Country Guide West (09-20-2011)

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WESTERN EDITION

September 20, 2011 $3.50

ANNUAL

MARKETING ISSUE

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HOW LONG CAN THESE PRICES LAST? DON’T OVERLOOK OPPORTUNITY COST OF BINS • FARMERS WHO REALLY KNOW DIRECT FOOD

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SEPTEMBER 20, 2011

S N O I T S E U 5to aQsk your market adviser

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BRIDGING THE GAP Saskatchewan food writer Amy Jo Ehman says conventional farmers ignore urban foodies at their peril. You’ll need allies, she warns.

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BOOM VS. BUST

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BIN THERE Bins are going up as fast as the manufacturers can hire crews to install them. Does that mean farms without storage are doomed to lose out?

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SEPTEMBER 20, 2011

BREAKING THROUGH

HITCHING UP

EVERY ISSUE 8

MACHINERY GUIDE High-horsepower tractors get the adrenalin flowing in every farmer. Here’s how to make sure they get your gray cells working too.

42

HANSON ACRES With multiple generations on the farm, the Hansons find there’s extra advantage to hiring a marketing adviser.

46

GUIDE HEALTH Shhhh! We aren’t supposed to mention it, but there’s a world of new treatments for the age-old problem of incontinence.

Our commitment to your privacy At Farm Business Communications we have a firm commitment to protecting your privacy and security as our customer. Farm Business Communications will only collect personal information if it is required for the proper functioning of our business. As part of our commitment to enhance customer service, we may share this personal information with other strategic business partners. For more information regarding our Customer Information Privacy Policy, write to: Information Protection Officer, Farm Business Communications, 1666 Dublin Avenue, Winnipeg, MB R3H 0H1.

IN AT THE START

Could the program that puts University of Manitoba students into Buhler’s engineering department be a hiring model for agriculture?

HE PICKS U-PICK U-pick is good business, says Roly Reenders, as long as you like to start with customers, continue with customers, and end each day with customers too.

BETTER OFF

Farm marketing takes on a whole new meaning for producer Mike Smith and exporter Dan Doner.

FARM DIRECT When Fred de Martines ventures into posh Toronto restaurants, it’s the chefs who take out their wallets, asking for more pork than de Martines can deliver.

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8/23/11 10:34 AM

Can agriculture thrive when mixed in with high-tech entrepreneurs? Heck yeah, says this Alberta program.

The bears aren’t just hibernating. It looks like they’ve left the planet for good. Can the good times really go on forever?

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Yes, money is important, but if your marketing plan doesn’t deliver more than cash, this small farmer says you can’t call yourself a success.

BOOK REVIEW Tired of struggling through the bookwork? Fed up with the grain markets? Cut yourself some slack, says Tom Rath. He promises your farm will be better for it.

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PETUNIA VALLEY There’s no place like the farm to learn that the best jobs can be the ones that you create for yourself.

CONTENTS

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With superior

country-guide.ca 3

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: Gord Gilmour (204) 944-5756 Fax (204) 942-8463 Email: gord.gilmour@fbcpublishing.com Maggie Van Camp (905) 986-5342 Fax (905) 986-9991 Email: bmvancamp@fbcpublishing.com ADVERTISING SALES Cory Bourdeaud’hui (204) 954-1414 Cell (204) 227-5274 Email: cory@fbcpublishing.com Kelly Dundas (519) 619-2140 Email: kelly.dundas@fbcpublishing.com Head Office: 1666 Dublin Ave., Winnipeg, MB R3H 0H1 (204) 944-5765 Fax (204) 944-5562 Advertising Services Co-ordinator: Arlene Bomback (204) 944-5765 Fax (204) 944-5562 Email: ads@fbcpublishing.com

Tom Button is editor of Country Guide magazine

The short and long of it By selling $41.3 billion worth of crops, livestock and related products last year, Canada’s farmers generated 2.6 per cent of this country’s $1.57 trillion gross domestic product.

In its turn, Canada’s GDP accounted for 2.5 per cent of the world economy, which means that our farmers — who do more than their share of feeding the world — generated 0.07 per cent of global GDP. Considering the scale and the importance of the job that farmers are asked to do, these numbers make it untenable to argue that agriculture is inefficient, or that it is in any way poorly managed or a bad investment. In fact, it’s hard to imagine a better deal for humankind.

At this particular moment, too, the market looks astonishingly rational by efficiently allocating tight supplies and sending incentives to farmers to continue to invest in their businesses and to produce even more in future.

Of course, the market isn’t trying to be rational. If you simply look at fundamentals, actual prices in 2011 make no more sense than they did a decade ago when they consistently lingered below farmers’ cost of production.

Free-market food isn’t priced according to the grand vision of some all-knowing, all-seeing demigod in a United Nations office. Despite the imperfections and inequalities in the system, it’s priced by and large by the billions of producers and consumers who make self-interested decisions every day.

4 country-guide.ca

In this month’s issue, associate editor Gord Gilmour asks whether the boom in commodity prices can continue, or whether there is a bust around the corner. To a certain extent, the answer has to be, how far away is this corner you’re talking about?

If prices are to stay up and never ever cycle down into extended lows, it would be the first (and last) time in history. But then, history isn’t a useful time scale. A better perspective is, if prices were at or below cost of production for the 20 years leading up to 2008, is it possible that they can stay significantly above cost of production for the next 20?

Last year, I said that it can’t happen, because politicians won’t sit on the sidelines. The fact that those politicians — domestic and overseas — haven’t intervened to cut food prices in the last 12 months is amazing, and encouraging.

Still, the question is a real one, with wise heads on both sides.

I’m banking that over a reasonable five-year outlook, prices will generally be strong. A business plan that puts you in a healthy financial position with competitive production capacity and aggressive marketing will get you to 2016 in good shape.

I’m also betting that if you want to be in business beyond 10 years, a strategy of growth is essential because margins will get cyclically tight.

In case you’re wondering, yes, I see the conflict. Let me know what you think.

Reach me at 519-674-1449, or email me at tom.button@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.

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Call toll-free 1-800-665-1362 or email: subscription@fbcpublishing.com U.S. subscribers call 1-204-944-5766 Country Guide is printed with linseed oil-based inks PRINTED IN CANADA Vol. 130 No. 10 Internet address: www.agcanada.com

ISSN 0847-9178 The editors and journalists who write, contribute and provide opinions to Country Guide and Farm Business Communications attempt to provide accurate and useful opinions, information and analysis. However, the editors, journalists, Country Guide and Farm Business Communications, cannot and do not guarantee the accuracy of the information contained in this publication and the editors as well as Country Guide and Farm Business Communications assume no responsibility for any actions or decisions taken by any reader for this publication based on any and all information provided.

september 20, 2011

Keeps going from

BOOK REVIEW

STRENGTHS FINDER 2.0 Tom Rath Gallup Press 174 pages $24.45 (includes online assessment) Reviewed By Tom Button, CG Editor If you want to continue driving your farm’s success, should you focus on getting better at the things that are your weak points now, or should you focus instead on creating more chances to do more of the things that you do well?

It’s a better question than you might think at first, and although many of us will be tempted to shrug it off or even roll our eyes, it’s worth pausing for a minute to see if you should dig deeper.

After all, this book has been among the world’s business bestsellers since 2001, when an earlier version was published under the title NOW , D ISCOVER Y OUR STRENGTHS. Today it is one of the most prescribed textbooks in MBA schools, and it has earned praise from just about every business leader you can think of.

Clearly, no one gets very far in farming without finding out that they have many strengths, and many weaknesses too.

Maybe you get a charge from marketing.

Or maybe you’re always up on the latest technology. Maybe you excel at working out a system so all your field work runs like well-oiled machinery, or maybe what really turns your crank is the sense of

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of

control you get from really knowing your business numbers.

The only thing that’s highly unlikely is that you’re equally good at all of them.

Yet one of the demands of farming as a profession is that you do just that — be good at everything. Or so it has seemed.

Increasingly, now, one of the profession’s advantages is that you get to decide which jobs you’re going to tackle yourself, and which you’re going to get some experts to work on.

Business writer Tom Rath has no doubt how you should go about assigning who does what. Start by tossing out the old adage that, as long as you try hard enough, you can be anything you want to be. As proverbs go, Rath insists, it’s nonsense.

Instead, his maxim is, “You cannot be anything you want to be — but you can be a whole lot more of who you already are.”

Rath points to research by Donald Clifton, honoured by the American Psychological Association in 2002 as the father of strengths-based psychology. He also points to four decades of polling by Gallup aimed at discovering the specific capabilities that come into play when building a business.

The default assumption for most of us is that if somebody isn’t good at something, they aren’t applying themselves. If we aren’t good at marketing or at financial management, we simply need to buckle down and get it done.

Rath replies that this is a recipe for stagnation. You can get the job done, sort of, but you will be slow at it, you’ll only ever get average results, and you’ll resent the time you have to spend at it. Even more important, you’ll pay a heavy opportunity cost. You’ll have less time to lead your farm with the inborn talents you do have.

Business today is too competitive, Rath suggests, to get by with average performance.

The trouble is, how do you know what your talents are? For instance, marketing isn’t a talent. It’s a complex activity that requires several talents. So are most other jobs on the farm.

When you buy STRENGTHS FINDER 2.0, you get one free pass to the book’s website, where you answer a battery of 177 questions. (You only get 20 seconds per question, so you can expect to be done in a half-hour.)

The questions aren’t challenging.

Instead, they’re basically asking how you see yourself, how you like to interact with

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of8/23/11 challenges 10:34 AM you like to tackle. Indeed, when you get asked whether you’d prefer to have a wide circle of friends or a few close intimates, you may even wonder what they could possibly have to do with running a business.

Gallup, however, has designed the questions in line with its business analyses, which sort business attributes into 34 primary categories that it calls “themes.”

After you complete the online questions, it tells you which five of those 34 themes best describe you, and then goes on to make specific recommendations to help you manage better.

There’s no right or wrong. Any personality can be as sucessful as any other, Rath says. But only if you build on your themes, instead of trying to get good at the things you will never be good at.

In my own case, my themes are Strategic, Learner, Individualization, Ideation and Relator. After completing the test, I can then dig back into the book to learn more about those management types. I also get a report from Gallup telling me how to make the most of what I bring to the table. As one superficial example, I should give myself chances to think about longrange plans, but I should make sure I’ve got people around me who actually like to get things done, not just talk about them.

Is that something I didn’t know already?

After going through the process, my view is that it comes back to the first question that we asked. If we’re going to make progress, should we build on the things we do well, or get better at the things I’m not so good at? In other words, should I try to get more action oriented myself, or should I align myself with others who are better at action than I will ever be?

If the goal is important, using the best possible information for such decisions is important too.

Besides, after leafing through the descriptions of the other themes, I now have an even better understanding of just how big the differences are in the way that the people around me think. CG country-guide.ca 5

opinion

Bridging the gap Even if foodies seem out to lunch, Saskatchewan food writer Amy Jo Ehman says all farmers need to know them better.

They’re powerful, she says, and besides, making allies is such a wise move

By Gord Gilmour, Associate Editor

When The 100-Mile Diet was topping bestseller lists in North America, the reaction of Canada’s thetic “OK, but so what?”

reality, something our farmers understand only too

Most of our farmers after all are in the business

well, and which they captured with the frequently

of producing wholesome and affordable products

heard rhetorical question: “A 100-mile diet? Won’t

that are then shipped as bulk commodities to dis-

that be pretty bland in January?”

tant cities or around the globe. Even the domestic

In 2005 Saskatchewan-based journalist, writer

supply management system is bulk oriented, with

and one-time Prairie farm kid Amy Jo Ehman set

just a handful of dairies processing most of the

out to answer that question and write about it in

milk across the nation.

the book Prairie Feast — A Writer’s Journey Home

Local food might perhaps make an interesting

for

Dinner (Coteau Books, 2010). Country Guide

discussion topic. It might even be a bit of a threat,

spoke to Ehman recently about what the growing

but few farmers were going to waste time thinking

consumer interest in food means for farms, and to

about it, especially when it had all the earmarks of

ask more about why she believes every type of farm

a flash-in-the-pan trend.

from large export-oriented operations to small local

And then of course there is the cold Canadian

6 country-guide.ca

U-picks needs and deserves your respect.

september 20, 2011

Photo credit: Stuart Kasdorf

commercial-scale farmers barely rose to an apa-

OPINION

COUNTRY GUIDE: Tell us about your background as a kid from a farm who moved to the city, went to university and became a journalist.

How does that dual life story change how you look at food?

AMY JO EHMAN:: I grew up on a grain farm that was considered a larger operation by the standards of the day — 3-1/2 sections (2,240 acres) near Craik, Sask., which is about halfway between Regina and Saskatoon on the main highway between the two cities. My parents farmed there and my brother Tom still farms there today.

When I left the farm I moved to the city, where I worked primarily in broadcasting with the CBC. In 2000 I began working as a freelancer for a number of different outlets, and in 2005 my husband and I decided we would eat only Saskatchewan food products for a year. I approached the SASKATOON STAR PHOENIX about writing a monthly column while doing it, and they agreed, but the column continues even today, so I guess I’ve become their local food columnist. When that year was up, I started writing a book.

What I found was, even though I was fortunate enough to have a family farm to go back to, I didn’t really have much connection to food and agriculture. I felt quite disconnected from it, even though I was right here in the agricultural heartland of Canada.

CG: So as you were exploring that gap, what were some of the biggest surprises from both of these perspectives — someone from the farm and at the same time a consumer looking for more information?

EHMAN: From the perspective of someone from the city, I was surprised by the wide variety of food products you could find locally if you were willing to look for them. For example, I didn’t know about spice production in Saskatchewan. I’d heard of the mustard industry, of course, and I knew that Saskatchewan was the world’s largest producer of mustard. But I didn’t know we also grew spices like cumin and coriander. Or another specific example of a discovery was the fish farm on Lake Diefenbaker, which I found out is the largest freshwater trout farm in the country.

I was also very surprised just how hard it was to find any information from a consumer perspective. Most of the websites I found, for example, talked a lot about producing the crops and marketing the crops and the value of the crops. There wasn’t much out there in terms of information to consumers, though there were some industry groups that seem to be doing a very good job, Pulse Canada, for example. The canola industry does some too. But generally, you had to be a bit of a sleuth to find out about what was available.

I was really surprised about how little marketing seems to be done towards consumers.

SEPTEMBER 20, 2011

CG:What do farmers need to understand better about consumers to connect better with them? And why should larger, perhaps export-oriented producers care about this?

EHMAN: Right now there is a very strong ethic towards food patriotism.

People want food that is produced in their local area. They want to know about that food. If you start a dialogue with them, and tell them about what you’re doing, I think that would be a very good thing.

It’s true, if you’re someone who’s producing primarily for export these consumers may not ever be major customers of yours — we do produce and export a lot of food from this region.

But they might become your allies, and that’s important.

Consumers have a lot of clout, both in the marketplace and politically.

CG: I’ve talked to people who seem to find it all a bit threatening. At times it almost seems like an attack on what they’ve been doing. Have you noticed this?

EHMAN: I can honestly say that I’ve never really encountered that attitude you’re talking about. I’ve found people to be very open and interested in this, even some of the large farmers I’ve spoken to who export a lot of product around the world. They may not think it’s a market for them and their farm, but they’re still very interested in hearing about it.

CG: What’s your key message to farmers who want to understand consumers better? To me it seems they’re looking for something any good capitalist could understand — better information on the market to make their decision.

EHMAN: I like that — that’s certainly what I’m after. I think what more and more consumers are looking for are better choices and easier choices in the marketplace. For example, it’s easier to buy New Zealand lamb than Saskatchewan lamb at the grocery store. At best you can get lamb that’s raised locally but sent elsewhere for processing and labelled Canadian lamb — there isn’t a single federally inspected processing facility for lamb in Saskatchewan. I think you can expect to see more engagement with policy-makers like politicians and distributors including grocers aimed at getting better access to these choices.

CG: Just in conclusion, what can you tell us about eating a Saskatchewan-based diet? What was it like?

EHMAN: It was really good. I never set out with the intention of denying ourselves good and tasty food and I found, once I’d done a bit of research, that there were tremendous choices available. I just had to go and find them. In fact, when the year was up, I didn’t really quit, though I wasn’t as strict about it. I’ll buy bananas now, for example. But most nights when we sit down for dinner, you’ll find that the majority of our meal comes from local sources. CG country-guide.ca 7

Machinery

By Philip Shaw

Yes, big power can be intoxicating, but there’s more than ego to today’s monster tractors. On more and more farms, they’re essential for covering big acres, and also for hitching onto today’s big high-efficiency implements. They also come with big price tags, however, and a bucket full of decisions that must be made right.

Case IH Steiger and Quadtrac Series

new holland t9 series 4wd

Case IH says farmers don’t need to sacrifice productivity to meet new emissions regulations. The proof, the company says, is in its six models, the Steiger 350, 400, 450, 500, 550 and 600 at corresponding hp. The Steiger 350, 400 and 450 maintain the heavier steel frame of the larger Steiger tractors, but are built narrower frame for row-crop tractors. Available on the Steiger 450, 500, 550 and 600 hp, the Steiger Quadtrac has four individually driven oscillating tracks that reduce compaction and provide better flotation and traction in the field.

The largest Steiger tractors are powered by a 12.9-litre FPT Powertrain Technology engine. It is Tier 4A compliant with fuelsaving Case IH SCR technology for 10 per cent lower operating costs than previous models. The Steiger 550 and 600 models use a two-stage turbocharger that offers low-r.p.m. responsiveness and superior boost at high revs. Inside the industry’s first suspended cab is the MultiControl Armrest, which offers simple comfortable controls.

Case IH says the Steiger Quadtrac models give optimal ground pressure, superior flotation and better traction. It reduces compaction with all four tracks remaining on the ground and with equal torque transferred during turning. With the Steiger Quadtrac positive drive, it adjusts automatically under transport or light loads. www.caseih.com

New Holland offers six models in the high-power T9 category with the 390, 450, 505, 560, 615 and 670 models. Responding to the needs of row-crop producers, the T9 series has a slimmed engine hood for improved forward visibility and inboard planetary drive axles for narrow wheel width settings. This is reflected in the T9.390 to T9.560 with 300 to 500 hp on a 36-inch-wide frame best suited for row crop. For broad acre work, the wider frame T9.615 and T9.670, with 535 and 600 hp respectively, deliver more power to the wheels.

These New Holland tractors are powered by the new Cursor 9 and Cursor 13 engines, which employ New Holland’s ECOBlue technology with SCR and deliver increased horsepower while using less fuel and meeting Tier 4A emission standards. According to New Holland, the results are machines that cover more acres in a day, saving both time and money. The Cursor 13 engines that power the T9.615 and T9.670 have a two-stage turbocharger, one feeding the other, increasing torque for the toughest field conditions.

The T9s have a 16-speed full powershift transmission with Ground Speed Management, which automatically downshifts the tractor and adjusts engine r.p.m. to maintain best performance. As well, says New Holland, the T9s have the quietest cabs in the business, with the company’s “Comfort Ride” cab suspension and Sidewinder II armrest. www.newholland.com

 Versatile hht 4wd Versatile describes their tractors as focused on power, durability and reliability. According to the company, their high horsepower 4WD tractors from 305 to 535 hp feature proven Cummins engines, durable transmissions and spacious cab environments, and they are built to serve the farm for many years.

The Cummins QSM 11-litre six-cylinder engine powers the Versatile 305, 440, 375 and 400 models, with the 15-litre Cummins QSX six-cylinder in the Versatile 435, 485 and 535. With a 35 per cent torque rise at 1,400 r.p.m., peak horsepower is boosted, elevating the 535 for example to 570 hp. These tractors offer a choice in gear boxes between a mechanical 12x4 synchronized transmission and a CAT TA22 Powershift transmission with 16 forward gears and four reverse speeds, and eight gears in the field working range.

A key feature of the HHT lineup is the outboard planetary axle design developed by Versatile engineers. The planetary and sun gears are placed toward the end of the axle, with the planetary hubs suspended on large diameter bearings mounted directly on the axle tubes. http://www.versatile-ag.ca/ 8 country-guide.ca

S e pt e m b e r 2 0 , 2 0 1 1

JOHN DEERE 9R AND 9RT SERIES  Deere’s hot new 9R and 9RT tractors replace the 9030 series range with eight models ranging from 360 to 560 hp. Five models are wheeled and three come with tracks. The upgrade marks the company’s biggest introduction in the category since 2007, and according to John Deere, these new 9R/RT series tractors feature the latest improvements in power, hydraulics, hitch and PTO options, as well as cab comforts and controls.

“Beside the cosmetic changes that customers will easily see, we’ve made a lot of improvements to the 9 family of tractors that contribute significantly to overall productivity in the field,” says Jerry Griffith, division marketing manager for John Deere Waterloo Works. “We engineered these new 9R and 9RTs with operator comfort and ease in mind. We added more horsepower and more integrated technologies like AutoTrac and JDLink, and we’ve equipped all ag models with high-flow hydraulics and PTO options.”

Most 9R/RT series models come with Deere’s advanced PowerTech PSX 13.5L engine with a single fluid solution for optimal power and operator convenience. These engines feature an in-line, six-cylinder, four-valve head, cooled exhaust gas recirculation, electronic engine controls and series turbochargers. Transmission choices include 24-speed PowerSync manual shifts and 18-speed Powershifts. www.deere.com

 CHALLENGER MT 800C/MT900C Challenger offers advanced “C” series high horsepower tractors with the MT800 C Series track tractors and the MT900C series of four-wheel-drive articulated tractors. These tractors feature Challenger’s new digital dash display, which indicates the gear, ground speed and the number of service hours. Added to this is a redesigned tractor management system, which provides an enhanced intuitive operator experience. Integrated into them are an ISOBUS control system, which integrates with compliant ISOBUS implements to enhance the productivity and performance of the tractor.

There are nine models in the Challenger Advanced “C” line which span the engine horsepower range from the MT835C at 410 hp to the MT875C/MT975C at a whopping 585 hp. The Challenger MT835Cm, MT845Cm, MT855Cm, and MT945C feature a Caterpillar CAT C15 engine with 15.2-litre or 923-cu.-inch displacement.

The MT865C, MT875C, MT965C and the MT975C get a CAT C 18 engine displacing 18.1 litres or 1,106 cu. inches. According to Challenger, these engines have up to a 42 per cent torque rise, which under heavy loads gives the MT875C and MT975C the ability to push out more than 630 engine horsepower.

These Challenger tractors have the CAT-built 16F X 4R electronically controlled powershift transmission designed specifically for both track and four-wheel-drive applications. There are eight gears in the popular working range of four to 9.3 m.p.h. Challenger says their unique Mobil-trac system gives the smoothest ride in the industry with no grease zerks or daily maintenance points. http://www.newfromchallenger.com SEPTEMBER 20, 2011

country-guide.ca 9

business

5to askquestions your market adviser The swirl of conflicting market information sometimes makes all our heads spin, and all the promises from marketing advisers can read like so much hype. What you really want is confidence that your market adviser is the right choice for you, but there doesn’t seem any way to be sure.

The answer may be better questions. Start with these five

By Maggie Van Camp, CG Associate Editor

“Markets can be overtaken by hype and emotion,”

Once you know what you want, you can start

says ag economist Al Mussell. “The last thing you

putting together a list of all the advisers and bro-

need is an adviser or broker who injects even more.”

kers who say they can deliver on it, says Mussell,

Before the frustration sets you storming out the back door, chucking your smart phone into the

who teaches a well-known futures and options course at the George Morris Centre.

field and yelling some words that you aren’t even

Be prepared for it to be a long list, and one

supposed to know, start by thinking clearly about

that is quickly getting longer. It's getting longer in

what exactly you want.

the West with pending changes to the CWB, says

Some farmers are only looking for market back-

adviser Mark Lepp of FarmLink Marketing Solutions.

ground and outlook information. Or maybe you sim-

And it's also getting longer in the East, thanks to the

ply want a broker to make the trade. But then, maybe

energy in today's markets.

you could use someone to help you create a com-

Also be patient. Selecting the right company or

plete marketing plan with targets for each commodity.

person can already be daunting. But it's a crucial job that will not only drive your business performance, but help you sleep as well.

So get in front of your computer, or pick up the phone, and start asking these.five questions.

10 country-guide.ca

September 20, 2011

business

1. What can’t you do?

M

arket advice comes in myriad shapes, sizes, titles and kinds. There’s no one package that’s perfect for every farm, but it’s essential to know which of the following services your adviser can offer, and which they can’t.

Basically, futures brokers, commodities brokers, carrying brokers, clearing brokers, commodity futures brokers and futures commission merchants (FCM) all do the same thing — buy and sell futures and options. A broker/FCM is a person or firm registered under the Commodity Futures Act and Securities Commission in each province, meaning they use certain accounting standards and the firm is financially secure.

A FCM submits trades through their firm’s trading software or phones the order to the brokerage house order desk. FCMs are regulated by each provincial securities commission and Liz Robertson, executive director of the Canadian Association of Farm Advisers says most work for brokerage firms such as RBC Dominion Securities or ScotiaMcLeod.

Says Roberton: “These are rare professionals as it is very stressful.”

“Brokers can also give advice, forecast, prognosticate, and deal with you in the cash commodity,” says Mussell.

There are also merchants who connect buyers to sellers. They’re not registered to trade on the exchanges but are well connected with buyers. They can also be good sources of market information.

Also at work are single-proprietor market analysts who take third-party analysis and give their recommendations to neighbours and clients, and there are also marketing advisers hired by grain companies to develop marketing plans for their customers.

A marketing plan is essentially a blueprint and reference point for selling commodities, usually developed before the crop goes in the ground. Some take this service a step further and link marketing plans with the farm’s financials, including things like ROI, cash flow management, and personal risk tolerance.

“With the high commodity prices we’re experiencing higher land values, higher fertilizer prices and higher overall risk,” says Mark Lepp. “As a result, we’re seeing more growers looking for help managing the overall risk to their operation.”

2. What types of marketing strategies do you prefer?

“T

he marketing plan is really a strategic plan for marketing farm products,” says the George Morris Centre’s Al Mussell. “You need an objective — what you want to accomplish.”

Then compare your objective not only with what your adviser or broker can do, but likes to do. By stating your goals up front, you both will know whether the fit is right.

Your goals could be to sell at the maximum price or it could be to protect an operating margin or to sell with a plan that lets you sleep at night. Will you measure the success of your plan strictly by whether you achieved a certain price, by whether you hit some percentage of the range in the futures market, or by some other measure?

If this is how you’re going to judge your adviser, it’s good that they know this up front and that they explain how their strategy meshes with your objectives.

“It’s not really that technical. It just needs to be thought through logically and pragmatically,” says Mussell.

September 20, 2011

By asking which marketing strategies your broker prefers, you can assess if their approach matches your goals. For example, do they prefer hedging with futures/ options, or forward contracts?

“Risk management with hedging is different than trading commodities,” says CAFA’s Robertson.

Knowing your adviser’s preferred strategies will also let you compare them with recent research to see if they are in fact likely to be winners.

Several research projects have questioned the effectiveness of certain market strategies. In 2008, Richard Vyn, associate professor at the Ridgetown Campus of the University of Guelph, ran simulation models for corn and discovered the strategies with the highest average prices across all years incorporated short hedges using futures contracts. These strategies returned prices about 30 cents per bushel more than the baseline strategy of fall cash sales.

Vyn’s strategies with put options also generated Continued on page 12

country-guide.ca 11

business Continued from page 11 returns nearly as high as those of the futures contracts strategies.

In Vyn’s study, however, spreading cash sales through the year didn’t result in significantly higher prices than selling off the combine. Any price increases in the months after harvest may be offset by storage and inventory costs. Nor did spreading cash sales out over the year reduce risk, since there is so much year-to-year deviation in the market’s seasonal performance. Vyn also concluded that it may be prudent to use different strategies in response to the current set of market conditions.

While you’re talking with your adviser, it can also be an ideal time to sniff out if that person knows enough to clearly explain specific trading strategies that you may want to use. For example, Lepp says he’s had questions lately about how his company is going to help

clients with the potential changes to the wheat market in Western Canada. It’s certainly a way to see if the market adviser can help position the farm for any opportunities and threats.

David Clarke from RBC Dominion in London, Ont. recalls during a presentation at a seminar being grilled by a farmer about spreads. “One of the attendees asked all kinds of questions: old crop/new crop spread prices, hog/cattle spreads, wheat/corn spreads,” Clarke says.

“Thankfully, I’ve made a bit of a hobby out of watching various spread relationships so I was quite comfortable having the conversation with that individual.”

Clarke thinks the farmer’s strategy was sound, and he suggests asking a question or two about commodity spread relationships. “If the candidate can come back with an intelligent response, there’s a pretty good chance the adviser knows a thing or two about marketing,” Clarke says.

3.What’s your track record?

T

he bottom line for most farmers is that we want to know if the advice was worth paying for. “This question mostly relates to where we get growers in the range of prices,” says Mark Lepp, “…and what our client retention rate is.”

Certainly there’s a broad range of market success. Long-term research has tended to find that prices achieved by farmers who marketed on their own are similar to farmers who hired a professional market advisory service. “Our results show, at best, there was a very small price performance advantage by following advisory services recommendations for marketing soybeans and corn in Illinois from 1995-2004,” concluded Scott Irwin and Darrel Good at the University of Illinois, in their research project called AgMAS. They also found, however, that there was a huge variability in prices recommended by the services, and that it wasn’t easy to predict next year’s winners based on past results.

The best way to check success and trustworthiness is through referrals. Talk to other farmers, traders, industry professionals and industry organizations. Also check if your adviser has been a member in good standing with well-known industry associations for a substantial time.

Find out what type of skills the broker or adviser has, including their employment and education history, says CAFA’s Robertson. Also, don’t forget to ask how long the candidate has been involved in trading, and their experience before becoming a broker.

“From what I’ve seen, the longer in the game, the better the ability to read the markets,” says Robertson.

Advisers come from all walks of life. They may have lots of experience in some area of agriculture, such as lending, sales, manufacturing or consulting but not so much in marketing.

Commodity marketing is a very specific sector within the industry, and experience within the sector is extremely valuable, says RBC Dominion’s David Clarke.

Brokers and advisers who have dealt with the full spectrum of economic environments and market factors are more likely to direct you to the right action under most circumstances. Additionally, advisers who have survived through various choppy markets tend to have developed a strong appreciation for risk management.

Some people are better connected in certain commodities. For example, a company may suit your farm because you grow a lot of barley and the broker is well connected with the malting and feedlot industries. Or you may want to deal with a person who has considerable local knowledge and experience. Personal contacts in the marketplace often can provide background information that’s not otherwise available.

“Right or wrong, it seems folks in agriculture feel most comfortable dealing with someone who can talk their language,” says Clarke. Brokers with an agricultural background might pick up on a simple error in terminology when speaking with an inexperienced hedger and end up saving some grief.

It’s also important to ask exactly who will be doing your analysis and making the sales recommendations. Lepp asks, will it be a team, one person, in-house or third party?

Continued on page 14

12 country-guide.ca

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business

4. How do you keep clients informed about the market and their accounts?

W

hether it’s by instant messaging, emails or by picking up the telephone, does the way your adviser wants to communicate with you match how you prefer to be communicated with? There isn’t much point getting email alerts if you depend on voice, just as it can be a major nuisance if your broker is always calling you when you prefer updates by smartphone.

This is also an opportunity to find out if your candidate adviser has convenient office hours or

cellphone access. If they are hard to get hold of or slow to return your telephone calls or emails, this is probably a bad sign.

Mussell says you should also ask about responsibilities, such as finding out who will implement the plan and who will communicate with lenders.

Knowing who to contact regarding questions about your account statement or disputed orders may save headaches later.

5. What do you charge?

L

ike most services, costs vary with the amount and types of service. Also, make sure you understand all additional fees for value-added services.

Most newsletter groups charge a flat fee. For market advice only, you can expect to be charged by the acre with usually some minimum and maximum fees or a flat fee. “Our two entry-level products are a flat fee per year, and our AdvisorLink and BusinessLink services that are charged by the acre,” says Mark Lepp.

“We do introduce buyers to our clients and facilitate the sale of their crops but that is part of what we are charging for,” says Lepp. “We recommend on when to sell plus who to sell to. The final decision is always the farmer’s.” Brokerage fees for exchange trades are above and beyond these charges.

Commodity brokers make money through commissions. Remember, commission rates on futures contracts are paid per contract, not per order. The only way they can make a commission is if you make a new trade. Some may be tempted to churn, or overtrade accounts. Be wary of any broker charging outside than norm or who recommends you blow all the funds in your account on the first trade.

Always remember, good brokers never pressure clients to trade.

In the 1990s, many commodity brokers were charging in excess of $150 per round-turn. Since about 2005, full-service rates have typically ranged from $80 down to about $30. Transactions done at the Chicago Mercantile Exchange or the International Commodity Exchange are levied in U.S. dollars and ones at Winnipeg Commodity Exchange are

14 country-guide.ca

levied in Canadian dollars. A round-turn rate covers both the buy and sell sides of a trade. A half-turn rate only covers the buy or sell side of a trade.

Minimum gross income or net worth and a minimum operating line of credit or bank cash deposit is usually required to have a trading account. Minimum size accounts are sometimes required, along with margin requirements and call procedures. Some of these guidelines may be reduced or waived under certain conditions especially for clients who only plan to hedge in their trading accounts.

According to Alberta Agriculture and Rural Development’s fact sheet, Choosing a Commodity Broker,(www1.agric.gov.ab.ca/$department/deptdocs.nsf/ all/sis1015), churning an account is giving the broker permission to buy and sell futures and options contracts based on the broker’s opinion of the market and with no specific order from the client. The objective is to make a profit for the client but the client, not the brokerage firm, covers any losses.

In some parts of the U.S., option chophouses use churning or rolling the money to generate enormous commissions. They peddle options over futures contracts because commissions are charged up front, no margin calls or deficits are possible, and they can sell more options than futures.

Firms can have different policies regarding margin. Watch out for companies that want you to invest an inordinate amount of money in commodity options. Options require money upfront and not on the back-end, so these companies may want your working capital for themselves right away. CG

September 20, 2011

BUSINESS

BOOM VS. BUST

Can the good times last forever?

By Gord Gilmour, CG Associate Editor

anadian grain growers are in unfamiliar territory.

Their farms are suddenly profitable. Even stranger, their farms are consistently profitable, mainly due to across-theboard strength in grain prices. And that’s only the dizzy start.

Suddenly, all the old economic laws about market cycles look like they were written for some other industry in some other era. The bears aren’t just taking a break. They seem to be extinct, and we’re assured that the new demand-led market means prices will be stratospheric for decades to come.

To be sure, there are words of caution.

Rémi Lemoine, chief operating officer of Farm Credit Canada paints a challenging, but not impossible, landscape that farmers need to tread carefully while passing through.

“Don’t be naive and think it’s the new reality and it’ll never change,” Lemoine SEPTEMBER 20, 2011

says. “Now is the time to build equity and invest in the future.”

That said, Lemoine isn’t pessimistic.

“Debt is higher, but the tools to manage it are better,” he says. “We shouldn’t see a repeat of the past debt troubles. I don’t see it going like it did in the ’80s.”

Even among farmers — who are as skeptical an audience as you’re likely to find anywhere — the evidence of population growth, ethanol demand and the rising global middle class is hard to dismiss.

This effect is even more pronounced because of the dismal economic times the sector endured from the 1980s through the early 2000s. For an entire generation of farmers, it could be tough to downright impossible to pick crops that pencilled out for profitability.

As you might expect, better times have made for a wave of optimism in the grain industry, reinforced by a chorus of Continued on page 16 country-guide.ca 15

BUSINESS Continued from page 15 financial analysts and investors suddenly interested in agriculture. But within these opportunities, some analysts are also seeing dangers — even an echo of the boom-and-bust cycle of the 1970s and 1980s.

In the 1970s a similar commodity boom swept the world. An Arab oil embargo in 1973 caused energy prices to spike, and the entry of the Soviet Union into grain markets as a buyer at roughly the same time drove prices to a new plateau, setting off an explosion of investment on the farm.

But when the boom went kaboom and prices fell below the cost of production, it set the stage for the farm crisis of the 1980s, one of the blackest decades in farm history.

So the question is, is it really different this time?

There are plenty of voices saying yes, usually supported with the above litany of population growth, biofuels and middle-class spending.

And, of course, looming in the background is the issue of our production limitations, especially with weather that seems to rock from extreme to extreme.

Even in an ideal scenario, it’s got to be a tough challenge for the world’s farmers to feed nine billion mouths and almost as many automobiles.

It all adds up to a tough environment for grain producers to make business decisions in. How should they invest in their operations to take advantage of these opportunities? How can they balance risk and reward while they do it? And what do they need to know to make the right decisions?

BUSINESS CHOICES Daryll E. Ray, an agriculture economist based out of the University of Tennessee in Knoxville has been one of the loudest voices counselling farmers to exercise caution. He recently told COUNTRY GUIDE that the farmers he’s spoken to about these issues acknowledge there are a lot of balls in the air right now, and trying to predict where they’ll all land is causing a lot of trepidation.

“I certainly feel their frustration,” Ray says. “It can be very difficult to understand what’s going on right now, especially since I’m not sure we have a clear picture as an industry.”

For example, Ray says, take a look at the prevailing wisdom that growing demand will drive prices upwards over time. Then take a look at the real numbers. Sure, the dollar value of exports has grown over the past several years, but the volume of total exports hasn’t matched that pace.

The International Grains Council’s August 2011 Grain Market Report provides a bit of context. It pegs total coarse grain trade in 2007-08 at 240 million tonnes and it estimates the same trade in 201011 to have grown to just 243 million tonnes.

“The total value of these global grain exports has certainly climbed as prices have risen,” Ray says.

“But the total quantity has actually been very flat.”

Add to that equation the reality that many of 16 country-guide.ca

these developing countries are making huge investments in agriculture research. For example, China is said to have close to 20,000 PhD-level agriculture biotechnology researchers working on increasing agriculture productivity, and their government expects their genetic breakthroughs to contribute 63 per cent of agriculture productivity growth by 2020.

While there are never any guarantees in life or farming, primary research is a numbers game. More researchers means more discoveries, and more grain and oilseed production, Ray says. And that suggests a central flaw in the prediction that we’re headed into an era of ever-increasing prices.

“We’re always looking at the demand side, not the production side of this equation,” Ray says. “I think that’s a mistake. We should look at both.”

The story of which side of the equation to believe boils down to a pair of competing world views that can be best summed up as the Two Thomases.

On one side is Thomas Malthus, the 18th century Scottish economist who penned the groundbreak-

“Prepare for the next downturn, whenever it is.”

— Rémi Lemoine ing Essay on the Principle of Population in 1798. To simplify his central idea, Malthus claimed that human population and progress would, ultimately, always remain checked by agricultural productivity, a world view that’s now referred to as “Malthusian.” Population is always poised to grow faster than our ability to feed it. So if we remove disease and other restraints, we will have a guaranteed market for every bushel that farmers can produce, basically from now to eternity.

On the other side is Thomas Edison, inventor extraordinaire. His spirit of discovery and innovation, say proponents, will surely find solutions to production limitations as they arise. They point to the green revolution and biotechnology as just a pair of examples of human potential and its ability to solve these thorny problems. But exactly what will that innovation look like?

Initially it won’t look all that much different than today, says Ray. There’s still a fair bit of low-hanging fruit in established production areas that haven’t yet made the investments to maximize production. One of the most obvious spots is Brazil, where farmers there are industriously converting former pastures to cropland using huge applications of lime to balance the soil pH and make it suitable for annual cropping.

Ray says there’s the potential for something between 200 million and 300 million acres to be added to the global arable land base in this country alone.

“I suspect we’ll see their beef industry move closer SEPTEMBER 20, 2011

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BUSINESS to the model we’re familiar with where animals are fed in feedlots, and that pasture will continue to become cropland,” Ray says.

While the details differ, there are also other regions where production could increase just by making investments in proven technology that’s already widely used in other parts of the globe. Ukraine, Russia and the collection of former Soviet territories known colloquially as the “Stans” for example, have long failed to live up to their productive potential, first under the Soviet collective farm model and now under a botched land privatization scheme from the early ’90s that saw much of the land broken up into small, uneconomic units.

Then there’s the longer-term picture which could see the yield potential of genetically modified crops finally begin to pay off. And that’s all fine and good — at least in the short to medium term. But over the longer term there are some much larger challenges that need to be grappled with, say others.

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THE OTHER SIDE OF THE COIN Don Flaten, a soil scientist at the University of Manitoba says that at first glance, crop nutrients show the potential to be a major production bottleneck in the future.

“We can probably continue to increase agricultural productivity in the short term with improved genetic yield potential and better management of water and nutrients, but there are limits to this,” Flaten told COUNTRY GUIDE recently. “In many cases our farming systems rely on intensive and increasingly expensive inputs of non-renewable resources such as fuel and fertilizer that are not used very efficiently or recycled very well.”

To get some sense of this, consider the two major crop nutrients, nitrogen and phosphate. Nitrogen is almost exclusively manufactured from natural gas. Phosphate comes from rock phosphate mines, which are a finite reserve.

“Reserves of both will eventually become exhausted or too expensive for Continued on page 18 SEPTEMBER 20, 2011

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Continued from page 17 many of the world’s end consumers to afford,” Flaten said.

That’s not to paint an entirely grim picture, however. New technology like fertilizer coatings and inhibitors show great promise in reducing environmental losses of nutrients. Better tools are becoming available for measuring soil nutrient reserves and crop needs, paving the way for more precise applications. Likewise there remains enormous potential to close the nutrient “loop” and reclaim nutrients from everything from waste food to human sewage.

But that’s not necessarily going to translate into peace of mind for the country’s grain growers, Flaten concedes. He suggests that volatility both in prices and input costs will be the simple reality going forward.

“These economic factors, as well as climate variability, will keep farming as a high-risk venture,” Flaten said.

THE ECONOMIC DICE Then how do farmers make basic business decisions amid such uncertainty?

The FCC’s Lemoine says it’s time for farmers to get strategic in their thinking.

“Prepare for the next downturn, whenever it is,” Lemoine says.

Investments should include everything from new technology that makes your cropping systems more efficient, to sound business advice that ensures your business is well positioned to withstand theoretical — but likely inevitable — future shocks.

Among the most important exercises a farm man-

18 country-guide.ca

China has graduated 20,000 PhDs and says they’ll boost yields more than the Green Revolution ager can undertake is a stress test that changes some of the variables like crop prices and interest rates.

“Crank your interest rates up to seven per cent, and see what happens to your bottom line,” Lemoine advises.

While interest rates have hovered near historic lows in recent years, sooner or later they will begin to creep upwards. With many farmers using a variable rate with the option to lock in rates at a later date, being aware of interest rates trends will be very important.

“Fortunately, we don’t seem to be seeing the dramatic swings that we have in the past, such as in the 1980s,” Lemoine says.

Generally Lemoine says he sees farmers as well positioned. They may be using a lot of debt, but they’re good at managing it, he explains. They also seem to be making investments that will improve efficiency and productivity in the good times to make their operations more resilient in the long run.

EVERY SO OFTEN So is the answer boom or bust? To put it bluntly, nobody really knows. Crystal balls are in short supply, there are no psychics out there and the best anyone can do is try to make an informed decision.

FCC’s Lemoine says in the end it’s all going to come down to sound business management. Well-run businesses will succeed. Others will encounter challenges. Farmers should make sure they’re taking a realistic approach to their operations and the sector itself and prepare for the future. If they don’t they might not like the results.

“It can certainly catch up to you,” Lemoine says.

In the end, every farmer will make their own decisions based on their businesses, their appetite for risk and the opportunities they see, he says. Just don’t get too carried away by the sudden wave of optimism that has swept through the farm community.

Daryll Ray insists that the past can help inform us about the future.

“I’ve been in this business for close to 50 years now,” Ray says. “That means I’m now into my fourth new era. There was the postwar boom, the boom of the 1970s, a shorter period in the mid-1990s and today. They all sounded the same at the time.

“Every so often,” says Ray, “we enter into a period where we hear that everything is going to be different — and it never is.” CG SEPTEMBER 20, 2011

BUSINESS

Across the country, bins are going up faster than anyone can count.

Does every farm need its own system?

By Richard Kamchen

SEPTEMBER 20, 2011

BIN THERE t’s a change you just can’t hide.

More and more farmers all across Canada are choosing on-farm bins as their primary strategy for value adding.

At first glance, it seems an almost foolproof choice. You get the benefits of value adding without the costs of going into specialized crops, and without the risks of alternate markets. And that’s exactly how it turns out on a majority of farms, where bins prove a successful strategy for generating extra income.

The farmers that C OUNTRY G UIDE talked to in order to background this story report their on-farm grain storage and drying systems pay for themselves in three to five years, with minimal downside risks as long as the systems are well planned and you’re able to pull off average to above-average yields.

A potential surprise, however, can come from the fact that on-farm grain handling actually is more like other value-adding projects than it first seems.

Like them, grain handling is a value-adding project that tends to influence farm decision-making at every turn, from how you plant, finance and market your crops to how you pass on your estate.

There are opportunity costs as well.

Grain-drying systems in particular can eat the clock, not only during harvesting but also for monitoring, repairs, upgrades and even general thinking.

That’s all time that you could be spending trying to turn an extra dollar somewhere else, so the cost analysis and the payback calculations for drying systems can be much more difficult than the computer programs at the dealership might suggest.

Nor is on-farm storage a universal choice. Manitoba farmer Jim Pallister

for one is no big fan of on-farm storage.

Although he’s buying some hopper bins this year, it’s more a reflection of a wet spring that forced him to seed everything in a two-week window, which in turn is making for a concentrated harvest.

“My philosophy around grain storage is we’re not in the business of storing grain, we’re in the business of growing it and selling it,” Pallister says. “Over the years, I have never invested in granaries because our strategy was always to move the grain as quick as possible since the crops that we were growing were always quite in demand.

“There’s risk of storage of grade loss, to say nothing of the interest,” Pallister says. “And by having cash, we were always able to have relatively good liquidity over the years.

Pallister also sees changes at the Canadian Wheat Board as curbing bin expansion. “The quota system is what held grain back onto the farms and forced people to deliver it over 12 months,” Pallister says. “Rather than get drawn into that and build a bunch of storage, we’ve managed to expand steadily here and only buy a few hoppers.”

Pallister believes that in the event the CWB loses its single desk — as the Conservative government is planning — on-farm storage expansion in Western Canada will be cut back significantly.

There can be a downside with cash flow too. “It’s not like an elevator where you go in today and say I’m going to sell my 20,000 bushels and pick up a cheque tomorrow,” says Mark Brock, who farms at Staffa, Ont. “The only problem with on-farm storage from a marketing standpoint is it’s not quick cash that you can Continued on page 22

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Business Continued from page 19 get at an elevator if your crop’s stored there. But I don’t think that’s a deterrent at all, I just think you have to be conscious of it.”

Grain buyers are paying “There’s a lot of bins gone up in the last five years in the area by guys who historically never really thought about it and took their crop to the elevator. Now, they’re seeing some advantages to investing in their own facilities,” Brock says.

Brock runs D&D Brock Farms, a livestock and cash crop operation with broiler breeders and a 1,500-acre rotation of corn, wheat and soybeans.

One of the reasons for the rising number of bins is grain company consolidation. In Brock’s area too, Cargill has shut down a few sites, in no small part due to the creeping suburbs that are engulfing elevator locations, and the noise and dust complaints that often follow.

“They’re a little concerned about being good neighbours in the community,” says Brock. “For a while, there was a slowdown by the commercial elevators in their expansion and capitalization. So farmers themselves have been investing instead of these commercial elevators.”

Elevator companies would rather have farmers doing the storing anyway, says Bob Devolder of Devolder Farms, a seed-processing and grain-handling and storage equipment business two hours west of Brock at Dover Centre.

“You see more old elevators closing all the time, and that’s because they see farmers building their own (storage),” Devolder says. “As these old elevators get past their time, where it might take some money to fix them up, a lot of them are just closing down.”

The growing size of farm operations is also contributing to storage expansion, says Devolder.

“All of the farmers who are bigger and expanding, they pretty much all believe in having their own storage,” says Devolder. “When they pick up more acres, they need to expand, even if they have existing dryer setups and storage.”

Saskatoon’s Bert Sutherland, a dealer for Sukup Manufacturing Co., which produces grain storage, drying and handling equipment, sees similar trends in Western Canada, where grain companies are paying farmers to do the storing for them.

“Instead of them building the bins, 22 country-guide.ca

Simple paybacks as short as three years are driving bin expansions, but watch those opportunity costs the farmer is building the bins and they give him a little premium on the price,” says Sutherland, who also heads up Bert Radio Online. “They don’t want the expense of the storage.

“The other thing that enters into it is there’s lots of farms being started up or purchased by corporations,” adds Sutherland. “They’re looking for farms that are located in strategic locations for transport, with power and gas, and that have grain handling on them. They want to roll the trucks in, load them, and get them out.

The goal is 15 minutes per truck.”

There was a time when if a grain elevator point moved a million bushels of grain in a season, it was cause for celebration, Sutherland notes. “Today, we have farms that store a million bushels of grain. That was almost unheard of, but there are farms like that.”

Market advantages One of the main benefits of on-farm grain storage is marketing flexibility, as farmers can hold on to their crops while they hunt for better prices.

“I think it gives you way more options,” agrees Devolder. “If you deliver in the fall to a particular elevator, your options are really limited at that point. (With storage), you can shop around. You have way more flexibility on what you can do.”

Typically, a farmer will make more money storing his crops because at harvest time, supplies are plentiful and buyers will have access to all the product they need. It’s later in the year when grain is more scarce that they’ll pony up.

“Ethanol plants never shut down so they need it right up until September, October when the new crop comes off.

So somebody has to hold it, and they usually pay you well for doing that,” Devolder says.

Another advantage is you’re not paying anyone to store your grain if you have your own facilities.

“If you’re storing at an elevator and the price of corn goes up five cents, you’ve probably already got five cents into the storage, so you haven’t made anything. Whereas if you’re storing it on farm, and it goes up five cents, that

comes back to you,” says Alan Kelley of Kelley Grain Bins in Paris, Ont. Some farmers with on-farm storage avoid dealing with elevators, selling their grain directly to end-users and picking up the handling fee.

“The big companies don’t want to deal with a lot of smaller ones,” says Kelley, who sells grain bins but also farms. “The one place where that works quite well is feed mills. There’s a lot of farmers who store on farm that take their own directly to a feed mill and get a better price.”

Harvest flexibility is a big plus that drying and storage offers farmers, adds Devolder. Farmers can set their own hours and aren’t dependent on when the elevator is open. “It certainly gives you a lot more freedom to control your own destiny,” Devolder says.

Economics have also played a part in farmers undertaking their own drying. According to Kelley, his customers have told him their upfront costs end up being about half of what they would pay through the elevator.

“Now, that doesn’t cover their capital costs and labour, but there again, they’re paying themselves.”

A system can end up being paid back in three to five years, although it can be even less. Brock at one point made a $40,000 upgrade to an older system and estimated it paid for itself in about two years.

“But that was because the way corn came off wet for two years and yields were good, so we had more volume to dry and I was drying for half the town,” Brock says.

“Now I put a bigger system in since then and I looked at it as a pretty comfortable three- to five-year payback, no problem.”

Brock adds that farmers looking into expansion and upgrading should be prepared to invest a good amount of time and management to look after whatever system they choose. Some are able to automate their operation to some degree.

For instance, Brock uses his BlackBerry to access a web camera so that he can check out how his corn is progressing through the dryer while he’s combining. He’s also looking into operating the system remotely, where he can control it over the Internet.

September 20, 2011

business “I don’t think we’ll ever be able to start the dryer over the Internet, from a safety standpoint, but we’ll be able to shut things down if we had to,” Brock says. “Down the road, if we put in different transfer systems, we could shut down one transfer system and start up another one.”

Buy or lease?

Leasing has become very popular over the last 10 years or so, according to Sutherland, who says he leases most of his bins.

It can take 20 years to depreciate a bin under normal capitalization, but through leasing, the majority of it can be written off in three years, Sutherland explains. “You do three years if you’re looking for tax opportunity, use five years if you’re looking for some cash flow, and if you want longer, finance it.”

Leasing also allows more cash flexibility and the option to buy the equipment at the end, Sutherland adds. “If you’re looking for a piece of equipment and you go out and spend 100 grand on it, there’s $100,000 cash out of your pocket. But

September 20, 2011

if you lease it, you can put out $33,000 for the first year, $33,000 the next year, $33,000 the next year and then buy it for $10,000 or $20,000.”

If a farmer does want to buy instead of lease, Sutherland strongly urges against being swayed by the lower prices of purchasing used bins at farm auctions.

“I’ve seen it done, not with much success,” Sutherland says. “You pay the labour to take it down and pay the labour to put it up,” in addition to the cost of new bolts to rebuild the torn-down bins.

What will you pay?

Basic bins start in the range of $1.75 to $2.25 per bushel, including full-aeration floors, concrete foundations and unloading systems with power sweeps, but that can be a very misleading way to guesstimate the cost of a new system.

Equipped with a dryer, legs and complex augers, system costs can easily climb toward $10 per bushel, especially if you need to upgrade to three-phase electricity and bring natural gas to the site.

Contractors contacted by Country

Guide say they install systems starting at $20,000 and topping out above $1 million.

“The bigger the bin, the cheaper it is per bushel to build,” says Alan Kelley. “With the different types of dryers, there’s such a variance whether it’s inbin or a tower dryer. There’s a huge difference in the capacities. Obviously the bigger it is, the more money it’s going to cost. To put any kind of an average on it, there’s just too many variables.”

As a rule, however, a 10,000-bushel bin will have a much lower per-bushel price than two 5,000-bushel bins, but some farmers may still prefer the latter, depending on their operation. “And for the guy who only has 10,000 bushels of storage, a transport auger is all he needs to empty that bin and fill trucks and not do it that often,” Kelley says. “But someone else who’s got a bigger setup needs to move the trucks through quicker, and you get into an overhead bin on a structure, so now you need a way to fill it and it’s getting too high to just use an auger, so he’s got to get into elevator legs and all this stuff...” CG

country-guide.ca 23

BUSINESS

SELLING THEMSELVES The farmers in the following three profiles sell a bit of themselves when they sell their crops and livestock. It’s what their customers pay a premium for… having a relationship with the people who grow their food

By Rebeca Kuropatwa t’s an exaggeration to say that farmers and consumers are on opposite ends of the direct-marketing debate, with consumers wanting farmers to pull up their driveways and drop off the week’s local food, and with farmers saying, “Thanks, but that isn’t what I do.”

But as exaggerations go, it isn’t that big.

In terms of numbers, more farms across the country really are getting involved in direct marketing. But the growth is patchy, it’s often spasmodic, and it isn’t coming anywhere close to filling market demand.

Of all places, it is surprising to see empty stalls at farmers’ markets in agriculturally rich Manitoba and Saskatchewan, where there are increasing calls for more crowd-drawing farmers’ markets in even the remotest of communities.

There’s a disconnect between what these consumers say they want, and what farmers say they can run a business doing.

“We (need to) figure out a plan to recruit farmers’ market vendors,” says 24 country-guide.ca

Dianna Mae Hocaluk, director of the Farmers’ Market Association of Manitoba. “There is a lack of affordable farmland for small-scale farms… (and) a lot of large, corporate farms have taken over most of the land.”

Manitoba has over 13 million acres of improved farmland, with the bulk of it being operated by large farm operations.

There’s evidence that smaller farm operations are on the rise, but demand continues to outpace them.

That said, there’s no denying that local food has made big strides in the province.

Manitoba had only 13 farmers’ markets back in 2007. Today, there are 48.

Saskatchewan has a similar outlook.

The province’s farmers in the last two decades have undergone huge diversification into crops and livestock breeds that used to be dismissed as “niche.” Still, that isn’t making it easier to introduce localfood marketing. “I know there’s good spice production, but they (the producers) are too big to consider doing some portion

at a small scale and getting the product right into the hands of the people who live here,” says Debra Claude, operations manager for Saskatchewan Farmers’ Markets.

Economic realities are at play, says Kim Shukla an agrologist and co-owner of Stoneland Orchard, a fruit and vegetable operation near Steinbach, Man. She and husband, Richard Whitehead, bought their farm 10 years ago and sell at two farmers’ markets a week.

“We have to be selective about the markets we choose,” said Shukla, who said she would need to turn $2,000 to $10,000 to make a market day worth her time, which is something far more feasibly achieved in more densely populated areas.

It turns out, however, that it isn’t all about the numbers. At least, that’s according to the following three farmers who reflect the trend in what might be called non-conventional marketing. They say they look beyond pure numbers when they are evaluating their farms. The question is, Am I doing what I want to do?

SEPTEMBER 20, 2011

BUSINESS

FARM DIRECT Direct marketing works for Fred de Martines, because he embraces it at every point in his operation

By Steven Biggs, CG Contributing Editor t’s a funny thing to remember about the posh event where I first met Fred de Martines, but the striking thing about lunch was all the trendy meat served up with such great fanfare, including cuts that a generation ago we were told to turn up our noses at.

Believe me, no one was turning up their noses on this day, or closing their wallets either. We were in the ivy-clad Hart House at the University of Toronto, a place that may well be the most famous university building in Canada, and we were seated around linen-draped tables in the aptly named Great Hall.

It is a place meant to breathe culture and sophistication. To be in the midst of it, looking at the polished wooden panelling and the leaded windows that soar up to the vaulted 60-foot ceiling is to live, what in these circles, is the very definition of the good life.

The occasion was a hospitality industry symposium called Terroir. On the agenda were breakout sessions covering topics such as deciding whether or not wine should be oaked, how to use bitters to make the perfect cocktail, and how to create a local menu.

Then, at the end of the day, everyone retired to a tasting session in a more intimate — and absolutely packed — room.

I suspected I was the sole farm writer in the clutter of food-writers, sommeliers, restaurateurs and chefs, and I had practically given up any hopes of making any new farm contacts.

Yet it’s here that someone introduced me to her “favourite farmer,” and while the crush of people made me feel claustrophobic, Fred de Martines appeared SEPTEMBER 20, 2011

before me, relaxed and clearly enjoying the ballroom-type mingling.

Later, as I got to the door, thinking I had done more schmoozing than anyone could ever be reasonably expected to do, I took a parting glance over my shoulder and there was de Martines, still chatting his way around the room, looking as fresh and as engaged as at first sight.

It was then that I first wondered what image he might create on his farm. It was hard to imagine him with dirt under his fingernails, let alone s*** on his boots.

A few weeks later when I did visit de Martines on his farm, Perth Pork Products Ltd., he emerged from the hog barn clad in workboots, dusty blue overalls, a ball cap, and a dust mask hanging around his neck.

He had metamorphosed into the role of farmer, yet the look on his face was the same as it had been at the university.

In other words, that was the moment my education really began.

CUSTOMERS WELCOME HIM When I ask de Martines whether his neighbours seem interested in direct marketing, he shakes his head and says, “None of them would want to do what I’m doing.”

It requires frequent trips into the city and talking to strangers — and to many farmers, these are the opposite of what attracted them to farming. But then de Martines says something that might make a lot of farmers think twice: “Each and every customer that I go to is happy to see me.”

No doubt his friendly manner has something to do with the reception he gets, but equally important is the product he is selling. While he has conventional pigs in the modern finishing barn, they don’t belong to him — he raises them on contract. The focus of the operation has shifted to rare and heritage breeds with Continued on page 26 country-guide.ca 25

BUSINESS

“Talking is easy, listening is hard.”

Continued from page 25 Wild Boars, Tamworths, Berkshires, and Wild Boar X heritage breed crosses. The finishing barn isn’t suited to the heritage breeds, otherwise he wouldn’t have any conventional pigs at all.

While he does sell to farm visitors, the core of de Martines’ direct-marketing business is restaurants and butchers. He rattles off a long list of Toronto clients to me, and those that I recognize are high end. While he has customers all over the province, a good chunk of his product goes to the Toronto market, where he himself makes the deliveries.

A CONVENTIONAL BEGINNING To most commerical hog farmers, the idea of heritage pork might carry a whiff of alternative agriculture, but that isn’t how it started for the de Martines family.

Fred and his wife, Ingrid, purchased their current farm when they came to Canada from the Netherlands in 1979. Fred’s background was farming, having trained as a certified swine specialist in Europe.

They were well entrenched in farming hogs conventionally. That’s why they built the modern barn, although even here there is a customer-focused difference. De Martines added a viewing room to allow visitors to peer through glass windows to see the animals, slatted floors, and dimmed lights.

26 country-guide.ca

De Martines tells me that when a group of visiting journalists got to the viewing room, he decried the fact that so many stories about farming are inaccurate. “It’s because of you,” he told them. Another time, a woman visiting the farm didn’t want to go into the viewing room for fear she might have nightmares. When she eventually did, she heartily thanked him for the eye-opening experience.

INTO DIRECT MARKETING Between rising costs and bad publicity for farming, de Martines was uncertain about the future of conventional pork. In 1992 he decided to raise a few Wild Boars.

De Martines started marketing directly in nearby Stratford because only restaurants were interested in buying Wild Boar meat. As the operation grew, he eventually took on the Toronto marketplace, about two hours away. “I felt that I was ready,” he simply says.

De Martines has slowly built his client base, one restaurant at a time. “You must find out how restaurants work,” he says, adding that such an understanding is critical because what’s important to a chef is not necessarily important to a farmer.

It took de Martines 15 years to ramp up the business to its current size. In the beginning he finished one non-conventional animal per week. Now he does 20, and the limiting factor is his production capacity, not his sales.

De Martines has no regrets about moving into direct marketing. “I really like it,” he says. Chain stores, he explains, are intensely focused on price, despite assurances they promote locally raised food. “There’s no interest in the farmer,” he says.

That contrasts with the butchers to whom he sells. They make sure he gets a price that allows him to stay in business and continue to provide a product they want.

De Martines cautions that direct marketing may not be the right choice for everyone. “If you’re doing it only for the money, don’t bother,” he says, adding that it takes a lot more than a ready smile and a change of clothes. For example, he must understand how every client wants their meat cut. That means not only attentively listening to client needs, it also means spending time learning about butchering. “Talking is easy — listening is hard,” de Martines says.

When I ask about food events, he says, “I’m talking to people who really enjoy good food and really appreciate it,” adding, “It’s a lot of fun.” Along with the hospitality symposium where we met, he recently participated in an event called Savour Stratford and a big Slow Food event in Toronto called Picnic at the Brickworks. These events help build contacts, he stresses, and he makes a point to speak with every chef.

De Martines places a lot of emphasis SEPTEMBER 20, 2011

PHOTO CREDIT: DAVID CHARLESWORTH

— Fred de Martines

BUSINESS The family designed the farm logo to make Perth Pork Products easily recognizable. It has a smiling pig over the outline of Perth County, with the tag line Quality From The Farm.

“The message I want to leave with people is that they’re talking to a friendly guy,” de Martines says. “You can be very serious and still have fun.”

on conversation skills. “If you show true interest, you can talk about things other than pork — it’s important,” he notes. He also engages with everyone, not just the executive chef or butcher. The line cook today may one day be the executive chef.

As for challenges, he says the main thing is the long lead time, which for some of the rare and heritage breeds is 1-1/2 years to two years — an eternity compared to commodity pork.

“That lead time was a bit nerve wracking,” de Martines says. He goes on to describe the time and commitment it takes to find new customers and he emphasizes, “Repeat customers are so important.” The key to repeat customers, he says, is quality.

“You have to have a consistent quality.”

When I ask what his farming neighbours think of him, he shakes his head and says, “They think I’m crazy,” adding that many of them wonder who will eat the stuff he produces. He is still a farmer, although he only spends part of his time on production.

The rest goes to sales and marketing. “Just me,” he says, when I ask whether he hires anyone to help with marketing.

BUILDING AND PROMOTING A BRAND De Martines says that he doesn’t actively seek out media coverage but the media seems to find him. A short while after visiting Perth Pork, I found an article about the farm in a general-interest Montreal quarterly magazine, and after my farm visit I received a copy of the Perth Pork email newsletter, which tells customers that chef Lynn Crawford of the Food Network show “Pitchin’ In” spent the week filming an episode on the farm.

The de Martines’ son, Mark, has started breeding Tamworth pigs and selling them to Fred and Ingrid to finish. It’s a

good way for him to get into farming. But Fred points out that raising Tamworths is only worthwhile if there is someone to manage direct marketing, giving more value for the premium animal than a distributor would.

As we finish the farm tour, we pass a pen of Wild Boars and de Martines shovels in some black walnuts. The Wild Boars have their mouths open as they use their molars to crack open the walnuts, and Fred explains that is why the crunching sound we hear is so loud.

Walnut-finished pork is a premium product. But more than that, the walnuts turn out to be a means of engaging with homeowners in nearby Stratford, who rake up bags and bags of walnuts every fall. Until he offered to take the walnuts, they went to landfill. Some people like to drop off bags of walnuts at the farm so they can feed a few to the pigs — if not, de Martines makes a run into town to pick them up.

What’s next? He’s looking for a source of acorns. Customers feeding the livestock nuts: that’s a change of thinking. CG

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BUSINESS

HE PICKS U-PICK

30 country-guide.ca

By Rebeca Kuropatwa

oly Reenders’ story starts out the way a lot of Canadian farm stories start, with Reenders taking over the family operation when his father retired. But that’s about as far as the similarities go.

Reenders’ father wasn’t a typical farmer, and it wasn’t a typical farm. Instead, his father was a full-time teacher who farmed on the side for much of his career, and the farm was 30 acres of vegetables just north of Winnipeg, the city in which Reenders grew up.

“My dad bought 30 acres of farmland in 1969,” recalls Reenders, who was just seven at the time. “Because we had 30 acres of vegetables, it was a lot of hard work… and, as a kid you’re not really interested in a lot of hard work. But growing up, I realized I still liked seeing things grow, growing food, and I always knew I’d get into some sort of produce farming.”

Reenders went on to graduate from the University of Winnipeg in kinesiology and today, on top of his U-pick operation, he works full time for the province as an ergonomist in the Department of Labour and Immigration.

To some farmers, Reenders’ story will seem like it’s short on commitment. Yet Reenders doesn’t see it that way.

Like many other U-picks, the Reenders began with other plans.

“My dad started up the U-pick operation back in 1976,” says Reenders. “Before that, he brought his produce to a wholesaler. But at one point, he was left with a whole bunch of really nice peas because the wholesaler couldn’t take them. So, he put an ad in the paper saying ‘pick your own peas.’”

“People came and helped clean off that field, giving him the idea to try it out with some other crops.”

But, having 30 acres of U-pick to manage came with challenges.

Simply put, it was an enormous amount of work, especially since it was being farmed organically. So over time, the family sold lots off the farm, with Reenders’ father farming just eight acres when the reins changed hands.

“The first year I had the land, I didn’t grow any vegetables or farm it other than planting the whole acreage into rye,” Reenders says. “The rye made that land gorgeous. There wasn’t a weed to be found. The next year, in 2000, my dad and I started working the land together — this time with him helping me out, instead of the reverse.”

In the intervening years, Reenders has seen the U-pick sector start small, get big, and then get small again. Today, Reenders said he only knows of a couple remaining U-picks. “That’s likely because it’s a lot of work to maintain and for people to come and pick.”

Now, however, Reenders believes U-pick is poised to increase again, thanks to more people wanting to buy local food, as well as wanting to get back to the earth and eat naturally grown produce.

For Reenders, it points to the essential ingredient for U-picking.

“You must stay on top of it,” he says. U-pick farming takes active management.

It also takes a willingness to let people onto your land. Sometimes that’s easy. Sometimes not so much.

Reenders says he sincerely enjoys working with the public. “You need good people skills and to be able to explain proper picking — not damaging your crops while also helping to teach them.”

Floodway Gardens has a website (http://floodwaygardens.com) and two phone lines feeding into an answering machine that provides crop availability and picking conditions. Reenders doesn’t do mass emailing or advertising, with most of his business coming from word of mouth.

SEPTEMBER 20, 2011

Photo credit: Khammy Phanthavong

business

Although the market is growing, Reenders warns that starting up a U-pick may be difficult, because it takes time to build up a solid reputation.

“You need steady clientele coming in to pick your fields,” he says. That’s not just to generate cash flow, but also to make efficient use of the crops. If cucumbers aren’t regularly picked, for instance, they’ll quickly get too big. Not only is that a lost sales opportunity, but Reenders then has to pick the oversized fruit and either give them away or compost them.

Some of Reenders’ more profitable crops are cucumbers, beets and garlic. Still, he continually makes a variety of crops available because, he explains, “You need a diversity of vegetables to get people out.”

But does the U-pick strategy pay?

“I’m not sure how much farmers can make on an acre of grain, but it’s substantially lower than what you can make on an acre of vegetables,” Reenders says.

“My equipment costs are also a lot lower,” he adds. “I need less equipment, using only a cultivator, plow, discer, brush cutter, and a 45-hp tractor.”

More than anything, Reenders sees the biggest challenge for running a U-pick operation as working with the weather.

He uses irrigation to keep plants growing, but nothing will convince customers to venture out when the weather is extreme.

This year has been good for Floodway Gardens, because it’s been a warm, dry summer with nearly no mosquitoes.

“With good irrigation, the crops come in nicely, and people get used to the heat and come out regularly,” says Reenders.

In fact, Reenders has been seriously eyeing expansion for some time now with adjacent land to his property possibly being available for rent. The market demand for fresh, locally grown produce is growing. Expansion could also allow more diversification with the possibility of adding a greenhouse, but there are challenges of finding labour and simply managing a bigger property.

Meanwhile, Reenders focuses on improving the performance of the existing farm, and he also focuses on maximizing its non-monetary rewards too, getting to meet and help new people and developing relationships. “They’re so happy to meet the producer and to know exactly where their food is coming from,” Reenders says. “People simply love buying their food directly from the farmer.” CG

Roly Reenders’ tips for starting your u-pick business 1. Location, location, location Proximity to your city and town customers is a huge bonus. You need a large pool of potential pickers. They also need to think their costs (i.e. time and gas) are worth paying for the freshness.

2. Organic and non-GMO now what your customers want. Organic non-GMO will give you K the largest possible customer base.

3. Grow a wider variety of crops wide variety will attract more customers. Even better, if the crop A they want is in short supply, you’ll have other choices for them to buy. Plus you can teach them to like specialties that only you grow.

4. Look for ethnic preferences Many ethnic communities are looking for crops they can’t buy in grocery stores. Others want more and better quality. Reenders, for instance, plants extra cucumbers for Ukrainian-Canadians who love to pickle.

5. Manage crops for long harvests tagger planting dates to spread out your harvest, and use irrigation to S ensure there’s always plenty to pick. Customers who come for a favourite fruit or vegetable will buy others if they’re available.

6. Let your customers know what’s ready onsider a website and a phone message system so customers C know what’s available before they drive.

7. Focus on customer service elect workers based on their ability to provide a positive experiS ence for your customers (and remember that this goes for you too).

8. Don’t start too big es, advertising works and is especially important in the early years.

Y The best way to build your customer base, however, is through word of mouth, which takes time.

9. It’s a business, not a hobby eep records, grow what sells, keep the fields clean, label the K crops, publish your business hours, and have business cards, a website and professionally printed materials.

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country-guide.ca 31

March 2011

BUSINESS

BETTER OFF

Dwayne and Shelley Logan escape farming’s high entry cost with low-input “sustainable” ag

wayne Logan is convinced.

“Any new farmer not starting off with a lot of money or help from their parents is better off taking the sustainable farming route,” Dwayne tells me as we walk the 600 acres he and Shelley farm near Nesbitt, about 15 minutes south of Brandon, Man. The question is, what does Dwayne mean by “better off?”

It isn’t size. The Logans are hoping to expand but they will always be smaller than neighbouring farmers. And it certainly doesn’t mean sales volume, or net income.

They’ll never be at the top of those lists either.

But that doesn’t mean the Logans are unambitious, or that their approach to farming and business is unsophisticated. In fact, the Logans argue the opposite, and they believe they have a shrewd business philosophy based on the concept that money is only one of the rewards of business success.

They look to pride, self-worth and family bonds as payoffs too, and they believe that these are payoffs that can be optimized by building a business plan that is designed to do just that. The money has to work out, of course, but business doesn’t have to be only about always gunning for bigger bucks.

Besides, Dwayne says, the options aren’t great. Getting on the treadmill of always buying more equipment and always farming more acres simply means a life of worry and debt, with a possible big payout at the end.

“We were unwilling and probably unable to do that financially,” Dwayne concedes.

“We’ve only been able to remain successful in farming through direct marketing, sustainable practices, and diversification.”

The Logans have also had to take on offfarm work, carpentering and working as a 32 country-guide.ca

butcher, and Dwayne has started a business at nearby Turtle Mountain teaching wilderness survival skills to classes from northern tier U.S. states and the Canadian West. “It’s for anyone interested in the back-to-the-land concept, emergency preparedness, or outdoor recreation,” says Dwayne.

“It has become a real passion,” Dwayne adds. “I’m very driven to learn and teach people about it.”

In fact, that kind of passion and commitment is in its own way the biggest form of capital that the Logans use to keep their farm moving forward. “The only way we can healthily grow anything with our dwindling sources of phosphorus and fossil fuels is to put it all back in — to create a sustainable system,” Dwayne says.

Shelley agrees. Dwayne (35) and Shelley (33) Logan own 495 acres of farmland and rent about another 110 acres. They have left what they view as the typical chemicalintensive method of farming behind, replacing it with natural, sustainable alternatives.

They met unconventionally too, via an online dating service in 2005 when Shelley was working in Winnipeg. They met, found that they had similar beliefs, and as the saying goes, the rest is history. “My dad was always adamant that he wanted his cattle to be natural,” says Shelley, raised on a dairy farm near Portage.

“He took very good care of his animals and instilled that in me,” Shelley says. “I just thought all farmers were like my dad.”

That didn’t mean Shelley had all the tools she needed to run a farm. When Shelley’s dad retired, Dwayne points out, he sold the dairy farm. “Her dad wasn’t very open to the idea of the females in the family continuing with the dairy. He thought they should go to the city.”

By contrast, Dwayne now believes that Shelley’s business thinking is a great asset for their growing farm. “I find women are often more willing to be innovative and creative, and are less burdened by tradiSEPTEMBER 20, 2011

PHOTO CREDIT: COLIN CORNEAU

By Rebeca Kuropatwa

business

tion or the way things were done by their parents,” Dwayne says. “Shelley more easily sees changes and improvements.”

“For us, sustainable farming is critical,” Shelley says. “Today’s farming is all about taking from the land. Farms operating like that pay for their depleted soil through fertilizer and pest control bills.

“Although it’s hard to put one or two crops into a summerfallow or a green manure crop on a large farming operation, we believe that for smaller farms, the opportunity to try these things is there,” Shelley adds. “That will hopefully keep them going… and possibly influence the larger, conventional farmers.”

Dwayne has been farming most of his life and has had no formal education past high school, but says that both he and Shelley have learned through their research and their connections with low-input farming that their farm’s success hinges on diversity.

Now, they are taking that learning and applying it more broadly. Diversity is September 20, 2011

critical for their business health, not just for healthy crops and livestock.

On the farm, the Logans use the closed-system concept, trying to retain and recycle as many nutrients as possible.

Each year, the couple divides their acreage with one-third for pasture, one-third for hay, and one-third for cereals.

Their main business focus is on selling direct-marketed meat. “We work to get the most sales per customer by supplying many different options,” says Dwayne, noting they raise sheep, goats, beef cattle, Berkshire pork, and chickens. “The beef, lamb, and goat are all grass fed. The pigs and poultry are pasture raised. Rotational grazing and cropping are the biggest tools we have for maintaining the health of the animals, land, and grasses.”

Dwayne started out by buying a quarter with help from his father. After a few years focused on getting his feet under him, he bought another quarter and got married to Shelley. Then when his father retired, they

took over the home farm, and soon after, daughter Willow was born.

The Logans may expand further in the near future. There are two other quarters of land being rented to other farmers that they are considering taking on as they grow their operation.

“The changeover from conventional to sustainable farming, personally and financially, has been worth it,” says Dwayne. “We wouldn’t be farming if we weren’t going this route. The farming industry is growing so quickly. People borrow and get into debt just to keep pace and stay competitive.”

Still, the plan has required off-farm income. “To get enough income from a small farm is a challenge, so any extra income makes a big difference,” Dwayne agrees. As noted above, he has worked as a carpenter, and he now works at Prairie Rose Meats, a butcher shop in Souris where he helps to butcher beef, bison, lamb, goat, and pork (full time in the winter, and one day a week in the summer).

Dwayne also admits to liking a good dose of variety in his life, continuously learning new things. “This is why I started a wilderness course.” The two- and threeday courses are hosted by David Neufeld of Room to Grow (an organic greenhouse and bed and breakfast). Dwayne and coinstructor Laura Reeves, a botanist from Prairie Tall Grass Reserves Manitoba, teach wilderness and urban survival skills as well as traditional farming skills ranging from blacksmithing to hide tanning.

“It’s also very good income, and is something I can pick and choose how much I want to do each year… because the 9-to-5 thing doesn’t work, being a farmer,” Dwayne says.

“We’re overwhelmed with people contacting us, wanting to visit our farm or learn skills, and people wanting reliably good-quality food.” Again, though, it’s a business strategy that comes full circle, satisfying the Logans because it generates income, supports the other facets of their farm, and feeds them on a deeper level, helping re-assure them that they are heading in the right direction.

They also expect more farmers to move in their direction. Says Dwayne, “It’s inevitable that we’ll return to a smaller-scale, local way of existence.” CG country-guide.ca 33

business

In at the start Can agriculture thrive when mixed in with high-tech entrepreneurs? Heck yeah, says this Alberta program

By Madeleine Baerg oss Bricker was a hard guy to get hold of that Tuesday. He wasn’t in his office and his cellphone kept jumping right to voicemail. I wondered, is he on a conference call that just won’t quit? Is he stuck in an endless meeting? Maybe he’s on year-end, or has to put total effort into hitting some deadline.

The next day, Bricker is apologetic. He had to take a vacation day, he tells me. After all, it was auction day, and he needed to get some of his registered polled Herefords to the bull sale.

Now that he’s back in the office, Bricker has exchanged his mucky boots for shiny corporate loafers and he looks every inch the corporate executive that he is — president and CEO of AVAC, a private,

“ Investment opportunity in agriculture is really significant — almost staggering.”

— Ross Bricker

34 country-guide.ca

not-for-profit company that invests in promising value-added Alberta businesses.

To date, AVAC has helped clients generate sales of $485 million and attract additional investment of more than $603 million.

AVAC was established in 1997 when the Alberta government decided the agribusiness, electronics, life sciences, and industrial technology sectors in the province were getting left on the sidelines of the boom in value adding. So with startup funds of $35 million from Edmonton and $10 million from Agriculture and Agri-Food Canada, AVAC began to identify and invest in promising Alberta-based agribusinesses.

Its mandate — to stimulate the value-add sector and to promote the commercialization of innovative valueadded products and services — grew into sectors beyond agriculture about five years ago.

The question I’ve got for Bricker isn’t how a farmer can manage a diverse operation like this. Farmers have business smart that will let them compete in virtually any sector. No, what I want to know is how agriculture fits into such a big-picture venture without getting lost.

Bricker’s attitude is that agriculture doesn’t have to apologize to anyone. Not only are its farmers smart, its outlook is stellar in an uncertain economy.

Like many farmers who hold off-farm day jobs, Bricker is used to juggling his office and farm roles. The fact that his office job is also tied to agriculture — 65 per cent of AVAC’s investments are in the agribusiness sector — not only suits his admitted preference (“I’m a fourthgeneration Alberta farmer, so I have a bit of a bias.”) but it’s also where he sees the most investment opportunity.

“Agribusinesses and areas related to environment surrounding agriculture are probably the No. 1 area for (investment) growth, in particular in North America and in Canada for sure,” Bricker says. “The amount of investment opportunity in agriculture is really significant — almost staggering.”

“The destruction of the public markets with subprime lending and the credit crisis really rattled the investment community,” Bricker says. “At the same time, the energy sector really turned down. Those two things signalled a rethink as to where investors want to put their dollars.”

Burgeoning demand, both for quantity and variety in agri-products, means agricultural investment offers solid long-term fundamentals. Here at home, September 20, 2011

business our aging, increasingly unhealthy population, combined with consumer demand for a multitude of specialty products, means entrepreneurs have endless agri-opportunities. Globally, the need to feed, clothe and provide energy to more than nine billion people by the year 2050 will continue to drive demand for our safe, reliable and high-quality agricultural products.

“If you had asked the question ‘why does agriculture make a good investment?’ a few years ago, people would have really struggled to come up with an answer,” says Art Froehlich, AVAC’s board chair. Today’s attitude is light years ahead. Says Froehlich: “Agriculture is the only industry that is going to solve some huge issues.”

Bricker and Froehlich’s enthusiasm for agri-investment is much more than idle talk. AVAC has been involved in bringing many agri-based startup companies to impressive success. Some of their biggest name agri-investments include Afexa, the maker of ColdFX; SemBioSys Genetics Inc., a biopharmaceutical company that “grows” human insulin in plants to combat diabetes; and Botaneco, an oilseed innovator that isolates oil bodies for use in emollients and cosmetics and as pharmaceutical carriers.

AVAC’s list of success stories proves that entrepreneurial businesses don’t have to start big to thrive. “When we went through recession, I kept hearing companies were too big to fail,” says Froehlich. “Most businesses in our (client base) are thought of as too small to succeed. Yet most successful businesses started in a basement.”

As well, for those who think only brand new products will claim market share, AVAC’s clients prove that a twist on an old idea may be enough to generate impressive results.

A prime example is RedMoon Custom Pet Food. Noting pet owners’ increasing commitment to — and willingness to spend money on — their four-legged “children,” entrepreneur Jason Bailey developed a creative turn on the long-standing concept of pet food.

Ordered online and delivered directly to your door, RedMoon’s fresh-made pet foods are formulated with locally sourced ingredients and lots of fresh meat. They contain no corn, wheat, soy, glutens or other common allergens.

In case that’s not enough to pique Fido’s discerning palate (or more correctly, Fido’s owner’s complex purchase attitudes), there’s more. RedMoon products are the first customized dry pet foods in the world. Based on a six-step online questionnaire, RedMoon identifies a custom blend of ingredients and supplements to suit each pet’s individual health profile and dietary needs.

Bailey says the opportunity for value-added agri-products is “huge.” He should know. RedMoon has posted double-digit growth every month since it opened a year ago, and Bailey anticipates hitting $5 million-plus in annual revenue in the next two to three years.

When it comes to entrepreneurial success, Bailey’s advice is simple and to the point. “Spend the time, create a new product, do some nice packaging, and go after the high-margin and value-added business,” he advises. “That’s where the real opportunity is.”

Having spent years supporting a wide variety of agriinvestments, Bricker has also learned some lessons about what separates success from failure in agribusiness.

“The product and the market are table stakes,” Bricker says.

“The decision as to whether we invest is based on the people. At the end of the day, their ability to do the job and recruit the right people is what will make the company successful… or not.”

September 20, 2011

Build a better cookie Kinnikinnick Foods went from a stall at Edmonton Farmers’ Market to North America’s largest producer of gluten-free foods. Here’s how they did it

I

f you are a North American with celiac disease, you’ve heard of — and likely depend on — Kinnikinnick Foods, North America’s largest producer of gluten-free foods. Kinnikinnick supplies products to 10,000 stores and hundreds of restaurants across North America, and is currently expanding into multiple overseas markets.

It’s hard to believe that Kinnikinnick started in the late 1980s as a bakery kiosk at the Edmonton Farmers’ Market, and that their product line featured, as they themselves admit, “some of the worst gluten-free products ever made (which is saying something).”

Then fast-forward through a decade and a half of perfecting recipes and multiple moves to bigger and better production spaces, and Kinnikinnick’s success looks more predictable. By 2005, it was clear that its growing popularity meant they needed to expand their production capacity in a big way. Even operating on a double shift, their 30,000-square-foot facility couldn’t keep up with increasing consumer demand.

When one of the largest cookie factories in North America closed down, Kinnikinnick snapped up the 120,000-square-foot facility.

“You can imagine going from 30,000 to 150,000 square feet overnight,” says Kinnikinnick president, Jerry Bigam. “The acquisition made us the most sophisticated gluten-free manufacturer in North America.”

The question, how did Kinnikinnick make the transition from a small company with the odds stacked against it to a sizable company with clear leadership in their sector? It’s a transition that most small businesses can’t negotiate.

Here’s what Kinnikinnick needed along the way:

1. The right product It isn’t enough for your product to be good. There are lots of “good” products out there competing for the same consumer dollars. And, given that production costs are generally fairly high in Canada due to transportation and labour costs as well as high oil prices, getting the product right is even more essential.

If you’re going to build a generic widget, you might as well build it somewhere like Chicago where production costs are lower, says Bigam. If you want to create your product here, you need to make a non-generic widget so it can survive in the marketplace.

“There are many good Edmonton firms that make really good generic products, but every time oil prices go up and the Canadian dollar goes up, they get killed,” he says. “Having unique, differentiated products is absolutely essential to success.”

Bigam recommends looking at market trends to determine what products are most likely to survive in today’s competitive marketplace. “Big, commodity-based businesses are for the most part finished. We’re not going to put another beef plant in this province. We’re not going to build another malt plant,” he says.

“The growth is really only coming from companies like ours.

That’s where industry has to go.”

Continued on page 36 country-guide.ca 35

BUSINESS

“It’s like the mouse swallowing the elephant.”

— Jerry Bigam

Continued from page 35 “If you’re looking to develop a business, you need to look at where to put your energy. You need to develop some leadership that hopefully buys you a position in the marketplace. And, you have to hope you build a market position before your competition jumps in and tries to knock you out.”

The second essential element to ensure you have the right product for the market is research and development. Back in 1999, Kinnikinnick received $250,000 in R&D investment funding from an investment company called AVAC (see related story).

Of the four products developed out of this R&D, Bigam says, “One product was a raving success, one was pretty good, the third was so-so, and the fourth didn’t work too well.”

Bigam believes that taking the time to develop new products that aligned well with market demand put Kinnikinnick into the leadership position that it still holds in the gluten-free market.

2. The right timing For Bigam, timing is everything. Between 2000 and 2005, Kinnikinnick grew at a rate of about 30 to 60 per cent per year “because no one else knew about the market,” Bigam says. The phenomenal growth was based on the fact that the celiac market was expanding rapidly as doctors became increasingly knowledgeable about the disease and its diagnosis. (Today, a blood test can determine celiac disease with 95 per cent accuracy).

36 country-guide.ca

“When we first got into this business, conventional wisdom was that one in 5,000 people had celiac disease. Today, they’re saying that one in less than 150 people have it,” says Bigam.

About five years ago, other food manufacturers began picking up on and creating products to suit the burgeoning celiac market. However, even with increased marketplace competition, Kinnikinnick remains well positioned for growth. Given that only about 15 per cent of celiacs are currently diagnosed, Bigam expects the market to grow at a rate of about 15 per cent per year for many years.

3. Innovative marketing In 1998, Kinnikinnick became North America’s very first company to provide perishable food over the Internet. This online ordering system, made possible by one of the earliest corporate websites, meant that customers from across North America could enjoy Kinnikinnick goods before their local stores carried the products.

“All of a sudden, there were hundreds of people across North America who became our best sales people,” Bigam says. “They went into stores and told the managers how good the products were. Or they popped up on the web with their comments about new products or just how pleased they were to get decent gluten-free food.”

Today, online ordering from corporate websites is commonplace. What is the next big trend in marketing? Companies designed for success, like Kinnikinnick, will certainly lead the rest of us into the next marketing trends.

SEPTEMBER 20, 2011

BUSINESS 4. A willingness to take risk Every business book repeats it: if you build it, they will come. Still, growing from farmers’ market kiosk to North America’s largest producer of glutenfree food took a very big vision, and a willingness to take on fairly large-scale risk.

“We knew we were going to grow the business.

Whether we thought it would grow as fast or as large as it is, I don’t know,” says Bigam.

“It’s like the mouse swallowing the elephant,” Bigam says of Kinnikinnick’s acquisition of the 120,000-square-foot cookie factory. “It was a massive shift from small-scale conventional bakery to large-scale, automated production.”

The new facility’s 450-foot ovens are a far cry from the mid-scale (think grocery store bakery sized) ovens they’d used in their existing plant. All of their products had to be re-engineered to accommodate the enormous machines of the new plant.

The willingness to adapt paid dividends. Up until the acquisition of the cookie factory, Kinnikinnick had to ration its markets. They didn’t have enough production capacity to meet the market, so they also had to be cautious about building new customers.

The acquisition of the new plant meant that, all of a sudden, they had all sorts of capacity and could aggressively go after new markets.

In addition to market growth, the sophisticated

production equipment in the new plant allowed Kinnikinnick to expand their offerings into more complex products such as Oreo-style sandwich cookies. Because few competitors possess as sophisticated equipment, it remains very difficult for them to compete.

“Many products we make are really difficult for competitors to produce, which certainly strengthens our leadership position in the market,” says Bigam.

5. The grit to get through the tough times In retrospect, the growth decisions Bigam made for Kinnikinnick appear rock solid. However, Bigam admits the period following the acquisition of the large-scale facility was a very difficult time.

The decontamination of the new facilities took eight months, during which time “the clock kept ticking,” says Bigam. And, while all indicators pointed towards high market demand and low competition, the purchase was a major investment that left Bigam with no choice but to produce large-scale returns.

Kinnikinnick was lucky. Most companies attempting significant growth suffer much more significant pain en route. As Ross Bricker, CEO of AVAC (the investment company that has helped finance Kinnikinnick’s success), says, “One thing we find with our companies, and with just about every success story, is that (the companies) have a near-death experience. It’s almost a right of passage. It refines their focus.” CG

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country-guide.ca 37

BUSINESS

Breaking through When health rules become trade barriers, “marketing” takes on huge new dimensions

an Doner’s eyebrows jump when I mention May, 2003. Eight years later, the reaction is still there, and it’s still easy to understand why. That May, a Canadian animal first tested positive for bovine spongiform encephalopathy (BSE), taking control of Doner’s business life just as it did for thousands of other livestock farmers and buyers across the country.

More accurately, it took control of Doner’s business life — until Doner seized that control back.

That May, international borders closed overnight to exports of anything that looked like it had ever come even within spitting distance of a Canadian cow. Doner, an international cattle dealer, was sit-

This year’s sale is only the first, say dairy producer Mike Smith (l) and exporter Dan Doner.

ting on top of a loaded trailer of prepaid heifers ready to be shipped.

“It was a nightmare,” Doner simply says.

On that fateful spring day, trade of live animals from Canada was decimated, taking with it the thriving livestock export business. The impact stretched beyond the massive losses in the beef feeder industry and is still strangling some sectors.

Breeding stock sales of sheep, goats and dairy cattle stopped, and within a few years, most of the firms formerly involved in exports were out of business or shifted into other ventures. A few, like Doner’s company, ADI Cattle Corp. managed to survive by switching focus to embryo sales.

“On May 20, 2003, we lost access to all export

PHOTO CREDIT: DEBORAH DEVILLE

By Maggie Van Camp, CG Associate Editor

Business markets for all products,” says Rick McRonald, executive director of the Canadian Livestock Genetics Association. “Bovine semen and embryos came back fairly quickly but we are still struggling with live cattle, live small ruminants and even semen and embryos from small ruminants.”

Yet spring 2011, exactly eight years after the axe fell, new hope took flight. A trio of unsuspecting but carefully quarantined, tested and paperwork-packed cows boarded a plane for Europe.

Once the container pens were unloaded in England, the three two-year-old Canadian Holsteins were trucked to their new home, Ponderosa Farms in Spain. Two of the two-year-olds came from Raivue Farms of Sunderland, and one from High Point Farms of nearby Port Perry, Ont., where farmer Mike Smith is hoping this first shipment will help reopen international markets to Canadian Holsteins.

Others share that hope. “Exporting live animals to the U.K. will help increase the value of all heifers,” says Alain Lajeunesse, manager of market development and communications for Holstein Canada.

Doner and his partner in the U.K. marketed, brokered, negotiated and jumped through a maze of logistical hoops to get this deal done. Although this is a small shipment, Doner says that it’s a symbolic victory and a message to the domestic industry that a formerly lucrative market is again open for business.

There’s still significant interest in Canadian Holstein genetics from outside Canada, including Europe. “They want our genetics, they want our animals,” says Doner, who’s looking forward to the fall, which is the major marketing window for showquality dairy cattle.

North America is still the preferred source for Holstein genetics. The genetic population is large and diverse and the marketing companies market more strongly than anywhere else in the world. Profiles are made in North America, says Doner, particularly if the animals do well at the Royal or at the World Dairy Expo in Madison, Wisconsin.

Doner also says top-end buyers in Europe want live animals, with strong genetic and phenotypic traits and there’s potential to reclaim the once lucrative niche market and rebuild relationships.

In 2002, live dairy cattle sales were worth $133 million a year, the exchange rate was good and demand for quality genetics was phenomenal. “The Canadian dollar was low (compared to the U.S. dollar) and we were exporting about 100,000 head per year,” says McRonald.

In 2004, live sales were $0 — completely annihilated by the BSE trade prohibition.

Since then, live cattle exports have slowly climbed as borders opened and new markets were found. In 2009, sales rose briefly with world milk prices to about $100 million.

However, these new markets are proving unstable. Last year, total live animal sales slumped to $17 million when the economic crisis hit, accompanied by a weaker American dollar and a drop in milk September 20, 2011

prices of more than 50 per cent. Also, in the U.S., the impact of sexed semen contributed to recordhigh heifer inventories.

Healthy trade In the wake of the BSE discovery in North America, health regulations have morphed into trade barriers. At least, that’s the consensus among Canada’s livestock sector, which says health regulations and the government agencies that administer them have become swords hanging over global animal exports.

It helps explain why the three Canadian heifers left to a chorus of cheers.

“This small load of high-quality Holsteins is an even bigger victory over the world’s new trade negotiation tool — health status,” says McRonald.

When the World Trade Organization was created in 1995, stacks of traditional trade barriers were essentially eliminated, leaving animal and plant health standards to become the focal point for controlling the movement of agricultural goods.

According to the WTO’s new Uruguay rule book, a country can use health fears to close its borders, although it must be prepared to scientifically justify its position.

The World Organization for Animal Health (known internationally by the initials OIE) became the reference point for animal health issues and any disputes can be referred to them for expert opinion. When BSE hit North America, the focus turned to OIE, which created a code for safe trade. It also tracks the BSE status of countries, and Canada, the U.S. and Mexico are now classified as controlled risk.

However, international trade can be complex and very political. “There are situations where there is no scientific reason for a market to be closed but it is due to other issues,” says Lajeunesse at Holstein Canada.

Since 2003 Canada’s surveillance system has uncovered only 17 cases of BSE, with the most recent in February, 2011. “The measures undertaken to stop the disease are working and we are on the way to eradication,” says McRonald. “The economic impact of this rare disease has been incredible and it isn’t over yet.”

The first post-BSE shipment of Canadian cattle was to Barbados in March, 2007. Later that year, large shipments of heifers went to Russia and finally in November the U.S. border was reopened to breeding cattle. Mexico followed suit the next year and Europe finally allowed imports in September, 2008.

However, that still leaves 14 of the countries on the CLGA’s wish list still closed to Canadian livestock due to health regulations.

Prior to the BSE crisis, 90 per cent of Canadian cattle exports went to the U.S. and Mexico. After BSE, exports to new markets have been developed with shipments to Kazakhstan, Serbia, China and even Croatia.

“Once you close a market,” says McRonald, “it’s hugely complicated to reopen and its very frustrating.” CG country-guide.ca 39

machinery

Hitching up Engineering students wanted a sponsor.

Versatile wanted the brightest grads.

Now, they’re both getting what they need thanks to innovative thinking that shows what it may take for farmers to hire tomorrow’s best prospects

ith large farms adding more employees, and more mid-size farms getting serious about hiring farm managers, the competition is on to find and hire the best of a new generation of farm employees.

Now, more eyes are turning to programs such as tractor maker Versatile’s sponsorship of the scale-model tractor team at the University of Manitoba, wondering if this could be the future even for farmers.

Tractor makers are facing their own people challenge. Hiring the best and the brightest isn’t just a slogan, it has to be an achievable goal. This past summer explains why. Manufacturers launched everything from seeding and planting equipment to combines and entire new series of tractors into an intensely competitive marketplace where new technologies are needed virtually every year in every equipment line.

That puts a huge demand on engineering staff to churn out new and better features, so it’s no surprise that engineers are in high demand.

The question is, where do you find the brightest minds? Running an ad in local newspapers and then waiting for the line to form is only going to end in disappointment.

Many farmers can appreciate the need for good employees. They also appreciate the competitive nature of the marketplace that makes those employees hard to find — and sometimes harder to keep.

Increasingly, the major equipment brands are working closely with engineering colleges and universities in order to get acquainted with their engineering students. They then identify and offer the rising stars a job long before the students even think about scanning the want ads.

Thus, when a team of students from the University of Manitoba knocked on the door at Buhler Industries’ Versatile tractor plant, looking for corporate support for their entry in a one-quarter-scale tractor-pulling competition, the company saw it as a stepping stone to an ongoing relationship not only with the university, but with the students too.

40 country-guide.ca

“Rather than just give them money and call it a day, we decided it was a pretty good opportunity to meet the next generation,” explains Adam Reid, marketing manager for Buhler Industries (Versatile). The goal then became one of giving the students more than they expected.

“We acted as more of a resource for the team,” says Reid. “If they had questions about some of the part fabrication, they would come over and look at what we do at Versatile, particularly in our R&D and engineering departments. I think it really gave them a chance to see how a real-world R&D shop operates.”

The quarter-scale competition is voluntary for students, but the payoff can be big, says Don Petkau, an instructor in the Biosystems Engineering Department at the U of M. When they participate in the competition, which is held by SAE (the Society of Automotive Engineers) in Peoria, Illinois, students get a taste of the challenges they’ll face when working as engineers.

“There is a huge benefit to the students,” says Petkau. “They have to design and build it. It’s kind of a compilation of all their education through the years.”

Because it’s an extracurricular activity, the students who approached Versatile had to find their own sponsors. It’s a trend that the universities themselves are encouraging, and which they’re supporting with advice and resources for the students.

“The engineering faculty has been cultivating a relationship with many private businesses,” Petkau says.

Much of that effort has been to create co-op programs, where students get a chance to work as interns in an industry related to their field of study. But by approaching Versatile for sponsorship, the students themselves initiated what Petkau sees as the best kind of publicprivate relationship, one with broad-ranging possibilities that stands to benefit everyone involved.

Buhler management saw immediate benefits. “It was a twofold opportunity,” says Reid. “We got to meet the next generation of engineers and ag students coming out of the U of M, which was good for us from a connecSeptember 20, 2011

Photo credtit: UMATT, University of Manitoba Association of Tiny Tractors

By Scott Garvey, CG Machinery Editor

machinery

tions standpoint. And then just from a brand perspective, having them take our trailer and the tractor… it was good for us just to have a presence there.”

In fact the competition tractor was so similar to Versatile’s production models, the company also featured it at its corporate display at the Western Canada Farm Progress Show in Regina last June.

The design and development mentorship paid dividends for the students. Among the prizes captured by the team this year was the “Most Improved” award, and the team moved up 12 spots from last year’s event to a fifth-place finish overall this year. “To improve our standings over last year and present a tractor that is among the best in the competition is a great feeling for us,” says Annette Kroeker, one of the team captains.

But Reid sees the competition sponsorship as just a first step, with the possibility of even bigger and better collaborations on the horizon. “We also tried to look at the bigger picture with Buhler Industries working with the U of M on other projects going forward,” he explains. “This was a good opportunity for us to get the partnership going and see where it goes.”

That is just fine with the university, too. It opens the door to joint efforts, such as research projects that could create unique learning opportunities and attract more students to the engineering program at the U of M. “In the last few years there have been some changes in the way the university operates, and we’re looking for more of these partnerships,” says Petkau.

If the university understands what local industries want from engineers, it can structure future learning programs to more closely meet those needs. “If you look at mechanical engineering back when I went to school years ago, they had an offshoot called ‘Industrial engineering,’” recalls Petkau. “Over the years they changed it to ‘Manufacturing engineering’ because we have so much manufacturing in Manitoba.”

Keeping in touch with the industries that will eventually employ its students is essential for engineering colleges to keep their accreditation. “Accreditation is September 20, 2011

becoming more design focused,” says Petkau. “Some of the teaching we do now is more directed, because of what industry is telling us they need in their students.”

With a large aerospace sector in Winnipeg, the university has already gained experience with partnerships. “It’s big time with the aerospace industry in Manitoba,” Petkau continues. “We’re trying to do that now with ag.” CG

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country-guide.ca 41

ACRES

By Leeann Minogue

More than price With multiple generations on the farm, the Hansons find there’s extra advantage to hiring a marketing adviser ale and his son Jeff were on their way to town to fix the dishwasher in Dale’s father’s condo when Dale casually asked the question that brought things to a head. “So, do you want to haul that canola into the terminal later this week or do you want me to look after it?”

“What canola?” Jeff asked.

“Maybe I forgot to tell you. I sold 5,000 bushels on Friday. The price is as high as it’s going to get, and your mom’s been nagging me about those payments that come due in early November.”

Dale kept driving, not noticing that Jeff’s face was turning every shade of red. “Hey,” Dale nodded toward the farm they were passing, “Looks like the Marshalls bought a new SUV.” Jeff took a deep breath. “Dad, I thought we were going to do this together.”

Dale was confused. “Fix your grandpa’s dishwasher?” he asked.

“Not that,” Jeff said, managing to stay calm.

“Now that I’m back on the farm, I thought we’d make decisions together.”

“Oh,” Dale said. “I guess I didn’t think of asking you. It’s just carry-over from last year.

Not new crop.”

Not that there would be much crop this year.

42 country-guide.ca

After the spring flooding in southeast Saskatchewan, the Hansons had only managed to seed 500 acres, and that hadn’t yielded well.

“Look Dad. Either I’m part of this business or I’m not.”

“So you don’t think I should’ve sold the canola?”

Dale asked. “We’ve already burned through most of our Unseeded Acreage payment. If we don’t sell something, we’ll be well into an operating loan.”

“I didn’t say you shouldn’t have sold it. I just wanted to be part of the decision,” Jeff was starting to feel like a teenager all over again.

Then they were distracted when Rick Wilson passed them on the highway, waving, and they didn’t speak again until they were inside Ed’s condo, trading opinions about his dishwasher.

“Not that I needed the help,” Ed insisted, sitting on a stool 30 minutes later when Jeff and Dale finally declared victory over the Maytag and got up from the floor. “I could’ve fixed it myself, if I’d just had the tools here. Or got a hand from some of the guys that have coffee at Wongs.”

“Right Dad,” Dale said.

“Jim would’ve come,” Ed went on. “He’s got lots of experience fixing dishwashers.”

“Yeah. That’s why his caught fire last year,” Jeff laughed. “Sometimes it’s good to call an expert.”

SEPTEMBER 20, 2011

ACRES

“I’m not sure you two are exactly experts,” Ed said.

“Yeah, I know,” Jeff said, drying the wrench on his jeans before he put it back in the tool box. “I was thinking of something else.”

“You think something else needs fixing around here?” Ed said. “I may be getting old, but I can manage a condo.” Then he looked at Dale, who was using a rag to dry the floor under the dishwasher. “Well, most of the time.”

“I was thinking about the farm, Grandpa,” Jeff said. “Remember my friend Eric from university?

With the farm over by Oxbow?”

“Yup,” Dale said, wringing the rag out into the sink.

“He’s trying to farm with his brother. They can never agree about the markets. So they started using a consultant. He kind of works as a tie-breaker when the brothers don’t agree.”

“You think we need a consultant?” Dale asked.

“You know why they call them consultants, don’t you?” Ed said. “It’s because all they do is ‘con’ and ‘insult.’ Why would you want to pay for that?”

“It might be good to work with a professional,” Jeff said. “Someone who could help us put together a marketing plan. So we’re not just figuring things out on the fly.”

“It won’t take much of a plan to market this year’s crop,” Ed said.

“I know,” Jeff went on. “But it might be good to talk to someone about our seeding plans for next spring. Someone who could help us get a better handle on our per acre costs. Eric said he and his brother feel like they have more control of their farm since they’ve been working with their guy.”

“I thought we sent you off to ag college so you could do this yourself,” Ed said.

“One thing I learned at university is that it never hurts to ask a professional,” Jeff said. “And another thing I learned is that we have a lot of money at risk here. We can’t afford mistakes.”

“So you think your dad and I made a lot of mis-

takes?” Ed asked, incredulous. “When we built the farm up from nothing?”

“Of course not,” Jeff said. “But this business gets more complicated every year. And with changes in the wheat market, there’s going to be even more to worry about. We don’t want to leave money on the table. And what about Trina?” Jeff was talking about his sister. “She’s not living here, but she has shares in the farm. We get along great now, but someday she might have questions about the way we manage things. If we had an outside opinion, we could be a bit more accountable.”

“So you want to hire a consultant to please someone who’s not even here?” Ed said.

“Grandpa…”

“And how much would this cost?” Ed demanded.

“They’ll work something out with us,” Jeff said, “since we don’t have much crop to sell this winter.

And then they’d charge by the acre next year. They would sit down and help us figure out what to seed, and then put together a sales plan.”

Ed just shook his head, so Jeff kept talking. “And there’s a couple of government programs that might pay for part of it.”

“Government money to make a plan,” Ed snorted.

But Jeff noticed that, although Dale hadn’t said anything, he was nodding.

“This might not be your worst idea,” Dale told his son.

Jeff exhaled, relieved that his dad finally seemed to understand the changes he wanted to make on the farm. But then Dale kept talking. “Do you have a number for this guy? I could call him in the morning. See what it would cost, anyway.”

But before Jeff could say anything, Ed came to his rescue. “Dale, I’m not wild about this. And I don’t want the guys down at Wongs Café finding out we can’t sell our wheat without someone holding our hand. But if you’re serious about letting that kid of yours get involved in this business, you’d better let Jeff make the call.” CG

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country-guide.ca 43

w e at h e r NEAR NORMAL

MILDER THAN NORMAL

Pe rain riodic /s Frosnow t

* *

Occasional rain / frost

NEAR-NORMAL TEMPERATURES AND PRECIPITATION

NEAR-NORMAL PRECIPITATION

Sc Wa a rm ra tter in ed

Cool Wet spells

R TEN T E W THA AL U US

Sto at ti rmy mes

*

Occa si snowonal

BRITISH COLUMBIA

September 25 to October 22, 2011

Sept. 25-Oct. 1: Variable conditions this week from fair and mild to wet and cool.

Chance heavy rain west. Occasionally windy. Some snow and frost north. Frost threat interior.

Oct. 2-8: Expect seasonal to occasionally cool temperatures. Frost areas inland.

Blustery winds at times. Often fair but intermittent rain in the west turns to snow in the north and at higher levels.

Oct. 9-15: Changeable weather and temperatures. Occasional rain, chance heavy in places on the coast tapering to showers inland with snow north and higher elevations.

Oct. 16-22: Fair on most days but with periodic rain on the coast, changing to snow higher areas and north. Variable temperatures. Windy from time to time.

ALBERTA Sept. 25-Oct. 1: Sunny skies overall with several frosty nights but expect a couple of unsettled days with rain becoming mixed with snow in the north and higher elevations.

Oct. 2-8: Fair with seasonal temperatures on many days but colder air advances southward on a couple of days bringing occasional rain. Chance snow. Windy at times.

Oct. 9-15: Look for variable weather this week ranging from fair to wet with rain.

Chance of snow mainly west and north.

Blustery at times. Changeable temperatures.

Oct. 16-22: Fair overall with seasonable temperatures but cooler outbreaks bring 44 country-guide.ca

rain or wet snow on a couple of occasions this week. Cool, snow north. Occasionally windy.

SASKATCHEWAN Sept. 25-Oct. 1: Temperatures vary but end up near normal this week. Often sunny but look for rain on a couple of days, mixed with snow in the north. Windy, frosty at times.

Oct. 2-8: Mostly fair but expect unsettled conditions on two or three days with blustery winds, cool temperatures and periodic rain. Rain mixed with snow central, north.

Oct. 9-15: Disturbances result in variable conditions this week ranging from fair and dry to wet and blustery. Temperatures vary from mild to cool. Cooler north with intermittent snow.

Oct. 16-22: Look for seasonal to cool temperatures with sub-zero lows. Often fair but some rain on a couple of days, mixed at times with wet snow. Cool north with heavier snow.

MANITOBA Sept. 25-Oct. 1: Sunny skies on most days with highs in the teens except for one or two cooler, wet, windy days. A few subzero lows. Cool spells with some snow or rain north.

Oct. 2-8: Expect unsettled weather this week as mild, dry days alternate with cool, wet and windy days. Frosty nights. Periods of wet snow, rain and frost in the north.

Oct. 9-15: Fair skies will be interrupted by rain and blustery winds on a couple of

occasions this week. Temperatures vary under blustery winds. Occasional snow in the north.

Oct. 16-22: In the south, fair weather interchanges with rain, possibly heavy in places. Seasonal to mild at times. Cooler, windy in the north with intermittent snow.

September 25 to October 22, 2011 NATIONAL HIGHLIGHTS Relatively warm temperatures are expected to linger over much of central Canada this fall.

As a result, milder than usual temperatures are anticipated in Manitoba, Ontario, Quebec and the western Maritimes well into October. Disturbances will bring a few wet spells to these areas but precipitation totals should end up near normal. In contrast, cooler northwesterlies from time to time will produce more seasonal temperatures across the western Prairies and British Columbia. Frost and occasional rain will be common in these areas, and snow is likely to be confined to higher elevations and northern regions. Near-normal precipitation is expected in these western areas in spite of a couple of heavier precipitation events. An unsettled weather pattern is emerging over the far eastern sections of the country. Here a series of storms, moving northward along the seaboard, threatens to bring frequent heavier rain and strong winds to the eastern Atlantic Provinces.

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.

September 20, 2011

The caller begins “I have something to tell you…” Not expecting bad news, I hesitate to ask. “We had a hailstorm and the airport got pounded. Your airplane was damaged.” I had flown my airplane to Lloydminster, Alta. for an inspection. The next day “hail the size of ping pong balls” hit. The caller says the storm seemed to target the airport. I wonder if hailstorms seek out airports, much as tornadoes seem to seek out trailer parks. Both seem to occur regularly.

An airplane is only a machine. It can be repaired. I have sent enough money to the insurance company. It is their turn to pay.

Some friends express sympathy. I am grateful for their concern but I respond “Others suffer real misfortunes. I didn’t lose my house in a fire or a flood. I am glad nobody was hurt in the hailstorm.”

Eric is a retired policeman. He spends his summers as a hail-insurance adjuster. He says it is difficult to meet with farm families whose hopes for good crops are wiped out, sometimes in a matter of minutes. Plans for paying off debt, making improvements or building a new house are dashed. I marvel at the patience of farmers whose fate is determined by the wiles of nature. A barn along the highway between Saskatoon and Regina proclaims more than a name: RISKANHOPE FARM. Sometimes people hear of the misfortunes of others and say “God spared us.” Others blame God for catastrophes. What is the truth? I believe in divine intervention but I do not believe God inflicts destruction. I cannot explain the inconsistency between these two beliefs. Sometimes all we can do is ask questions. How do you explain that your crop was hailed out while your neighbour was spared? Was the Lloydminster airport targeted by a hailstorm?

The pursuit of perfection and the search for definitive answers leads to frustration and disappointment. I have a friend who says “You play the hand you are dealt.”

A water bearer in India had two large pots, each hung on opposite ends of a yoke he carried across his shoulders. One of the pots had a crack in it. The other pot was perfect. It delivered a full portion of water at the end of the long walk from the stream to his employer’s house. The cracked pot arrived half full.

The cracked pot was ashamed of its imperfection. It felt like a failure because it was able to deliver only half a load of water. One day it spoke to the water bearer, “I am ashamed and I want to apologize to you.”

“Why?” asked the water bearer. “What are you ashamed of?”

“I deliver only half my load. This crack in my side allows water to leak all the way back to your employer’s house.”

The water bearer replied, “Tomorrow I want you to notice the beautiful flowers along the path.” As they went up the hill, the cracked pot noticed the flowers on the side of the path.

The water bearer said to the pot, “Did you notice that there were flowers on your side of the path, but not on the other pot’s side? That’s because I have used your flaw. I planted flower seeds on your side of the path. Every day while we walk back from the stream, you’ve watered them. If you were different than you are, we would not have these beautiful flowers.” (Author Unknown) We are all broken, all flawed in some way, yet worthy of God’s love and care.

Suggested Scripture: Matthew 5:43-48, Matthew 11:28-30

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Relevant info to help you make informed decisions, plus ag business location and contact details — you’ll find it all together at

Rod Andrews is a retired Anglican bishop. He lives in Saskatoon.

SEPTEMBER 20, 2011

country-guide.ca 45

h e a lt h

Incontinence — nothing to ignore

By Marie Berry t one time, people merely coped with incontinence. Today, however, there are medications and therapies that can help, and you shouldn’t be embarrassed about seeking assistance.

Nor should you feel alone. More than three million Canadians are affected by incontinence. In fact, if you believe the various television and magazine advertisements it may seem like even more.

Incontinence is the involuntary leakage of urine. It can be transient — that is, it comes and goes — or it can be chronic. Chronic incontinence is classified as urge, overflow, or stress. If you are bothered by incontinence all the time and if you can identify the type, then there are medications that can help.

In urge incontinence the detrusor muscle, which is responsible for the propulsion that empties your bladder, doesn’t function properly and you end up with uncontrolled contractions and urine leakage.

Because the muscle is controlled by the nervous system, drugs like oxybutynin work through the nervous system to block muscle contractions, reducing this type of incontinence.

Overflow incontinence is like your kitchen sink overflowing because the drain is clogged and you don’t know it. You wet yourself without realizing you’re doing it. Men with enlarged prostates are susceptible to this type of incontinence, and treating the prostate problem will help.

Another cause of overflow incontinence is something called a large neuropathic bladder, such as people with diabetes may have. Think of this type of bladder like an athlete that’s “gone to seed.” It’s oversized and flabby, unable to flex its muscles.

Stress incontinence is most common in postmenopausal women. There is leakage upon physical exertion such as coughing, sneezing, climbing stairs, or even turning over in bed. It is attributed to a weakening of the bladder neck and pelvic floor relaxation. Incontinence during pregnancy With the aging of the Canadian population, dementia including Alzheimer’s disease is becoming more common. Presently, about half a million people are living with Alzheimer’s, but over the next 25 years the number is expected to double. Next month, we’ll take a look at dementia in general and some new therapies.

46 country-guide.ca

or because of multiple pregnancies is stress incontinence. Exercise to strengthen the pelvic floor is useful, for example walking, running, yoga and aquacise.

Specialized exercises known as Kegel exercises are specific for strengthening pelvic floor muscles and will help with most types of incontinence, for both men and women.

First, locate the right muscles by stopping the flow of urine while you are urinating. However, once you’ve located them, don’t make a habit of stopping the flow because the practice itself can contribute to incontinence. You want to contract these muscles and hold the contraction for about five seconds, then relax the muscles. Aim for at least 10 repetitions about three times daily. A nice aspect of this exercise is that you can do it anywhere and no one will know you are!

If you experience incontinence, regardless of the type, look for any factors that could contribute to it.

Urinary stones or tumours, urinary tract infections, constipation, prostate problems, and even poor control of conditions like diabetes should be addressed.

Some drugs can worsen incontinence (for example muscle relaxants, antihistamines, antidepressants and decongestants) and you may not even realize that your symptoms are a drug side-effect.

Some people try to solve incontinence problems by reducing their fluid intake. However, you do need a good fluid intake to ensure proper bladder functioning. A better idea is to try toilet training.

That is, take routine trips to the bathroom regardless of whether you feel the need or not. Later in the day and closer to bedtime, your fluid intake can be reduced, and don’t forget to avoid caffeine and alcohol, both of which are diuretics.

If you experience incontinence, don’t just accept it as part of growing older. Yes, as you age your risk does increase, but with treatment of any underlying cause, changes in habits, exercise, and even medications, incontinence doesn’t need to interfere with your day-to-day activities. And, don’t forget that there are incontinence products that are ideal for keeping you dry when you may experience leakage.

Marie Berry is a lawyer/pharmacist interested in health care and education.

September 20, 2011

Va l l e y

A relief (milk) pitcher Dan Needles is the author of “Wingfield Farm” stage plays.

His column is a regular feature in Country Guide started playing it for the first time since high school. He was thinking about busking down at the bay where the ferry docks.

Just last winter my wife and I were walking along a country road in the hills above the beach house we rented on the west coast of Barbados. I looked over a fence and saw two dozen Jersey cows grazing in a paddock under graceful royal palm trees, beside an old plantation house. The sign at the gate advertised antiques and for once, I did not protest when she suggested we walk up the lane past a tropical dairy shed and 12-unit herringbone milking parlour.

The owner, a tall middle-aged English woman, greeted us warmly and gave us a tour of the place. It was like stepping back in time as I watched her hose out the warm concrete floor and smelled the distinct aroma of dairy cows fed on tropical Imperata grass. She had inherited the farm from her mother just recently and was trying to figure out what to do with it.

“It is completely exhausting!” she exclaimed. “I haven’t had a break in months.”

My wife raised one eyebrow at me. “You don’t like sitting on the beach much. Maybe we should arrange a farm swap.” She turned to the Englishwoman and asked: “Do you ski?”

ILLUSTRATION: RICK KURKOWSKI

y son Lofty just returned from a beverage tour of Europe and is complaining that there is no work to be had in the present distressed state of the economy. I sympathize with the young people today but I suggested to Lofty that he think about inventing a job for himself.

“How would you do that?” he asked.

I explained to him that apart from being a writer, the only job I have ever held for any length of time was milking cows.

I believe I actually introduced the concept of “relief milker” to the Southern Hemisphere.

When I got out of high school in 1969, I set off to Australia to spend the year touring and working, although the immigration agent at the Sydney airport warned me there was a serious downturn and jobs were very hard to come by. Within a week I landed a job milking cows on a dairy farm in the Murray River Valley in Victoria. The farmer’s wife had just given birth to their second child and he needed temporary help in the barn and with the hay crop. Across the road, there was another dairy farm operated by a man named Bob who had a raft of young kids. One day Bob asked me if I would be interested in milking his cows for him on Tuesday and Thursday mornings so that he could take his kids in for swimming lessons. My employer, Keith, offered to advance his milking time by an hour so that I could get to Bob’s cows by 7 a.m. And so, I stumbled upon the magic formula for seeing Australia on a limited budget.

Bob had a very pretty younger sister who came home on holiday from teacher’s college after Christmas. She was staying at the home farm about 70 miles farther down the river on the New South Wales side of the border. When I finally left Keith’s farm, I went in that direction, thinking of dropping in for a visit. Just before I arrived, I spotted another set of dairy sheds and on impulse, turned in the lane and asked the owner, Noel, if he needed a rest. Noel pushed his hat back up on his head and looked at me as if the thought had never occurred to him. He actually knew both Keith and Bob and he hired me on the spot. All dairy farmers have tricky backs and Noel took the opportunity to drive to Melbourne to have some treatments while I milked 150 cows and went calling on the schoolteacher.

The romance quickly fizzled but the concept of a relief milker proved very durable. I was never out of work for the rest of my stay in Oz. I picked the concept up again when I returned to Canada to study economics and even did one stint in the county of Wiltshire in England before I graduated from university. Then I got a job with a newspaper and started to assemble a proper resume that made no reference to my earlier profession.

Lofty thought about this story and said nothing but the next day he hauled out his bagpipe chanter and

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