CGE120215 by Farm Business Communications

EASTERN EDITION

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February 15, 2012 $3.50

Expand or diversify YOUR 2012 CHOICE

TRAITS OF BETTER FARM LEADERS TEST FARM HEALTH IN MINUTES Publications Mail Agreement Number 40069240

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AWAYS FOLLOW GRAIN MARKETING AND ALL OTHER STEWARDSHIP REQUIREMENTS AND PESCTICIDE LABEL DIRECTIONS. Details of these requirements can be found in the Trait Stewardship Responsibilities Notice to Farmers printed in this publication. ©2011 Monsanto Canada Inc. (DK1050-S1-E-04/11)

Country Guide - CGEDGCF’12- 7”x10” - DK1050-E-04/11 Bunnies

FEBRUARY 15, 2012 THEIR SUCCESS IS NO SECRET PG. 14 Three Farmers is just that — three Saskatchewan grain farmers — plus Natasha and Elysia Vandenhurk who know the best way to sell camelina is to sell the story, not just the oil.

MANAGEMENT — IT’S ALL ABOUT PRACTICE McGill’s Henry Mintzberg is Canada’s top business thinker, with pointed advice for farmers.

EVERY ISSUE

DIVERSIFY OR EXPAND?

SEE THE FUTURE

A LONG WAY TO GO Mobile technology is paying big time for Gary Sanocki, but he wants more.

CORPORATE CITIZENSHIP FOR FARMERS Corporations think strategically about their donations budgets. Do they have lessons for farmers?.

A CLEAR PICTURE In minutes, Yvonne Thyssen-Post’s home test can tell if your farm is on the right track.

DRY IN THE TANK

A QUESTION OF SIZE

PRODUCTION 38

SOYBEAN OUTLOOK 2012 Philip Shaw shares his strategy for a year when the U.S. dollar will be the elephant in the market.

FALLING BEHIND Corn yields are growing six times faster than soybean yields. Can you change that?

FEBRUARY 15, 2012

PETUNIA VALLEY City people are different, and Dan learns that sometimes, it’s best just to leave it at that.

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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.

GUIDE HEALTH Attend to your dry skin before it gets… well… out of hand. Pharmacist Marie Berry tells us how.

If you think you know why farms keep getting larger, it’s time for another think.

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.

HANSON ACRES The next generation does get it. Sometimes it’s what you don’t do that makes all the difference.

Are those diesel shortages in Western Canada going to spread?

MACHINERY GUIDE Combines are boosting their technology to meet tougher and tougher on-farm challenges.

Wayne Wikkerink didn’t get into dairy. Thanks to Growing Forward, he did something even better.

GUIDE LIFE — KEEPING IT TOGETHER Four out of 10 marriages end in divorce. So what makes you so sure yours is so safe?

Doing more of what you already do best is proving to be a safer growth strategy than diversification.

GUIDE HR — YOU’RE BETTER THAN YOU THINK Take Pierrette Desrosier’s 15-minute test to identify the management strengths you should build on.

THE BETTER LEADER We ask leading farm advisers: What traits set great farm business managers apart?

DEBT LOAD In good times, aren’t we supposed to pay off debt? It isn’t happening.

DISCOVERING THE FARM This Manitoba project is breaking new ground for consumer awareness of agriculture.

WATCH THAT IP MARKET It may be time to run against the herd and sign those IP contracts for fall and winter delivery.

GROWING CANADA’S SOYFOOD MARKET It’s no longer a question of whether the soyfood market will grow, but which products pay best.

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 (905) 986-5342 Fax (905) 986-9991 Email: bmvancamp@fbcpublishing.com Gord Gilmour (204) 294-9195 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 (204) 954-1414 Cell (204) 227-5274 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

We all make mistakes For this issue, contributing editor Anne Lazurko interviewed McGill’s Henry Mintzberg — arguably Canada’s foremost business prof — in search of insights for managing a farm, which Mintzberg does have. But instead of telling us how farmers should copy all the good things that his corporate clients are doing, Mintzberg had a different message. Don’t copy their mistakes, he told Anne. Don’t go wrong where they go wrong. In particular, don’t let management get disengaged from production. If you do, Mintzberg implies, you’ll get autocratic and you’ll follow those big corporations into their current nightmares. Mintzberg also warns against letting business become too much about business. If we do, he says, we’ll risk making it a failure. We need to recognize that farming for example is a calling that demands passion and dedication, not just business smarts. It turns out the business world often gets psychology wrong. An easy example is brainstorming, a technique developed by Manhattan advertising executive Alex Osborn way back in 1948. Osborn said that you could multiply a business’s creativity by sitting your team members in front of a flipchart and getting them to fill page after page with ideas. It doesn’t matter how fanciful the ideas, Osborn said, just write them down, and never ever criticize any idea at this stage, because criticism kills creativity. The idea helped Osborn peddle his best sellers. Indeed, brainstorming is a routine part of business at many companies. 4 country-guide.ca

Some companies build their entire culture around it, and even some larger farms have toyed with it. Except it doesn’t work. As early as the 1950s, psychologists put brainstorming to the test. When they asked college students to come up with ideas via brainstorming, or via a more aggressive debate system, they invariably got more and better ideas by debating, not brainstorming. It’s a message that farmers will feel they’ve always known. But that doesn’t mean farmers have learned all the lessons that psychologists can teach. If you agree with the psychology, you’re acknowledging the crucial role of frank discussion on the farm. But as we all know, not all farms are open for debate. Instead, individuals become entrenched, or one individual assumes they know what the other will think — there are endless variations — and you end up getting into a corner. In fact, it’s partly because of these family dynamics that psychologists also say you’ll come up with your best ideas if you talk to people who are like you, but not too close. We get lots wrong at Country Guide too, although we do have what you might call quality control strategies. We talk to multiple sources. We ask the same questions in different ways, and we talk, talk, talk to our farm subscribers. We also go looking for viewpoints you otherwise might not hear, like Henry Mintzberg’s. Are we getting it right? Let me know. I’m at 519-674-1449, or email me at tom.button@fbcpublishing.com.

Advertising Services Co-ordinator: Arlene Bomback (204) 944-5765 Fax (204) 944-5562 Email: ads@fbcpublishing.com Publisher: Bob Willcox Email: bob.willcox@fbcpublishing.com Associate Publisher/Editorial Director: John Morriss Email: john.morriss@fbcpublishing.com Production Director: Shawna Gibson Email: shawna@fbcpublishing.com Assistant Production Manager: Farrah Wilson Email: farrah@fbcpublishing.com Director of Sales and Circulation: Lynda Tityk Email: lynda.tityk@fbcpublishing.com Circulation Manager: Heather Anderson Email: heather@fbcpublishing.com Designer: Jenelle Jensen 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 — $33.60 for one year, $51.45 for 2 years (prices include GST). U.S. subscription rate — $35 (U.S. funds). Subscription rate outside Canada and U.S. — $50 per year. Single copies: $3.50. Publications Mail Agreement Number 40069240. We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage.

Canadian Postmaster: Return undeliverable Canadian addresses (covers only) to: Circulation Dept., PO Box 9800, Winnipeg, Manitoba R3C 3K7. U.S. Postmaster: Send address changes and undeliverable addresses (covers only) to: Circulation Dept., PO Box 9800, Winnipeg, Manitoba R3C 3K7. Subscription inquiries:

Call toll-free 1-800-665-1362 or email: subscription@fbcpublishing.com U.S. subscribers call 1-204-944-5766 Country Guide is printed with linseed oil-based inks PRINTED IN CANADA Vol. 131 No. 3 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.

february 15, 2012

Machinery

By Philip Shaw

It’s no wonder farmers put such pride in their combines. There’s no feeling like the harvest season when every thing is working smoothly. Besides, today’s combines are beautiful feats of engineering — and as the new breakthroughs in combine technology show, they just keep getting better.

new holland cr twin rotor combines 

 massey ferguson 9500 series

New Holland is featuring its new CR Twin Rotor combines with five different models from the CR6090 to the CR9090, offering 401 to 571 max horsepower. New Holland emphasizes the 35-year track record of what it calls its “Twin-Rotor bloodline,” offering exceptional multi-pass threshing. New Tier 4A engines cut emissions and reduce fuel bills. The ECOBlue SCR technology turns cool, clean air into power, saving up to 10 per cent. Combined with the IntelliCruise automatic crop-feeding system which automatically matches the forward speed to crop load, this keeps the focus on maximum harvesting efficiency. The twin rotors generate 36 to 40 per cent more centrifugal force than any other rotary design, moving grain quickly for faster separation, which the company says virtually eliminates grain damage and loss. www.newholland.com

Massey Ferguson introduced their Next Generation axial combines in August 2011, saying the new 9500 Series combines are the most productive and efficient combines they have ever offered. The 9500 Series consists of three models, the 9520, 9540 and 9560 from 313 to 460 max horsepower. At the heart of the MF9540 and MF9560 models is the all-new Trident processor featuring a segmented rotor to efficiently yet gently handle today’s heavier, tougher crop material. The mechanically driven rotor uses a combination of threshing elements and separation paddles arranged in a helical configuration. The interchangeable narrow and wide paddles deliver uniform and gentle separation of crops in a wide range of conditions. To maximize crop flow, the Trident rotor features a multi-zone intake that feeds the rotor evenly while also consuming less power. www.masseyferguson.us

February 15, 2012

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lexion 700 series combines Manufactured by CLAAS, the LEXION 700 Series rotary and straw walker models offer an award-winning threshing and separation design that targets both harvest and fuel efficiency. Along with the other 700 Series rotary models, for instance, the 563-horsepower, 360-bu. grain tank capacity Class X LEXION 770 features the LEXION APS Hybrid System. In essence, this is a combination of conventional threshing cylinder technology and a dual rotary separation system. It starts with the Accelerated Pre-Separation System (APS), which includes the accelerated pre-separation cylinder, a main threshing cylinder and an impeller. The company says up to 30 per cent of the grain is separated at the APS cylinder and sent directly onto the cleaning system. The remaining crop is fed into the main threshing cylinder at a gradual angle, covering the entire width of the cylinder at a constant thickness, resulting in higher grain quality. The impeller then divides and feeds the thrashed material into the RotoPlus dual rotary separation system. www.claasofamerica.com

case ih 30 series

john deere s series combines

For 2012, Case International is introducing its new 30 Series Axial Flow combines. The series ranges the 295-horsepower Class V Case IH 5130 to the massive 560 max horsepower Class IX 9230, with several stops in between. With their FPT Tier 4 SCR engines, the Case IH designs emphasize emission compliance without compromise. The Case IH SCR technology functions outside the main engine, treating the exhaust post-combustion, unlike EGR solution in other makes. Case International is marking the 35th year of its simple and reliable axial flow design with the introduction of the 30 series combines. Its 7230, 8230 and 9230 models can power the grain tank extensions from the cab, covering the tank right from the operator’s seat. According to Case IH, Power plus CVT drives on these models provide more power and less downtime, and are unique in field capabilities such as header to groundspeed synching to ensure smooth material flow from header to spreader. All Case IH 30 series combines incorporate the state of the art AFS Pro 700 display for yield monitoring. These units are compatible with all Case IH equipment and can easily be transferred to your tractor cab. www.caseih.com

When it introduced the S Series in 2011, John Deere said these combines are the smartest machines Deere has ever built. While the series starts with the S550 at 300 horsepower, the new S Series Class 9 is also among the most powerful machines Deere has ever built. In fact, the company says the S690 will give you more horsepower than any other in the industry. A larger cleaning shoe also delivers up to 15 per cent more capacity. The new shoe features a large one-piece chaffer and a larger sieve to deliver bigger capacity compared to previous systems. Louver area is 30 per cent bigger in the chaffer, and there’s 18 per cent more louver area in the sieve as well. According to Deere, the unique, multi-level design is also less sensitive to slopes, giving high performance even in hilly country. John Deere describes their new cab, as a “room with a view.” The view from the seat is almost 180 degrees. The cab is also 30 per cent bigger than previous John Deere cabs. There are sunshades, plenty of power outlets and a new air-conditioning system with increased blower capacity and improved air quality. There is even an integrated refrigerator to keep food cool, and of course there is impressive capability, including the power to adjust sieve settings without stepping out of that coddled comfort. www.deere.com

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February 15, 2012

business

Discovering the farm This University of Manitoba project is breaking new ground in getting non-farmers to know about, and care about agriculture By Rebeca Kuropatwa

he word discover is one of those words that means the opposite of what it used to. Today, to discover something means to find it out for yourself. In the old days, to discover something meant to uncover it or to reveal it to someone else. It’s a useful thought to keep in mind when you learn about The Food Discovery Centre, the University of Manitoba consumer education facility that has been breaking the rules, even hiring a professional museum curator to help tell agriculture’s story to non-farmers. By “discovering” agriculture to urban audiences, the centre helps consumers “discover” where their food comes from. If it sounds like something that boosts the energy level, says visitor services manager Guy Robbins, then you get the point exactly. Check it out yourself by going to the centre’s website, http://umanitoba.ca/afs/ discoverycentre/. The gulf between city children and the farm is all too wide, Robbins tells me. “We ask them where food comes from and they answer ‘the grocery store,’” he says. “People today don’t know any farmers.” Robbins has an extensive 20-year background in museums and discovery centres, and says the food centre is all about finding ways to bridge that gap. The Bruce D. Campbell Farm and Food Discovery Centre officially opened Sept. 16, 2011, with visits of test groups having begun in May. The centre is run by the university’s faculty of agricultural and food sciences, and it is both a research station and an operating farm on the edge of the city. The original idea was to give visitors a chance to see a conventional hog barn on site. “With biosecurity being a major concern with livestock, the faculty first thought to just add windows to a new hog February 15, 2012

barn that was being built,” said Robbins. “From there, the idea grew. “The thinking was that if we were going to be letting people look into a hog barn, we should really also be explaining to them what they’re seeing — the process of raising livestock and the research that goes into hog farming,” he says. “We then thought to not only do livestock but also crops.” The main goal is to share with visitors how their food gets from the farm to their plate. The faculty set up a committee of producers, exhibit consultants, and educators who worked for nearly five years planning which exhibits to showcase, and ended up taking a “close the loop” approach, incorporating everything from farming to agricultural science and research, food production, grocery stores, and people’s personal kitchens. Not only do visitors learn about agriculture, they also learn about potential careers in the sector. “Farming is no longer just the farms — although, of course, that’s the main area,” Robbins says. “There are all different career segments supporting farmers that help bring food to our tables.” When visitors enter the centre, they take a pathway that goes all around the building and they view some of the Manitoba research currently underway. Topics range from food production and genetic research to environmental protection and manure use, with lots in between. The centre also has a crop section that focuses on how crops are produced and the importance of water and different nutrients, plus the effect of insects and the weather. “We also look at what kind of food can be made from the different crops, and how microbes can be used in food production — like yeast for bread, the making of beer from barley, and the use of live bacteria in milk for cheese and yogurt,” says Robbins.

The livestock section of the centre is where visitors can look through four windows into the hog barn — learning how hogs are produced, including their nutritional and water intake. There, visitors also get a bird’s eye view of egg production and the design of egg-laying crates for chickens. The centre doesn’t hide the science of modern agriculture. Consumers see how producers use science to design poultry housing to mimic natural bird habitats, with scratch pads, dust bowls, and perches. On the hog side, they can use an ultrasound to see if a sow is pregnant or if she’s in good condition for pregnancy. In this section, visitors can also check out feed systems that provide the right amount of nutrition for each sow. There is also a grain silo, tractor cab, and state-ofthe-art technology currently being used on farms for all to see. Although the centre does go a little bit into the business side of agriculture, Robbins says, “The focus is more on hands-on education — getting people curious enough to research the subject further. “There are other agricultural museums that tend to be more focused on the heritage, historical side of things — how people farmed in olden times — but there aren’t many places focused on farming today,” Robbins says. Currently, the centre attracts three main audiences — the general public, schools (mainly Grades 4-8), and the industry itself — trying to make it fun and understandable for all. “When visitors come, they’re generally here for one or two hours, so we’re only scratching the surface,” says Robbins. “Still, we get them interested… we’re planting seeds which will hopefully germinate at different points for different people along the way.” CG country-guide.ca 7

F E B R U A RY 2 0 1 2

NEWSLETTER Take A New Approach to Farm Business Management

Boosting crop yields and farm income through education The Canadian apple industry has been challenged by rising international competition during recent years. This has created an opportunity for growers to access financial and business management programs such as the Ontario Apple Growers’ School, a two day event which brought farm business management training to farmers through a unique educational and networking conference.

hen you run your own business, every decision counts. For apple farmer Chris Hedges, his decision to attend the Ontario Apple Academy last winter is already resulting in changes in his Norfolk County orchard. Ontario’s apple sector is a small segment of the global apple industry, making it critical for farmers to have access to specialized farm business management training to be competitive. Most farmer information programs are organized for general horticultural production, leaving apple growers without training opportunities specific to their industry. To fill this need, the Ontario Apple Growers (OAG) hosted the Ontario Apple Academy last year, an applefocused education program supported by the Agricultural Management Institute (AMI) that attracted 121 participants, including 81 growers.

AMI newsletter spread2.indd 1

By Lilian Schaer Leading apple expert Terence Robinson from Cornell University was one of the speakers at the event, sharing hands-on information with growers on what they need to do to get their orchards into profitable, early production. This includes moving towards a highdensity orchard system where trees are planted quite close together, allowing farmers to increase crop yields without needing to expand their acreage. Robinson also advocates focusing on tree growth instead of fruit during the first three years following planting. This means allowing only minimal amounts of fruit in years two and three and taking the tree into full production by year four, advice Hedges is now implementing in his orchard. “We’re following this approach on 15 acres of new plantings in our orchard and we’re seeing good growth,” says Hedges. “What it means for our bottom line is our trees will now be in

full production of about 1,500 bushels per acre by the fourth year, instead of having to wait till year seven or eight to reach that capacity.” Hedges is a first generation apple farmer with 100 acres of orchard near Vanessa, north of Waterford. Approximately 70 acres are newer, high-density plantings less than seven years old. “Terence Robinson is a world authority on apples so it was really useful to growers to hear that information here in Ontario. I also attend fruit tree association meetings but there’s really no other venue here besides the Apple Academy where you can go to learn the things we’ve learned there,” adds Hedges. A panel of growers from Nova Scotia, New York and Michigan shared their management and production experiences with participants, which Hedges hopes will help Ontario

f c C w

T G w t m o p t l I p l a

farmers do a better job of achieving consistent yields from their Honey Crisp trees, a variety popular with consumers.

management changes to improve their profitability.

The main goal, according to OAG General Manager Kelly Ciceran, was to encourage producers to incorporate farm business management practices into their operations by evaluating their growing practices in terms of economic thresholds and cost benefit in areas like finance, environment and labour. Information from the speaker program has assisted apple farmers like Hedges to assess their operations, and help make positive business

Innovation a normal part of doing business Innovation can be new application of technology or operational process and can take on many forms such as new packaging, new marketing channels or the application of established products for new uses. These new additions to the farm can be imported through the induction of foreign practices or purchased from other developers and investors. Two things to consider when pursuing on farm innovation strategies: 1. A thorough investigation of new production opportunities which provides the potential for looking beyond the farm gate to capturing a new market 2. Ideas should first be tested in a controlled manner where failure will not harm the short or long term viability of the farm 1. Source: The Global Economic Crisis: Winning Business Strategies for Ontario Agriculture, Strategic Capital & Intelligence Group Ltd. (2011)

“For the apple industry, the biggest benefit came from the quality of information presented and the networking opportunities,” says Ciceran. “We specifically designed the session so that apple farmers could hear speakers and information they may not have heard before.” “As well, having only apple growers in attendance and providing specific time for socializing and networking allowed for exchanges of ideas farmer to farmer,” she added. “Apple production in Ontario is spread out across the entire province and while there are pockets of apple farmers in the major growing regions, this event gave them an opportunity to come together as an entire Ontario apple ‘community’.” A follow-up survey of Academy participants showed that 100 per cent

of attendees learned something at the event they plan to implement in their business. As well, 71 per cent gave the Academy high marks for helping to advance their farm business management skills. A majority indicated they’d like to see a similar event hosted in the future, which speaks well to the Academy’s success, says Ciceran. Twenty-one industry experts from Canada, the United States and Switzerland participated in the Ontario Apple Academy, including some of the most sought-after speakers in the apple industry. Most presentations were video-recorded and are now available from OAG as a three-disk DVD version of the Academy. A full proceedings book is available for downloading from the OAG website, www.onapples.com.

Planning Creates Results! The feedback received from the Apple Academy conference is supported by results of a recent survey of farm managers completed by Ipsos Forward Research for the Agricultural Management Institute. It showed a clear connection between farm business management planning and business growth and profitability. According to the study, 22 per cent of respondents are categorized as “planners,” farmers who are most likely to have a formal business plan for their operations, are actively setting farm profit targets each year and are trending increasing total farm sales. The survey, which included six focus groups, 20 in-depth interviews with farmers as well as telephone interviews with 500 farmers of various farm types across Ontario, segmented participants based on business planning behaviour and defining attitudes. An overwhelming 70 per cent of Planners have a formal business plan for their operation, compared to only 22 per cent of all farmers surveyed. Planners are also much more likely to have carried out risk and/or business assessments, or to have participated in a Growing Your Farm Profits workshop. They believe planning is a worthwhile activity with the potential to pay dividends, know where to find farm business management tools and resources and they make use of them. 1. Source: Baseline Study of Farm Business Management Planning, Ipsos-Forward Research (2011)

A federal-provincial-territorial initiative.

AMI is part of the Best Practices Suite of programs for Growing Forward, a federal-provincial-territorial initiative.

ami@takeanewapproach.ca www.takeanewapproach.ca

12/01/2012 10:21:28 AM

OPINION

THE BETTER LEADER What traits set great farm business managers apart from the crowd? We asked leading farm advisers. Their answers cover a lot of ground, but they agree leadership depends on just a few core strengths By Madeleine Baerg

BRENT BENDER Regina district director Farm Credit Canada Great farm business managers surround themselves with an exceptional group of people, all of whom are committed to the success of the operation. These experts — the accountants, lenders, agronomists, lawyers, and involved family members — confirm whether the decisions the manager is considering making are the right decisions for the operation, and suggest other ideas and perspectives. Plus, of course, high-level farmers know how important it is to communicate openly and regularly amongst the team members. The second piece of the puzzle setting great farm business managers apart is actually made up of two parts, but they go hand in hand — generating cash flow, and business planning. From crop input prices to weather to market variability, there are lots of things outside of a business manager’s control. But, great farmers have solid business plans, both for the short and long term, and a strong credit rating so they can afford to jump on opportunities when they come up. These farmers are really proactive about their finances. They know the debt capacity of their operation, and they understand their equity position. They are always a couple steps ahead of the game. Great farm business managers never quit learning. They know they don’t already have all the information, and they know they can’t do it all themselves. That’s why they are always looking for more knowledge, and they know how to utilize others’ expertise.

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MERLE GOOD Business arrangement specialist Alberta Agriculture and Rural Development They’re both great leaders and great managers. As the old saying goes, leadership is about choosing the right things to do, and management is about doing those things right. These farmers have four characteristics in common. I call them the “four Cs”: confidence, competitiveness, courage and character. First, they have confidence in who they are and what they are doing. Next, they are competitive not only with their neighbours but with all farmers. In fact, they help set the bar high for the whole industry. Third, they have courage to move forward, even when things go wrong and mistakes get made. And finally, they have strength of character, which is really what makes the other three characteristics possible. In order to show the four C characteristics in their business, great farm leaders need to have three As: attitude, acceptance and accountability. They have a positive attitude towards relationships, both personal and business. In agriculture, you can’t be the lone cowboy anymore. As off-farm functions like crop input supply and the marketing of commodities gets taken over by bigger and bigger companies, you have to be able to develop relationships with the people you need to work with. These farmers also have a balanced attitude towards risk and reward. Understanding what motivates you when you get up in the morning — whether it is the fear of failure or the thrill of success — is key to being great in business. They also accept what they can and can’t do. It’s natural to second-guess yourself, but the most successful farm leaders don’t beat themselves up too much and don’t feel that losses are personal. After all, you can’t outsmart the weather, all you can do is take appropriate measures to minimize risk. Finally, they are accountable to themselves and their business. The people who do a really good job don’t just have intent, they have action.

FEBRUARY 15, 2012

OPINION VAL MONK Family business risk manager Val Monk and Associates Great farm business managers have a clear vision of where they want to be. The vision is authentically their own. It doesn’t work to try to take on someone else’s vision. They have resilience. There are always unknowns and unknowables in business, especially farm businesses, but resilience keeps you strong through those natural ups and downs. They also inspire others. As leaders, they are always setting an example, and everything they do counts towards the total team good. And they are continuous learners. In today’s world, we can’t stand still. Continuous learning is a given, whether face to face, virtually, in a classroom, or across a fence. Great business leaders know the “why” of what they are doing, and encourage others to ask “Why?” and “Why not?” Those questions have a lot of impact: out of them grow the passion, the commitment, and the resilience you need to stay in this business. Most farmers have a huge emotional attachment to farming, since it’s about family survival and creating a livelihood from the earth. Therefore, farming has a unique culture and a soul that sets it apart from other businesses. Understanding and appreciating the culture of farming is a shaping force for great farms. They also have strong support from the previous generation. Passing on and receiving wisdom, knowledge and encouragement from the previous generation is very important for them, but so is recognizing that farming is not what it was even 20 years ago and that the new generation is facing new challenges. Family farms require help on technical, transactional issues, but also on transformational soft issues. Way too often, families look at the technical issues, but not the soft issues. They need to be finding the right help to walk them through the emotional aspects of growth, succession, hardship and change.

LEO KOSOKOWSKY Farm management consultant AgMpower Services Ltd. A great farm business manager makes being very profitable seem easy and natural. Everything seems to happen like clockwork, and anything that goes wrong is quickly rectified. That’s because they possess these traits: Humility: Great farm business managers are very confident in the decisions they make, but they recognize that they don’t know everything. They typically believe that they are doing a good job, but they also appreciate that there are other successful farmers who can do equally well. And, although they know they have worked hard to get where they are, they also believe they have been very fortunate along the way. Being humble keeps great farmers inspired to ask questions and to keep learning. Networks: Recognizing that there are many ways to be suc-

FEBRUARY 15, 2012

ANNETTE ANDERSON Manager of business management Ontario Ministry of Agriculture, Food, and Rural Affairs We combined our experience as a team on this question, and feel successful farm managers generally: • Manage their costs well by calculating their exact cost of production, and they place a high priority on controlling their fixed costs. • Search for new and innovative methods to improve their rate of production. Quality enhancements and branding of products are two methods used to increase value and improve net return. • Look for ways to run their farm business more efficiently and profitably. Benchmarking is used to measure performance and to set goals. • Use sound management techniques resulting in an efficient team that works together. Roles and responsibilities are clearly defined and farm enterprise goals are clearly communicated. The farm business is able to capitalize on the competencies within the team. Managers communicate on farm through formal and informal meetings. • Maintain long-term business relationships and have a strong industry network. They watch for and capitalize on market opportunities through daily use of Internet, links to brokers, email updates and other available resources. In today’s changing and volatile agriculture environment, the farm business manager’s role is highly demanding. A manager often has many roles including planner, organizer, leader, controller, change facilitator and delegator. A farm business’s success depends greatly on a manager’s ability to adapt to the market conditions and competitive environment.

cessful, great farmers seek out people they can learn from. They foster relationships with local dealers, agronomists, mechanics, commodity merchants, business consultants, etc. who can give reliable and timely information. They aren’t looking for anyone to make decisions for them, but they know they need access to good information to make good decisions. Passion: Great farmers really love farming. Their love for farming keeps them hungry enough to jump into opportunities without being desperate and likely to make mistakes. Their tirelessness comes from being inspired about what they do. To know what makes a farm business leader successful, you just have to look at what makes a seed prosper: quality seed, a good seedbed and proper growing conditions. An inspired young farmer needs to start with smarts and skills. Then, he or she needs peers to look up to and learn from, like good soil that makes a seed grow quicker and stronger. And then they need the right conditions: they typically need to have some early successful years to build up equity and build confidence, as well as some stressful years and close calls so they can gain experience and learn to stay alert with an eye to managing risk. CG

country-guide.ca 11

insight

In the first of this two-part series, worldfamous economist Henry Mintzberg tells us he’s worried that farmers are learning the wrong lessons from corporate North America. Says Mintzberg of farming, “People keep saying it’s a business, but it’s a calling.”

Management

It’s all about practice By Anne Lazurko, CG Contributing Editor I contact Henry Mintzberg. I want to find out what one of Canada’s most famous business professors can tell us that would help on the farm. Instantly, though, the tables are turned. confess it’s a little intimidating when one of the world’s premier management thinkers interrupts you on the phone and asks you for a nutshell overview of the state of Canadian agriculture. But Henry Mintzberg asked, and I do my best to answer. Mintzberg likes to turn conventional wisdoms on their head, not because he wants to be sensational, but because he wants the world of business to be a better place. He is candid about the need for farmers to be wary of the mistakes made in the corporate world, a caution that is surely relevant in an environment of increasing farm size, market volatility, and pressures to behave… well… like a business. Mintzberg is Cleghorn professor of management studies at McGill. He’s an internationally renowned speaker and author on organization and management, has written 15 books and over 150 articles, holds honorary degrees from universities around the world, and is an officer of the Order of Canada. He is often critical of current management practices and the state of corporate North America, but when he speaks, people listen. 12 country-guide.ca

While he may not know much about agriculture, he certainly knows leadership and management, and he believes the two are only successful when inextricably linked. Leadership, Mintzberg says, is management practised well. Which would, by definition, mean that practising good management is leadership. “Management is disconnected because it has become management by decree,” he says. In a 2009 Business Week article he illustrates this point. “Being an engaged leader means you must be reflective while staying in the fray — the hectic, fragmented, never-ending world of management. The reward: access to the ideas flowing around you.” But do farmers actually have the reverse problem: too much fray and not enough reflection? Farmers are busy with everyday work, and many would agree they simply don’t invest time in thinking about the broader picture. “Certain industries have built-in strategies, like a hotel for instance,” Mintzberg says. “It has a built-in location, number of rooms, operations, etc. Farming is like that. It’s not so much about strategy. You make the decisions about what to grow but beyond that it’s mostly operations. Which is OK. But once in a while you have February 15, 2012

insight to step back. The danger of not stepping back is that the more routine you’ve got, the less able you are to step back.” It’s pretty clear that, for Mintzberg, being immersed in operations is the better of the two extremes. Overtly critical of what he calls disconnected “big-time leaders” on Wall Street who aren’t real managers, Mintzberg hopes that the trend toward large corporate farming won’t lead farmers to make the same mistakes as big business. “Leadership on the farm is, I suspect, much more personal. Big organizations have lots of spin and hype that a farm probably wouldn’t have. But (farms) still require leaders who have a knack of getting people enthusiastic,” he says. “The danger on the corporate farm is that you need to get dirt under your fingernails, in this case literally.” Farming is a business. That’s the drum farm leaders have been beating over the past decade or two, behaving as though the lifestyle aspect is an unimportant and possibly even embarrassing afterthought. But there’s a strange dichotomy happening. Many of the young farmers I’ve spo-

ken with still very much care about and value the lifestyle that farming offers. But they talk about it in hushed tones as if they know they’re not supposed to think it. “The fact is we’re living in a time when it seems nothing but business matters,” Mintzberg says. “Art, health care, everything is made into a business. I think that’s a mistake. “Seeing farming as only a business is probably a mistake too,” Mintzberg says, linking farming and health care. “People keep saying it’s a business, but it’s a calling. Hospitals are not a business and doctors are not businessmen. Johnson and Johnson who supply the hospital are a business, but health care in itself is not. There is some of that idea of a calling in farming.” The implication is that farmers will do a better job of managing if they see their farm as a business and embrace the lifestyle that comes with it. Mintzberg points again to the mistakes the corporate world makes about ownership, and in the case of farming, ownership of land in particular. “Detached ownership disconnected from operations makes people into mercenaries,” he says. “Most people see markets as a big

thing for economists. But markets are the heart and soul of communities. Markets without community create mercenaries.” The implication then is that ownership and attachment to what is produced create community within the farming sector. Mintzberg is big on community whether it be within a corporation or in the traditional sense of the word. And while his words might sound radical to some, they might be worth thinking about in a world where fewer farmers own the land they farm, and speculators and investment companies own more and more acres purchased at prices beyond the means of the average farmer. Already there are rumblings that land is not being farmed as well as it might be because those who own it are not directly tied to it in the same way farmers were tied to the land in past generations. And what then of our communities? “Detached ownership is not just about agriculture and land, it’s about personal ownership of any kind,” Mintzberg concludes. “In agriculture it seems you’ve the same issues of small versus large, public versus private, but with the dimension of land on top of it.” CG

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February 15, 2012

Country Guide-CGGGRR2YF’12-7X5-TR2060-E2-04/11 REVISED SEPT 23

country-guide.ca 13

business

Their success is no secret For Natasha (l) and Elysia Vandenhurk, building a business on the basis of a vegetable oil nobody has ever heard of has meant long hours, many miles, and a terrific education

alking down the aisles I see the posters for nutritional supplements. They all seem to show ripped guys in tank tops and tanned, toned girls. In the crowd, I see anti-GMO pins on lapels, and everywhere I turn I see the words organic and natural on products ranging from tofu and snack bars to Indian cooking sauces, chia porridge, and herbal extracts. I’m not surprised by the pins and the words organic and natural. After all, this is a Toronto trade show for health foods. What strikes me as bizarre, though, is that almost everything I see is highly processed and highly packaged. As I sample vanilla soy milk from a small paper cup, I remember the assignment I’ve been handed and head to booth 220. That’s where I hope to learn more about the three farmers from Saskatchewan who were on the press release from Saskatchewan Trade. It’s not long before I’m at their display, sampling Three Farmers brand camelina oil. I don’t meet the three farmers themselves, but I do meet the daughters of one of them: sisters Natasha and Elysia Vandenhurk. I crunch on a breadstick dipped in the oil as they tell me about the culinary characteristics of their camelina oil, such as the nutty flavour and high smoke point. 14 country-guide.ca

Then they rhyme off retailers here in Toronto selling their oil. I stop listening as they name Pusateri’s — a shockingly expensive culinary outlet. “Cool,” I tell them. “I’m impressed.” Natasha adds that they have about 15 retailers back home in Saskatchewan, plus about 30 here in the Toronto area. People in Saskatchewan, she says, are very excited about the product, but the potential market is small. “That’s why we went to Ontario so quickly after launching our product,” she tells me. “We needed a larger market.” The Vandenhurks aren’t waiting for word of mouth or for a food writer to help Toronto to discover their camelina oil. They’re here getting it into stores themselves. February 15, 2012

Photo credit: David Stobbe

By Steven Biggs, CG Contributing Editor

Photo credit: David Stobbe

business

Canpressco Products Inc. The oil and the Three Farmers brand are part of Canpressco Products Inc. The company has four owners, three of whom — Colin Rosengren, Ron Emde, and Dan Vandenhurk — are the farmers growing the camelina. The fourth is Ken Greer, a soil scientist. Natasha says the farmers grow the same mix of crops they grew before the business began because, for now, the camelina acreage requirement is fairly small. Rosengren later tells me by phone that he farms 5,000 acres with a mix of about 10 crops. Emde and Vandenhurk, February 15, 2012

he says, each crop between 10,000 and 15,000 acres and a half-dozen crops. I ask Rosengren if he has grown specialty crops such as camelina before. He has, but for production contracts, meaning he didn’t have to market and process them. Rosengren says he has found a big difference. “It’s not an easy track if you’re going to process it,” he says. The role of sisters Natasha and Elysia is to get the word out about the oil. Elysia, the product development officer, trained as a chef and worked for the famous chef Susur Lee in Toronto. “We needed somebody with more of

a culinary background,” says Natasha, as she explains her sister’s role in the company. Natasha, the director of sales and marketing, studied economics and worked in financial planning before joining Canpressco. As for me, I’ve always associated camelina with biodiesel, so I’m intrigued to know what prompted Rosengren, Emde, and Vandenhurk to grow it as a food crop. Natasha laughs, saying, “You have to know these three guys, they’re always looking for something new.” Rosengren tells me they had been Continued on page 16 country-guide.ca 15

business

Continued from page 15 looking for an opportunity to market a crop directly to consumers when, in 2007, he learned of the potential of camelina. “We had already been talking about doing something and were snooping around,” he says. Besides being suited to their growing conditions, camelina has high levels of vitamin E and omega-3 fatty acids — both of which are sought after by health-conscious consumers.

For farmers Dan Vandenhurk (l), Ron Emde and Colin Rosengren, camelina means business ewan, and soon afterwards — in April 2011 — it launched in Toronto. I ask Rosengren what his neighbours think about the product. He responds by saying, “We’re really focused on urban areas.” Selling at his back doorstep isn’t the priority.

Getting started

Creating a brand

Selling camelina oil as a food product — not for biodiesel — meant they had to apply to Health Canada for “novel” food status. That required lab reports, paperwork, and information on historical usage. It took about 18 months for approval, which they received in January 2010. In the meantime, they needed to figure out where in the marketplace to sell the crop, and they needed a product. Natasha says that the three main channels they considered were as a food ingredient, as a cosmetic ingredient, or as a culinary product. Then they picked one and focused on it. “The culinary (market) seemed to be the most obvious of the three,” she says as she notes her sister’s culinary experience. In November 2010, Three Farmers camelina oil hit the shelves in Saskatch-

As we talk about the brand, Natasha says, “We tried to make it scream Saskatchewan.” They want camelina to appeal to people wanting something natural. Being producer-processors, they can offer consumers traceability. “We really wanted to connect consumers back to their farmers and put a face to their food,” she says. It’s a point of differentiation, and it’s right there in the product brochure, which says, “We are a handful of farmers, passionate about growing natural, healthy food and driven by the desire to reconnect with you, the food consumer.” “We had to think about what kind of consumer would enjoy something like this,” says Natasha as she talks about the flavour, scent and health benefits. She says health food stores are inter-

16 country-guide.ca

ested in carrying the oil because of the omega-3 fatty acids and vitamin E content, while farmers’ markets are a natural fit because shoppers there are often interested in connecting with farmers. “We need to be very focused,” Natasha adds, noting that it would be easy to try to market the product more widely and go off-strategy. Natasha says that an engaging brochure and website aren’t enough to win over shoppers. “A really big part of this project is just educating people about it because nobody has heard of it,” she says, adding, “It’s a lot of face time with customers, and we enjoy that because that’s where you get feedback.”

To market “That’s one of the best pieces of advice we received,” Natasha continues as she explains why they haven’t partnered with any distributors yet. They were warned that their lone product could be buried amongst the array of products in a distributor catalogue. “For every retailer that we’re in right now, it’s been a knock on the door to introduce them to the product,” she says. The upside to this approach is the February 15, 2012

BUSINESS strong relationship with retailers. “I feel like they’re actually rooting for us,” she says, noting that if retailers have any questions about the product, they call directly. The downside is the extra work. It means they warehouse and ship product themselves. Natasha says that they’re at the point where they could consider partnering with a distributor, now that they have forged the brand and retailer relationships. A distributor would make her life easier. “I spend 85 per cent of my time working on shipping and logistics,” she laughs. “Essentially, I’m a mailman.” The other advantage to dealing directly with retailers is getting a feel for what product attributes resonate with retailers and shoppers. “You have to read your surroundings when you go in somewhere,” says Natasha as she talks about pinpointing what retailers and shoppers find appealing. It could be that the product is new, it has unique culinary properties, it is from Saskatchewan, or that it comes straight from farmers through a vertical supply chain. As an example, she points out that

at Pusateri’s, customers seem interested in the trendiness of the product — it is brand new and sexy. At some stores, she says, clients are more interested in the story. “They care about where it came from, that my dad is one of the farmers. And they love that story!” People who know the story, Natasha says, are often repeat buyers. Getting out there can mean media attention too. A MACLEAN’S magazine article came about after a tasting. “Most of the media we’ve had has been free,” says Natasha as she talks about a recent blurb in the NATIONAL POST. “People are looking for interesting things to write about,” she says.

Those city streets Managing distribution themselves means a lot of travel time for the sisters. During a later phone call, Natasha tells me how Elysia is travelling from Vancouver to Calgary right now. And they’ll both be back in Toronto next month. She doesn’t see any alternative to all of the travel, saying, “It’s really just a matter of getting out there.”

At consumer shows, for example, customers often recommend stores where they could sell the oil, a worthwhile payback. It strikes me as neat that all the off-farm travel they do to Toronto and other cities allows them to be involved in the farm business. Canpressco will soon introduce a line of infused oils. They’ve considered other products too. Camelina oil makes great hummus, Natasha tells me. But hummus is a perishable product and that would introduce lots of logistical problems that they aren’t yet ready to tackle. There will be lots more shows and tastings. “Once people try it, the feedback is so positive.” As I walk towards the escalators to leave the health food show, I pass a booth promoting broccoli lotion. The labels look cluttered to me. Then I pull out a sample bottle of Three Farmers camelina oil to look at the label. It’s simple and classy. Reading the text, I see, “Taste: earthy, nutty, light on the palate.” I bet that description resonates with Pusateri’s shoppers. CG

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country-guide.ca 17

Business

Diversify or expand? Farms that build on what they do best are more likely to come out ahead By Maggie Van Camp, CG Associate Editor t was the winter farm meeting season of 2006 and I had just driven through a blizzard to find myself hearing the same words. “Think outside the box,” I was told yet again. “Look to new paradigms.” “Don’t keep expanding production of what you already know how to do,” speaker after speaker told us. “Diversify, diversify, diversify.” The take-home message was clear. We needed to create more net income, not increase production. On the way home, the snow had stopped but my head began to ache with discouragement. We were trying to be like farmers all across this country... hard-working, risk-taking, smart people who are the absolute experts at increasing our productivity and reducing our costs. Now we were being told that this wasn’t enough. How could that be? Fast-forward a mere six years. Pastures have been ripped up, hog barns depopulated and organic vegetable warehouses are now conventional distribution centres. Some value-added and secondary businesses have flourished, of course, but at the same time, those crazy, tough-headed negative-margin farmers who slowly bought lower-priced land instead of planting grapes or setting up a bed and breakfast look like geniuses. Today, farmer optimism abounds. In the 2011 Farm Credit Canada national vision panel survey, 58 per cent of farmers said they plan to expand or diversify their operations within the next five years, up about five per cent from three years ago. In total, 27 per cent said they’ll expand, 11 per cent said they’ll diversify and 20 per cent said both. Which is the smartest strategy, diversification or expansion or both? Diversification has traditionally been a risk management tool. If one enterprise didn’t do well, the farm had other enterprises on which to rely. Returns were generally not as high as with specialization, but year-to-year variability was less. On the downside, however, that risk-fighting benefit could be completely overwhelmed by the fact that you had foregone the opportunity to decrease your production costs on your main enterprises through enhanced economies of scale. 18 country-guide.ca

Although our farms are bigger and more specialized, Canadian farms are still amazingly diversified, especially in some sectors. More than half of FCC clients have a secondary enterprise; 77 per cent of their dairy customers, 65 per cent of grain and oilseed farmers and 50 per cent of beef farmers have secondary enterprises. Yet while there are some glowing successes in value-add ventures, the trend is actually toward less diversification. Five years ago the number of farms with secondary enterprises was about 10 per cent higher for grain, beef and hog farmers than it is today. Only FCC’s dairy customers have increased their business efforts outside their barns, likely because of the limited supply and cost of quota. “The trend toward increased specialization suggests that cost savings associated with specialization and size more than offset the benefits of diversification for many farmers,” says George Patrick, agricultural economist at Purdue University. This trend doesn’t surprise Bob Evans, who operated a crop input business in Saskatchewan for 20 years before becoming an independent consultant and agrologist with McCannell Financial Group in Saskatoon. “Over the years I noticed that the guys who focused on one element of the business and didn’t get distracted by secondary businesses were more successful,” says Evans. “Specializing — whether it be in dairy, beef or grain — is generally more successful than combining those enterprises.” When pushed he couldn’t think of any wildly successful diversified operations in his area still in operation. On the other hand, he could think of a couple handfuls of grain farmers who had lost or nearly lost their farms after starting up a livestock enterprise. “In general, if the goal is reduced risk then I think specialization is preferable to diversification,” says Evans. “Internal growth is way, way less risky. “With new businesses often you don’t even know what you don’t know, and that puts your risk levels on high alert,” Evans says. With the core business, farmers are often on the other end of the learning scale and are unknowingly skilled, meaning the required skills are second nature. Many factors affect risk, including sector history, February 15, 2012

Business

timing, size and pace of investments, business management acumen and individual skills. A Statistics Canada report called “Failure Rates for New Canadian Firms: New Perspectives on Entry and Exit in 2000” put the likelihood that a new farm business would survive beyond a particular age of agriculture at 74 per cent for the first year, 60 per cent for the second and 50 per cent for the third. Then it goes down by about six per cent per year.

Entry rates by industry sector (1984-94) Goods-Producing Industries

Rate of Entry (%)

Agriculture Fishing and trapping Logging and forestry Mining, quarrying and oil wells Manufacturing Construction Total (Goods)

13.6 17.0 21.0 14.2 11.8 16.5 14.8

Service-Providing Industries

Rate of Entry (%)

Transportation and storage Communications and other utilities Wholesale trade Retail trade Finance and insurance Real estate operations and insurance agents Business service Accommodation, food and beverage Other services Total (Services)

16.7 16.2 12.2 14.3 17.2 12.7 17.0 18.3 23.3 17.0

All Industries (Goods and Services)

16.3

“The success of expansions varies based on circumstances and on whether it’s an internal or diversified enterprise,” says Mike Hoffort, FCC’s senior vice-president of portfolio and credit risk. “There are situations when both or either option can work well.”

There’s always risk Credit agencies generally rate the risk levels of various sectors according to their historical performance. At FCC the supply management sectors are rated strongly for risk, followed by crops, then beef and then hogs, based on what’s happened in the last few decades. Farmers investing in non-farm enterprises generally take on another level of risk. The closer in nature the added enterprise is to your core the less risky it is. “The skills required to be a successful manager of non-farm enterprises tend to be a little different,” says Hoffort. However, when assessing a loan, FCC starts by looking at the applicants’ management ability, experience, business plan, financial strength of their operation, and their understanding of the market, says February 15, 2012

Hoffort. “This core understanding is something we look at as much as what enterprise they’re looking at to get involved in.” Of FCC’s $22-billion loans portfolio, 12 to 13 per cent is in value-added enterprises. “These are slightly higher risk than traditional agriculture,” says Hoffort. “If you expand into more commercial types of businesses in addition to the farm, that extends the risk pendulum.” FCC’s value-added portfolio mostly covers joint efforts between farmers in new-generation co-operatives or new companies with hired staff.

The management factor “For all expansions you need a strong business plan and you need to ensure that it doesn’t bring down the core business,” says Hoffort. Risk-bearing ability is directly related to the solvency and liquidity of one’s financial position and cash flow. The best sources of historical production and marketing information are the farm records. The records may be supplemented and complemented by off-farm information, forecasts, and predictions. However, the farm records reflect the production and business management capabilities of the specific assets. “There is no substitute for farm record data,” says Purdue’s George Patrick. At the top farmer seminars held at Purdue, Patrick says the average education level is at post-graduate/entry-level masters. These farmers want answers for specific questions and they want to go directly to universities for insight and advice, sidestepping extension services. Does that mean part of agriculture’s difficulty with diversification is tied to the level of advice we’re getting on diversification strategies. It’s certainly next to impossible to find historical success rates of farm diversification or benchmarks comparing diversified farms to sole enterprise operations. “Management, that is the key,” agrees John Anderson, financial consultant with Collins Barrow WCM. “We can discuss time and skills, but if management has assessed their strengths and weaknesses, time and skills will have been assessed.” The farm enterprise failures Anderson has seen usually happen when management is stretched to a level of incompetence. That can happen either in a straight expansion or setting up a secondary enterprise. By contrast, the common characteristic of successful expansions — whether they’re diversified or internal — is that the farmers are excellent managers in every sense of the word. For example, a dairy farmer who is unable to buy much more quota may decide to start buying more land and equipment, adding a cash crop Continued on page 20 country-guide.ca 19

Business

Continued from page 19 enterprise. However, the contribution margin may not meet the debt service commitment for the land and equipment investment. It ends up bleeding his base enterprise, the dairy. “It was a reaction to a situation with minimal assessment of the risk and returns,” says Anderson. “So many times the expansion puts the core profit centre at risk.”

Know your limits Farm diversification can also stretch the human resources. For example, if a farm adds an outlet store that overwhelms the family’s time, human resources and management capability, the entire farm can be put at risk. “They’re not on the farm when they are needed and they’re not in the store when they are needed, so both enterprises suffer,” says Anderson. Success happens more often when the expansion is thoroughly planned. Anderson is currently working with a large-crop farmer who is considering adding trucking, elevator, drying and marketing enterprises to his business when his son comes home from university. “They’ve done an assessment of their present business. They’ve completed a business plan. They’ve created a timetable for events to occur,” says Anderson.

“ The guys who focused on one element of the business and didn’t get distracted were more successful.” — Bob Evans, MFG Ltd. This family recognized they didn’t have strong skills required for this new venture. So the son is going to work for another agricultural supply business for a couple of years after graduation. Often diversification projects are structured based on skills, especially in multi-generational farms, says the FCC’s Hoffort. The next generation will come back to the farm with a whole different skill set, ideas and interests, and these take the farm in a new direction. However, diversification still requires the ability to multi-task, and that usually shows up in the history of the farm. “Does the management have a high capacity to manage multiple projects well?” asks Hoffort. “Diversification sometimes equals distraction,” says Mark Lepp, owner of FarmLink Marketing Solutions in Winnipeg. Most of FarmLink’s customers are young and focused on internal expansion in the grain and oilseed business. Lepp says it’s more dangerous for a farmer in the throes of succession to invest outside the core than 20 country-guide.ca

for an established farmer with little debt and high asset wealth to put some money in a joint venture. “There’s government funding for farms to do market studies to diversify,” Lepps says. “Why isn’t it available for looking for ways to improve the core farm?”

Upsizing To expand, farms need the resources and net revenue stream to meet the additional debt servicing. Moreover, prior to making the expansions, farmers should consider the lifestyle commitments and additional labour needs. Managing the pace and scale of investments is key to the success, says John Anderson. Management must size the operation appropriately to the core farm size so they don’t put the core business at risk. “The classic in my region of the country is the dairy farm that builds a big new facility but then finds themselves without the quota so the business is being operated at less than capacity and they cannot service the debt or lifestyle needs,” says Anderson. “Expansion does not always increase margins.” A better option would be for the dairy farm to rotate cows through the present facility as they expanded their quota holdings and then build the facility or add robotic milkers. However, often the conundrum comes with the lumpiness of today’s production. With new technology the size required for efficient use of machinery or buildings is much larger. Bob Evans says that outside those sweet spots — which he estimates at 3,500 acres for a combine, 2,000 acres for an air drill — it can be a struggle to compete. It also makes it more difficult to execute a strategy calling for slow but steady expansion, Evans says. This may have its greatest impact on young farmers. Traditionally, new farmers would buy a section or two or add to the herd or flock a bit at a time to expand the core operation slowly. However, that startup model is changing. Hoffort is seeing more part-timers add an enterprise that complements the core business and allows for a smoother transition. For example, the grain farmer’s daughter may buy a quarter section while the parents buy a high-clearance sprayer to do custom work. After five years, the family no longer needs the custom income, so they downsize the sprayer for just their own farm use. The quarter section is paid down and the new farmer has some land equity and experience built up. It takes a little more creativity and planning than trying a new crop or adding some cows. The bottom line is managing expansion. Also, diversification is less risky if the secondary enterprise is fairly close in nature and matches the skill set and time resources of the people involved. Expansion needs to be relative in size to the core business and the investment timed according to market demands and cash flow. CG February 15, 2012

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11/01/12 4:56 PM

business

See the

future Wayne Wikkerink didn’t get into the dairy business. Thanks to Growing Forward, he did something even better

hat phrase “If you build it, they will come” may have worked for Kevin Costner, who played a farmer in the movie “Field of Dreams” but it’s a high-risk strategy for farmers in real life. Instead of heading off into the unknown, any farmer looking to try something different on the farm wants first to take a hard-nosed look at whether the idea is feasible or not. A “will it fly?” analysis before plunging headlong into a new undertaking can keep a good idea from crashing to earth. The catch is, how do you get that kind of insight? For Lethbridge-area farmer Wayne Wikkerink, one of the answers was through Alberta’s Business Opportunity Program. Launched in March 2010 under the federal-provincial Growing Forward agricultural policy framework, the program targets producers looking to take farming operations in new and different directions. The program matches applicants with outside expertise to analyze new-venture ideas to see if they will work. “The idea is to help producers make a business decision — a go or no-go decision — and then work on implementing it,” says Jodi Murphy, a provincial Growing Forward business opportunity grant specialist. “The program provides assistance for them to be able to do the investigation and planning work on how to implement.” The business opportunity program is open to both beginning farmers and producers already in the business. That includes producer groups. “We deal with agricultural entrepreneurs looking at value-added businesses from an early stage,” says Elaine Stenbraaten, a new-venture business coach with Alberta Agriculture and Rural Development. “We’re the first point of contact. We work with clients on helping them get their business ideas fleshed out and developed.” The process isn’t always easy or painless. Stenbraaten describes it as a kind of tough-love exercise in which 22 country-guide.ca

producers may have to bury their dreams. Crunching numbers and analyzing data in the cold light of day can reveal that some dreams simply won’t make money. That was the case with the Wikkerink operation, where Wayne and Anne own Pura Vida Farm and recently participated in the program. The Wikkerinks had hoped to diversify into dairy cattle and possibly broiler chickens. But after consulting with the professionals and doing the paperwork, they realized their plans for supply management weren’t going to materialize. But sometimes when one door closes, another opens. The consultants pointed out to the Wikkerinks that they had a ready-made marketing opportunity with the grass-fed beef and pastured poultry they were already raising. The family had been selling to local farmers’ markets and the experience had given them a good idea of the kind of natural, free-range products consumers were willing to buy. An idea emerged: why not sell their beef and poultry as specialty products to high-end niche markets? And so, with the help of the consultants, a marketing strategy was born. February 15, 2012

Photo credit: Chris Yauck Photography

By Ron Friesen

business

Today, the Wikkerinks market to whitetablecloth restaurants and hotels in Calgary, Banff and Lake Louise. They also host chefs’ tours of their farm. Wayne Wikkerink says the consultants stressed the importance of building relationships with customers and showing them how animals are raised, how they are handled and how the meat is processed. The more you can demonstrate to clients what you do on your farm, the more likely they are to appreciate your product, he says. As self-marketers, the Wikkerinks feel better off financially because they give more attention to financial margins and have a stronger awareness of what the market is willing to pay. In short, they’re more market savvy. And it happened because of professional advice from a government program which steered the Wikkerinks’ diversification plans away from one idea and toward another one. February 15, 2012

Farmers sometimes grumble about the amount of paperwork involved in filling out forms to qualify for programs. But in this case, it was more than worthwhile, the Wikkerinks say. “Analyzing the programs that are out there and how they fit into what you’re trying to do is time very well spent. It has great returns,” says Wayne. “The hour or two you spend filling out applications to assess these kinds of programs is time better spent than just driving a tractor around.” Other provinces also offer business opportunity programs for farmers through Growing Forward, and farm business advisers say it’s an essential early step to check out the details of what’s available in your province. Many provincial variations are broader in scope than Alberta’s program, which concentrates on adapting existing farm businesses to meet changing markets and consumer

demands, rather than creating new and separate enterprises. A cattle producer who wants to expand his cow herd wouldn’t qualify. But if he wants to raise sheep as well as beef cattle, that might be another matter. Murphy says the Alberta program so far deals mostly with producers seeking to diversify their crops and livestock. That could mean growing new crops, selling into niche markets or direct marketing specialty products to retailers. In one instance, a couple who wanted to raise goats inquired about the kind of land and capital investment they would require. Another example involved a group of producers who applied to form a marketing company to sell grain and specialty seed. Stenbraaten says she gets queries as varied as agriculture itself. Some people inquire about growing biofuels for alternative energy. Others express interest in producing jams, jellies and salsas commercially. Or somebody may consider building a small on-farm meat-processing plant. Producers applying to the business opportunity program start by phoning 301-FARM (3276) to speak with a newventure business coach. The coach works with the interested party to determine goals and to apply to the program. If an internal review committee recommends the application for approval, the producer then works with a third-party consultant or business adviser. A work plan is completed and submitted. Once that is done, the applicant submits an invoice for reimbursement. Funding from the program covers 75 per cent of eligible third-party costs up to a maximum of $30,000 per applicant. It’s important to note that not all plans work out. For example, one client had a plan to sell sweet corn from a roadside stand. Murphy says it was a good idea but an analysis showed the proposed site lacked the necessary traffic to make the stand viable. So it didn’t go ahead — but at least the applicant found out in advance before investing in a business that was likely to fail. Stenbraaten says that producers will actually get honest, professional evaluations about which enterprises to pursue and which to avoid. That’s very valuable to a fledgling entrepreneur, says Wayne Wikkerink. “Even if you get bad news, you’re better getting it up front.” CG country-guide.ca 23

A long way to go Mobile technology is paying big time for Gary Sanocki. The challenge is, he wants it to pay even more By Angela Lovell

24 country-guide.ca

ere’s a question that your iPhone can’t answer. With all the phones and tablets out there, how much value can you expect mobile technology to add to your farm, and how much cost can you expect the learning curve, the program limitations, and the lack of connectivity to your PC to add to your farm? Will mobile technology suck up time that you should be spending on “real” farm work, or is the technology already a money-maker everywhere it’s used on the farm? As everyone knows, it’s all too easy to spend a huge amount of time at the computer, learning all sorts of wonderful things that you really don’t need to know… and that are never going to make you a dollar. In the same way with mobile technology, it’s all too easy to get hooked on watching commodity markets so you follow every tiny gyration all through the day, even though you know you don’t intend to sell any crop until next month. February 15, 2012

Photo credit: Fiona Love

management

management “The question producers will ask of any new technology is, is it going to make me money or save me time?” says Andrew Campbell, an Ontario dairy farmer and founder of Fresh Air Media. “It has to fall under those two categories or it’s just not going to be adopted. Once producers are convinced that something is a valuable tool for them, they are going to use it.” The challenge with e-technology is that both sides of the equation — value and time saving — are largely dependent on the individual producer. It isn’t like a new herbicide or a new GPS unit, where there’s basically one way to use it. Getting selective about the information you need — and when you need it — is a learned skill, Campbell says, and one of the keys to developing that skill is to take advantage of the technology’s flexibility. “I don’t have time to sit in on every webinar that comes up, so it comes down to which ones are the most important for me right now,” Campbell explains. “But the good thing about technology such as webinars is that you often choose when you want to watch them. If a webinar scheduled for noon eastern isn’t going to work for me that day, I can sit down and watch that video at 9 p.m. on my tablet, in an easy chair watching a hockey game at the same time.” Mobile electronics are gaining ground in farm country. In a recent survey by Farm Credit Canada, 29 per cent of farmers said they own a smartphone, about the same as for Canadians overall. Roughly six per cent of farmers use tablets, again about the same as for other Canadians. Farmers are also beginning to realize they can do a lot more with the computer in their pocket than just texting and email. “There really is no end to the possibilities with mobile devices like smartphones,” says Campbell. “Why bother going to the office when you can do it right from where you are?”

In the real world Gary Sanocki has owned a smartphone for about four years and is convinced the technology has added extra capabilities and flexibility to his 1,800-acre farm near Eaglesham, Alta. Sanocki uses his iPhone (and an iPad) to connect via the web and social media platforms like Twitter with other farmers, his agrologist and more. “I see tweets regarding weather conditions, bug problems, spraying recommendations,” Sanocki says. “I can see what other guys in my area are seeing February 15, 2012

in-crop. It’s like taking a crop tour with many people who have lots of expertise.” Sanocki also gets information and ideas about equipment, seed varieties and different chemical products. “It’s been an irreplaceable source for contact with individuals who actually know things about the topics I’m interested in,” Sanocki says. Sanocki’s wife, Fiona downloads lectures and podcasts to her iPod and iPad and listens to them when she’s on the tractor or combine or when she’s on a long drive, making better use of one of the scarcest commodities on the farm: time. Few industries lend themselves as well to mobile technology as agriculture, where business isn’t conducted behind a desk, but rather from the barn, the combine or the grain truck en route to the elevator. As a result, we’re seeing some agriculturally themed application software (apps) coming to the marketplace, although in general these are still sponsored by farm organizations or agribusinesses that provide them to the producer to add value in some way to the service or products they are offering. An example is John Deere, a company that is ahead of the trend with its recently unveiled FarmSight technology, a suite of applications that can be used to optimize everything from equipment operation to decision-making through the use of mobile technology, and which also connects farm operators and managers to off-farm support services including agronomists and dealers. The next step is to make this technology more useful for managing and adding value to individual farm businesses, says Peter Gredig of AgNition, a company that specializes in developing apps for mobile and web technology for agriculture. “The primary benefit of mobile technology for agriculture is that your office can now be on your hip, along with the management tools that until now you have had to allocate time for first thing in the morning or at night,” says Gredig. “They will soon be with you wherever you go.” Providing independent apps geared for producers to use for specific purposes should increase the appeal of mobile devices to farmers. “We think there is room for decision-making, management apps that have high value for the end-user, the farmer,” says Gredig. Producers are already tapping the potential by, for instance, emailing their agronomist a picture of a weed or disease right from the field and getting immediate

control recommendation. They’ve also begun working with equipment dealers, snapping a picture of a broken part to find out if it’s in stock. These are getting better. AgNition has just released an app called ScoutDoc for iPad, which can be found at www.scoutdoc. com. It’s a simple scouting app for agronomists and producers, which allows them to go into the field and draw a map on the iPad screen or import a field map. They can write on the screen within defined fields to indicate disease, weed and insect pressure and make general notes about what they are seeing as they scout the field. Once completed, the report can be emailed back and forth between the agronomist and the farmer and forms a permanent, electronic record of field-specific information.

Getting better Other tasks are evolving too. Soon it will be easier to take a video when you’re on a field tour and then share it with an employee when you get back to the farm. Or to confirm a bid for your crop as you harvest it. All of these things, and more, are starting to happen, but as the saying goes, we ain’t seen nothing yet. Sanocki is ahead of the curve. He routinely uses his iPhone camera to send off pictures of crop issues or broken equipment parts to his agrologist or dealer to get advice or replacements faster. He takes pictures of serial numbers on equipment to be filed for future reference. Sanocki says his iPhone allows him to conduct business anywhere, at any time and he now makes more grain sales and input purchases by text than he does by phoning. He especially likes the versatility of his iPad. “The iPad gets used a lot and the PC is used less since we got it,” he says. “The iPad is the main grab when we want to check emails pretty much anywhere and is nicer to use than the iPhone because of screen size.” Not every farmer is going to rush out and embrace all that technology has to offer — at least not until their neighbours do. The FCC study reported that onethird of Canadian producers say they will try new technology once they hear positive feedback from their peers. “With any technology there are always a few early adopters and I think we certainly see that today with mobile devices,” says Campbell. “As more come on board they begin to take interest in what some of their Continued on page 26 country-guide.ca 25

management Continued from page 25 neighbours use their mobile devices for and they discover how they are finding value in them, that gradually convinces more to jump on board.” Campbell and others in the mobile industry think the greatest unexplored potential of smartphones and mobile devices is in the area of farm data management. “Data management is so critical to farms today. And I think producers have a hard time keeping track. I may have certain regulations here and my financials there and my crop plan somewhere else. Why is that not all together in one place on my phone where I can access it and update it in real time?” asks Campbell. “I really think that the industry needs to catch up in terms of data management.”

The barriers So why is agriculture lagging behind? A big reason is cost, says Gredig. Mobile programming is expensive, partly because there are so many devices and platforms like BlackBerry, iPhone, and Android, each requiring a different version

Sanocki updates his inventory as he loads his truck, saying he needs even more farm apps

26 country-guide.ca

of the app. Another factor is that the business model used to market consumer apps doesn’t fit all that well for agriculture. “The web model has been that tools are put up and they are free for people to use,” says Gredig. “With sponsored apps the cost is covered by someone else.” That micro-pay model — where you charge $1.99 for an app and 300,000 people buy it — doesn’t work in agriculture either, says Gredig. “Smartphone use is fast becoming mainstream in agriculture, but the numbers are still low relative to the general population. We can program apps to do almost anything, but once we get beyond sponsored or product support apps, producers will be asked to pay for the high-value apps they are looking for.” How much they are willing to pay remains a big question and, once again, it comes down to value and functionality. GPS software packages for PCs can cost in the range of $500 or more, which is a lot more expensive than the average office-style app that costs as little as $20. Sanocki feels something in the range of $100 might be the upper limit for something like a good GPS app, but it would

need to do what he wants it to do and, importantly for him, he would want to be able to try it out first. “One issue I have with a lot of apps is very few let you try before you buy,” Sanocki says. “I’m sure I’m missing out on good apps because I download the cheap or free one first and just put up with it because I’ve tried paid ones, opened them a couple times, hated them and never used them again.”

The work-arounds Sanocki wants to be able to do a better job synchronizing his smartphone and desktop so he will be able to access most of his records, contracts, contacts and so on anywhere, even if he’s out of a service area. He also wants all his devices to automatically update when he returns to a service area. Currently Sanocki uses an app called Dropbox to do this, which allows him to store and share files across his mobile devices. It’s a good example of what’s already available on the market, although it’s not specifically aimed at the agricultural industry. Now, Sanocki would like to see apps that could allow his sprayer, seeder and harvesting equipment to communicate with his smartphone and download records straight into a field records program that would transfer automatically to his computer and save him a lot of time and effort. “My records are only as good right now as the inputting,” Sanocki says. “That’s where I sometimes fall short, especially during peak times,” he says. Sanocki would also like to have a better GPS app for his iPhone so he could transfer maps and manipulate them to add layers such as seed plot and soil sampling data, and then be able to find those spots without having to go drag out the laptop or use the same monitor that built the maps in the first place. The upshot is, there is still plenty of scope for developers to come up with apps that will add a lot of value to the farm business. Buried underneath, however, is a value that is proving more and more important for many farmers, even if it is hard to translate into dollars. That’s the social potential of the technology in an industry where isolation can be a real challenge. “The social thing is important,” says Sanocki. “Like my sending what stupid thing I did today to my friends, and them sending their goofs to me too. It’s like a stress relief tool some days.” CG February 15, 2012

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business

Corporate citizenship

for farmers

Corporations think strategically about how to invest their donations budgets for both altruistic and business goals. Then they review the effectiveness of those dollars. Maybe farmers should too By Maggie Van Camp, CG Associate Editor

n sunny day last October nearly 3,000 spectators watched as farmers near Monkton, Ont. set a world record time for harvesting 160 acres of standing soybeans. They did it in under 11 minutes, thanks to 115 combines. In total, those combines harvested about 8,000 bushels, which were then auctioned off to raise $250,000 for the Canadian Foodgrains Bank. The list of contributors to this event called Harvest for Humanity, were mostly agricultural, ranging from individual local farmers to huge multinational corporations. On that list was BASF’s crop protection division, a global business that posted sales of over $8 billion in 2010. This company didn’t get on the list arbitrarily. Like other big corporations, BASF uses a predetermined process to consciously and critically choose sponsorship. In this case, the Monkton project tied in with one of BASF’s five pillars of operation, sustainability. As I scan down the list of other sponsors, I recognize some of the names of the farm families and wonder how they chose to sponsor this event. Was it based on emotions — guilt or a genuine desire to help — or maybe it was a quick last-minute gut decision, or perhaps they had just got into a better position to see their year-end and they knew they’d have the cash available. If your local hockey league asks you to sponsor a team, you’re likely going to do it without any thought of the payback. However, with fewer and fewer farmers and an insatiable number of organizations needing time and money, the decision of how much to give to whom is getting tougher. Maybe it’s time to learn from larger companies how to think more strategically about corporate citizenship instead of the fire-a-shotgun28 country-guide.ca

at-the-squeaky-wheel-until-there’s-no-ammo-left approach. Mike Schaad, eastern Canadian business manager for BASF, is part of the group that decides which projects his company sponsors. Their budget is set a year ahead, somewhat based on budgeted sales, with a rough split geographically of about three-quarters in Western and one-quarter in Eastern Canada. The BASF territory managers are asked to submit ideas from their respective areas to be selected centrally. “The territory managers have better touch points; they know the organizations and they know the people involved,” says Schaad. Filtering a year ahead at the local level weeds out projects that maybe wouldn’t be as well planned or as significant to their customers. After all, the main idea is to put BASF in a positive light with the company’s grower customers. “If it’s important to our end-users, it’s important to us,” says Schaad. “I have never met a farmer who isn’t socially responsible and cares for the environment. It’s part of their core beliefs.” Schaad has been with BASF for 26 years and has noticed corporate citizenship in the industry becoming more important. “Generally the social conscientiousness of the world is greater and we’re part of that world.” In fact, he says the agricultural part of BASF has been a leader in the company in executing and making sustainability real. In Canada, that goal is reached by sponsoring grassroots events with long-range impacts, like the Canadian Foodgrains Bank project. Through informal discussion, a committee of four decides which projects nominated by their sales staff meet the corporate criteria of sustainability. Having more than one person involved in the decision takes the subjectivity out of it, says February 15, 2012

business

Schaad, and everyone’s idea of social responsibility is different. “We try to strike a balance between ecological, social and economic needs.” Although BASF doesn’t require recognition or an advertising campaign, he says it’s nice to be recognized for the time and effort.

Nice to be seen According to a recent survey by charity research group and watchdog, Imagine Canada, most companies give to improve their reputation. However, about three-quarters of businesses would give to charities even if they didn’t get any business benefits in return. At BASF, public relations is becoming a larger part of their promotional budget. “With all the forms of communication, we’re bombarded with so much information so we’re always looking for ways to break through the clutter with positive messages,” says Schaad. Businesses are a growing source of support to the charitable and non-profit sector and large ag businesses are stepping up. Cargill contributes more than $57.5 million a year to charities and community causes globally, about two per cent of its pre-tax earnings. About $2 million of this is spent in Canada. In 2010, Viterra donated about $1.5 million to a number of different community initiatives. About 30 years ago, seed company Pioneer HiBred started a fund to invest in organizations and projects to help improve the quality of lives in communities across Canada where their customers, sales representatives and employees both live and work. As Pioneer has grown, the amount of money dedicated from the initial launch of the Community Investment Program has more than tripled, says Tara Moir, the company’s communications manager. Pioneer also provides funding for community projects above and beyond the Community Investment Program, and these dollars have also increased over time. So business philanthropy lives, but most often it’s not nearly so planned and analysed. Of the 1,500 businesses surveyed by Imagine Canada, only 22 per cent have a regular ongoing program for contributions, only 13 per cent measure the benefits, and only eight per cent have a written policy. Pioneer is one ag company that does have a written policy for their Community Investment Program. Instead of locally recommended projects, like BASF, Pioneer accepts only written applications which are sorted through and selected by a committee based on written guidelines. Made up of employee representatives, this committee reviews and decides on proposals on a quarterly basis. It looks favourably on charitable organizations and projects that involve its customers, seed growers, employees and sales agents. February 15, 2012

The policy states that this fund does not support individuals, organizations lacking charitable status, religious or political organizations promoting a particular doctrine, elected officials, sports organizations and events, marketing or advertising programs or organizations where there is a conflict of interest with Pioneer values. Instead, the policy says, the focus of the proposal should be on agriculture and conservation, education and leadership development, rural health and welfare, and heritage preservation or the arts in rural communities. Pioneer does have some other initiatives beyond this fund. For example, youth hockey teams across Western Canada can enter a contest to possibly win a set of game-quality jerseys.

“ We’re always looking for ways to break through the clutter with positive messages.” — Mike Schaad Increase the impact Beyond trying to do some good, this is about creating a positive image that customers and employees remember. The BASF committee tries to select organizations and events with more people involved, including their own staff. At least, the local sales representatives will often attend events. Companies have also been known to hire a photographer or use advertising companies to get more mileage out of sponsorship. Company logos and names are sometimes placed on signs, items and press releases. That kind of spending may be out of reach for most farms, but a call to local newspaper reporters or posting photographs on websites can go a surprising distance to creating image. There are also internal benefits. BASF staff share stories of granted projects through an internal newsletter. It makes the staff feel good that they work for a company that sponsors programs that support sustainability, says Schaad. Schaad has also noticed in the last three years that more people he interviews for full and summer staff jobs want to know about the company’s social responsibility. Employees want to work for a company with a good reputation, but upper management has to create the will and the structure for delivery. Corporate citizenship then becomes part of a cutting-edge organization’s culture, Schaad says. “It’s higher up in their decision-making.” CG country-guide.ca 29

business

A clear picture In minutes, Yvonne Thyssen-Post’s method can help you track your farm’s business success By Kim Waalderbos he mere mention of farm financial analysis can raise more sweaty palms and heart palpitations from farmers than eager enthusiasm. And it’s no surprise. Many farmers would opt to do anything but delve into financial statements, even though they’re key to running the farm business. “As farmers, you do what you do because you love it,” says Yvonne Thyssen-Post, “and you try to do the best job you can at it as a business.” Thyssen-Post, a farm business consultant with Thyagrissen Consulting Ltd. in Truro, N.S., sees it as her job to help farmers understand the numbers behind their businesses, and how these numbers can be used to make confident decisions. Thyssen-Post takes a very straightforward approach to financial analysis — an approach that she suggests farmers can easily take themselves. It’s a system that Thyssen-Post says will work for most farmers who use accrual-based rather than cash-based accounting methods, since with accrual accounting revenues are matched with expenses as they are incurred. By contrast, cash accounting methods won’t include the things that you haven’t paid for yet, which will skew your numbers. To start, simply pull together the numbers that show your revenues and expenses for a particular time period, as well as the number of units that you’ve sold in that same time frame. Whether those units are bushels of grain, numbers of bales, head of livestock, hectolitres of milk or tonnes of produce, just use whatever unit you always use to measure the main products that leave your farm. The best place to find an accurate measure of your revenues and expenses is your farm Income Statement. Once you have the three parts together for your time period — revenues, expenses, units sold — it’s a matter of one-step math. Thyssen-Post starts with revenues first. Take each category listed as revenue and divide that revenue number by the number of units sold. The answer will be in dollars per unit sold. Then, do the same for each category listed as expenses, and divide by the number of units sold. When this is completed, you now have a benchmark for you particular farm. Thyssen-Post says you can use these numbers to compare against calculations from previous or future time periods. 30 country-guide.ca

“ The numbers you calculate will show you how efficient you really are with your decisions.” Find the trends For example, take the income from a sample year and divide it by the number of your units you produced to see how much net income you generated per unit. Then, do the same calculations with last year’s results and compare the numbers from the two years. Do the numbers show that you’re getting more efficient as a business whose goal is to generate net income? “When you compare year to year or month to month, for example, you can start to look for trends,” says Thyssen-Post. “Where are you improving efficiencies? Where can you make improvements? What are your decisions actually costing you?” Once her clients catch on to this approach to financial analysis, they are usually curious to see February 15, 2012

business if and how the numbers will change as their farm grows, such as with land or quota purchases, or with investments in new technologies. Thyssen-Post says these changes are automatically captured. “As long as you’re always looking at all the revenues and expenses related to a specific amount of units sold, then your analysis will always compute and compare,” she says. “That’s because all the numbers are still broken down by the units that were sold in that particular period.” For example, if you’re comparing the past year to a current year in which you purchased more acreage, all your expenses for the current year would still be divided by the number of bushels sold — including the additional yield that may have come from that new acreage. “It really starts to compare apples to apples,” Thyssen-Post says. “Regardless of any changes you make on your farm and whether you’ve made big purchases or not, the numbers you calculate will still show you how efficient you really are with your decisions.” For farmers who have more frequent income streams such as dairy and poultry farmers, ThyssenPost suggests doing this analysis monthly or quarterly. For farmers who earn revenues less frequently in the year such as cattle, sheep, crop and produce farmers, an annual analysis will likely work best. Still, farmers who track more frequently will be able to pick up on changes more quickly.

For an added perspective Comparing your own farm numbers against those from previous time periods is one great way to see trends. For added perspective, Thyssen-Post recommends finding ways to compare how your farm is doing in the context of others — though it can be challenging to find sound benchmarks. While there are benchmarks shared through sources such as Statistics Canada, she encourages farmers to check the details about the benchmark information they find. Ask when was it collected, is it up to date, how was it collected, what is included in each category, and what types of farmers contributed the information? In some parts of the country, farmers are gathering to open their books, share financial numbers and learn from each other. The challenge to building a great benchmarking group is to find ways to ensure all the farmers in the group are categorizing information the same way. “What’s in vet bills? What’s in supplies? What’s in machinery and repairs?” asks Thyssen-Post. “Make sure all the farmers in the group are recording their expenses the same way so you get a true picture when comparing.” For farmers who don’t have external benchmarks to compare their farm against, but still want to find efficiencies, Thyssen-Post suggests starting with the high-cost items (per unit sold). For instance, this may mean concentrating on machinery, labour or feed costs. By focusing on these areas first, even the February 15, 2012

smallest change to find savings on a high-cost item will give you more bang for your buck. As another check, Thyssen-Post says it can be helpful to look at how the amount of interest paid per unit sold compares with your other high-cost items. For businesses that are just starting out, or that have made significant recent investments in capital, the amount of interest paid on loans is likely to be close to the other high-cost items in your analysis. However, for farms that have been in business more years, having interest paid ranking high among the items in your financial analysis is a red flag and should be thoroughly investigated.

Evaluating future decisions A structured look at how much you are actually paying for inputs on your farm can also help with decision-making. By using the numbers from this financial analysis, you can evaluate the effects of potential decisions to increase types of revenue streams, decrease particular expenses or spend any money that’s left over. Thyssen-Post cautions farmers against a common misconception that she encounters with clients. “Remember that net income does not equal the amount of money you have in your pocket to play with,” she says. For a true picture of the money left over she suggests taking the amount shown as net income from the bottom of the income statement. To this, add back the amount that was subtracted for depreciation. Then, subtract three other expenses that still need to be deducted — the amount paid for that period as principle on loans, the amount paid out for living expenses for your family, and finally the amount to be paid as farm income taxes. What’s left equals the amount that’s available for spending or reinvesting. If the income left at this stage is negative — the farm has expenses beyond what its revenue stream can support, which means it’s time to dig into the numbers and find areas for improvement. While you’re evaluating revenues and costs, Thyssen-Posts says, keep your overall goals in mind. In particular, regularly calculating your net worth position helps keep tabs on your farm’s financial health. The numbers on your balance sheet are valued at cost, not market value, and they are compared against what you have to physically show for your investments. Because of this, a positive net worth is an indication that the business has grown in profitability over time and is worth more than what you invested into it. However, a negative net worth is an indication that the business has lost money over time. A negative position can be a real challenge, especially for farms planning to transition. Even so, says Thyssen-Post, effective management always starts with effective analysis, which means a clear picture of where your farm stands financially. CG country-guide.ca 31

machinery

Dry in the tank

Western Canada has suffered intermittent diesel fuel shortages in each of the last three years. Here’s why one of the country’s primary oil-producing and exporting regions is suffering from its own petroleum supply problem By Scott Garvey, CG Machinery Editor ou’d have to look back as far as the Second World War to find the last time there was serious fuel rationing in Western Canada. Even the energy crisis of the 1970s came and went without much if any disruption to the region’s retail fuel supply. But during the latter part of 2011, diesel fuel consumers west of Ontario faced a limit on their daily purchases, imposed this time by the petroleum industry rather than a government order. A shortage of supply from western refineries caused the problem. In fact, 2011 was the third consecutive year marked by intermittent diesel shortages. The shortage this past year, though, was longer lasting, beginning in September and dragging on into December. The primary reason behind it all is the economic boom the region is experiencing. While the rest of the country and most of the world are languishing in the doldrums of the economic downturn, things are hot on the Prairies and have been for a while. That economic success, as it turns out, is putting a squeeze on the diesel supply. “Diesel demand is very dependent on the economy,” says Michael Ervin, vice-president for Kent Marketing Services, a petroleum industry consulting firm. “Western Canada is benefiting from a very strong energy-driven economy. So that’s keeping demand for diesel very high. 32 country-guide.ca

That demand coupled with production and supply issues has led to some shortages of diesel and somewhat higher prices relative to other regions in Canada.” “Over the last couple or three years there have been unplanned events that have caused some disruptions,” adds John Skowronski, director of environmental affairs at the Canadian Petroleum Products Institute, the organization that represents most refiners. “They weren’t necessarily refinery related. Some were, but some were trucking or weather related, those kinds of things.” This year a fire at the Federated Cooperatives refinery in Regina reduced its output by 20 per cent for an extended period until repairs could be completed. At the same time, a supplier to the Suncor facility in Edmonton couldn’t deliver the amount of hydrogen needed to maintain production levels there. “That led to what I might refer to as a perfect storm of supply difficulties,” says Ervin. That shortfall in supply led to rationing for consumers at the retail level, and no one felt the effects of that more than the trucking industry. “It just seems that the perfect storm is happening every year,” says Al Rosseker, executive vice-president of the Saskatchewan Trucking Association. “It (the shortage) is major for us. It impacts scheduling and it impacts prices.” February 15, 2012

machinery The extra costs that trucking companies racked up coping with the latest shortage have had a significant impact on an industry already operating on tight margins. For farmers, however, there was adequate supply to see them through to the end of the harvest season. And because most machinery was being put away for the winter by the time limits on daily retail sales volumes had became widespread, the shortage didn’t have much of an effect. “Truth be told, we haven’t seen any impact on our farm at all,” says Gerrid Gust, a farmer near Davidson, Sask., and chair of the Western Canadian Wheat Growers. “Other than sometimes the truckers we have custom-haul have to be pretty creative to get enough fuel to keep running.” Most western farmers seem to have shrugged off the recent restrictions on pump purchases. “I haven’t heard any of the farm groups talking about it.” adds Gust. “We’re just about to come up to our annual convention and fuel shortages weren’t on anyone’s radar I know of.” But Canadian trucking associations remain concerned about the possibility of more trouble ahead. “I’m hopeful but not overly optimistic,” says Rosseker. To really understand why diesel shortages have been popping up repeatedly over the last few years, the experts say we need to understand the market forces driving petroleum refiners in Western Canada. The same factors behind the growth in farm size, which allow producers to take advantage of the economies of scale, are at work in the refining sector too. Just as fewer farmers now grow more grain overall, a relative handfull of refineries now supply more fuel to the marketplace than ever before. “In the ’50s in Canada, there were something in the league of 50 refineries,” explains Skowronski. “Today we’re down to about 17 or 18, and the amount of product those refineries are producing is more than those 50 did before.” “There is sufficient capacity there to produce what the needs are,” Skowronski continues. But with only seven refineries serving the four western provinces, a slowdown in production at one location has a greater impact now than it used to when there were more facilites, each producing smaller volumes. Those western refineries are also routinely working nearly flat out to meet regional demands, so there isn’t much room to ramp up production at one facility to compensate for a shortfall at another. “Unlike those in the rest of North America, they are pretty much producing at maximum capacity,” says Ervin. From a business perspective, refineries operating at a high level of utilization are maximizing profits. “Like any manufacturer you want to run at high levels of capacity,” says Skowronski. “That optimizes your operation. The challenge is that you do end up with times when things go awry.” The irony is that despite the critical need for ample supplies of fuel in all western countries, the overall demand, particularly for gasoline, is declining due February 15, 2012

to a variety of influences. There is also intense price pressure on the industry from new “super refineries” in China. So, no company is willing to build a new facility in the West, even though regional market demand is strong. “We’re not likely to see demand increase to support investment in new refineries,” says Skowronski. However, there has been significant investment made to increase capacity at existing locations. CPPI statistics say the industry has already spent about $8 billion in upgrades during the last decade. According to a Conference Board of Canada report, the startup cost of a new refinery is north of $7 billion. That’s a lot of money to invest in an industry with a declining market demand. But Ervin believes diesel-refining capacity in the West could grow, eventually. “Certainly the impetus to increase diesel production is there,” he says. “I think that’s a need across North America. The balance is shifting. Diesel is becoming more prevalent (than gasoline). Having said that, it’s not something that happens overnight.” While most refineries are typically able to produce both gasoline and diesel, a wholesale switch to diesel production at any location would require added investment and some rejigging of a plant’s infrastructure. So far, it seems governments have been keeping well clear of the regional supply shortage issue. Rosseker says representatives of the trucking industry have discussed the problem with various officials and the response has been muted, at best. Provincial governments in the West have opted not to create the kind of regulated environment for diesel that’s in place in Quebec and the Maritimes. “We respect the competitive marketplace,” says Bob Ellis, director of public affairs for the Saskatchewan department of mines, energy and resources. In all likelihood, refinery capacity in the West will remain at current levels for the near term, which means the possibility of shortages well into the future. “Given that refineries are very complex plants and unexpected problems do occur, farmers can occasionally expect to see tight supplies and physical shortages,” says Ervin. But Ervin doesn’t think any future supply problems are likely to be serious enough to warrant farmers spending money on increasing the size of on-fram storage tanks to safeguard against them. “By and large I don’t think it’s going to be an economically viable proposition, building more storage capacity to anticipate what might not happen,” he says. “I think the risks are generally low. I’ve yet to see cars left stranded on the side of the 401 or the Trans Canada highway (because of fuel shortages).” “It’s not that we were out of fuel,” Skowronski says. “It’s just it wasn’t there when the customer wanted it.” Rosseker and others in the trucking industry, however, see the threat in bigger terms. “At some of the card locks, we were restricted to 300 litres per day,” Rosseker says. “At an average of six miles per gallon (for a tractor-trailer truck), do the math on that.” CG country-guide.ca 33

business

A question of size Why are our farms getting larger? The answer is a bit more complex than we probably think By Gerald Pilger

arge farms are getting larger. This trend is well documented and will not be a surprise to anyone. But the reasons why farms are getting bigger may surprise many. While most farmers would say the growth in farm size is simply because economics of scale mean farmers must get big to stay competitive, James MacDonald, chief of the agricultural structure and productivity branch of the USDA’s Economic Research Service, discounts this argument. Instead, MacDonald believes that relative price factors, innovation, and government policy are much bigger drivers of the trend to larger farms than economies of scale. If economies of scale were the reason for increasing farm size, MacDonald says we should also see a definite difference in the cost of production between large and mid-size farm operations. However, while cost-of-production studies have consistently shown a wide variation in production costs between individual farms of all sizes, those studies haven’t found much difference in the averaged production costs of large versus mid-size commercial farms. MacDonald sums it up in a few terse words: “Unit costs do not always fall as farm size increases.” Part of the explanation for why agriculture doesn’t respond as readily as other industries to economies of scale is the “lumpiness” of capital equipment. Farm size can only be increased so much before additional equipment is required, MacDonald points out, and then production costs are high until enough land is farmed so the second set of equipment is fully utilized. A second problem is the seasonality of agricultural production. Agriculture simply does not lend itself to the routines and procedures that contribute to economies of scale. So MacDonald looked for other drivers that could explain the growth in farm size, and he found a very strong correlation between farm size and relative factor prices. Farms grew rapidly in size following the Second World War. This was also a time when wages in non-farm occupations grew quickly. 34 country-guide.ca

The opportunity costs for farm labour increased and many farmers and family members of farmers chose higher-paying occupations over farming. At the same time that people were leaving the farm for better-paying occupations, cost of capital was also decreasing, so business-savvy farmers substituted capital for labour. Then, further benefits were realized from innovations in equipment which enabled a farmer to increase the area that could be farmed with the same amount of labour. This trend has continued to this day. Bigger and faster machines enabled an operator to seed 10 times as many acres per day and harvest seven times as many bushels in 2005 compared to 1970, and MacDonald points to work by Kislev and Peterson which found most of the growth in farm size between 1930 and 1970 is accounted for by substitution of capital for labour. “Another driver of increasing farm size is government policy,” says MacDonald. As an example he points to peanuts and tobacco. Both crops were subject to quotas to limit production and support prices. Strict trading rules of quota ensured production stayed on small farms in the areas where these crops had traditionally been grown. As soon as these quotas were eliminated, production shifted to larger farms and lower-cost regions. There can also be a strong correlation between farm size and government programs. Larger farms typically receive more total payments than smaller farms regardless of the cost of production. “This enables large farms to outbid smaller farms for land and have more resources available for growth,” MacDonald says. “As well, internal capital has a lower cost than external (borrowed) capital so larger payments received can be used to finance growth that would not be profitable if that growth had to be financed.” “Even tax policy has an impact,” MacDonald adds. “Expensing and depreciation provisions benefit large farms over small farms.” Studies by Key and Roberts in 2007 and 2008 concluded between one-half and three-quarters of the growth in the largest farms in the period 1987 to 2002 was a direct result of program payments. february 15, 2012

business

The future Many people fear that the trend to larger farms will threaten the family farm model which agriculture was built on. Will we see the demise of the family farm? MacDonald says family farms still dominate U.S. agriculture. “Family farms account for 97 per cent of all U.S. farms and 84 per cent of production. The numbers imply that large farms are less likely to be family farms, but among those with $1 million to $5 million in sales, family farms accounted for 87 per cent of farms and 85 per cent of sales. The numbers fall off when sales rise above $5 million but family farms still accounted for 64 per cent of those farms and 57 per cent of sales.” MacDonald also says that success in farming requires the precise timing and efficiency of tasks that are subject to weather and topographic conditions. A family farm operation tends to be much more nimble in decision-making than a corporate bureaucracy and can respond to change much more quickly. Furthermore, an owner-operator enterprise has a better incentive structure and therefore tends to be more efficient than bureaucratically organized farms. However, family dynamics and management ability become increasingly important as farms grow in size and MacDonald outlines some strategies farm operations can and are using as their operations grow in size. They include: • Employing custom service providers to meet equipment needs until the operation reaches a size where an additional line of equipment is justified. • Using consultants to provide information which is needed to make good decisions. • Including a non-family equity partner in the business. • Hiring a professional manager for the farm operation. • Assembling a number of farm operations together as an economic unit in order to capture bulk-buying opportunities of inputs and to capture marketing opportunities. “There is no right size of farm,” MacDonald says. “There are a wide range of sizes that are viable.” So why is all this important to Canadian growers? february 15, 2012

In January, Farm Credit Canada released its 2011 Vision survey. Remarkably, 60 per cent of farmers indicated they intended to expand, diversify, or expand and diversify within the next five years. J.P. Gervais, senior agricultural economist with FCC says, “We do see the trend in farms getting bigger continuing. The industry is changing. We are losing the mid-size farmers and large farms continue to get bigger.” At the same time, Gervais says, there are more and more small farms that are targeting specific market segments. “We are seeing a growing barbell pattern of farm sizes with increasing numbers of large farms and small farms and declining numbers of mid-size farms,” Gervais says. If half or more of farmers do in fact expand production, this may lead to increased land and input costs. If this expansion was driven by economies of scale, those additional costs may be recaptured through lower production costs. If MacDonald is right, however, and the real drivers of farm size are relative price factors, innovation and program payments, then expansion at this time could be risky. After all, labour prices have stagnated for the past decade. The opportunity cost of leaving the farm for another occupation is declining. The economic slump and high unemployment rates, especially in the U.S., means more people may be looking for opportunities in agriculture than are exiting the sector. At some point the cost of labour may become lower than the capital cost of increasingly expensive bigger and faster machines. We may also see a cut in the government transfers that have driven past expansions. Farmers must calculate whether expansion is a viable proposition without program payments. Expansion will likely require borrowed capital. All-time-low interest rates may make expansion possible today but how long will rates stay at current levels? The consensus is, farmers need to analyze whether expansion is really a good business decision or simply a quest to be bigger. Both are valid reasons for expansion, but only the first may be economically sound in the changing agricultural environment we are heading into. CG

Available Bachelorettes Energy to boot, this single parent is 47, 5'6, 150 lbs. with a pretty smile, long hair and the energy of girl half her age. I have a catering business. I have employees, customers and I have three teenage daughters. I also live on my family farm and have the rest of the land leased. I am busy. I don’t have time to find a MAN. I want a man in my life. With all this estrogen around me I need a man to balance everything. I am always on the go except when I relax on my front porch in the summertime. Our house is almost 100 years old and I have completely remodelled, refurbished and redecorated. I have a wonderful place by the sea in Mexico that me and the girls like to go to. I want a man who is a farmer, has kids, is a big kid himself, and wants to have a fun and interesting companion in his life. Boring I am not – that’s for sure.

Widow, 52, toned, slim, fit. This lady has abs that would put many gym bunnies to shame. She is 5’6, 131 lbs., not an inch of fat, a farmer and a government worker. Her family farm is profitable, stable and earns a considerable amount but it wasn’t always that way. Anyone who farms knows the bad time and what needs to be done to get through on a day to day basis. I come from a large family so I know how to get along. I love to garden, work out, cook, visit friends and family. I would love to take a road trip across Canada. I have never tried white water rafting. That looks like fun. I would like to do something different on the weekends. There is always something to do on the farm but my boys handle all the work, so I am free to go to dinner, plan a weekend away or cook a romantic meal for two. I have not done that in a while.

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Trait Stewardship Responsibilities Notice to Farmers Monsanto Company is a member of Excellence Through StewardshipSM (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 StewardshipSM is a service mark 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® agricultural herbicides. Roundup® 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™, Acceleron and Design™, DEKALB®, DEKALB and Design®, Genuity®, Genuity and Design®, Genuity Icons, Roundup®, Roundup Ready®, Roundup Ready 2 Technology and Design®, Roundup Ready 2 Yield®, RIB Complete and Design™, RIB Complete™, SmartStax®, SmartStax and Design®, VT Double PRO™, VT Triple PRO™ and YieldGard VT Triple® are trademarks of Monsanto Technology LLC, Monsanto Canada, Inc. licensee. 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 trademark of the Canadian Seed Trade Association. Used under license. (TR2054-E-06/11)

CGETLF’12-c 2.125”X5”-TR2054-E-06/11 ountry-guide.ca 35 2.125 x 5

opinion

Debt load By Gord Gilmour, CG Associate Editor

Too much isn’t good. Nor is too little. says FCC Rémi Lemoine

When times are good, should you pay off debt? Or should

recent years, however, the top line number has injected a

you take on more debt to add productive assets, parlaying

lot of drama. Canadian farmers today are carrying way more

the strength of today’s commodity prices into growth?

debt than ever, a spiralling trend that StatsCan says has been underway since 1993. According to the most recent StatsCan figures from the

the fact that we have so little in the way of broad perspec-

end of 2010, total outstanding Canadian farm debt now sits

tives on the issue certainly doesn’t help.

at $66.1 billion — yes, that’s right, 66 followed by a “B.”

To get the inside scoop on farm debt in Canada, Country

It’s caused some observers to sound the alarm, saying

Guide sought out someone who is widely acknowledged to

Canada’s farmers are carrying too much debt and there-

be one of the country’s foremost experts on farm lending.

fore are much too vulnerable to future shocks. Others are

Rémi Lemoine is COO of Farm Credit Canada and is among

less concerned, saying it’s a natural part of the business

a handful of people in the business with a firm grasp

cycle and reflects the fact that Canadian farms have been

of farm debt issues across the country and in multiple

growing and making investments to make them more

agriculture sectors.

productive and profitable.

Every year, Statistics Canada releases its report on total

Still others are a bit confused. After all, many Canadian

outstanding farm debt in Canada. If you’re not an agri-

farmers have been experiencing fairly good economic times

culture economist, it can seem like pretty dry reading. In

lately, so shouldn’t farm debt numbers be falling, not rising?

36 country-guide.ca

february 15, 2012

Photo credit: Carey Shaw

Every farmer knows these are critical questions — potentially the most critical questions they will ever face — and

opinion

Country Guide: At first glance the fact that farm debt is rising during relatively good economic times seems a bit counterintuitive. What are your thoughts on that? Rémi Lemoine: I think one of the most important things it tells us is that the issue of farm debt is very complex and can’t be boiled down to simple, almost philosophical, statements like “Pay off debt during good times.” You also can’t read too much into numbers that cover the entire industry or entire sectors of the industry, because every farm operation has its own unique financial situation and the answer to the question of how much debt it can and should carry will also be unique. It’s a question of balance. You can’t afford to scrimp too much and miss making key productive investments — new technology that makes your farm more efficient, for example — or not replacing equipment so that it’s breaking down during harvest and you’ve now got a production risk, which really doesn’t strike me as good risk management. On the other hand, you also can’t afford to be so heavily indebted that the slightest hiccup or change in conditions causes you to run off the road. It is true that total farm debt has gone up significantly in recent years, but I’m not sure that this one number tells the whole story. We also have to look at the debt-to-net-income ratio, and that paints a different picture — though I do want to add a word of caution that you can’t just apply it across the board either, for many of the same reasons. But when we look at it, it has actually been remarkably stable over the past decade. Yes, debt has risen, but so has income, and therefore the price that farmers must pay for productive assets. The one exception is in the supply-managed sector, where we saw it climbing quite significantly, to the point that the various boards began taking steps like setting maximum quota exchange values. It’s now in the process of dropping and will likely revert to close to the long-term average. CG: It sounds like what you’re saying is that there’s a sweet spot that’s somewhere between being reckless and having an overabundance of caution. How do you know when you’re in it? RL: Yes, that’s exactly right. As for finding the sweet spot, I think it all starts with the information about a farm’s individual financial health. It’s important to understand and analyse that information very carefully and that’s where having a good accountant or financial adviser is very important. A good accountant or adviser can really help you understand your farm’s financial position and sketch out scenarios and options that take into account the risks and the potential rewards. I think that this is actually one of the most important and cost-effective things a farmer can invest in when working on debt management and overall financial planning. It lets you both build a plan and stress test it. It lets you explore issues like what your business plan would look like with a three per cent rise in interest rates — or a drop in prices, or perhaps a sharp increase in the cost of inputs. It also allows you to build a “Plan B” that you can implement when something like this happens, so you can get back on track as quickly as possible. Our ability to put financial information in electronic spreadsheet format has made this far easier than it has ever been before, and many if not most of the farmers we deal with are doing this.

february 15, 2012

CG: Are there different ways producers approach debt? For example, have younger farmers come to the business with a different way of looking at this issue? RL: I don’t want to be waving my finger and scolding anyone here, but there is a very real difference in the way younger and older farmers approach debt. Older farmers have had the mindset that you borrow as little as possible and pay it off as quickly as possible. Younger farmers ask different questions — for example they want to know what the income-generating potential of an investment is, and if the numbers are there, they’re willing to take on debt to make that investment. Again, however, I don’t want to draw too many generalities because these decisions really do have to be made taking an individual approach, based on that farm and that farmer’s unique financial information. I suppose if I worry about anything when talking about farm debt, this is one of my bigger concerns — that farmers tend to talk amongst themselves about these things, and there’s the natural tendency to want to do what the other person is doing. But if the other producer is in their 50s, has been farming for more than 30 years and is in a comfortable financial situation, they have a very different ability to take on and carry debt and risk than a neighbour who’s in their 20s and is only five years into paying off their land. CG: One of the biggest risks I see is that interest rates might rise. We’re currently in a period of historically low interest rates, and long-term money seems to be very cheap. Does it make sense to consider locking in your debt for as long as possible to mitigate that risk? RL: Well, I should say that I don’t do interest rate forecasts. (chuckles) I’m afraid everyone is on their own there. But you can analyse the situation a bit and make your own decision. If you look at historic interest rates, say over the past 30 years or so, we’re clearly at a low. Long-term money is cheaper than ever, so it might make sense, given the right individual circumstances, to consider locking in these rates — especially if you can get a loan with a decent prepayment option. Maybe something on the order of the ability to pay 10 or 20 per cent back early without penalty. On the other side of the equation, however, if you kept a variable-rate loan, and look at the past 50 years, there’s a very good chance you would have won. There are potential benefits to that strategy too. The key thing to remember is that when rates move, they can move fairly quickly. And recent history might not be a particularly good guide. The last time we saw a rate increase, the yield curve was quite gentle — maybe something like moving a variable-rate loan that was three per cent to a five-year term at four per cent. There’s no guarantee that will be the case. It’s entirely possible that in a couple years’ time you could see that three per cent variable-rate loan jump to six per cent for a five-year term. I can tell you what our customers are doing. Right now about 65 per cent of them choose variable rate and about 35 per cent of them choose fixed terms. Again though, I stress that you can’t take the general trend and apply it to your specific farm. CG

country-guide.ca 37

production

Soybean

Outlook 2012 The U.S. dollar is the elephant in the soybean market this year

By Philip Shaw

38 country-guide.ca

espite last year’s tough spring and the midsummer drought, Ontario soybean growers produced 109 million bushels in 2011 on approximately 2.4 million acres. A decade earlier, in another year with tough weather, we produced a scant 47 million. Clearly, the romance between Eastern Canada’s farmers and the soybean is getting warmer and warmer, so it’s a good thing for our growers that the world has an insatiable appetite for protein, and that soybeans continue to be the oilseed of choice for the consuming world. Both those factors augur well for soybeans in 2012, although they are counterbalanced by growing carry-overs this year. Being the oilseed of choice for a hungry world is a very big deal. Yes, in Western Canada, another oilseed — canola — is a very important part of the agricultural economy, and yes, canola does get traded at a premium to soybeans, with this premium sometimes reaching toward $100 per tonne before soybeans get substituted for the canola. Still, soybeans are the world’s first choice for vegetable oil, and the demand for vegetable oil continues to grow. Burgeoning economies such as China’s have a seemingly insatiable hunger for oil. Basically these countries are turning into buyers for whatever soybeans we can produce. So here’s what makes life interesting. Despite the good news above, soybeans are still a second choice — and sometimes even lower than that — for many Ontario and U.S. corn belt farmers. In plain language, they’d rather plant corn. Corn genetics are improving faster than soybeans. In Ontario, provincial soybean and corn trials show a 0.32-bushel-peracre-per-year increase in soybean yield, compared to a 2.0-bushel-per-acre-per-year increase in corn yields. So, in many ways, growing soybeans over corn is a leap of faith. (See Falling Behind, page 40.)

There are even some observers who argue that South America is better suited to grow soybeans, while North America may be better suited to grow corn. They may be right. At the very least, with South America currently producing 50 to 60 per cent of the world’s soybeans versus 10 per cent of its corn, it’s an argument that is gaining traction. Still, the world’s appetite for protein is strong. Elaine Kub, grain merchandiser and analyst with the ARC Group of Lincoln, Nebraska says world demand for calories is growing even faster than global population. Simply put, people want better diets, meaning they want more meat, and more differentiated food products. World demand for feed grains is growing with that meat demand, and this is also good for global demand of soybean-based protein feeds. For Canadian soybean producers, consumption trends are also good because of growth in Asian tofu and similar markets. This was brought home to me in a very personal way some years ago when I met February 15, 2012

production

with an Ontario soybean buyer in Singapore. Before I had gotten on the plane to meet him, I had loaded Ontario soybeans from my bins which were destined for Asia. When I met the buyer, he told me that he had eaten soybeans for breakfast that morning, as he always did, and he explained to me how much demand that represents. For an answer, though, he didn’t give me a number. Instead, he pointed out over the city of Singapore, and over the masses of people thronging its streets. From that point forward, I understood, and while that meeting took place 18 years ago, demand has consistently grown ever since. World production for soybeans now stands at 257 million metric tonnes (mmt). The U.S. produces 83.2 mmt, with its competitors producing 173.8 mmt more. Not long ago, the U.S. produced well over half of world soybeans. Now, in 201112, Brazil is set to produce 75 mmt and Argentina 50.5 mmt. For the sake of perspective, it’s important to note that Ontario produces 2.96 February 15, 2012

mmt. We just are not a big player on the world stage. Despite that, however, we are still very competitive in the markets we serve and there is no reason why that cannot be enhanced. USDA reports serve as a litmus test for futures price movement. The 2012 January USDA supply-and-demand report pegged U.S. soybean production last year at 3.056 billion bushels, up from the December figure but down 273 million bushels from last year. U.S. exports were estimated at 1.275 billion, which is down 226 million bushels from last year. This is a significant decline from last year and reflects not only the drop in production but also the strength in the U.S. dollar that has made American soybeans more expensive on the world stage. Ending stocks for soybeans in the 201112 crop year were forecast at 275 million bushels, up from 215 million last year. This actually raised the stocks-to-use ratio to 9.1 per cent. Although this is still considered bullish, it is certainly much more comfortable than last year. The average price projected by the USDA based on their projections in January was US$11.70 per bushel. Unlike the corn market, which is dominated by the United States, South America is increasingly the dominant factor in the soybean complex. In January and February of 2012, the South American soybean crop is maturing and moving rapidly toward harvest in Brazilian and Argentinian fields. South American weather during this critical time is exceedingly important in determining the supply that will end up on world markets. This will also have a large bearing on futures and on cash prices leading up to the spring planting season of corn and soybeans in the United States and Canada. Soybean prices will surely be affected by South American production in 2012. But they will also be impacted by the division of acres planted in the spring of 2012 in North America. Corn stocks are still tight. In fact, the corn stocks-to-use ratio at 6.7 per cent is the lowest since 1995-96. As well, because of ethanol, corn demand continues to build globally, so in 2012 we should expect a larger increase in corn acres in the U.S., possibly up to 94 million, which will need to come from somewhere, most likely soybean acres. A significant decrease in soybean acres in the United States will surely affect prices moving forward. Soybeans are not nearly as bullish as corn. However, with early

2012 South American weather being very dry, soybean stocks may be compromised further in the lead-up to planting in North America. Price movement coming out of that may be very significant. The January 2012 USDA report increased soybean production slightly for the 2011-12 crop year. Soybean prices fell on the news, but mainly followed corn on the way down. From August of 2011 until the middle of January 2012, soybean futures had actually lost $3 a bushel. This was largely due to the non-agricultural investors leaving agricultural commodities and going into U.S. government securities, which boosts the U.S. dollar. These increased soybean yields in 2011 are now showing up in the soybean market through more bearish soybean futures spreads in deferred months. Darin Newsom, senior grain analyst for Telvent DTN in Omaha says the commercial side of the market is growing more bearish. As a result, the deferred futures months are strengthening, reflecting less demand coming from the commercial side of the market. In other words, commercial end-users are satisfied now with supply and at the present time are not willing to pay more to get old soybeans out of farmers’ bins. Soybean prices in 2012 will surely be impacted by currency manipulations. The elephant in the room is the U.S. dollar, which has been benefiting from speculative capital moving into U.S. treasuries, boosting the U.S. dollar. This is negative for soybean futures prices, making them more expensive on the world stage. At the same time, the Canadian dollar tends to move in an inverse relationship with the U.S. dollar. As the U.S. dollar moves up, the value of the Canadian dollar generally moves down — which is a positive for Canadian cash soybean prices. Even so, the Canadian soybean basis is especially sensitive to currency moves so this will need careful watching. Ontario soybean acreage in 2012 is in flux. Corn acreage is poised to climb beyond two million acres this spring. Winter wheat acreage is approximately 700,000 acres, so in 2012, soybeans will need to compete with corn to maintain acreage. For 2012, Canadian soybean producers need to measure all of the factors affecting the soybean complex, and to watch our production costs. The world loves its soybeans, but growing them profitably is always a challenge. CG country-guide.ca 39

PRODUCTION

Falling behind Corn yields are growing six times faster than soybean yields. As producers, can we change that? By Philip Shaw t’s a lament heard all across the North American corn and soybean belt. Soybean yields are lagging behind corn. Increasingly, the two crops don’t even seem like they’re competing in the same league. Corn powers its way to great yields year after year. Soybeans surprise us with strong yields — sometimes. More farmers faced with the need for a consistent, dependable crop are choosing corn. As producers, many of us feel corn yields are consistently better over time and soybeans continually give problems. The truth of course probably lies in the middle of that statement, but make no mistake. On most eastern Canadian farms, corn is king. Despite all the bold predictions over the past 20 years, and despite all the progress we’ve made with field management, for most of us it definitely isn’t soybeans. The question is, is the problem because of the soybean genetics, or is it because we farmers still haven’t found the right management package to unlock those genetics? At first glance it may be difficult to place the blame, or even to know how much blame to assess. As farmers, we ask ourselves, have we been made callous by new technologies in other crops that deliver big instant gains, especially in corn, so we don’t notice the steady progress of our year-overyear yield trend in soybeans? Or is there a problem because soybean biotechnology hasn’t caught up to corn traits? Or are soybean yields doomed to play second fiddle to the corn juggernaut? Based on provincial yield testing, soybean yields are increasing at 0.32 bushels per acre per year, Horst Bohner tells me. Bohner is the provincial soybean specialist for the Ontario Ministry of Agriculture Food and 40 country-guide.ca

Rural Affairs, based in Stratford and he says that, for comparison’s sake, corn yields in Ontario are increasing by 2.0 bushels per acre per year. So it’s true. Corn yields are outpacing soybeans, and if the trend continues, the gap will only get larger. Some might argue that this is unsustainable over time. It certainly creates great challenges for Ontario soybean producers, who have been growing soybeans for a considerable amount of time. With the agricultural economy providing huge cost hurdles to jump over every year, maximizing our financial returns is extremely important. So at the same time that corn yields are outpacing soybeans, it is also becoming more important than ever that as farmers, we get the choice right. In other words, it isn’t just genetics. Economics too are conspiring to make the problem of lower soybean yields even more acute.

Tight rotations Bohner says that one of the biggest reasons for the lower rate of growth in soybean yields in Ontario has to do with tight rotations. For instance, in some areas of Ontario it is a fairly standard practice to grow soybeans after soybeans, or in a two-year rotation with wheat or three-year rotation with wheat and corn. In these scenarios, soybeans are more susceptible to diseases, which keeps a check on soybean yield increases. Bohner says a longer rotation is optimal to enhance soybean yields. Of course in some parts of the East, it’s quite a management challenge to widen out the crop rotation intervals.

Bohner agrees, but still repeats that the squeeze on rotations is a major detriment to Ontario soybean yields. Bohner also has some specific comments about the characteristics of the corn plant versus the soybean plant. Corn is a “producer,” he says, and soybeans are better categorized as a “survivor.” In other words, corn produces starch, and can do that with less trouble versus the soybean plant, which produces protein. As well, soybeans are more of a survivor type of crop because they start with a great amount of potential and “suffer” many yield-robbing factors along the way to harvest. For instance, soybeans produce a lot of energy during the day, but lose significant amounts overnight. Or here’s another example. Soybeans produce a lot of pods, but abort many of them along the way. As well, soybeans fix their own nitrogen, but it takes energy to do this. At the end of the day, the soybean is a plant that has to survive the challenges that confront it in order to go on and produce yield. Corn seems more like the opposite. It’s off to the races unless something holds it back. Of course soybean technology is changing. In Ontario, Roundup Ready II soybeans are consistently outyielding Roundup Ready 1 soybeans in provincial trials by two bushels per acre. That’s a nice gain, but producers still FEBRUARY 15, 2012

PRODUCTION

want to know when we will be able to expect 90-bushel-per-acre soybeans on a consistent basis. At .32 bushels per acre per year increase in yield it may take over 100 years to get there. Bohner cautions that it’s hard to forecast long-term yields. One never knows what new technology may come along in the future to help mitigate soybean yield challenges. It may be just around the corner.

Endless pests There surely are myriad problems that soybeans face on their road to harvest time. Pests such as the soybean aphid and the bean leaf beetle along with assorted stinkbugs are just some of them. Corn on the other hand has fewer pests, with two of the main ones, European corn borer and rootworm effectively controlled by trait stacked corn hybrids. In part, David Hooker tells me, that’s simply because the corn genome is much easier to work with. Hooker is working on a soybean yield enhancement project called the Smart initiative at the University of Guelph’s Ridgetown campus. Smart stands for Strategic Management Adding Revenue Today. It is a systems approach looking at multiple factors that affect soybean yields and is focused on helping producers deal with the various factors that limit soybean yields. In the first few years of research with the program, Hooker and other growth researchers have seen a boost of four to 10 FEBRUARY 15, 2012

bushels per acre on various soybean varieties. This has involved, in some instances, juggling some of the multiple factors such as increasing plant population, using fungicides and increasing nitrogen application. The research is ongoing and will surely produce results that we will want to watch in the years to come. There is a specific need to focus in on the reproductive phase of the soybean plant because this is a phase specifically correlated to soybean yield, Hooker says. To explain, he points to the growing season in 2011 where much of southern Ontario received beneficial rainfall during the critical August period of reproductive soybean growth. This translated into very high yields for many Ontario soybean producers this year. Good conditions with adequate rainfall during the reproductive soybean growth phase result in more seeds per plant, which ultimately adds up to greater yields. Those individual seeds can be heavier too, which has an impact on the yield per acre. Research funding may also be an issue with regard to the difference in soybean and corn yield increases. Hooker says that because the corn genome is so much easier to work with and manipulate, investors can see a more direct route to a profitable return in corn than soybeans. So, by default investment capital flows more freely into corn versus soybeans, and the corn economy builds this into a feedback loop that drives more and more benefits. In other words, if you start out being better at working on

corn than soybeans, this gap just grows when you continue to do more corn work.

Back to rotations Yet Bohner and Hooker agree that part of the solution may be up to farmers. It’s that issue of rotations again. Hooker also says good soil quality is a foundation for good soybean yields. Compared to corn, soybeans have a root system that is much more sensitive to fungal organisms and pathogens. That is one reason why continuous soybeans produce lower yields. Hooker says the solution might be to look at a longer rotation with corn, wheat and soybeans. This may mean growing corn two years in a row, although there is a 10 per cent yield decrease associated with second-year corn, so it is a huge management problem that needs to be continually revisited. Still, Hooker says the 150-bushel-peracre soybean yields garnered by Kip Cullers in U.S. soybean fields give a good idea of the soybean’s true yield potential. How about getting those amazing soybean yields in Ontario? Or would we at least be satisfied with soybean yield improvement catching up to the rate of change in corn yields? The challenge of course is to not give up. Soybean yields are increasing. There is a way forward and maybe someday 100-bushel-per-acre Ontario soybeans will be the norm. CG country-guide.ca 41

production

Watch that IP market We’re risking our hard-won IP status by chasing short-term corn profits. Maybe it’s time to run counter to the pack By Ralph Pearce, CG Production Editor here’s no denying it. Corn has outperformed soybeans for the last two years, both in the field and at the elevator. But at a time when many growers are questioning the overall value of soybeans, and when they’re voting with their planters in favour of corn, there are rumblings that maybe we’re throwing out the IP baby with the bathwater — and that we may come to regret it sooner rather than later. Sure, corn on corn is getting easier to pull off. However, there is a contingent — growers, agronomists, seed dealers and buyers — that are worried Canada is sacrificing our stellar international reputation for the sake of a corn market that can’t last. Maybe these IP enthusiasts are smaller in number than the corn crowd, but does that make them wrong? According to multiple sources, the identity-preserved (IP) market for Ontario growers once sat as high as 35 per cent of overall soybean production. Today, that share is roughly 25 per cent. The market has dropped, but still it’s a viable one out of every four acres. For years, agricultural economists and brokers have rationalized the IP sector by noting that a 50-cent or a dollar-per-bushel premium means more on a percentage basis at $5 per bushel than it does at $10. So, now that soybean prices are in the low teens, and now that non-IP soybeans 42 country-guide.ca

are even easier to grow thanks to the convenience of herbicide-tolerant technologies and the launch of newer, higher-yielding varieties, the question becomes, “Will the added cost and management of IP pay for itself?” After all, IP brings more work with weed control plus elevator discounts for mud tagging (as in the 2011 crop), not to mention the potential for dockage and even rejection by the buyer and elevators. Late in 2011, Pat Lynch acknowledged the difficulty of deciding between Roundup Ready soybean varieties and IP soybeans. Yet when he compares the ease and convenience of the former versus the premiums with the latter, he concludes that it is best for growers to include some IP soybeans in their mix. Lynch is adamant. Growers must continue to service the market, for he fears that Canada’s reputation as a supplier of high-quality food-grade beans is at stake. “If the Ontario growers abandon it or seriously reduce the acres, it’s not something we can just turn off and turn on again,” cautions Lynch, now an independent certified crop adviser. He concedes that it is much easier to grow GMO soybean varieties and that at current pricing levels, it is easy to see a fairly good return coming out of the field. “However, we have to be thinking long term. We will have harder times back in the crop world. Then we will need the extra revenue from IP soybeans. Ontario has a

name for high-quality IP soybeans, and we have to work at it.”

The bloom off the rose Lynch is far from alone. Despite the ease and convenience of the latest GM soybean varieties, John Cowan agrees that there is too much at stake to give up on IP soys. Yet Cowan understands why market conditions dictate more of what growers will do than any sense of tradition. “The market always tells the farmer which direction to go and which direction not to go,” says Cowan, the vice-president of strategic development for the Grain Farmers of Ontario. “The market is telling farmers to produce more corn and also the price of soybeans is saying that the extra effort and energy required to produce IP soybeans is not what I need right now.” Having said that, Cowan is quick to point out that there are other factors that have the potential to drive growers back to IP markets. From his vantage point, he sees a day when researchers and breeders will begin to differentiate the soybean market, even within the IP sector. “Food health is an obvious way to go. So is exploring some of our domestic markets, and we haven’t even started to tap into the opportunity with what I would call ‘new tastes’ or the taste buds of new Canadians,” Cowan says. The other factor which may become more pressing, both in terms of frequency February 15, 2012

production

“ I don’t want to take the negative point of view, but we’re under pressure. The bookings are slow.” — Martin Harry, SeCan and intensity, is herbicide resistance, particularly with glyphosate-tolerant hybrids and varieties. The seed and chemical sectors seem to be focused more on developing seeds with the traits that are in demand, while Cowan believes there isn’t the same investment into superior end-use value. Still, the crux of the issue for the short term is staying the course and maintaining IP acres, and Cowan assures growers and buyers that every effort will be made, particularly from the Grain Farmers of Ontario perspective, to maintain and grow the market for IP soybeans. “We’re going to work hard to make sure that we continue to be knowledgeable and good stewards and growers,” says Cowan, adding that traceability and accountability will continue to be hallmarks for Ontario growers. “Every time we can segregate a market, we add value to that market.”

Broaden the view For Martin Harry, the issue goes far beyond Ontario’s borders. Like Cowan and Lynch, Harry acknowledges the reputation that Ontario IP growers have earned, but he wonders whether there is the understanding among growers of just how far that reputation reaches. Harry differs on another point too. He thinks growers will stick with IP because they have a passion for it, not just because the economics are a penny one way or the other. “Farmers aren’t going to change, and I don’t want to take the negative point of view, but we’re under pressure, the bookings are slow to come,” says Harry, eastern marketing manager for SeCan. “But on the positive side, there are a lot of open and unbooked acres of beans through the southwest and through the north. Some are telling me that the corn sales were extremely good for bookings but bean sales have been slower and thus there are open acres.” Whether those acres will go to corn in the spring, or go to IP soybeans or glyphosate-tolerant varieties remains to be seen, and there may be a lot of uncertainty right until the seed is in the ground. For his part, Harry is quick to suggest that many American suppliers are becoming more short sighted. The fact our neighbours February 15, 2012

in the U.S. Midwest are so heavily focused on GM soybeans takes their eyes off Ontario’s place in a global market, which gives us less competition not only in Japan and the Pacific Rim countries, but also in Europe. “There is no other place in the world, in my mind, that is doing as much work on conventional soybeans and coming out with new varieties,” explains Harry, talking of the work being done by Canada’s publicsector breeders and researchers. “Why do I get demand from all of the European countries, looking for conventional soybeans?” Of course, he adds, there’s a danger inherent in our status as a well-known food-grade soybean supplier. More European buyers are starting to ask about us now. But if we have to tell them that we won’t have supply next fall, how long will they keep asking? Still, Harry believes that Ontario’s leadership comes from honest roots. We have a long-standing focus on the conventional sector, along with the temperate climate that helps produce high-quality beans. “Conventional soybeans aren’t new, they’ve been here forever, and they’re the breadbasket for me and my growers,” Harry says. “But even in my system, it’s, ‘What’s new?’”

The hard numbers If there is any doubt as to the importance of markets for IP food-grade soybeans, Jim Gowland can help find the right perspective. Gowland not only has a long history as an IP grower, he is the founder and former chair of the Canadian Soybean Council. Gowland takes Harry’s reference to the European market and puts some numbers to it to emphasize its value. “The EU market has grown to nearly 1.2 million tonnes in 2010,” says Gowland, who farms near Holyrood in southern Bruce County. “That has been a very substantial increase in tonnage to the EU in recent years.” On the other side of the world, Japan represents a single market in Asia that is approaching 400,000 tonnes. “And that’s a premium, premium market, there’s no doubt about that,” says Gowland. For that market, adds Gowland, “at this point in time, we’re probably look-

ing at an average of at least $2-per-bushel grower premium at the farm gate — mainly for non-GM white hilum soybeans for tofu, miso and soy beverage production.” From a perspective of total global market value, the combination of premiumbased soybean markets could pump a minimum of $50 million annually into Canadian growers’ pockets. It’s a strong argument for continuing to build and maintain the Canadian brand, says Gowland, adding to Harry’s comment regarding Canada’s dominance of the IP soybean market, particularly measured against U.S. efforts to increase their market share. “The U.S has been a little more involved in IP soybean production during the last number of years, and is very competitive in the same markets that Canada is involved with,” Gowland says. “However, the Japan food-grade market represents a million tonnes and is a fairly mature market, so you’re not going to see too much more growth. But it’s a situation where Canada has grown the Japanese market share to nearly 400,000 tonnes in recent years, and that’s a pretty major achievement.” One thing also worth keeping in mind, in terms of measuring the IP market on a Canadian level is Gowland’s observation regarding total soybean production in the past 10 years. It was not long ago that Canada, as a country, was producing less than three million tonnes of soybeans, annually. In 2010, that number was nearly 4.4 million tonnes and much of that growth in the past five to seven years has come from Manitoba, with some also grown in Quebec, Prince Edward Island and Saskatchewan. “Certainly the new growth has not been here in Ontario,” Gowland says. At the same time, exports have also boomed, climbing to 2.2 million tonnes in 2010 from 1.7 million tonnes only a few years ago. IP has kept pace, Gowland says. “This equates to 60 per cent of Canadian soybeans being exported.” In fact, it may turn out that IP acres in Ontario don’t fall as much as they climb in other provinces. Nevertheless, these market-watchers say, attention must be paid to maintaining, if not continuing to build, Canada’s IP market. CG country-guide.ca 43

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Growing Canada’s soyfood market It’s no longer a question of whether the soyfood will grow, but which products will grow fastest The rate of growth has slowed in the past three he news on two fronts is very good. years however, with a softening of sales for soy beverCanadian food-grade soybeans have ages and tofu. Recent gains have been in the form of a earned a solid reputation in export modest rise in sales of soy-based energy bars and meat markets for quality and traceability. alternative products. Plus, the health benefits of soybeans A 2009 Angus Reid poll showed that when Canaare getting clearer and clearer, with more than dians choose soyfoods, the main reason is because 10,000 scientific articles now published globally they see soy as part of a healthy diet. In the U.S., 2010 citing soy’s inherently healthy low-fat protein, fatty United Soybean Board research shows that 80 per cent acids, fibre content and antioxidants as evidence of consumers think soy is heart healthy. They most that soybeans are a wise dietary choice not only for By Mary Wiley often associate certain health benefits with soy. In addiweight and diabetes management, but also for pretion to being heart healthy, they see soybeans as low in venting chronic diseases. fat, a source of protein, good for you, and cholesterol lowering. Across North America over the past 20 years, there’s been a Canadian industry leaders are closely tracking the trends, remarkable repositioning of the soyfoods category. It has shifted and they are working to identify emerging opportunities that from a narrow range of traditional soyfoods found primarily could give the soyfoods category another big sales boost. The in health and ethnic food shops to a wide array of flavourful, opportunities, they believe, centre on the themes of wellness, convenient soy products available in mainstream grocery stores product development, ethno-cultural influences and traceability. everywhere. If the Canadian soyfoods industry positions itself well, what The fact that soy products are still holding their own and could the future hold? that they are making some gains has many experts believing Unmanageable health-care costs are forcing governments at that the category will continue to grow. all levels to shift from a conversation about “health care” to In the 13 years between 1996 and 2009, U.S. sales of soy“health.” Prevention and control of chronic diseases rooted in foods grew from $1 billion to $4.5 billion. This growth was obesity and use of tobacco and alcohol are the new major focus. propelled by the USDA’s approval in the late ’90s of a labelling A December 2011 report by Ontario’s chief medical officer of claim for the health benefits of soy protein. health makes a strong case for putting resources toward wellness and The cross-border effect also boosted Canadian sales along health prevention, emphasizing that “healthy eating, regular exercise with our product offerings and distribution, driving the catand eliminating tobacco would prevent up to 90 per cent of Type 2 egory from $150 million to over $350 million with 70 per cent diabetes cases and 80 per cent of coronary heart disease.” of sales being through major grocery outlets. 44 country-guide.ca

February 15, 2012

production AcNow BC is a provincial cross-government health promotion initiative that aims to boost population wellness by supporting schools, employers, local governments and communities to develop and promote programs that will help B.C. citizens achieve some very specific goals, such as “reduce the percentage of B.C. adults who are overweight or obese by 20 per cent.” The current version of Canada’s Food Guide, released in 2007, includes increased and distinct references to soy. The Milk and Alternatives food group includes fortified soy beverage. Soybean oil is recommended as a healthy unsaturated fat. Tofu is depicted in the cover graphics, and the Meat and Alternatives section recommends. “Have meat alternatives such as beans, lentils and tofu often.” With a belief that the market for soy protein is underdeveloped in Canada, and that government support of healthy eating activities is on the rise, Soy 20/20, a Guelph-based soy industry market development body, is leading an industry quest for a Canadian soy-labelling claim. They are working with Agriculture and Agri-Food Canada and industry partners to champion the claim. Some 10 other countries, including the U.S., already have a soy food label claim. In December 2011, after an extensive scientific literature review process, the label claim was filed with Health Canada, according to Jeff Schmalz, Soy 20/20 president. “We expect next steps in the process to take at least a year — probably longer,” says Schmalz, adding, “We predict that such a label claim could boost Canadian soyfoods sales by about 25 per cent.” The proposed claim would allow Canadian soy food and beverage products to carry specific wording about the relationship between soy consumption and lowering blood cholesterol. “Such a health claim would certainly give a boost to sales, but it’s hard to say which segment of the soy food and beverage market it would help most,” observes Peter Joe, president of Vancouver-based Sunrise Soya Foods. “It will depend on the marketing and public relations spend of the individual companies. If such a claim is allowed, it will be interesting to see what effect new tools like social media will have in driving sales through marketing messages about the goodness of soy.” February 15, 2012

With manufacturing plants in both Vancouver and Toronto, Sunrise is the leading tofu manufacturer in the country. In the past couple of years, they have introduced individual serving tofu-based desserts and ethnic flavourinspired ready-to-heat tofu and sauce products. Joe says the desserts are doing well due to their uniqueness, and that marketing the heat-and-serve product line requires consumer education. Looking ahead, Joe says manufacturers will have to be on their toes when it comes to new soyfood product development. “It’s an area that companies have always been working on, but it’s increasingly difficult to develop truly new products,” Joe says. He cites increased competition — that fact that there are a lot more “good-for-you” foods out there now than there were a decade ago — as well as the ever-mounting challenge of dealing with retailers — as part of doing business for branded product manufacturers. With a voice of experience, Joe says, “Any new product takes a lot of marketing dollars.” The Washington-based Soyfoods Association of North America states that having a wide variety of soyfoods on the market will help consumers meet the 2005 U.S. federal Dietary Guidelines that call for eating foods like soy that are high in fibre, omega-3 fatty acids, key vitamins and minerals and lower in saturated fat, cholesterol, and calories. Gary Fread agrees. The Toronto-area food-marketing consultant, former CEO of the Guelph Food Technology Centre and chair of the Soy 20/20 board says, “Traditional growth areas for soyfoods have levelled off. Whether they take off again will depend on how innovative we get with tweaking those products.” Fread sees two areas for growth — the general area of healthier-for-you products, and growing demand for ethnic foods. “All the developed countries are going the route of the global menu, and Canada especially so, with its multicultural and ethnic diversity.” Fread points to the blend of different food types that are now in typical Canadian meals, as well as the fusion of flavours and food cultures being expressed in new products such as edamame-based hummus. “Ten to 15 per cent of consumers are looking for specialty, upscale,

artisanal foods, so we need to be looking at that niche as well.” So what does all of this mean to growers? Mark Huston and Kevin Marriott, both board members with the Grain Farmers of Ontario (GFO), have a special interest in soy industry market development activities. Huston, the GFO representative on the Soy 20/20 board, says growers would like to see a specialty soy crush facility established “to better connect the end products to the beans that we grow here, and to utilize fully traceable soy protein and oils in new ways.” “With the IP system in Ontario, we can grow more IP beans more consistently than anywhere in the world,” notes Huston. What has driven development of the IP system, he says, is the fact that “export markets are still vitally important to the industry, with 40 to 45 per cent of what we grow going to export markets in the form of non-GMO, white hylum, larger beans.” Marriott believes the industry should continue to provide accurate, up-to-date nutrition and product information about soy to consumers, and also work with Health Canada to facilitate development of the label claim. “When I go into a grocery store and see the soyfoods section, I’m reminded of how far the industry has come,” says Marriott. “Twenty-five years ago there were barely any soy products in the store, and now all the major chains have a significant soy section.” He also sees the emergence of soy items on Canadian food-service menus as a “bit of a win.” Marriott sees future developments for soy developing “one step at a time.” “ W h e t h e r i t ’s t o f u , b e v e r a g e s , shakes, protein bars or fresh edamame, soyfoods can serve a wide range of products and tastes,” Marriott says. It’s a positive sign, he says, that soyfood products in Canada are gaining market share, and that new product development is attracting high-level attention from aggressively managed companies. CG Mary Wiley is a St. Catharines, Ont. home economist, vineyard partner, and agri-food industry communications consultant. She serves as executive director of the Niagara Research and Planning Council, a community-based group that champions evidence-informed planning for a strong, vibrant Niagara. country-guide.ca 45

w e at h e r COOLER THAN NORMAL

NEAR NORMAL

MILDER THAN NORMAL

Oc ca snosiona w l

C Sn old ow y

NEAR-NORMAL TEMPERATURES AND PRECIPITATION

Occasional snow

E G N A O ER TI AV ITA AR CIP NE RE P

M Sn ild Ra ow in

Co Snold Rai w n

NEAR-TO ABOVENORMAL SNOWFALL

ONTARIO

February 19 to March 17, 2012 February 19 to March 17, 2012

Feb. 19-25: Windy conditions cause temperatures to fluctuate from mild and thawing by day to freezing at night. Sunny skies interchange with occasional snow or rain, possibly heavy in places. Cold, snowy in the north. Feb. 26-Mar. 3: Pleasant and mild days will alternate with colder outbreaks and occasional snow or rain. Chance heavy precipitation and strong winds on a couple of days. Heavier snow and colder in the north. Mar. 4-10: Unsettled conditions prevail this week as disturbances move by. Fair skies exchange with snow, except rain in the south on a few occasions. Risk heavy precipitation in places. Frequent thawing. Mar. 11-17: Temperatures climb well above zero in the south on several days. On cooler days look for cloudy skies with occasional rain or snow. Blustery at times. Often cold and snowy in the north.

QUEBEC Feb. 19-25: Blustery winds result in variable temperatures from thawing by day to freezing at night in the south. Fair, but look for occasional snow chance of rain on a couple days. Colder, snowy in the north. Feb. 26-Mar. 3: Seasonal to occasionally mild. On colder days expect intermittent snow, possibly heavy and mixed with rain at times. Windy at times. Cold in the north with periodic heavier snow. 46 country-guide.ca

Mar. 4-10: Fair overall but unsettled conditions on two or three days this week from racing disturbances. Windy from time to time. Occasional snow or rain in the south changing to heavier snow in the north. Mar. 11-17: Blustery with temperatures climbing well above zero by day in the south and freezing at night. Sunny apart from two or three days with snow or rain, chance heavy in places, especially northern areas.

ATLANTIC PROVINCES Feb. 19-25: Mild temperatures and thawing will mix with colder and windy outbreaks. Expect snow on two or three occasions, mixed or changing to rain along the coasts. Chance heavy precipitation in places. Feb. 26-Mar. 3: Partly sunny this week with thawing temperatures followed by blustery winds, colder air and occasional snow. Snow mixed with rain east. Chance of heavy snow along windward coasts. Mar. 4-10: Racing weather disturbances bring changeable conditions as fair skies interchange with strong winds, snow and rain. Temperatures vary through the thaw/ freeze cycle. Chance of heavy precipitation. Mar. 11-17: Unsettled and windy conditions prevail on most days this week as fair weather interchanges with occasional rain or snow. Seasonal temperatures with a few milder days and thawing.

NATIONAL HIGHLIGHTS Winter is expected to maintain its grip on much of Western Canada in this period while mild air will bring the first taste of spring to many areas of Eastern Canada. In the West, cold temperatures and heavy snow will be common in British Columbia and the western Prairies well into March, resulting in several bouts of inclement weather. In southern Ontario, southern Quebec and the Maritimes, milder southerly winds are likely to raise temperatures to above normal values. Snow and rain from time to time will boost precipitation to near or above average totals. Between these two extremes, the remaining areas of the eastern Prairies, northern Ontario, northern Quebec as well as Newfoundland and Labrador should see temperatures and precipitation close to long-time normal values.

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.

Editor’s note:

Where’s my weather page? Look in every second issue for your month-long Country Guide weather forecast during the winter months when we’re publishing every two weeks. February 15, 2012

You’re better than you think (at some things!) By Pierrett Desrosiers

hat is the most important skill to be developed in a leader? When 75 members of the Advisory Board of the Graduate School Administration from Stanford University were asked this question, the consensus was “self-knowledge.” But how well do managers and entrepreneurs (the leaders) know themselves? Only 10 per cent have a realistic perception of themselves. As just one example, 75 per cent consider themselves to be in the top 25 per cent for competence and intelligence! Can you list your 10 greatest strengths as well as 10 things you need to work on? When I ask participants to answer this question in 15 minutes during my training sessions, quite a few of them feel unsettled. Knowing your strengths and your weaknesses (things you need to improve upon) is one of the key abilities that comes with emotional intelligence, defined as the ability to identify, assess, and control the emotions of oneself, of others, and of groups. It’s not new. Socrates, one of the greatest Greek philosophers, made this concept famous more than 2,000 years ago when he said: “Know yourself.” Why is it important to know your strengths and your weaknesses? Take Mark, for example. He decided to triple his dairy production and thought that with the right equipment and a good account manager, everything would fall into place. He was dumbfounded when he realized that it was much easier to add cows to his operation on paper than in real life. Going from a business he ran with his wife to a business with three employees required different competencies, abilities and interests. Reality was far from what he had pictured. “Had I known that human resources management was so difficult and that my job would change so drastically, I’m not sure I would have made the same decision,” says Mark. “Human relations and management day in day out are not my strengths.” Of course, Mark could work on these skills, but it is an increasingly accepted fact that in order to perform well, a person is best to work in an environment that relies on his strengths, not his weaknesses. We must adapt our work, our roles and our responsibilities to who we are, not the opposite. For a long time, experts thought that with training, time, energy and motivation, anyone could excel at anything. Companies invested thousands of dollars to help employees and managers overcome their weaknesses. At best, by working very hard on February 15, 2012

your weaknesses, you could become average in an area, but never outstanding. By focusing on your strengths and your natural talents, however, you will excel. As a bonus, you will feel fulfilled and enjoy your work even more so. Of course, we must be fully aware of our weaknesses. We must identify them, recognize them and understand how they can affect our business. We must surround ourselves with people whose strengths compensate for our weaknesses. This does not mean that we cannot improve ourselves. However, the success of our business should not rest on our weaknesses but on our natural talents. For example, if you are not a natural salesman, but prefer to work in administration, it would be best to hire someone else to look after the sales. Working with our weaknesses rather than with our natural strengths and then expecting the best return on our investment would be like a farmer attempting to grow a certain crop in a soil that is inappropriate for that seed. Even if he fertilizes the soil, it will still only result in an average harvest. Therefore, before undertaking a big project and making major changes that will affect your role, ask yourself if this change allows you to use your strengths and shifts the focus away from your weaknesses. As long as it does, you will be motivated, more resilient to stress, and happier. And, you will perform better in your business.

Take the test: In 15 minutes, make a list of your 10 strengths and 10 weaknesses. If you stop after three strengths only, you are either being too modest or you don’t know yourself. If you find many more weaknesses than strengths, your self-esteem suffers. Finally, if you only write down strengths and almost no weaknesses, you are quite sure of yourself, but it may be in your interest to ask people around you for feedback. Do you really want to know yourself? Ask five people who know you well and whom you hold in high regard to describe your main strengths and weaknesses. This is an excellent exercise in self-knowledge… and humility. Pierrette Desrosiers 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) Email: pierrette@pierrettedesrosiers.com. country-guide.ca 47

ACRES

By Leeann Minogue

In for the long haul Sometimes, it’s what you don’t do that makes the difference ousin Allison’s wedding dance had reached the point where the women were discoing to Village People songs, small kids were roaming the hotel ballroom like a pack of wolves, and Allison’s father had cut off the flow of free liquor. “I got to the bartender just in time,” said Dale Hanson’s nephew Mark, almost spilling an overloaded tray of rye and cokes as he set it down on the corner table where Dale and his son Jeff were nursing their drinks and watching their wives dance. Mark was just a few years older than Jeff, but since his farm was a two-hour drive north of Hanson Acres, Dale and Jeff usually only saw him at family events. “Who holds a wedding in Saskatoon in February?” Mark asked. “The bride could’ve at least given us an excuse to go to Mexico.” “I had a winter wedding,” Jeff reminded him. “It was -37. Elaine’s flowers froze solid.” “Oh, yeah, that’s right,” Mark said. Jeff didn’t bother taking offence. Mark often forgot to think before he talked, especially when there was an open bar. “Made your seeding plans?” Mark asked, settling into a chair. Dale nodded, and Jeff answered, “Mostly.” “Canola pencils in pretty good,” Mark said. “Of course, I need to plant a bit of wheat, since I signed some contracts to celebrate the death of the wheat board. But mostly I’m planting canola.” Mark fin48 country-guide.ca

ished his drink and chose another from the full tray. “Help yourselves,” he said. “Thanks,” said Dale. “Didn’t you seed a fair bit of your farm to canola last year?” “Sure did,” Mark said. “But it makes me the best money. And I’ve got to make payments on that new combine.” “I heard about that,” Dale said. “Yeah,” Jeff told his dad. “Mark sent photos.” “I was thinking,” Dale went on, “you must be pushing your rotations a bit, with so much canola.” “It’s not hurting anything,” Mark said. “My yields have been going up these last few years.” “You’re not having any trouble with disease? Weeds?” “Nah. Those guys who push that stuff just want to limit supply. And keep my profits down. Jeff agrees with me. He said so last month at Uncle Ed’s funeral.” “Is that right?” Dale said, looking over at his son. Jeff looked away, just in time to spot his toddler at the tail end of the pack of kids on their way to raid the midnight lunch table. The little boy sneaked a look over his shoulder at his dad, but kept running. “He knows if he looks at me I’ll drag him upstairs to the hotel room and put him to bed,” Jeff grinned. Mercifully, the DJ finally stopped playing disco and put on a set of slow songs to finish out the dance. Dale’s wife Donna and Jeff’s wife Elaine limped back from the dance floor, worn out and carrying their high heels. “It’s late,” Dale said to his wife. “Why don’t FEBRUARY 15, 2012

acres wedding dress. Uncle Tony’s dancing. Donna’s bliswe round up that grandson. If he spends the night tered heel. Until finally Dale couldn’t stand it anymore in our room, Jeff and Elaine can stay out and party and he had to find out what Jeff was planning. a bit longer.” “So,” Dale said. “Canola?” It took three adults to separate the toddler from the “What’s that?” Jeff said. rest of the pack, but finally Dale had him under one arm “You’re planning to seed a fair bit of canola?” and the three of them headed out the ballroom door to “What are you talking about?” Jeff asked, clearly the elevator, leaving Jeff, Elaine, Mark and a handful of baffled. “We went over the seeding plans a couple weeks other cousins to head to a nightclub for last call. ago. You booked the seed. Didn’t you?” The tired little boy was snoring before the elevator “But, last night. Mark said…” got to their floor, and Donna was asleep soon after. “I saw him talking to you,” Elaine said. “Was he But not Dale. on about canola again?” Dale had been reading Canola Watch. He knew the “Yeah,” Jeff told his wife. “His neighbours must be canola council recommended growing canola only one furious. He’ll be spreading clubroot all over the area.” year in four. He knew pushing rotations was risky. But he “Or blackleg. Or Roundup-resistant weeds,” also knew that Mark likely needed the extra cash. Mark Elaine said. “But he probably needs the money.” and his brother had had a lot of poor crops over the past “So you were just stringing Mark along?” Dale few years. And when Mark’s wife left, she’d hired a cagey asked. lawyer to fight for a good settlement. Dale couldn’t imag“No point doing anything else,” Jeff said. “I just ine how they were making the combine payments. ignore him when he gets going. It’s not like he’d listen to But would Jeff follow suit? Dale had always tried me. Don’t worry. I’m not actually taking his advice.” to pass on his feeling of a long-term responsibility for “Oh,” said Dale, trying to save face. “That’s what the land. “We’re in this business for the long haul, I figured.” and we have to act like it,” Dale had said, more than Jeff grinned. “You know what they say. We’re in this a few times. for the long haul. We have to act like it.” Mark wasn’t alone in being short on cash. Hanson Then the waitress came to take their order. Dale asked Acres hadn’t had a banner year last year. After spring for the special. With extra coffee, to keep him awake on flooding in the southeast, they seeded only 500 of their the drive home. CG 5,000 acres, and that hadn’t yielded well. Crop Insurance payments would keep them afloat, but there wouldn’t be enough income to allow the Hansons to take much money out of the farm for a while. Dale’s family wasn’t short of money, but he knew Jeff’s wife had been talking about wanting a new house. Maybe she was putting Jeff under more pressure than Dale realized. Dale thought he and Jeff had finalized their seeding plans. They’d booked seed, and cleaned their own seed. But Dale was trying to pass control of the farm on to his son. Was Jeff changing plans on his own now? Without telling his father? Dale spent most of the night flopping around in bed, periodically getting up to look out the window at the parking lot. “Just keeping an eye Are you having trouble on the car,” he told Donna when she woke to see him pacing at 3:30 a.m. “You know how managing your farm debt? high the crime rate is in Saskatoon.” We can help. Mediation may be the solution. There were giant dark circles under Dale’s eyes when he, Donna, and their grandson took The Farm Debt Mediation Service helps insolvent farmers overcome the elevator down to meet Jeff and Elaine for financial difficulties by offering financial counselling and mediation services. breakfast the next morning. They found Jeff This free and confidential service has been helping farmers get their debt and Elaine in the lobby, saying goodbye to repayment back on track since 1998. Financial consultants help prepare Mark. “That sounds like good advice,” Jeff a recovery plan, and qualified mediators facilitate a mutually acceptable financial repayment arrangement between farmers and creditors. was saying to Mark. “I’ll text you.” Mark said his goodbyes and the Hanson To obtain more information about how the Farm Debt Mediation Service family went to the hotel restaurant. They can help you: greeted a few tables full of other Hanson relaCall: 1-866-452-5556 Visit: www.agr.gc.ca/fdms tives staying in the hotel as they followed the hostess to a booth. After they read the menu, they talked about the toddler. About cousin Allison’s february 15, 2012

country-guide.ca 49

life

Keeping it together Four in 10 marriages end in divorce. Of course, that could never be yours. Or could it? By Helen Lammers-Helps he countryside isn’t immune to the trendlines in divorce. Recently I was at a party chatting with another farm couple when the subject of divorce came up. They told me they knew eight farm couples in their area who are in the process of splitting up. I was shocked, but as I talk to more and more people, and as I do some of my own counting, I get the feeling that they may not be as far off the average as I had always assumed… or at least hoped. The farming life comes with its own set of marital stressors. Unpredictable weather and fluctuating market are right up there, of course, but so is operating a business that includes parents, siblings, children and other family members on top of all the usual stuff that husbands and wives have to deal with. This isn’t at bottom a money issue. It’s a marital one. But of course on the farm we have to recognize that it is a money issue too, says Don McCannell of McCannell Financial Group Ltd. in Saskatoon. Besides the obvious emotional turmoil that comes with divorce, most people underestimate the financial pain of divorcing. “The cost of lawyers, spousal support, child support, selling the family cottage… if more people knew what was involved they might have hung in longer,” muses McCannell. Hung in longer? Presumably when most people say “I do” they intend to make a lifelong commitment. So what goes wrong in so many marriages? John Henderson, a registered marriage and family therapist in Oakville, Ont. says he sees two common patterns when it comes to marital break-up. The first group are those who divorce after four to seven years. Mainly, they break up due to conflict. The truth is, it doesn’t seem to matter what the source of the conflict is. It’s more about how a couple deals with the conflict, or in some cases how it doesn’t deal with it, that matters. The second critical stage is around the 20-year mark, says Henderson. After the kids have left home, the couple finds they have grown apart and they no longer know how to reconnect with one another. In her work as a farm family coach, Elaine Froese of Boissevain, Man. sees another trouble spot for farm couples. After 40 or 50 years of marriage, the wives want to enjoy a life away from the farm but their hus50 country-guide.ca

bands won’t retire. A lot of these women are saying, “I’m outta here.” So what can we do to keep our marriages strong? Even those who consider themselves happily married will usually admit there is some room for improvement. There are several key issues that many couples face. Kelly Brushett, a registered marriage and family therapist in Halifax, says one of the reasons couples grow apart is that they don’t prioritize their relationship. They’re too busy doing everything else that needs to be done — working, raising the kids, being involved in the community — and they don’t make time to nurture their relationship. Brushett encourages couples to plan ahead for time together. This could be one or two date nights per month, or if that’s not possible, carve out smaller amounts of time, she says. Froese agrees with Brushett. She says many farmers spend more time checking their cattle than the “state of their union.” Or some women are so busy with the kids that their husbands feel they don’t count. Brushett recommends couples have a regular date night. “You need to remember how to have fun together as a couple, and leave your parenting role at home for a while.” Froese and her husband have taken sailing lessons, gone skating, hiking, and camping, watched a sunset over a lake, and taken moonlit walks in the dead of winter. “While dinner and a movie are old hat, some women would be thrilled by the chance for a night out when they don’t have to cook,” says Froese. She recommends each spouse take turns coming up with ideas. After years of being together, the early passion wears off and couples tend to take each other for granted. To overcome this problem, Brushett recommends couples practise what she calls mindful consideration. Write notes, do small favours, take a walk, snuggle, or try a new activity together such as taking a dance class, she suggests. “Make gratitude your attitude and give loving affirmations,” Henderson adds. “Let your partner know that you appreciate the things he or she does and show you care through touch, eye contact and walking hand in hand.” For example, if your partner got up at 5 a.m. to milk the cows while you were sick, and still got the February 15, 2012

life

Books kids breakfast and out to the school bus on time, be sure to do something nice for her when you recover, Henderson notes. It’s also important to balance the various aspects of our lives. Too often people are paying attention to everything else but not looking after themselves. “If you don’t look after yourself, how can you be helpful to others?” asks Brushett. To drive home her point, she uses the metaphor of the airplane safety instructions. The air flight attendant tells the passengers to put on their own oxygen mask before putting one on their child. Brushett explains, “Cultivating our own interests enriches our individuality and our relational togetherness. It can make us more intriguing to our partners and creates a healthy balance.” Another challenge in long-term relationships is that people change. Roles change too, so expectations need to change as well. “Partners need to communicate openly about how they’ve changed, how their needs have changed and about their hopes and dreams for the future,” says Brushett. “Too many times people fail to communicate, so they make assumptions instead… they disengage and turn away from the relationship to other activities and people.” It’s also important to watch how you communicate. Avoid harsh, cutting comments, hostile name calling, needing to be right all the time and saying whatever comes to your mind without filtering your thoughts first, stresses Henderson. And use humour, he says. A little humour can lighten the mood and ease tension. Henderson says communication requires really listening to your partner. “Put the newspaper down and give your undivided attention when your spouse is trying to tell you something,” he says. The ability to communicate is a key ingredient in successful marriages, agrees Elizabeth Campbell Huss of Baden, Ont., a retired marriage and family February 15, 2012

• H old M e T ight : S even C onversations for a Lifetime of Love by Dr. Sue Johnson (Little, Brown and Company, 2008) • The Seven Principles for Making a Marriage Work by John Gottman (Three Rivers, 2000) • Love That Lasts: Personal Stories of Lasting M a r r i a g e by Elizabeth Campbell Huss available at www.lovethatlasts.ca

therapist who is celebrating 50 years of marriage this year. She shares 26 stories of marriages that lasted more than 30 years in her book, Love that Lasts: Personal Stories of Lasting Marriage. “Being able to share thoughts and feelings, to hear what your partner has to say, and to be fair to them… those are really essential,” Campbell Huss says. The good news is that couples who have grown apart can rekindle their warmth if they try. With the right attitude, even an affair can be overcome, says Henderson. Brushett agrees. She has seen amazing results if couples have the attitude that “I really want to do this and am willing to work on it instead of throwing it away.” “Commitment is a necessary ingredient to hold the relationship together while emotional repairs are being made,” agrees Campbell Huss. While there is much that couples can do on their own, if couples become stuck an objective counsellor can help couples resolve conflicts and rebuild their emotional bond. Those marrying for the second time especially benefit from four or five counselling sessions early on, says Henderson. To find a qualified counsellor, go to the Registry of Marriage and Family Canada at www.marriageandfamily.ca. “Love at first sight is easy to understand, it’s when two people have been looking at each other for a lifetime that it becomes a miracle,” said comedian Sam Levenson. Well, maybe it’s not a miracle. Maybe it just take some effort! CG country-guide.ca 51

h e a lt h

Don’t put up with dry skin By Marie Berry

veryone experiences dry skin at some time, and in our climate dry skin is extremely common in the cold, dry months of winter. Preventing dry skin is definitely better than experiencing the flaking and itching! Your skin covers the entire exterior of your body and has a surface area of close to two square metres or 21 square feet. It has three layers with the outermost layer, the epidermis, protecting the underlying layers. The epidermis is the part of your skin that you see. Its cells develop in its lower areas, rising to the surface in six to eight weeks, where they sloughoff. With dry skin, the surface skin cells contain less moisture and more readily flake off.

Treat dry skin early and aggressively because it can result in skin damage, loss of skin integrity, and infections Moisture is essential to preventing dry skin. At about 30 per cent room humidity, dry skin occurs because there is not enough moisture to maintain skin cell integrity. Ideally, you want at least 50 per cent room humidity, and you may need a room humidifier to achieve it because in the winter months, outdoor humidity is low and with indoor heating, the air in your home can be both hot and dry. Besides low humidity, hot baths or showers, using harsh soaps or detergents, and sun exposure can worsen dry skin. Ideally, when humidity is low or you have dry skin, you want to keep hot baths or showers to a minimum, and moisturize your skin immediately after bathing or showering. Choose mild soaps and avoid ones that contain deodorants, antiseptics, or antibacterials as these tend to be harsher. Soaps or shower gels with added moisturizers are good choices.

How many times have you thought of breaking your tablets in half in order to save money? Yes, in theory splitting tablets makes sense, but there are some problems associated with the practice. Next month, we’ll look at these issues. You may find that breaking tablets isn’t always a good practice.

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If you already have a skin condition like eczema or psoriasis, you are more susceptible to dry skin, and you may dismiss your dry skin symptoms as being part of your skin condition. With thyroid problems, your skin can be dry, but good thyroid control will reduce skin symptoms. Unfortunately, as you age, so does your skin, leading to an increased risk of dry skin. It’s estimated that 75 per cent of people over 65 years are bothered by dry skin. You may be familiar with the symptoms of dry skin, including skin tightness, itching or pruritus, flaking or peeling, fine skin lines or cracks, and redness. Yes, it is bothersome, but you do want to treat dry skin early and aggressively because it can result in skin damage, loss of skin integrity, and infections like cellulitis and folliculitis. If you do treat your dry skin, but it doesn’t seem to improve or if it even becomes worse, you need to check with a health-care professional. When your dry skin is extremely red or has open sores or covers large areas, you also want to have it checked. Creams and ointments are the mainstay of dry skin therapy. Creams are water based and more esthetically pleasing. However you do need to apply them more often because their moisture rapidly evapourates with low humidity. Ointments are greasier like petroleum jelly and remain longer on the skin surface, locking in moisture. Most moisturizing creams and lotions are combinations, but the key to effective use is frequent application. Choose a moisturizing cream based on your personal preference. Remember, perfumes can cause irritation to your already-irritated skin. Bath oils are not usually recommended because they make the bathtub slippery and are usually washedoff when you rinse. A better approach is to apply a moisturizing cream to your still-damp skin as soon as you finish bathing or showering. For the itchiness that accompanies dry skin, avoid wearing fabrics that worsen your symptoms and consider a non-drowsy antihistamine to control the symptoms. And, don’t forget to wear gloves to protect your hands! Marie Berry is a lawyer/pharmacist interested in health care and education February 15, 2012

In the movie The Adventures of Tintin a young crime reporter named Tintin forms an unlikely alliance with a sea captain named Haddock. At one point the captain says “My memory is not as good as it used to be.” Tintin queries “What did it used to be?” The captain replies “I can’t remember.” Memory enables us to tell stories. Stories enrich our lives and transmit our history through the generations. When our family gathered for Christmas, we told stories from our childhood. As I watched the faces of my nieces and nephews, I recalled sitting around my grandparents’ dinner table listening to stories. Stories describe who we are. Jeff O’Brien, archivist for the city of Saskatoon, speaks about his father who had increasing dementia toward the end of his life. “When he died, it was as if the library had burned down. Actually, my father’s aging was like taking the library apart page by page until it was empty.” A combined Doukhobor and Anglican service presented a unique opportunity for story telling. The two groups worship in quite different ways. As Anglican leader, I described ritual and symbols, explaining candles, crosses, bread and wine. To tell their story, the Doukhobors formed a choir and sang without benefit of musical instruments. The songs described the persecution their ancestors experienced as they left their homeland in search of religious freedom. Following the service we shared a meal, told stories and came to new understandings. William R. White in his book STORIES FOR TELLING says “Not only do we tell stories to entertain, but to learn from the past, to understand our world, and to grapple with the mysteries of life. Through stories we attempt to find patterns of significance in apparently meaningless events, as well as teach values to the next generation.” To illustrate, White retells this folktale. “A couple lived with their son Conrad in a house at the edge of a forest. One day the man’s father came to make his home with the young couple. The grandfather’s eyes had grown dim, he was nearly deaf, and his hands shook like leaves in the wind. When he ate, he was unable to hold his spoon without spilling food. Bits of food would run out of his mouth, soiling his clothing. The couple discussed what they might do. Finally they set a table for him to eat in a corner of the kitchen. As he ate, he looked sadly at his family. When he spilt his food, he would sob. “Eventually the old man could no longer hold his glass bowl. It fell to the floor, breaking into a dozen pieces. The woman scolded him and purchased a wooden bowl as a replacement. The old man said little as he sat in his corner eating out of his wooden bowl. “One day the father came home from work to find Conrad carving a block of wood. “What are you making?” asked the father. “It is a present for you and mommy” answered the child. “I am carving two wooden bowls so that you will have something to eat from when you live with me in your old age.” “The husband and wife looked at each other for a long time, and finally began to weep. That evening they moved the elderly grandfather back to the family table. From that day on he always ate with them, and they said nothing when he spilled his food.” Suggested Scripture: Deuteronomy 6:4-7, Psalm 103

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Rod Andrews is a retired Anglican bishop. He lives in Saskatoon. FEBRUARY 15, 2012

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Va l l e y

Saving face on the Sideroad

ILLUSTRATION: RICK KURKOWSKI

Dan Needles is the author of “Wingfield Farm” stage plays. His column is a regular feature in Country Guide

took the family to one of the neighbourhood parties at the Fisher place down on the River Road over the holidays. It was a pretty typical mix of farm and small-town families. The men stood in the heated garage, holding beers and moaning about the price of pinto beans and foliar fungicides. The women were gathered in the kitchen sipping fizzy drinks and moaning about their impossible children. I came to a halt beside my son and two of his cousins who had come up from the city to visit for a few days. “So what exfoliant are you using?” I heard my son ask the other two. This made me stop dead in my tracks. Lofty is a philosophy major and couldn’t tell you the difference between oats and barley. One of the cousins is studying freshwater biology and the other is doing exercise science. They are all originally from the country but even if they put their three heads together, they don’t have the agronomics to grow a carrot. So, it was pretty odd to hear them discussing crop inputs. “No, Dad,” sighed Lofty with that bemused expression he uses for ancients like myself who have become decoupled from the popular culture. “We’re talking about exfoliants for your face. You know, a deep cleanser.” I glanced over my shoulder nervously. “Is this the sort of conversation that men should be having?” I asked. “Of course,” said Lofty. “Every man 54 country-guide.ca

should scrub the dead skin cells off his face. It’s the first thing you do when you get out of bed. After the exfoliant you should wash with a hypo-allergenic soap and follow it with a good moisturizer. Don’t you do any of that, Dad?” I explained patiently that a farmer would rather sit through the Ice Follies than scrub his face with apricot pit and lingonberry abrasives. The cousins looked intently at my cheekbones and one of them asked: “Do you mean to say he’s still using a bar soap?” “That’s right,” I replied. “Pit run, hotel-grade, bar soap. You find it anywhere they sell straight razors, whalebone corsets and Dixie Peach Hair Pomade.” This last joke was lost on them because they all apparently plaster their hair down flat with modern-day pomades, in various aromas of apple and spice, which explains why they all look like they just stepped out of Fred Astaire’s backup line in Flying Down to Rio. The boys tell me that exfoliation exposes the face’s hair follicles, allowing for a better shave. And we all know that a smoother shave is at the top of the list for a man’s morning ritual. As I listened to them I thought these young sophisticates could be looking at one of the last big, untapped markets in Canadian agriculture: an exfoliant for farmers. Of course, there will have to be some careful marketing. The trick will be

to convince the farmer that exfoliating is a manly thing to do, sort of like going out to the shop to sand a dresser. It probably might help to explain to him that there is something living on his face that needs to be killed. The product should have a name like FaceSaver XL and the TV ads could use football and military metaphors, with a voiceover by Sam Elliott. It would also help if the product could be delivered in bulk by truck. The sell sheet message should stress the short window of opportunity for application so that there’s some pressure to get moving early in the season. The usual discounts would apply to early orders. In the second year we could announce a shortage due to interruptions in the Brazil pomegranate harvest and soften them up for a stiff price hike. You’ll know the campaign is getting some traction when you overhear a conversation like this in the diner: “Where’s Larry?” “He’s exfoliating.” “Oh, jeez, I guess that means he’s going to miss the moose hunt.” I looked at my own grizzled chops more carefully in the mirror this morning. The lad has a point. Something needs to be done. But where does it stop? French cologne? Lace cuffs? A powdered wig? In the end, I did what all old farmers do. I broke the ice on the rain barrel with a hatchet, splashed my face with cold water and scrubbed dry with a feed sack. February 15, 2012

SEE THE BIG PICTURE. Gain a new perspective on your farm, family and future with this informative video series from Agvision, available at country-guide.ca Upcoming video topics include:  How to Fix the Daughter-In-Law

“Please fix our daughter-in-law!” According to Dr. John Fast this is a very common complaint in farm businesses and a most convenient person to blame when things are not going well.  Farmers Without Wills

An untimely death without a will jeopardizes the financial viability of your farm and could leave your family in an absolute mess.  Who is the Boss?

Dr. John Fast is a leading expert on farm family business in Canada. As the founder and director of the Centre For Family Business and with his background as a family counselor, educator, and entrepreneur, John is sought after for his ability to motivate and inspire audiences to make a difference.

Family businesses face enormous complexity and this can result in role confusion and internal conflict. Who is the boss? Dad? The farm manager?  Changing the Farming Business Model

The number one reason Dad has trouble making the changes to the business model desired by the next generation is because of Dad’s fear the new generation will run the farm better than he did.

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