks like it can
Rejuvenation is a term Hughes has often used to describe the management overhaul now well underway in New Holland’s North American operation, something he has been at the centre of since coming to the brand from parent company CNH three years ago. Indeed, before his arrival, leadership changes were hitting New Holland at breakneck speed, robbing the group of stability and long-term vision. “New Holland was a brand that needed rejuvenation,” Hughes agreed. “There were a series of management turnovers. So the division was suffering. One of the first things I did was focus on leadership, beefing up the team. A lot of people (managers) didn’t survive. “In my opinion,” Hughes told me, “they had lost the right to run their areas.” After those people were ushered out the door, Hughes opted not to parachute in a new group of executives from other companies. Instead, he looked to his own staff, picking “stars” and grooming those who shared his excitement for the brand. That sent a message throughout the organization. In fact, Hughes didn’t hire any new leaders from outside. “I promoted everyone from within,” he explained. “It was important. There were a few things people realized. No. 1, if they weren’t performing, there wasn’t a spot for them. And I wanted everyone to know that I promote from within. “I tell people, if you want to get to the next level in your career, raise your hand. There’s a lot of opportunity here. We’ve hired 20 to 25 per cent more people over the last three years.” The way Hughes sees it, his job of developing managers and growing the brand are closely related. “I gather everyone together after every quarter,” Hughes said. “We talk about what’s working and what’s not. We talk about the challenges ahead. We congratulate people who are doing really well, showing people we appreciate them. It’s simple things like that (that are important).” For those employees who want to move ahead in the corporation and have proven they have the necessary drive, Hughes helps them hone their skills. “Last year I created a talent development program so we could give the 10 or 15 people who are our stars Continued on page 40 October 2013
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CountryGuide.indd 1
9/13/2013 9:49:06 AM
management
Above: Abe Hughes II (centre), New Holland’s North American vice-president of sales and marketing fields questions from journalists in a hayfield in Houston, Texas, during the introduction of 2014 model-year haying equipment. left: After taking his turn at running a round baler, Hughes gives his bale a thumbs up. Photos: Scott Garvey
Continued from page 38 the exact skills they needed,” Hughes said. “Those are the kinds of things that motivate everyone.” When talking with members of his management team, there were obvious signs Hughes really has created excitement within head office, and it has apparently filtered down through the ranks as well. Over lunch, I chatted casually with one of the senior team members in a tent on the edge of a Texas hayfield, and I asked her about the logistics of organizing the media gathering. To illustrate how enthusiastic many of the current staff are, she described how junior staff kept coming up with new ideas, and how they worked in the brutal Texas summer heat to implement them. Hughes believes it’s essential to have a management team that is nimble enough to quickly implement — and even encourage — last-minute bright ideas, avoiding the bureaucratic inertia which can stifle that kind of initiative elsewhere. Even the media event itself was the result of a spur-of-themoment decision. 40 country-guide.ca
“We decided two weeks ago this would be a great way to leverage the infrastructure we had in place,” Hughes said. “I tend to be very dynamic in terms of implementing management decisions quickly.” But New Holland is a multibillion-dollar corporation. Can the senior executive really be hands-on and run a company of that scale effectively? “I choose my battles,” Hughes said “There are only a certain number of things I can be involved with.” Even if Hughes can’t be everywhere all the time, his management style sets the tone for others in the company. “Our style at New Holland is more down home, down to earth, where a handshake really matters,” said Hughes. “We’re very corporate; don’t get me wrong. We have our processes and our corporate struggles too. At least with my team at New Holland and the dealer network, we can be as true to our rural, agrarian roots as possible, because I think that’s the winning combination. That’s how farmers like to do business… I don’t think we need to get too big for our britches in the way we run our business and our dealer networks.” CG October 2013
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Has riding the bull changed our marketing psychology? By Errol Anderson ou are deep in thought. “Grain prices have been pretty good over the past year,” you tell yourself. “We have made solid profits, and everyone says this is the new reality. It’s a new era, the farmer is in the driver’s seat, and there’s no need to forward price this year…” High prices in any commodity mean exciting times for the producer. Business profits swell, and so does market confidence. But does it make us drunk with optimism? Whether it’s bullish talk about precious metals, or rising land prices, or surging soybean futures, human optimism fuels the idea that the good times will keep rolling, sometimes well past their true expiry date. This is human psychology at play. The question is, was the great U.S. drought of 2012 the starting point to a bullish era in North American grain prices, or just a blip in the overall market cycle? No doubt, global grain prices last year were incredible. But markets are cyclical. There are no one-way streets. As the old saying goes, the cure for high prices is high prices. But the cure for low prices is also low prices. The U.S. drought did alter market fundamentals worldwide, but not for the long haul. Markets repair themselves. More acres and an improvement in weather add up to a sure-fire cure for overheated prices. And 2012 was indeed overheated. Plus, there is a common thread to all bull markets, whether in grains, livestock, metals or energies. Bull markets don’t last forever. They overheat, they drop and then stabilize for a spell awaiting the next round of fresh bullish news. It can take weeks, months or even years to regenerate this cycle once again. As a result, bargaining power shifts back and forth between buyer to seller. And superheated bull markets tend to have shorter lives than bears. Financial markets, commodity funds and global weather have a lot to say in our ag markets. And changes in demand can be affected by changes in large-scale economics. As well, during periods of excessively high prices, global substitution flourishes, and the price peak for any commodity in short supply is when demand is eventually rationed by price. The trade calls this demand destruction. So where are we now? The U.S. drought of 2012 made a powerful impact on farm incomes. But it didn’t provide bulletproof protection against the reality of lower price ranges during periods of more normal supply. In all 42 country-guide.ca
commodities, strained supply and demand fundamentals have the uncanny ability to rebalance themselves. And this is occurring right now. Markets constantly move. Prices can go up quickly, but drop even faster. And without a pricing plan, prime pricing opportunities can be missed. So with this in mind, let’s take a look at a typical market cycle. This cycle begins with a change in supply and demand that can trigger the human market psychology cycle of greed, followed by hope that prices recover, then fear and finally panic. Remember first that all rallying markets exhaust themselves. In a global weather or demand event, prices scramble higher, peak, then ultimately collapse. Also remember that there is little advance notice when that peak is achieve. Lets take a look at the typical steps of a market cycle. Step 1. The market heats and climbs in steps. In other words, prices move up, then rest, then move up again. This is sometimes called a resting bull market. This signals the start of a healthy price rise ahead. A bull market snorts, then rests, then snorts again. Step 2. Futures prices spike, sometime for several trading sessions. Those caught on the wrong side of the market are squeezed financially. They panic. All buyers, no sellers. This heated market roars to a final blow-off top. Step 3. The market peaks and begins to dive. Buy orders vanish. Speculators are now racing to liquidate their long (buy) positions. The selloff begins, and the market plummets virtually into a freefall. Step 4. The market drops so quickly, it actually gets oversold. Margin calls that force buyers to exit the market are starting to ease. What was once market mayhem turns into calm, and prices finally rebound toward true market value. Marketing grain through volatile times can either be highly stressful or extremely profitable depending on how it is handled. But one thing for certain. Although market prices will forever cycle, our emotions must remain in check. A market plan helps discipline us, so that as markets cycle, we can latch on to those attractive prices while the bull is being spurred. As will always happen, heated bull markets eventually buck off their speculative riders. But during the ride, producer profits can shine. CG Errol Anderson is author of the daily ‘ProMarket Wire’ risk management report and a commodity hedge broker located in Calgary. He can be reached at 403-275-5555 or by email at prowire@shaw.ca. october 2013
Country Guide ad Canada, 09-13.indd 1
9/9/2013 10:50:00 AM
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protected buffers help to protect watercourses from damage and can reduce the risk of equipment rollovers into drains and streams. Careful and thoughtful farm management can result in reduced drain maintenance costs and acceptable environmental outcomes. Each farm manager has a responsibility to consider how their actions may impact other drain partners, downstream neighbours and the ecosystems that will be affected.
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HR
When smartphones make us stupid You aren’t the only one having trouble turning off your phone at night. Here’s help By Pierrette Desrosiers, work psychologist, business coach, and author teven and Jackie are in Europe for a vacation. Their amazing get-away, however, is turning into a huge conflict. “He is always connected to his smartphone!” Jackie complains. “He follows the markets. He texts his employees. He even bought a tractor on our way into the museum in Paris!” Jackie was angry. Steven had promised he was taking his smartphone “only for emergencies.” “I think that he is completely addicted to technology,” she tells me. “Is this possible?” When I speak with Steven, he is quite proud of all the apps he used. From his perspective, it’s great to be connected to his barns from across the world. “You can control a lot,” Steven tells me. “You don’t lose anything, everyone can reach me any time.” Obviously, Steven didn’t see a problem. According to UCLA professor, Gary Small, “When we think of addiction, most of us think of alcoholism or drug abuse. But the easy access, anonymity, and constant availability of the Internet, email, texting, chatting and twittering has led to a new form of compulsive and dependent behaviour.” The neural pathways in the brain that make us dependent on substances can also reinforce compulsive technology behaviours, making them just as addictive and potentially destructive. We are seeing more and more agricultural programs and apps for smartphones, and we are reading more and more articles about the positive aspects of these technologies. But we need to understand that many things that are helpful when used in moderation are ruinous in excess. Phones are on that list. What makes technology so addictive? Dopamine, a neurotransmitter, is responsible for the euphoria that addicts chase, whether through Facebook, methamphetamines, alcohol, or Internet gambling. We become conditioned to crave and compulsively seek its elation while off-line or off-drug. Dopamine makes you constantly look for pleasure or novelty. We are not addicted to the phone or technology itself. Instead, we are additcted to the specific application of choice, whether it’s social media, shopping, gambling, gaming or compulsive surfing. In my consultation practice with business farmers, I’ve assisted many coping with the downsides of technology. “I can’t go to bed before two or three in the morning because I want to see what happened on 48 country-guide.ca
Facebook,” says Martin. “It means I can’t go to the barn before 7:30 because I am exhausted.” “He is always texting with his friends when milking,” complains Stephen’s father. “I play on Farmville for hours, so I don’t get my work done on the farm,“ says Suzie ironically. How do you know if you are addicted? • Do you check your phone before you get out of bed in the morning? • Do you compulsively check your phone during the day? • Do you send and receive emails and text messages during meals, while socializing, or during exercise? • Do you get anxious or depressed when you are disconnected? • Do you panic if you can’t find your phone? • Is checking your phone the last thing you do before you go to bed at night? • Are important family, social, occupational, or recreational activities given up or reduced in duration and/or frequency because of technology use? Why should we care about technology addiction in agriculture? In short, it impacts all dimensions of our lives. It causes personal and professional conflicts, affects mental and physical health, and impairs productivity. Here’s what you can do to help yourself: • Recognize that you may have a problem. Ask your relatives if they suffer from your utilization. • Keep a record of your utilization. • Articulate what you lose when you are connected (quality time with your family, going outside for exercise, relaxation, etc.). • Decide ahead of time on a fixed time limit. • Have one day per week free from your device. • Limit the number of apps and websites you regularly use. Do you use technology as a tool to enhance your quality of life? Or have you become a slave to technology? If you don’t know, ask your family and friends — they will know. 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. October 2013
w e at h e r MILDER THAN NORMAL
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NEAR-NORMAL TEMPERATURES AND SNOWFALL MILDER THAN USUAL NEAR- TO A BOVE-NORMAL PRECIPITATION
Fr e sn qu ow en t
Wet e p riods
ld Co owyaks Sn bre t ou
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* ** *
Wa ofterm wet n
NEAR NORMAL
y rm es o St tim at
October 27 to November 30, 2013
ONTARIO
Oct. 27-Nov. 2: Expect seasonal to mild temperatures this week. Blustery at times. Fair overall with scattered rain on two or three occasions. Frost threatens north with a chance of snow. Nov. 3-9: Brisk winds cause variable temperatures with some highs in double digits south. Heavier rain at times south, changing to a mixture of frost and heavier snow central and north. Nov. 10-16: Variable weather as mild air and cold air collide under windy conditions. Occasional rain south and snow central and north. Chance heavy precipitation, especially near open waters. Nov. 17-23: Variable temperatures with frosty nights in all but southwestern regions. A few higher wind chills. Fair but with intermittent snow, heavy near open lakes. Mixed rain south. Windy. Nov. 24-30: Unsettled and changeable under windy conditions. Mild, fair days exchange with dull skies, colder temperatures and periodic heavy rain or snow south, heavy snow central and north. Dec. 1-7: Windy. Variable temperatures. Disturbances bring intermittent heavier snow, mixed with rain south.
QUEBEC
Oct. 27-Nov. 2: Often fair with seasonal to mild temperatures but rain falls on two or three days this week, mixed with snow north as disturbances move by. Frost areas central and north. Blustery at times. Nov. 3-9: Seasonal to mild on most days but frost in some southern areas, more widespread central and north. Mostly fair apart from scattered heavier rain changing to snow central and north. October 2013
Nov. 10-16: Windy. Variable temperatures ranging from mild to cold with frost. Fair skies alternate with rain or snow south and snow north. Risk of heavy snow in some regions near open waters. Nov. 17-23: Temperatures fluctuate and at times trend to the cold side with higher wind chills. Mainly fair but snow on two or three days, heavy in a few areas. Chance rain south. Windy on a few occasions. Nov. 24-30: Unsettled. Windy at times with occasional snow, mixed with rain south. Chance heavy snow in a few regions. A few cold days with wind. Dec. 1-7: Fair days alternate with heavier snow, mixed with rain south. Temperatures vary and at times lean to the mild side. Windy.
ATLANTIC PROVINCES
Oct. 27-Nov. 2: Unsettled as windy and changeable weather brings scattered heavier rain as well as a couple of mild, fair days. Lows dip to near zero at a few inland localities on one or two clear, cold nights. Nov. 3-9: Seasonal to mild in spite of a frost threat at several inland localities at night. Often fair but disturbances bring rain, at times heavy to most areas on two or three days. Snow falls in some western areas and Labrador. Nov. 10-16: Frost touches a few inland areas but overall highs climb to near or above normal. Windy at times. Fair but periodic rain on a few occasions this week, changing to snow west and north. Nov. 17-23: Heavy rain threatens, changing to snow in western and northern areas as systems move through. Windy with variable temperatures trending to the cold side with higher wind chills.
Nov. 24-30: Colder with higher wind chills. Milder, windy influxes bring rain mixed with snow to eastern areas and snow west on two or three days this week. Chance of heavy precipitation in all regions. Dec. 1-7: Seasonal to mild. Fair but snow west and north on two or three days, changing to rain east. Chance heavy. Windy.
October 27 to December 7, 2013 NATIONAL HIGHLIGHTS As weather systems become more active and as temperatures begin to dip, many regions will experience their first taste of winter with snow, wind chills and storms. This will be especially evident in British Columbia and across the Prairies, where the overall outlook is for an average winter. Precipitation is anticipated to be near normal through the West, although portions of the southwest Prairies may receive a few heavy dumps of snow in November. Temperatures should also average out near normal, although there will be alternating mild and cold spells. In Eastern Canada, by contrast, a relatively mild weather pattern is likely to delay the onset of harsh, wintery conditions in many areas. In these areas, temperatures should average a little above normal. Precipitation in the form of rain and snow is expected to run close to or a bit above normal due to passing disturbances.
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 49
news
Argentina at the crossroads Its farmers are world class. But can they survive erratic governments?
By Gord Gilmour, CG Associate Editor
hen weather and crops specialist Bruce Burnett joined the Canadian Wheat Board more than 20 years ago, he knew what to expect from Argentina. In fact, sometimes Argentina looked a lot like home, especially in terms of crop mix. Both countries were major wheat exporters and sizable canola growers, and they even produced some fine wines. But today, Argentina has changed, Burnett says. They’re no longer quite such a sizable wheat and canola grower. Indeed, those crops have shrunk dramatically in recent years while another crop rotation has taken over — one that would look a lot more familiar to Ontario readers. “These days they’re growing much more corn and soy — especially soy,” Burnett told Country Guide during a recent telephone conversation. Soys today are firmly on top, followed by corn, then in third place wheat. Argentina has become the world’s top soyoil and soymeal exporter, and the No. 3 exporter of raw soybeans and corn. The oil is utilized in the international biofuels sector, and the meal is in demand for livestock feed, in no small part driven by Chinese demand, where an expanding middle class is developing a taste for more beef, chicken and pork, all fed on soymeal. That shift has happened for predictable reasons beyond just growing demand. New varieties can withstand the weather of the region better, and the crops simply yield more and return more per acre to the growers. Soybeans in particular offer good returns for relatively low inputs, so they pose lower overall risk to growers. Astute Argentinian farmers 50 country-guide.ca
have therefore voted with their acres and moved wholesale towards soybeans, says one Canadian farm journalist who recently travelled to Argentina. Owen Roberts was there in early September for the annual meeting of the International Federation of Agriculture Journalists, of which he is vice-president. He’s the director of research communications at the University of Guelph, and his Urban Cowboy column appears regularly in daily newspapers throughout southern Ontario (www.urbancowboy.ca). He says several days of touring the country and meeting various industry representatives demonstrated to him that Argentina is a soy powerhouse, with global implications. “They’re making a lot of investments in research, and the Argentinian farmer is advancing at a really high level,” Roberts said. “They’re very progressive, very pro-biotechnology.” Roberts pointed out in a recent column that in just one decade, Argentina’s soy production had increased fourfold, and that there appears to be plenty more room for expansion. “Just driving through the countryside you’re struck that there sure appears to be a lot more land that’s available for crop production,” Roberts told Country Guide. Much of this growth is coming at the expense of another storied Argentinian agriculture commodity — the nation’s long-heralded grass-fed beef. These days, more and more of those pastures are being converted to arable crop production, but even there, Argentina is moving ahead to fund research into how to establish productive new pastures. “One of the people we met with was a rangeland October 2013
news researcher from one of their large research institutions and he told us that’s a really important focus right now,” Roberts says. “They acknowledge that some of this new pasture is likely going to be on land that’s not quite as good as the traditional pasture land, so they want to look at making it as productive as possible.” In fact, everywhere he looked, Roberts saw signs that the farmers of Argentina are up to the challenge of pushing their productivity even more in years to come. Less clear was whether continued political chicanery may hamper the development of the sector. “The government is burning the candle at both ends,” Roberts explains. “On one hand, it’s promoting soy production, but on the other hand, it’s also hit it with a 35 per cent export tax.” That move has put $40 billion into government coffers every year, but it’s also brewing political unrest, with farmers and rural people rallying behind a populist candidate who’s calling for this inequity to be addressed. However, there’s no need to fear a Chavez-style leftist populist movement, Roberts says. “This is a movement of business people, who want to be able to continue to grow and be successful,” says Roberts. In fact, the CWB’s Burnett says politics is probably the fundamental challenge facing Argentina in the coming years. They’ve already got a progressive agriculture sector and a good track record with booming productivity, as well as being leading soy exporters. “But the government just loves to do things like slapping export taxes on,” Burnett says. “That really can put a damper on investment and growth.” In many ways if that barrier could be overcome, it would make Argentina a natural agriculture leader in the area, since so many other barriers have been overcome, including the crucial infrastructure question that dogs other grain exporters in the region who struggle to get their crop out of their countries. For example, where Brazil barely has modern ports, Argentina has a well-developed shipping infrastructure including an impressive system on the Rio de la Plata and its tributaries that see ocean-going ships moving well inland on fresh water to pick up grain cargoes. “In the context of North America, imagine that the U.S. had ocean-going ships coming as far inland as St. Louis through the Mississippi River system,” Burnett says. While the growth in soybean production has been impressive, it’s beginning to cause some to sound the alarm, saying such a shift won’t be sustainable over the long term. Recently the head of Argentina’s fertilizer industry group told the Reuters news service that growers are planting too much soy and are undermining crop rotations and depleting nutrients from their soils. In part, bad government policy in the wake of the nation’s 2002 sovereign debt default may be to blame. Locked out of international capital markets, the country has relied on the ag sector for tax revenue to fund President Cristina Fernandez’s “expansive” social programs. Unlike corn or wheat, soy isn’t subject to outright export limits. As Maria Fernanda Gonzalez Sanjuan, head of the fertilizer group, told Reuters, “Argentina is in a critical situation.” CG October 2013
Letter to the Editor Re: “Reading Atwood” in Country Guide, August 2013 I want to make it clear that our government has no intention “to sell the pastures to the highest bidders.” At no time has our government ever considered making these pastures available to anyone except the patrons. We have been approached by many other organizations, companies and individual producers, who are interested in purchasing these lands. Our response to all of these offers has been the same — patrons are the priority and only they have the opportunity to lease or purchase the pastures. In regards to the timeline of the transition, the federal government agreed to delay the transfer of management of the first five pastures by one year. I fully recognize there are some patrons who would prefer a further delay. However, the timing of the transfer is a federal decision. Both governments are working together to facilitate a smooth transition throughout the divestiture process. Our government is also committed to ensuring the continued and proper conservation of this land. All sale agreements will include conservation easements, such as “no break, no drain” and wildlife legislation is in place to protect all at-risk species. Patrons understand the importance of proper rangeland management — their livelihoods depend on it. To suggest that they are not in a position to responsibly manage and care for the very resource that is necessary for their success is unworthy of a magazine whose client base is the farming and ranching community. Our government has been consulting with patrons on a regular basis since the transfer was announced last year. We have been forthcoming with information and have worked to accommodate the needs of pasture patrons. To help patrons with the transition, we have announced several initiatives throughout this process, including: • The option for patrons to purchase or lease their pasture; • Funding of up to $120,000 per patron group to assist with business development plans; • Lease agreements of up to 15 years; and • The use of fixed assets, such as handling facilities, fences, dugouts, etc., at no cost. Pasture patrons are our top priority and we will continue to work with them throughout this transition. Lyle Stewart, Minister of Agriculture Saskatchewan
country-guide.ca 51
ACRES
By Leeann Minogue
“Now, about that oil change…” ale woke up with such a start that his arm slipped out from under his head and he banged his nose hard on the steering wheel of the grain truck. He hoped it wouldn’t bruise, but he was pretty sure it would. He wiped his nose with one hand while he checked the time on his wristwatch. Damn. He’d slept way longer than he’d meant to. It was a wonder Jeff wasn’t phoning him yet. Dale started the truck and put it in gear. He hoped the combine hopper wouldn’t fill before he could get to the canola field from his secret hiding place, out at the edge of the old Williams’ slough. Just then his cellphone rang. “You on your way out here to the combine yet, Dad?” Jeff wanted to know. “It’s getting pretty full out here.” “Sure thing,” Dale said. “Uh, just had to change the oil in this truck before I could come back to the field. Be there right away.” There was no way Dale was going let his son know he’d been slacking off on the job. Or worse —let any of the neighbours see him sleeping in the middle of the day and think he couldn’t keep up. Dale was exhausted, but it wasn’t Jeff’s fault. “Geez
52 country-guide.ca
Dad, take a break,” Jeff had told Dale, just that afternoon. “Go home and have a nap. It’s not your fault I’m on a deadline.” Jeff was burning the candle at both ends, working late and starting early, trying to get as much of the Hansons’ crop into the bin as possible before his wife had her second baby — it was due any day. “Should’ve planned that better,” Jeff’s grandfather Ed had complained at the start of the harvest season. “Take a look at the family records. Both of my kids were born smack in the middle of winter. I can count to nine and look at the calendar.” Dale’s wife Donna had just rolled her eyes at her father-in-law. “Don’t pay any attention to your grandfather, Jeff. I had you in the middle of seeding.” “Exactly my point,” Ed grumbled. “There I was, in the middle of seeding, trying to haul all the fertilizer, all by myself. But that was a good year… Wish I’d taken some pictures of that crop.” Ed had taken up photography a few months earlier. Now he was driving the family (and anyone else who would listen) crazy with lectures about focus and light clarity. “I swear, if he tells me about the ‘rule of thirds’ one more time, I’m going to break camera into three pieces,” Dale complained.
OCTOBER 2013
acres
Just then his cell phone rang. It was his son Jeff. “You on your way out here to the combine yet, Dad?” “At least he has something to keep him busy,” Donna said. “And something to talk to the other men about when he goes to the café. It has to be hard on him, not being able to get into any machinery this season.” “The man could never figure out the yield monitor in the combine,” Dale said. “Now he’s an expert with a digital camera.” “I think he paid Sam Cook’s grandson to show him how to use it,” Donna said. “Well I wish that Cook kid hadn’t taught Dad how to email the photos. I can hardly walk across the yard without him sending me another picture of something I just looked at with my own eyes.” “It could be worse,” Donna had said. “Your dad could be trying to run the grain truck, causing all sorts of trouble.” But today Dale was the one causing trouble, holding up the combine. He sped into the field and rolled to a stop under the outstretched auger. Canola was flowing over the edge of the hopper. Jeff started the combine auger pouring canola into the back of the grain truck, then climbed down from the cab and hopped into the passenger seat of the truck to talk to his father. “Dad, is that a bruise on your nose?” Jeff asked. “Are you OK?” “I’m fine. Probably just some oil,” Dale said, rubbing his nose, then trying to pretend it didn’t hurt when he touched it. “You know,” Jeff said, “we could bring the grain cart out here. I’d be fine with the grain cart and the truck for a few hours. You could go in and take a break. This canola’s not setting any yield records, after all that hail. “I’m fine,” Dale said. “Don’t worry about me. You just get this crop in the hopper before your kid comes along. And be glad I got the oil changed in this truck before it was too late.” Dale made
himself a mental note to remember to actually change the oil the grain truck some day when Jeff wasn’t home, so Jeff wouldn’t realize it hadn’t been done, and wonder why his old man had lied. For the rest of the afternoon, Dale made a point of staying wide awake, keeping in full sight of the road, and his son, while Jeff kept the combine running. Around 6:00, Dale’s wife Donna came out with hot food and drinks, parking her SUV at the end of the field. Jeff stopped the combine when he reached her, and Dale pulled up in the truck. “I’ll run the combine while you eat,” Dale said. “No point shutting ’er down now.” But before Dale could get to the combine, his phone chimed. “Email,” he said. “I’ll just take a quick look.” Jeff’s phone had beeped at the same time. And Donna’s. Soon all three of them were squinting in the sun, looking down at tiny phone screens. “Never mind. It’s just Dad. Emailing more photos to everyone he knows,” Dale said, turning off his phone and jamming it back into its case without looking at the pictures. “Yes, he’s been out most of the day, following you two around with his zoom lens,” Donna said. “He said he was trying to get some pictures for his photography club’s harvest contest.” Jeff was laughing and looking at his phone. “I think he’s got a winning entry. Take a look at this one, Dad.” Dale pulled his phone back out of the case and poked at the screen until he found the pictures again. There were a couple of the combine. One of Dale’s first grandson. Another of the dog. Now Donna was laughing too. “I told you he needed a break,” she said to Jeff. “What’s so funny?” Dale asked, still jabbing at his screen. Then he saw the photo. The red grain truck, glimmering in
the sunlight at the edge of the Williams’ slough. It was a good picture. The red of the truck against the green trees. A deer off to one side, caught looking right at the camera. And there — if you looked closely — Dale’s head. Slumped over the steering wheel. “Ed’s really got the hang of the rule of thirds,” Donna said, trying to keep a straight face.” “Guess I’d better put ‘change the oil in the grain truck’ back on my To Do list,” Jeff said, grinning. Dale shook his head and put his phone away. Then he climbed up into the cab of the combine, stifling a yawn. 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.
October 2013
country-guide.ca 53
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life
Make room for ‘Why’ One curious little word could put your family on the path to success in business and life By Helen Lammers-Helps
verywhere we turn we are told innovation is the key to economic success. But what does it take to be innovative? Are there ways to ensure that we’re creating an environment that promotes innovation? The answer may start with an even simpler question. It’s only one word: Why? The beauty of “why,” it turns out, is that it’s a tool that you can actually build into your farm management, even if you don’t feel you’re a particularly creative individual. Curiosity drives innovation, and innovation is one of the ways you can increase productivity, says Amanda Lang, co-host of CBC’s “The Lang and O’Leary Exchange” and author of the book, The Power of Why (Collins, 2012). It was actually a concern about Canada’s lagging productivity that prompted Lang to delve into the issue of curiosity, and she says that what she found is both exciting and worth sharing. It’s that “why” can be applied not only to how we run our businesses, but also to how we manage our lives. Lang is quick to point out that farming is among our most productive sectors. Agriculture is very entrepreneurial, and entrepreneurs tend to problem solve day in and day out. “They tend to do it naturally,” Lang says. Unfortunately, entrepreneurs can get so busy running defence that they don’t have time to ask questions like, “Why don’t we do it a different way?” or, “What else is possible?” says Lang. “It’s the status quo bias for business.” The temptation for small businesses is to be always looking to optimize profits and maximize efficiency. There’s nothing wrong with that, of course, but periodically entrepreneurs need to have those moments when they can “Blue Sky” and “let themselves be creative,” stresses Lang.
54 country-guide.ca
Put curiosity to work So if curiosity drives innovation, is curiosity something we can control? In her book, Lang points out that we are born curious. It’s how we learn. But many of us lose our sense of curiosity as we grow up. So what happens? Unfortunately, kids get the message that curiosity is a bad thing. Is there a parent who hasn’t hushed a preschooler for asking why for the umpteenth time with an irritated, “Because I said so, that’s why!” In fact, Lang reports that researchers found that 40 per cent of the time, adults either ignored the questions of young children or responded with a variation of “Get lost.” Our language can also discourage kids from being curious. Think of expressions like “curiosity killed the cat.” And it doesn’t just happen at home. Schools are terrific at disseminating information but not promoting curiosity. “Children learn to suppress their own insights and ideas and, instead, try to figure out what the teacher wants to hear,” Lang wrote in her book. “The system is set up so that kids will converge on the one right answer, rather than thinking divergently — coming up with several novel and unexpected possibilities — and asking questions of their own.”
October 2013
LIFE
A study in Britain found that 98 per cent of three- to five-year-olds could think divergently, but by the time they were eight to 10 years old that number had dropped to 32 per cent, and for teenagers it was just 10 per cent. In this fast-changing world, knowing how to learn and how to take pleasure in the process are the qualities that will help future generations not only adapt, but also succeed. Curiosity is also strongly correlated with intelligence. Highly curious kids learn more. In one study, researchers measured intelligence in children at age three and then again eight years later. Researchers found that children who scored equally at age three no longer scored the same at age 11. Instead, the curious kids scored higher on the intelligence tests. It’s clear that curiosity is a valuable trait. So what can parents do to promote a sense of curiosity in their children? A landmark study of identical twins showed that while 80 per cent of intelligence was the result of genetics, only 30 per cent of performance on creativity tests could be explained that way. That means 70 per cent is the result of environment, which means parents can encourage their children to be creative and innovative. Lang acknowledges there are different levels of creativity, and we aren’t all destined to be the next Steve Jobs. Social scientists, says Lang, differentiate between big C creativity and little C creativity, which is the kind that can be influenced by our environment, experiences and attitude. In doing her research, Lang says she was surprised at how often parents kill curiosity. While we tend to focus on making sure our kids get enough sleep and healthy food, it’s also important to remember that our children need our attention and patience, she says. “Take a minute to answer questions to let the brain flower the way it wants to.” Another way to encourage curiosity in children is to make it safe for kids to risk being wrong. Parents need to make sure they promote the view that being wrong is not a catastrophe, says Lang. To help children be successful at school while maintaining their sense of curiosity, Lang says we need to teach them to be respectful of teachers but also to continue to ask questions. Children do have to work with the system the same way they will have to work with other people later in life, but parents can instil the idea that curiosity is something you do for yourself, even if the idea isn’t well received in the classroom. At home parents can nurture their children’s sense of curiosity by not only answering their questions, but also by encouraging them to ask even more. For example, when you are reading a story with your children, stop and ask them what they think might happen next? When working on an art project, ask them what else they could make with the materials?
OCTOBER 2013
At snack time, ask them what they could do if they were lost in the forest. Research shows that asking children open-ended questions like these results in more divergent thinking. Remember, being curious has benefits for us on a personal level too. Those who maintain a strong sense of curiosity throughout life enjoy a better quality of life, says Lang. If you’re engaged in life and constantly learning, you’ll also be more energized. If you want to be more successful in business and more personally fulfilled, take the time to ask why and cultivate a sense of curiosity. As Lang says, “Whether you are a CEO looking to grow your business or a frazzled parent hoping to improve your relationship with your kids, asking the right questions, in the right way, at the right time greatly increases your chances of thinking innovatively so that you can solve problems and spot new possibilities.” CG
“People believe the ability to innovate and create something new is one you’re born with… Scientists have shown the exact opposite is true.” — Amanda Lang
country-guide.ca 55
h e a lt h
Keeping your bowel healthy By Marie Berry
veryone takes bowel function for granted, only noticing it when a problem occurs. The gastrointestinal tract (or, GI tract) is responsible for the body’s nutrition and it consists of the esophagus, stomach, small and large intestine, colon and rectum. Fortunately, you don’t need to think about proper bowel function because the autonomous part of the nervous system automatically keeps it functioning for you. The GI tract ranges between 20 and 30 feet long, and it breaks down or digests food into nutrients that are absorbed in the small intestine. The “left-over” material moves to the large intestine where water and minerals are absorbed for the body’s use. The remainder is held in the colon and finally excreted through the rectum. The whole process takes about five hours, but can vary depending upon what you have eaten. Rhythmic movements known as peristalsis are responsible for movement through the bowel with sphincters, much like back-flow valves, keeping material from moving backward. Because your nervous system is responsible for controlling these movements, nervous system damage can cause either constipation or diarrhea. Some conditions, for example diabetes and older age, tend to contribute to reduced activity and bowel problems as well. Constipation can affect anyone and it is estimated that up to 25 per cent of Canadians are affected chronically. You do not need a daily bowel movement, but you do need to maintain your regular bowel habits. A diet low in fibre, an inadequate fluid intake, some drugs like codeine, conditions like depression, diabetes and Parkinson’s disease and even lowered nicotine levels due to smoking cessation can all contribute to constipation. Obviously, a high-fibre diet, good fluids intake, exercise, and regular bowel habits will help. Diarrhea is the opposite of constipation, requiring too many trips to the bathroom, and again it is your regular routine that is important. The very young and The number of people affected by diabetes is on the rise. Several factors including the aging Canadian population may be the cause. As a result, diabetes complications are also on the rise. In November, we’ll look at these complications and what can be done to reduce them.
56 country-guide.ca
very old or frail are at increased risk from the excessive fluid and mineral losses associated with diarrhea that can contribute to cardiovascular problems. Drug side effects, food contamination, lactose intolerance, infections, eating foods to which your bowel is not accustomed, and eating foods like prunes or coffee that contain natural laxatives are some causes. Often, you will be able to pinpoint the cause, but if you can’t, keeping a diet diary can help. The bowel contains over 100 trillion microorganisms and could not function without them. They help digestion, prevent overgrowth of harmful micro-organisms, and help produce various vitamins and hormones. One bacterium that can be found in the bowel is Clostridium difficile. It is of concern because with overgrowth it can be debilitating and deadly. In the elderly, it can cause severe diarrhea with death occurring up to six per cent of the time, and it happens more often in hospitals and nursing homes, exactly where lots of elderly people are. Handwashing and avoiding contact with feces are key to avoiding infections. A new approach to treatment which is being studied is a fecal transplant, and yes it is exactly what it sounds like. Healthy fecal material with its own micro-organisms is transplanted into an unhealthy bowel. You probably take your bowel functioning for granted, and may even ignore symptoms of colorectal cancer. While cancer can occur anywhere in the bowel, it is colorectal cancer that is often diagnosed too late to be effectively treated. It develops slowly over time and you may attribute the symptoms to other causes. However about 13 per cent of new cancer diagnoses are colorectal cancer. If it is diagnosed early, the prognosis is good. The symptoms include changed bowel habits, rectal bleeding, tiredness, or weakness. Risk factors include older age, a family history, bowel inflammation and a history of growths in your colon known as polyps. Don’t take your bowel for granted! A highfibre, low-fat diet along with a good fluid intake will keep your bowel healthy, and don’t forget preventive measures like washing your hands well after using the bathroom. And, yes, tests for colorectal cancer can be “yucky,” but wouldn’t you rather be embarrassed than have cancer? Marie Berry is a lawyer/pharmacist interested in health and education. October 2013
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“This place looks incredibly boring. What do people do here?” My travelling companion, rooted in urban living, wonders what, if anything, happens in a small town. I argue that constant activity characterizes small communities. “Let me drive you around town.” I point out the community hall, the arena, the curling rink, the baseball diamond, a park, churches, a health-care centre, schools, a museum, a library and a fire hall. The seniors’ centre and the Legion Hall are popular gathering spots. At the edge of town we find the fairgrounds with corrals and gates for rodeos, and space for gymkhanas. “How do so few people manage to keep all of this going?” My friend is curious and intrigued. I explain that some facilities have a small paid staff but most are kept alive by volunteers. “The volunteers are busy morning to night. It is a two-pronged effort. They donate their time to help out. They also solicit donations and raise funds to pay the bills.” As a bishop in central Saskatchewan, I met with church committees and the subject often turned to finances. One lady expressed what was on everyone’s mind and what I already knew. “Bishop, we not only support our church, we support a dozen other causes. It is the same people who give as much as they are able.” The people who keep the church doors open are often the people who show up when the community hall needs a cleanup or repairs. Volunteers conduct the annual appeal for the Red Cross, Heart and Stroke and a variety of other worthy causes. The lady’s comment presented an opening to talk about “church work.” The conversation moved from a focus on the church building and paying the minister, to discussion on the town and its needs. We concluded that support for community is a demonstration of faith beyond the church doors. The church, when it is at its best, is a motivator for action in the community. As the discussion evolved, the people caught up in this whirlwind of activity were amazed to discover how much they do. They belong to service clubs, and auxiliaries for museums and hospitals. Hockey, baseball and soccer games are well attended and teams are supported financially. People need rides to the city for medical appointments. Everyone stops what they are doing when there is a funeral. The cemetery is tidied up. Lunch after the service is a co-operative effort. People who donate time and talent at the museum in the summer are found at the rink in the winter. Parents volunteer for school trips and field days. Lintlaw, a town in east-central Saskatchewan, population 162, has more than one community hall. While it is convenient to select the right location for small, medium or large gatherings the additional load is heavy for a limited number of residents. As I write, I am watching a spider weave an intricate web. The connections and interconnections balance. Making a spiderweb obviously requires planning and organization. A small insect pursues the task with unceasing energy. The web hangs together in a beautiful way. I wonder if community life is similar? Nothing to do in a small town? Ask the lady who volunteers to clean the church in the morning, bakes for her granddaughter’s school sale after lunch, takes her turn at the library in late afternoon and fries hamburgers at the arena in the evening. Suggested Scripture: Psalm 84, Acts 20:32-35
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Rod Andrews is a retired Anglican bishop. He lives in Saskatoon. OCTOBER 2013
country-guide.ca 57
Va l l e y
Shopping for iron
hen I was a kid, all the farmers I knew looked no farther than the dealership in town for new equipment. If it wasn’t on the lot you looked in a catalogue. Once a year we made the trip to the Royal Winter Fair and walked around the shiny tractors and new inventions displayed in the annex next to the Cow Palace. But by the time I was out of school the machines had outgrown the building and moved away to their own show on the edge of the city. Today there are indoor and outdoor machine shows across the country and many more a day’s drive south of the border. My neighbour Vern Bunton says the test of a visit to any kind of farm show is whether you feel better or worse when you get home. I have 30 sheep and a henhouse and the average agribusiness event makes me feel like a bug on the windscreen of food production. I once looked at the marketing sheet that listed all the advantages of taking a booth at one of these shows. It gave a snapshot of the gross receipts, net income, acreage under cultivation and annual spending on equipment for the average person coming through the gate. It’s amazing security didn’t stop me and throw me off the grounds. I usually tag along in the protective custody of Bob and Bert Pargeter, two cash croppers who churn up an area roughly the size of Wood Buffalo National Park. We arrive in a big diesel truck and I wear Tough Duck everything and a hat that makes me look like I’ve bought fertilizer within the last few years. Then I try to say as little as possible. When someone asks me for a number,
58 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
like how many acres I farm or how many sheep I have, Bob tells me to answer in small numbers, like “FIVE.” Then he says, if you see them start to lose interest, “just add a ‘K.’” He can carry that off, but I can’t. I once told a Cuban taxi driver that I was a farmer and he took one glance at my hands and just laughed. “You’re no farmer,” he said. The guys in these booths at the farm shows are just the same. At a glance they can see that I’m all hat and no cattle. Of course, I don’t help myself in these conversations. I say the most idiotic things. If I put my hand on a shiny new Massey tractor with hydrostatic everything a guy sneaks up behind me and asks, “Are you looking for something new?” And I blurt out something like, “Yes, just once before I die I would like to go around the barnyard on something that has power steering.” My Dodge truck is 15 years old and has circled the planet 40 times. I like it because it has coffee cup holders, FM radio and a tape deck, fripperies that had not been invented when my old Ford was built, back in the ’70s. The neighbours called that truck the Iron Eagle because
of the way the sides flapped when I drove down the side road. I would still have it today but an officer said he didn’t want to see it on the road again, so, I gave it up and moved on to the Dodge. I could probably afford to drive something from this century but it’s my upbringing that’s the problem. The old guys who raised me were products of the Depression and they taught me that the only way to survive in this business was not to spend any money. Ever. They thought a hardware store was a place of sin. They patched and welded until they knew their machines better than the people who built them. When a manure spreader failed for good, they turned it into a firewood trailer. When it wouldn’t hold firewood anymore, it was chopped up for rebar and gate parts. Like the story of the old guy who bumped around the fields for 40 years with the same plow he bought with his wedding money. Everybody knew he had plenty of cash in the bank. “For Pete’s sake, Earl,” said the equipment dealer. “You can’t take it with you, you know.” Earl replied, “I can’t take that new plow of yours with me either.”
october 2013
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