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MARCH 1, 2012

PG. 24 WHO’S BUYING OUR LAND? The rumour mill is wrong. When farmland comes up for sale in Canada, it’s still almost always a farmer who buys it. But as Richard Kamchen reports, change may be coming.

FUTURE FARMING

THE CONCILIATOR

HELP WANTED Your best bet may be to look for high-skill workers overseas.

EVERY ISSUE 7

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MARCH 1, 2012

GUIDE HEALTH Yes, you can save money by splitting pills, as long as you remember these rules from our Marie Berry.

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.

HANSON ACRES Planning is all well and good, but life on the farm has a way of intruding.

FARM CREDIT, CARBON STYLE It looks like free money, but it takes dedication and record-keeping to get carbon credits.

MACHINERY GUIDE Today’s mid-size tractors are better than your father’s. Heck, they’re better than last year’s.

MEET THE NEW BOSS Bryce Thompson is looking for farmers to rent land owned by investors.

GUIDE LIFE — STOP THAT PAIN IN THE BACK It used to be heavy lifting. Now it’s also office work that is causing farm injuries.

Brad Wildeman speaks softly, but he drives the amazing growth of Pound-Maker Investments.

GUIDE HR — PUT NEURO-LEADERSHIP TO WORK FOR YOU Science can finally explain why your management style is — or isn’t — working.

In this issue’s Big Idea, futurist Christophe Pelletier peers into farming’s crystal ball.

IS IT MARKET INFORMATION, OR ONLY MARKET NOISE? Our Errol Anderson on the difference between what you need to know and what will only waste your time.

MANAGEMENT — LEARNING TO MANAGE WELL Part two of Anne Lazurko’s interview with Canada’s most famous business prof. Can he help you farm?

GROWING, GROWING, GROWING Here’s why farm machinery execs are smiling. (It has something to do with your money.)

A NEW CO-OWNERSHIP OPTION New machinery is more efficient, but it’s also more costly. Here’s how to have your cake and eat it too.

PETUNIA VALLEY It’s taken 10,000 years to get agriculture right, Dan says, so let’s not screw it up now!

CONTENTS

BUSINESS

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desk EDITORIAL STAFF Editor: Tom Button 12827 Klondyke Line, Ridgetown, ON N0P 2C0 (519) 674-1449 Fax (519) 674-5229 Email: tom.button@fbcpublishing.com Associate Editors: Gord Gilmour (204) 294-9195 Fax (204) 942-8463 Email: gord.gilmour@fbcpublishing.com Maggie Van Camp (905) 986-5342 Fax (905) 986-9991 Email: bmvancamp@fbcpublishing.com Production Editor: Ralph Pearce (226) 448-4351 Email: ralph.pearce@fbcpublishing.com ADVERTISING SALES Cory Bourdeaud’hui (204) 954-1414 Cell (204) 227-5274 Email: cory@fbcpublishing.com Lillie Ann Morris (905) 838-2826 Email: lamorris@xplornet.com Head Office: 1666 Dublin Ave., Winnipeg, MB R3H 0H1 (204) 944-5765 Fax (204) 944-5562

Tom Button is editor of Country Guide magazine

How low must we bend? Most of us barely know what our forelock is, let alone how to tug it when we bow to the lord and lady of the manor. Nor do we know how incredibly close we came to having a landed aristocracy in Canada. All of us do sometimes wonder, however, if we could be evolving back into an agriculture all too much like the old days. It’s hard for us to realize today that after the American War of Independence, the prevailing opinion in England was that the United States was bound to fall apart. Even many Americans had their doubts. Really, there was barely such a thing as the United States at all. For most purposes in the early years, it was more like an ad hoc collection of 13 squabbling states. It’s hard too for us to realize that among the powerful in England, many felt the big mistake the English had made with the Americans had nothing to do with the Stamp Act or the Boston Tea Party. It was that the English hadn’t set up an American aristocracy to keep the populace in order. It’s why the British plotted a grand strategy. They would begin by transforming Upper Canada into a kind of monarchial heaven on earth, making the Americans so envious that they would clamour to be let back into the empire. For those who know Canadian history, this is how Ontario got the up-and-coming Sir John Graves Simcoe as its first lieutenant-governor in 1791, when he was given the job of making the Americans secondguess their revolution. 4 country-guide.ca

Lord Grenville, the English secretary of state who appointed Simcoe was also clear that Simcoe should establish a group of large landowners as Canada’s first hereditary aristocrats. As Grenville said, men of all stripes are slaves to titles of distinction. The history is controversial and endlessly fascinating, but what happened in the end is that the ordinary settlers said they would have none of it. On the farms and in the backwoods, they learned every day that on this side of the Atlantic, the critical thing was their own strength and courage, not someone else’s idea of their social standing. Does this story have direct parallels to today, when every neighbourhood has a few farm families that are amassing huge land bases, and when there are so many rumours of off-shore and non-farm investors buying up massive chunks of Canadian farmland? Will they become the aristocrats that other farmers will have to bow before? Clearly, you can get carried away with such analogies, but there is a new uncertainty about the long-term future of agriculture. We know there will be money to be made. We just aren’t quite sure whose pockets the money will end up in. We’ll talk more about agriculture's future in coming issues, but for now, a good place to start is with the stories in this issue of C ountry G uide , starting with Gerald Pilger and continuing right through to our columnists in the back. Let us know if we’re helping. You can reach me at 519-674-1449, or email me at tom.button@fbcpublishing.com.

Advertising Services Co-ordinator: Arlene Bomback (204) 944-5765 Fax (204) 944-5562 Email: ads@fbcpublishing.com Publisher: Bob Willcox Email: bob.willcox@fbcpublishing.com Associate Publisher/Editorial Director: John Morriss Email: john.morriss@fbcpublishing.com Production Director: Shawna Gibson Email: shawna@fbcpublishing.com Assistant Production Manager: Farrah Wilson Email: farrah@fbcpublishing.com Director of Sales and Circulation: Lynda Tityk Email: lynda.tityk@fbcpublishing.com Circulation Manager: Heather Anderson Email: heather@fbcpublishing.com Designer: Jenelle Jensen Contents of this publication are copyrighted and may be reproduced only with the permission of the editor. Country Guide, incorporating the Nor’West Farmer and Farm & Home, is published by Farm Business Communications. Head office: Winnipeg, Manitoba. Printed by Transcontinental LGMC. Country Guide is published 12 times per year by Farm Business Communications. Subscription rates in Canada — $33.60 for one year, $51.45 for 2 years (prices include GST). U.S. subscription rate — $35 (U.S. funds). Subscription rate outside Canada and U.S. — $50 per year. Single copies: $3.50. Publications Mail Agreement Number 40069240. We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage.

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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. 131 No. 4 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.

march 1, 2012

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IDEA

A new co-ownership option Maybe there’s a better way to own that new combine By Gerald Pilger ith price tags on the largest, fully equipped combines now topping a cool half-million, farmers are looking for strategies to reduce their equipment costs. The obvious solution may not be the best, however. Buying a lower-quality machine or a high-hour used machine may actually cost you more in increased repair costs and lower productivity than you save up front. A second option can also have big negatives. Hiring a custom operator is fine when it works out. But as we know, it doesn’t always work out. Success is largely determined by the quality of the operator and by their availability when you need them, but you also have the worry of whether you can rely on someone else to keep your best interests at heart. Concerns over transfer of disease and weeds between farms by custom operators are also increasing. Leasing or renting harvest equipment is a third option but the high cost of equipment and the relatively short harvest season has led to limited rental capacity. Now, ag economist Jared Wolfley has identified a fourth strategy and written a doctoral thesis at Cornell about it called Machinery-Sharing Contractual Issues and Impacts on Cash Flow of Agribusinesses. Wolfley used a simulation model to identify the actual cash flow impacts of Texas and/or Colorado and/or Montana farmers sharing a combine instead of each having their own machine. In each of the cases he studied, Wolfley found that sharing a combine reduced risk. That even includes when the sharing was between two farms in the same area — although the benefits do decrease when the harvest periods overlap. However, Wolfley also found contractual issues that are often overlooked but that must be ironed out ahead of time if coownership is going to work. These include machinery sizing, percentage of ownership 6 country-guide.ca

costs paid by each farm operation, depreciation, and penalties for late delivery of the combine to the co-owner. A share agreement does not have to be a 50/50 split of all costs. For example, Wolfley says, differences in financial status of two farm operations may prompt a different split to enable one farm to capture a greater portion of the depreciation allowance thereby giving both farms a greater net cash benefit from co-ownership. For the past 12 years Don Cantrell of Merna, Nebraska has shared ownership of a combine with an Idaho farmer he met at a farm management meeting for top producers at Texas A&M University. Both had similar farm operations, had the same attitude about equipment ownership, maintenance, and operation, and both were seeking a way to reduce their harvesting costs yet still run a new combine each year. The fact that the harvest season differs between Idaho and Nebraska presented an opportunity. “We created a limited liability company and each contributed $9,000 for the down payment on a new John Deere combine. We financed and insured the combine through John Deere and split the trucking costs between farms 50/50. Each fall, after harvest is completed, we trade for a new combine with the cost of the trade pro-rated on the hours each person has used the machine for,” Cantrell explains. Cantrell tells me the strategy has worked very well. He calculates that he has saved $20 to $50 per cylinder hour compared to the cost of hiring a custom operator. Plus, Cantrell gets to operate a new combine every fall, with new technology, increases in capacity, and lower risk of breakdowns. “This is now the 12th combine I have shared through our LLC.” Danny Klinefelter, economist at Texas A&M says the success of equipment sharing between two producers hinges on a number of factors in addition to the difference in harvest timing.

“There have to be agreements made on how costs are shared, the hours of use, maintenance practices, how and when it is delivered between farms, condition upon delivery (delivered clean), insurance, quality of operator who will be running it, and how the trade-in of the equipment is handled,” Klinefelter says. Other potential issues need to be worked out too. For instance, what happens if one of the partners significantly increases or decreases their crop size after signing the agreement? Klinefelter says farmers who share equipment are often those who want to trade for a new machine every year. Sharing equipment allows them to put twice as many hours on the equipment compared to if they owned it themselves. He also notes this strategy is more often adopted by farmers running more than one combine. Such farmers will own one combine on their own and then co-own the second and even a third. Complete ownership of the first combine reduces the risk of crop losses if the shared combine isn’t delivered in time for the start of harvest. Klinefelter is also noticing an increase in a sharing of labour amongst farmers who share equipment. For example, a farmer in Montana who shares ownership of a combine with a Texas farmer may go to Texas to help with the harvest there, and in turn the Texas farmer travels to Montana for that harvest. Or in other cases, a hired man may travel with the combine and operate it on both farms. “The most important and difficult part of equipment sharing is to find someone to share ownership with,” stresses Klinefelter. “You can’t simply put an ad in the paper.” Search out potential partners at management seminars or at meetings of top producers that such growers attend year after year, Klinefelter says. “You have to know who you are going to go into business with.” CG March 1, 2012

Machinery

By Philip Shaw

Getting that crop into the ground quickly, accurately and on time is crucial. Increasingly on today’s farms, innovative air seeders and drills can help us do just that. It’s all about air, and it’s also all about precision placement of seed and fertilizer, which is why this edition of Machinery Guide is all about air seeders.

horsch anderson planting systems ps 40-15 ps 60-15  Horsch Anderson offers the 60-ft. PS 60-15 and 40-ft. PS 40-15 air drills. Both drills have a 19-ft. transport width and a 16-ft. transport height. The five-section PS 60-15 has 48 openers versus 32 for the three-section PS 40-15. These “planting systems” can be used for more than planting, including strip tillage and applying soil-incorporated fertilizers. Trash can be an issue with air drills, but Horsch Anderson says they’ve got the best throughput in the industry… period. Their 15-inch shank configuration over four ranks gives plenty of space for material to flow. Even in row-crop residue such as cornstalks, the seed and fertilizer are well placed. The walking tandem packing system provides ground-hugging ability to consistently pack rows over uneven terrain, and the heavy-duty construction is built for years of service. www.horschanderson.com

salford 522 double disc air drill  Salford’s 522 Double Disc Air Drill aims to deliver a great stand through precise metering of seed and fertilizer at uniform depths. The Salford 522 parallel linkage row units provide from 85 to 500 lbs. of down pressure to match no-till, conservation-till and conventional-tilled soil. With widths of 30 to 55 ft., the Salford 522 has a peg and brush meter that is very easy to calibrate. It handles all seeds and fertilizers without having to be changed from one material to the March 1, 2012

next. The 522 has two sets of twin hydraulic toolbars for a variety of residue management and fertilizing options. These hydraulically controlled toolbars act independently to adapt seeding and fertilizer options on the go. The Salford 522 Air Drill is designed for tow-between, towbehind and mounted-tank options, and the openers have an operating depth of 3.5 inches with .25 increment depth adjustments. www.salfordmachine.com country-guide.ca 7

doing more. using less.

A series on being ready for the farming challenges ahead

Climate Change: The cause may be open for debate, but the effect isn’t. The world has been getting warmer.

Farmers are part of the solution If greenhouse gases are even partly responsible for such instability, then it’s our collective responsibility to reduce them. That includes all of us in agriculture. That presents a dual challenge: producing as much food — and more every year to feed a growing population — but doing it with fewer fossil fuel resources. Not that this is anything new to farmers. Doing more with less is part of running a successful business. If farmers can

gloBAl lAnd-oCeAn TemPerATure indeX .6

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or farmers, that’s been a mixed blessing, depending on who they are and where they farm. If you’re in southern Ontario or the U.S. Corn Belt, you can probably thank global warming for some of the yield increase you’ve seen over the past few years. Just by itself, a longer and warmer growing season means higher yields, but it’s also allowed plant breeders to develop longerseason varieties to take advantage of it. If you farm on the Canadian Prairies, you can thank global warming for offering you new crop alternatives — soybeans are now a major crop in some areas. But there’s also a downside. One of the predicted effects of climate change is not just warming, but instability. Prairie farmers found that in 2009 and 2010, two years when unprecedented moisture prevented millions of acres from being planted. Reinforcing the concern about instability, last spring, the rains stopped abruptly and drought became a concern in some areas, and remained so as we entered 2012 with record-warm temperatures and minimal snow cover. These losses pale in comparison to the devastation and loss of life from flooding in Pakistan in 2010 and 2011, and unprecedented flooding in normally dry Australia in those same years. Meanwhile, the worst drought in 60 years has devastated crops in Somalia, Ethiopia and Kenya, resulting in tens of thousands of deaths and forcing millions of people — many of them farmers — to leave their homes and move to refugee camps.

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produce more crops and livestock while at the same time producing fewer greenhouse gases — or absorbing them from the atmosphere — it’s a win for everyone. There’s no better example of that than how North American farmers have adopted minimum- or zero-till farming practices. That means fewer equipment passes and less fuel, but the greenhouse gas reduction benefits go well beyond that. Minimum till keeps carbon out of the atmosphere and in the ground where it belongs. That means improved fertility, less use of fertilizer and preserving soil to produce crops well into the future. Not only is equipment making fewer passes, but each of those passes is more efficient due to the industry’s adoption of progressively more efficient equipment, such as the latest Tier 4 engine technology. The advantages go beyond lower fuel bills. A cleaner engine is a more reliable engine that needs less maintenance, and therefore a machine that is available for more time during those increasingly unpredictable seeding and harvest periods. We can’t predict changes to weather and climate, but by being ready for them, farmers can do a better job of handling the challenges of the future.

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On a farm, there’s no such thing as a few small chores. You need versatile equipment that works as hard as you do. That’s why we offer a family of tractors and hay tools designed with the power, efficiency and versatility to help you get things done. All built for a level of operator comfort that makes those long, hard days a little shorter and a lot more productive. And right now, you’ll find great offers on our full line of Farmall® tractors, balers, windrowers, and Puma® and Maxxum® tractors. To learn more, visit your local Case IH dealer or caseihdeals.com.

©2012 CNH America LLC. All rights reserved. Case IH is a registered trademark of CNH America LLC. www.caseih.com. Please go to caseihdeals.com for official rules *No purchase necessary. The promotion winner will be selected from among all eligible entries by a random drawing on or before July 1, 2012. Entries must be received by May 15, 2012. Grand Prize Winner must pick up the Grand Prize Ram truck at an authorized Case IH dealer located nearest to the address supplied on the Winner’s entry form within 45 days of Winner’s prize notification. Prizes are not transferable, cannot be redeemed for cash, and the CNH Capital Reward card second and third place prizes cannot be applied to existing balances or transferred as a credit balance on a CNH Capital Commercial Revolving Account. All reward cards expire July 1, 2014. Unclaimed and undeliverable prizes remain the property of Sponsor. See your participating Case IH dealer for more information or visit caseihdeals.com/fieldofdealspromotion for complete promotion rules. Void where prohibited by law. SPONSOR: CNH America LLC, 700 State Street, Racine, WI 53402. Limit one entry per person; if you have already returned an entry form to your local Case IH dealer, you are already entered into the Promotion and need not enter again.

ď&#x192;§ John deere 1890 50- and 60-ft. 1890 no-till air drill John Deere offers multiple choices in its air seeding lineup, including both hoe drills and drills with the single-disk opener. The John Deere 1890 has previously come in 30-, 40- and 42-ft. widths, but now is available in 50- and 60-ft. versions, letting you cover even more acres in no-till conditions. The 60-ft. 1890 will cover 40 per cent more ground than the 42-ft. with each pass. The 1890 is designed to take heavy residue in stride. The opener system boasts two inches of float to allow the opener to follow the ground contour without extra down pressure. Combined with active hydraulic down pressure, this helps ensure accurate depth control. The 1890 has seeding widths of 7.5 inches for grains, or wider spacing such as 10 inches or 15 inches for other crops, with the JD 1910 Commodity Air Cart as a good complement. For transport, the new 60-ft. 1890 No-Till Air Drill folds down to 16.1 feet. www.deere.com

seed hawk air drills ď&#x192;¨ Seed Hawk says its seeding system delivers precise seed and fertilizer placement for quick, uniform crop emergence. The Seed Hawk Air Drill is offered in widths from 20 to 84 ft. with openers placed at 10, 12 and 15 in. Unique to the Seed Hawk are the separate seed and fertilizer knives for precise fertilizer and seed placement. According to the company, each opener assembly is made with two high-tensile 5/8 by 3.5-in.-deep steel side beams. Each unit operates independently by pivoting at the frame controlled by its own adjustable hydraulic cylinder. The result is superior seeding-depth accuracy that produces warmer soils, quick, uniform germination, even packing and consistent performance, regardless of environmental conditions. The Seed Hawk is enhanced by its sectional control technology or SCT. This technology works in conjunction with GPS and auto steer to lift openers when seeded ground is encountered, shutting down the metering of seed and fertilizer, thereby reducing costs and producing more uniform fields. www.seedhawk.com

ď&#x192;§ morris c2 contour air drill The C2 Contour Air Drill is the new offering from Morris Industries, and according to the company, the C2 Contour has a dynamic new shank design that significantly improves trash flow and makes opener adjustments easier. The independent contour opener with true parallel linkage maintains a constant opener angle relative to the soil as well as constant opener depth in relation to the packer wheel. Morris says the single shank design has lower draft requirements than most double shoot air hoe drills. This requires less horsepower, which means a significant fuel savings. The C2 Contour Air Drill comes in 41-, 47- and 51-ft. widths on the three-frame models, and 61-, 71-, 80- and 86-ft. widths for five-frame units. Transport widths range from 20.5 ft. on the smallest to 25 ft. on the largest model. www.morris-industries.com 10 country-guide.ca

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insight

In the second of this two-part series, world-famous McGill economist Henry Mintzberg explains his fear that farmers may be learning the wrong lessons from corporate North America. Says Mintzberg of farming, “People keep saying it’s a business, but it’s a calling.”

Management

Learning to manage well By Anne Lazurko, CG Contributing Editor

Callout

What does Canada’s most famous business professor know that can help farmers on their farms? enry Mintzberg may be Canada’s most famous business thinker, but his thinking about farming sounds at first very unbusiness-like. Farmers, he believes, will do a better job of managing if they not only see their farm as a business but also embrace the lifestyle that comes with it. In fact, much of what Mintzberg preaches — and much of what he gets paid to tell governments around the world, and much of what he earns handsome fees for telling a who’s-who of global corporations — comes in this sort of “both… and…” advice. Farmers must both see their farms as a business, and love the lifestyle. And equally important, leaders must both be involved in production, and rise above it. As for Mintzberg, he is not only a critical thinker on management, he is also a doer. The McGill economics professor is co-founder of the International Masters Program in Practising Management, and in 2007 he co-founded CoachingOurselves, a company

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designed to help managers improve their practice of management. “I never thought of it before, but the isolation of farmers might be the perfect place for this program,” Mintzberg tells me. “It’s a natural fit. It gets people together socially with topics of interest for everyone.” CoachingOurselves is basically a library of over 70 management topics written by world-renowned management and business thinkers to guide and motivate discussion, reflection and knowledge sharing within a management team. It can be worked through either with or without a facilitator. The idea behind CoachingOurselves is to get management teams — or in this case, groups of farmers — meeting together face-to-face to work through issues or processes they are currently dealing with. The input of others stimulates reflection and the topics provide a framework for the discussion. As the website says: “Each CoachingOurselves topic unravels a novel perspective, idea or theory

March 1, 2012

insight

on one aspect of management with carefully crafted content, questions and exercises that motivate 90 minutes of discussion and reflection on a management teams’ day to day experiences.” “CoachingOurselves is an approach to management based on discussions with ourselves,” says Phil LiNir, co-founder and executive director of CoachingOurselves. The idea came about when LiNir was managing director of a high-tech company and looking for a cheap and time-efficient means of increasing the management skills of his team. The objective was clear, LiNir says. “We simply wanted to become better managers.” The method is equally clear, LiNir says, using words that may hit home with farmers: “Management is a practice, and to improve you need to reflect on the work you’ve done as a manager.” In discussion with Mintzberg and learning from his own experience, LiNir and Mintzberg started the company in 2007 and the concept of “we-learning” has taken off. The program is now used by large and small corporations around the world and by individual managers. Operating in eight languages, their clients include Syngenta, Nissan, Bell Canada, and Cathay Pacific Airways, among others. The topics are written like modules and licensed for use by human resource departments or individuals. Topics are grouped by target audience such as senior leadership, middle management etc., or by theme such as engaging people, how global should our firm be, or talent management. Users can package the topics according to their needs. “Many entrepreneurs take a few topics they need to use with their teams. They pick and choose and we help get them started,” LiNir says. Farms tend to be small in staff, but LiNir says the CoachingOurselves topics are relevant to any level of business. “It’s about both building relationships and doing our own job better,” he says. “It’s about collaboration and team building. The topics provide structure or a lens to view through. The learning comes from the discussion.” “It’s not necessarily about managing people,” LiNir says. “It could be about processes.” And if a management structure isn’t already in place, LiNir says the CoachingOurselves topics can help to build one. “We have a number of teams within entrepreneurial organizations that are just getting off the ground. So part of what they do is team building and collaboration exercises.” As people work with each other week to week, things happen, LiNir says. “The group engages, they become tight and supportive, they bond with one another. They will engage because they are working collectively.” Some occupations like farming or engineering

March 1, 2012

“ Being an engaged leader means you must be reflective while staying in the fray… the hectic, fragmented, never-ending world of management.” — Henry Mintzberg for that matter are geared toward doing, toward action. “All I ask is that out of the 50 hours a week they spend at work, they spend one hour thinking,” LiNir says. “The other 49 they can do.” So how would CoachingOurselves work for farmers? While individual farmers may not have a large enough team on their farm, it would be possible to co-ordinate sessions with their peers — other farmers. Though the face-to-face-aspect might be logistically difficult with participants spread out across the country, it could be made to work with a facilitator. LiNir says some of the organizations he works with are spread throughout the country but still meet once a week using technology. The results, he says, can change everything. The ideas are often simple and help us realize ways of doing things. That 90 minutes allows us a forum to talk about these things and reflect. It also allows us to organize both ourselves, and collectively, to do things. We get to know each other and then advise, support and coach one another. The expectations of participants? First is motivation. Participants have to want to learn and improve themselves to be better at their jobs and in their role within the small community. Second, they have to talk. Sessions are held as a round robin, one topic at a time. CoachingOurselves might be another tool to help farmers manage in a changing business environment where they are expected to be experts in production, marketing, human resources, transportation, food safety, and agricultural policy. Whether you agree with Mintzberg’s analysis of agriculture or not, his theory of leadership is one that farmers are deeply invested in, almost by default. Mintzberg says leadership makes two demands. You need to be involved in production, but you must also pause and think about what you’re doing. If it sounds simple and obvious, Mintzberg would ask you why so many businesses get it wrong. “Being an engaged leader means you must be reflective while staying in the fray — the hectic, fragmented, never-ending world of management,” Mintzberg tells me. “The reward? Access to the ideas flowing around you.” CG

country-guide.ca 13

opinion

The word to remember is “complexity,” says this farm futurist By Gord Gilmour, CG Associate Editor

If you’re in the agriculture industry the prevailing wisdom is clear. Global agriculture has an enormous — maybe insurmountable — challenge ahead of it. By 2050, our global population will reach nine billion. If you’re keeping score, that’s two billion more hungry mouths than we’re trying to feed now. Meanwhile, we’ve all but run out of

For our focus on the future of agriculture, Country Guide spoke to a longtime food industry insider and now author

virgin land. Sure, a few more acres might

(F uture H arvests : T he

come on stream here and there, at the

tural revolution)

margins. But for the most part, farmers

ist, Christophe Pelletier. He’s a French

have to tackle the job with the land base

national who’s been living in Canada for

and resources they’ve got now.

the past 13 years, arriving here to take

next agricul -

and agriculture futur-

It’s all spawned a cottage industry in

over the organization of the salmon sup-

crystal ball gazing — and more than a

ply chain of Nutreco, a Dutch firm that

little ill-informed commentary. In fact, at

was his longtime employer, following suc-

times it seems like anyone who’s ever

cessful stints in their pork and chicken

put a spoon in their mouth feels quali-

divisions. The company might not be a

fied to make sweeping generalizations

household name in North America, but

about the future of food.

it’s the real deal — in 2010 the company

Here and there, though, are individuals who can offer real insight.

14 country-guide.ca

reported operating revenues of $4.9 billion.

CG: It sounds to me then that you’re of the opinion that this is a challenge, but cer tainly not an insurmountable one. Are you not concerned about global food security then? CP: The question of food security is very complex — much more complex than just producing more food. Yes, there are hungry people, but simply producing more food isn’t the answer if the real problem is that they don’t have enough money to buy it. One of the great ironies is that about two-thirds of the people who are hungry in the world are actually small farmers, but they don’t produce enough food for their needs and they don’t have enough money to buy more. The simple truth is that we have a lot march 1, 2012

Photo credit: Diane Lawrence

Future farming

Country Guide: Can you tell us a bit about some of the key trends and demographics that you see driving the shape and form of agriculture and food in the future? Christophe Pelletier: The key challenge is going to be feeding the animals, not the people. Everything is so much more global and interconnected that there really is no such thing as a local solution to these issues — and that has implications all over the place. For example let’s look at the implications of the increase in consumption of animal protein. In the emerging countries, consumption of meat is rising. If you have 1.5 billion people in China, and their meat consumption rises by 10 kilograms a year, that’s a lot of meat. But it becomes even more complex if you look at the changes in the type of meat they’re eating. Years ago, they were interested in what were basically byproducts. In the pork business they wanted offal, chickens were wing tips and feet and in salmon they wanted the heads. As they get wealthier, they want the same products we do. So we’ve suddenly got new competition for the products we want, as well as a challenge for the processors who are losing markets for these byproducts, which affects their efficiency and profitability. I think that this is going to be one of the key challenges for agriculture and it’s going to affect everyone, including grain producers.

opinion

of room for improvement in our food system. There are areas where we could make changes on the production side — making improvements to production methods such as herbicides and pesticides and fertilizers to allow crops to reach their genetic potential, for example. There are places like Canada that do this now, and there are places where these tools are not widely used. The larger question, though, is what we can do to improve our use of these products after production and harvest. Today about 20 per cent of the food that’s produced globally is wasted. In rich countries that happens at the end of the food supply chain in homes, at restaurants and in grocery stores. In poor countries it happens because they lack the basic infrastructure to get their products to market and they lack the infrastructure to store it. I think addressing this spoilage and waste, making those infrastructure investments, is probably our single greatest opportunity to increase our global food security. CG: Canadian agriculture is generally large scale and mechanized. We often refer to it as “efficient,” and it certainly is by certain metrics, like labour efficiency. But when you look at other goalposts, that question of efficiency becomes less clearcut. For example, our farms use a lot of energy. Do you have any thoughts about this and perhaps about how Canadian agriculture may evolve in the future? CP: It’s interesting that you mention energy efficiency, since those are exactly the sorts of questions that I encourage people to ask themselves. We’ve been in an era of cheap energy, but the same pressures that can be seen in agriculture — new consumers who want more and better things — can be seen here too. At the same time, the available energy resources are finite unless we get a renewable energy breakthrough, and it would seem we’re still quite some distance from that. If oil hits $500 a barrel, what does that mean for your industry? I encourage people to identify these risks now, rather than wait until their backs are up against the wall and it’s already a big problem. By then, it’s too late. One of the problems of having cheap resources is that we then can’t clearly identify the true value of them. It encourages us to waste them. I’m from Europe originally — I was born in France and I lived and worked for a long time in Holland — and I can see this every day in Canada. People run their water out the tap forever, and they walk around in shorts and T-shirts in the middle of winter. In Europe, these resources are more expensive so we change the shower heads in our homes and keep our houses at 19 C and put on a sweater if we’re chilly. In agriculture this plays out in a number of ways — take irrigation as just one example. The most common forms of irrigation are either surface flooding or sprinklers of one sort or another. That can be very wasteful, and in places like the U.S. southwest, where water is at a premium, they’re using new technology that places tapes in the root zones and the water is placed there. That can be expensive and labour intensive, but if the cost of water is high enough, I’ve seen paybacks as short as two years. march 1, 2012

CG: I get the distinct impression that you expect many of these solutions to be market driven. Is that a fair characterization? CP: Yes, I think it is. It really is as simple as “money talks.” Farmers don’t and won’t make their decisions based on anything else. They’re not running charities, and while they may like the lifestyle of farming, fundamentally they’re running a business and they want to make a profit. They’ll make the decisions that will make them more money. But if they can correctly identify some of these risks, and make their plans accordingly, they’ll be more successful. Where we tend to see problems is where governments make decisions and provide incentives to do things that wouldn’t otherwise be done. Maybe something outrageous like the government of Canada for some reason deciding to subsidize pineapple production in Canada. It makes no sense, but if the incentive were large enough, farmers would do it. In the real world, we can see that in olive oil production — there are huge parts of Spain where olives are grown simply because there was a subsidy from the EU to grow olives. Or in wine, where a subsidy caused a whole lot of vines to be planted. Then the price of wine fell and now those vines are being taken out. CG: Overall, are there things the Canadian agriculture industry is doing well at, and things they’re doing poorly? CP: It’s always a bit dangerous to make general statements — there’s always some parts doing things well, and other parts not doing them as well. Generally though, I think it does come back to listening to their markets. Farmers are really good at producing products and then pushing them out to markets. But if that’s what they’re doing, they’re not going to be identifying problems and then providing solutions. By getting a better idea of what your customers’ problems are, you can probably find more success. CG: It sounds like for agriculture producers over time you expect commodity prices to trend upwards, albeit with the occasional retrenchment? CP: I guess that’s one way of putting it, and certainly I do expect over time to see good profitability and rising prices, but I think a better way of putting it is that I expect to see much greater volatility. All of these complex issues that we’ve talked about — rising and changing demand and finite resources for example — will have an effect on each other and will then have an effect on the prices farmers receive. For example, growth in animal protein consumption will place pressure on feed grain supplies, those prices will rise and that will hurt the profitability of the livestock sector. If the prices rise high enough they’ll limit livestock production because it’s no longer profitable and that will cause feed grain prices to fall. Then there’s the issue of input prices. If the price of farm products rise, the manufacturers of farm inputs will see more demand, which will cause the price of these products to rise. So as you can see, it’s not simple at all, it’s very complex. But yes, generally speaking, even with this volatility, I would say that being a farmer is going to be a pretty good place to be over time. CG country-guide.ca 15

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18 country-guide.ca

March 1, 2012

business

The conciliator Brad Wildeman speaks softly, but with a voice that unites the beef industry and drives the amazing story of Pound-Maker Investments By Maggie Van Camp, CG Associate Editor rad Wildeman’s head is characteristically cocked slightly to the side as he listens intently to my questions. He carefully responds, mentally processing wide swathes of the last few decades of the beef industry and global trade into a neat windrow. Wildeman is well known in agricultural circles for creating consensus, especially when the quandary of the moment is seemingly unsolvable and potentially divisive. He seems to have some innate talent to quell hot emotions, to patiently draw solutions out of people and to motivate others to make it work. “I find if you listen long enough, and ask what do all the parties really want from this, you’ll find common ground,” says Wildeman, general manager and president of Lanigan, Saskatchewan’s PoundMaker Investments, with its 28,500-head feedlot and 15-million-litre ethanol plant. Pound-Maker was conceived in 1970 by local area grain farmers looking for an alternative market for their grain. A 2,500-head feedlot was built to use this grain with 50 local farmers as shareholders, including Wildeman’s nowdeceased father, Bill. Brad grew up nearby and his first job was pounding posts for the feedlot, and subsequently he worked at everything from milling feed to riding pen. By the mid-’80s, the feedlot had expanded to 8,500 head, and Wildeman became general manager. March 1, 2012

Today Pound-Maker’s gross sales are over $50 million annually and the operation's workforce has grown to 50 full and part-time employees. Wildeman leaves the post-pounding to others. Today, he’s busy enough juggling his feedlot management duties with sitting on several other boards — like the Continued on page 20

Online shares In 1999, 30 years after the original company was formed and shares were issued, Pound-Maker issued a new shareholder offering, and now there are over 200 shareholders in Pound-Maker Investments Ltd., sticking to the original view that the company did not want to be publicly traded, but wanted the revenue source of share purchases. Over-the-desk trading simply wouldn’t work logistically for them so instead an electronic bulletin board to buy and sell shares of the company was added to the company’s website www.pound-maker.ca. It gives a venue for share-price discovery. Farmers generally don’t have a lot of liquidity in their assets so this allows for the easy selling of the Pound-Maker share assets and it expands the investor base. Although the vast majority of shares are still held by local grain farmers, now there are Pound-Maker shareholders across the country. Originally the shares were worth $1 in 1970 and today the 645,000 shares have a book value approaching $30. After years of focusing on paying down debt and just maintaining operations during the BSE crisis, the company now has no long-term debt. The focus has turned to creating shareholder value, which in equity terms means paying dividends. “Now we’re on solid financial ground, which is a good place to be considering the cyclical nature of our business,” says Wildeman.

country-guide.ca 19

business

George Morris Centre — and federal and provincial advisory groups. He’s also past-president of the Canadian Cattlemen’s Association and the inaugural chairman of the newly formed Canada Beef Inc. In an industry known for fierce independence and strong convictions, Wildeman is a self-confessed non-argumentative personality. You might think this would mean his voice would be drowned out. In fact, being non-argumentative might be the last strategy you’d ever recommend in the industry. Yet Wildeman has somehow used his lowkey conciliation skills to maneuver organizations through some pretty sticky situations. In back rooms across the nation, instead of stirring up the differences, he helps people focus on a solution. Being able to hear these win-win solutions and sell them has enabled Wildeman to steer the Canadian beef industry — and Pound-Maker — through some historically critical points. Like the BSE crisis… In the pandemonium after the world closed its borders to Canadian cattle and beef, the CCA asked Wildeman to help steer the industry. It was a huge commitment fraught with challenges but he stepped up. He ended up spending about 80 per cent of his time working on keeping the Canadian cattle industry intact. “I would have been sitting at the feedlot in paralysis anyway, so it was better to be helping,” he says pragmatically. In the end, the cattle association managed to convince Canadian consumers to keep eating beef, but it took effort, time, and a well-managed public relations plan. Then there were also the balancing

Traceability As chair of the Canadian Cattle Identification Agency, Wildeman helped with the implementation of the Canadian Livestock Traceability System. His perspective on the government and industry infatuation with traceability is also blended with the reality of feedlot logistics, and with talking to customers around the world. “I was bloodied in the wars of selling traceability,” says Wildeman. “Traceability is not a solution. It’s a means of transportation.” In other words, consumers don’t care about traceability itself, they want safe, quality, affordable food. Moreover, companies like McDonalds support traceability so that if they have a food safety problem they can stand before media and say they’ve checked their system, and already audited every product so their customers can be assured of food safely. Wildeman isn’t convinced that tracing beef from the line to the individual cow adds any real value for consumers, or that it mitigates the risk of foodborne illness. However, he thinks there may be some marketing opportunities selling products that use tracing tools to prove traits such as organic, or “raised naturally” beef. Says Wildeman: “The battle over the next decade is the battle for the hearts of the consumers.”

20 country-guide.ca

acts of working with government agencies and politicians while also dealing with the on-farm realities. “We managed to hold the industry together with no shooting and burying cows,” says Wildeman. He was also a key player in the development of government assistance programs to help the industry survive the abrupt stop in trade. Wildeman remembers getting a call from then-finance minister, Ralph Goodale, asking him to meet. Along with CCA executive vice-president Dennis Laycraft, Wildeman spent an evening in Goodale’s office scribbling proposed solutions on a flip chart. Wildeman also remembers a lot of denial at first. “Many producers kept saying that the whole thing would blow over in a couple of months and that people will come to their senses. I still remember listening to the naive comments that ‘they’ll be rioting in the streets of Tokyo without our beef.’” Of course that never happened, and Wildeman in his current role as past chair for CCA and as chairman of the newly created Canada Beef Inc. is still working at reopening up markets that closed in 2003. “Markets are hard to earn and easy to lose… slow and expensive to get back,” he says. The entire beef and veal industry breathed a sigh of relief this year with the reopening of beef and veal trade with South Korea. Wildeman says the CanaMarch 1, 2012

Photo credit: Dave Stobbe

Continued from page 19

business

Employees In Saskatchewan there’s another battle going on, this time for employees. Potash mines are expanding and paying higher wages than feedlots can afford. Aggressive recruiting by the mines and a limited infrastructure of places to live means there a limited workforce. “The job market dynamics have changed since we first started,” says Wildeman. Originally, one of Pound-Maker’s goals was to provide employment for locals, particularly local kids. Until recently most of the employees were shareholders’ relatives, so they were dedicated and skilled. “We were always proud that our employee turnover rate was less than five per cent,” says Wildeman. “Last year we had a 20 per cent attrition rate.” Although the salary may be higher at the mines, Pound-Maker offers stability, longer-term employment and trade apprenticeships, including an ag apprenticeship program. Treating employees like family members can build a very strong relationship that makes employees want to stay long term. The company is also working through the process of bringing foreign labour into the province, a far cry from the original goal of employing more locals. Says Wildeman: “Whether we’re going to have enough labour is a key component in the matrix of selecting a financial investment today.”

Traceability is over-rated, Wildeman says, but it’s still essential for the looming battle to win consumer support dian industry is positioned to benefit from exports of 6,500 tonnes worth about $30 million by 2015, with potential to grow to 14,000 tonnes worth $65 million by 2020. “Korea was big for us.” The Korean market is a trip line for other markets to open up to Canadian beef, and is important for improving demand for both the lower-value cuts, like shanks and internal organs, plus higher value cuts. Asia is a huge developing market for beef and Wildeman’s experience in China is that they know everyone is chasing them and as a result they’re a little elusive. The European quota for grain-fed beef, although small, is also very positive from a national perspective, says Wildeman. There’s a potential market for hormone-free beef going into Europe, although some larger companies are driving up the price of that quota as traders fight to capture the higher-value European demand. “Basically there’s been no market off the East Coast for a very long time,” he says. “This may revitalize the industry east of Thunder Bay.” Two challenges in exploiting these trade agreements are the health restrictions that more importers are enacting, plus the shrunken Canadian cow herd. Cow numbers still haven’t rebounded and are projected to decrease again. We’re a long way from our cow herd recovering to the levels we saw a few years March 1, 2012

ago, and the that means lower feeder cattle supplies for a few years after cow number begin to increase, says Wildeman. The feedlots are still 20 to 25 per cent overcapacity. Positioning Pound-Maker around that weakness is something Wildeman has been working on. Recently the company bought some nearby marginal grainland they are converting to grass to feed up the lighter calves. In future they may expand this strategy further and build their own cow herd. “With the advances in technology and changes in how cows are managed now, with swath grazing and crop residue, it’s possible to have a corporatesize herd,” says Wildeman. “When you get into that size cow herd, you can pay for the management it deserves.” Even 1,000 cows are hardly going to make a dent in the 50,000 head per year requirement of their feedlot. However, Wildeman sees a well-managed large cow-calf operation using residue grazing as having a potential margin of opportunity. Moreover, it’s also a way to control the supply chain. “The dynamics have changed, some big stores are supplying some specialized markets now,” says Wildeman. “Having a captive supply of cattle with Continued on page 22 country-guide.ca 21

business

Continued from page 21 a strict production protocol may be a valuable asset to us. The question is can we do it at a cost structure that makes sense?” Again it comes back to the original vision and mission for the feedlot. “Pound-Maker has foundational objectives to use grain production and add value to it,” says Wildeman. To further that goal, in 1990 Pound-Maker Investments Ltd. established a new entity, PoundMaker Agventures Ltd. (PMA) with minority shareholders Saskatchewan Wheat Pool and Mohawk Oil. This capital helped fund expanding the feedlot to 10,000 head and building an ethanol plant. Significantly ahead of the green energy push, the facility became the world’s first feedlot fully integrated, wheat-based ethanol plant. The cattle are fed the byproducts of ethanol production, including dried distillers grains and wastewater loaded with nutrients.

When it seems impossible, we ask ourselves, “What do we really want out of this?” Wildeman says the first couple of years producing ethanol and feeding the byproducts meant a steep learning curve. “At the time we were the first feedlot to feed these wheat-based distillers grains,” says Wildeman. “Now everybody does.” Since 2002, all of the shares of Pound-Maker Agventures Ltd. have been repurchased by PoundMaker Investments Ltd., and Pound-Maker Agventures Ltd. is the operating company of both the feedlot and ethanol plant. Both their corporate partners have been gobbled up by larger entities, Saskatchewan Wheat Pool by Viterra and Mohawk Oil Ltd. by Husky. The decision to add ethanol was based on a commitment to making ethanol benefit the rest of the organization. By contrast, for example, although they transport feed, cattle and manure, the trucking business is simply not their thing. “Synergies between management teams is important,” says Wildeman. “We’re always evaluating a number of opportunities. Many are profitable but not within the scope of our vision.” In the past five or six years, company investments have shifted toward buying land locally to ensure they’ve got ground for spreading manure on in the spring and also so they can grow more of their own forages, straw and grain. With farmers adopting no-till, it had been getting more and more difficult to find farmers who work up their soil in the spring and therefore could incorporate manure. Growing their own feed has also provided opportunities to try some new crops in the area 22 country-guide.ca

that better meet their needs. Soft white spring wheat wasn’t grown in this area east of Saskatoon until Pound-Maker tested some varieties and had it as a field-scale demonstration crop. Soft white has a better fit for ethanol production too, and now over 70,000 acres are grown in the province. Pound-Maker has also been researching triticale and next year plans to test 300 acres of dryland silage corn. “Innovation comes from people seeing an opportunity,” says Wildeman. In the post-CWB monopoly world, Wildeman hopes that farmer will be growing more varieties so the characteristics of grain will be connected to use and more higher yielding feed grain will be on the local market. He’s enthusiastic that more crops will be grown with specific attributes, instead of trying to fit into the strictly CWB grading protocols. “I don’t care if it’s grade #1, 2 or 3,” Wildeman says. “We want starch.” Similarly he’s excited about the future of Canada Beef Inc. This one national independent agency has risen from the ashes of the Canadian Beef Cattle Research, Market Development and Promotion Agency (National Check-off Agency), Canada Beef Export Federation and the Beef Information Centre to conduct the industry’s marketing, promotion and research activities. The reality is that the cow herd has downsized, and likely will remain smaller for some time, so there will be fewer checkoff dollars to invest in marketing efforts. Quietly at the helm of this merger, as co-chair for the CCA’s Canada Beef Working Group, Wildeman has somehow emerged with a solution that all groups could live with. How the three parties got there was vastly different but each of them could see the same final goal as the most important thing. “If you listen long enough you always find a few common things,” says Wildeman. “Even when it seems like an impossible situation, we ask ourselves ‘what do you really want out of this?’” In the summer of 2010, the CBWG produced the initial merger proposal and Wildeman was elected as chair of the first board of Canada Beef Inc. The major changes have been to the governance model, reduced administrative and management costs, increasing accountability and focus, and the ability to better share expertise within the organization. “As long as we are fair to people and respectful, the process can be a fairly positive experience, no matter how painful it may seem at first,” says Wildeman. Meanwhile, in the last year Wildeman has also been slowly transiting out of Pound-Maker’s dayto-day management activities and encouraging others to take a leadership role in the organization. He tells them: ”Even if it’s the wrong decision as long as you used the right thinking process, a 360-degree analysis of the situation, the results are not going to be too bad.” CG March 1, 2012

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business

At any price The rumours are wrong. Most farmland still gets bought by farmers… at least for now By Richard Kamchen

aybe a huge change in Canada’s land ownership really is underway. Certainly the time is ripe. The big money funds are desperate for a safe haven. Overseas interests are anxious to lock up production capacity, and investors everywhere are looking for a slice of what they see as agriculture’s windfall. Everything seems to back up the growing suspicions that huge amounts of non-farm money must be flooding into Canada’s land market. Everything, that is, except the sales statistics. Despite all the forecasts about farmers becoming renters, and despite all the fears that land prices are rising out of the reach of farmers, almost all farmland still gets bought by farmers. That doesn’t mean change isn’t coming, or that maybe the first glimmers of it might already be visible. Yet this is hardly a wide-open, unregulated market, and the restrictions and regulations 24 country-guide.ca

appear to be doing just what they’re designed to do, keeping a lid on how much acreage slips off farmers’ hands. The country’s crystal ball gazers do see a permanent change coming. “In Canada, the whole trend toward other people owning farmland is going to increase,” says David Sparling, professor at the Richard Ivey School of Business at the University of Western Ontario. “What you’re starting to see are investment groups looking at farmland.” Sparling knows he isn’t the only one making these predictions. Rural acres are attracting nonfarm dollars because farmland represents a very stable investment, providing more security than volatile stocks and better odds than high-risk commodity markets. Not only are farmland values rising, but history says they’re highly resistant to deflation, and of course they also provide a stream of rental income. “All of those things are making people a lot more interested and aware of agriculture, and that March 1, 2012

BUSINESS

SASKATCHEWAN

makes them more aware of an investment opportunity,” Sparling says. In a way, it’s nothing new. A lot of farmland has always been owned by people who do not make day-today decisions about how it is farmed, says Brady Deaton of the University of Guelph, who estimates roughly 35 to 40 per cent of land is rented in Canada. Those owners are sometimes farmers, but more often they’re families in transition, either because the farmer has retired, or because the land has been inherited by family members who want to keep living on the family farm but who have jobs in town. That’s part of what makes it so difficult to track reliable statistics… but it also doesn’t help that there are hardly any good government numbers on land ownership. Statistics Canada, for example, has no data on foreign or domestic investor ownership of farmland. In the past four years, University of Manitoba economist Jared Carlberg has worked on two reports on farmland ownership patterns for Agriculture and Agri-Food Canada. Beyond that, Carlberg shrugs, “it’s more of a provincial issue than a federal one.” Yet as you’ll see in these pages, the provinces themselves don’t exactly have a great record of tracking corporate, foreign, or investor ownership of farmland. Only the market tells the story. MARCH 1, 2012

Saskatchewan is attracting more nonfarmer investment dollars than any other province, says the University of Manitoba’s Jared Carlberg, who despite apparent government indifference about land statistics has been digging through sales records. Depending on how you define these things, indeed, Saskatchewan may be attracting more investor dollars than all other provinces combined. “Saskatchewan land is the biggest target for outside investors because it’s the cheapest and the most plentiful,” Carlberg says. Canadian institutional investors have been making the most noise in the province, and consequently have a fair share of the media’s attention. These investors buy and hold land and generate revenue by either renting it out or by selling it at a profit, and their acquisitions are pushing toward the 300,000-acre mark. According to figures Carlberg assembled for his March 2011 report, Assiniboia Capital of Regina has around 110,000 acres worth about $55 million under management, most of which is concentrated in Saskatchewan. Calgary-based Pike Management’s Agland Inc. fund manages land holdings of around 100,000 acres. Ag Capita, also of Calgary, owns over 30,000 acres of land, mostly in Saskatchewan, and Ontario’s Bonnefield Canadian Farmland also has most of its 10,000 Prairie acres in Saskatchewan. Surprisingly, however, Carlberg’s survey reveals that in another way, Saskatchewan has the lowest percentage of outside buyers. Over 76 per cent of farmland sold in the province is purchased by local farmers. Less than 11 per cent is bought by outsiders. “There is a lot more farmland in Saskatchewan, so it can be the place with the most activity in terms of amount of interest, but still have the lowest proportion,” says Carlberg. Most of the thousands of non-farmer investors in Saskatchewan and the rest of the Prairie provinces are individuals or families with historic ties to the rural community, Carlberg says. And for each of the Prairie provinces, about three-quarters of rented land is owned by retired farmers or their family members, most of whom continue to live in the area. Carlberg’s survey of rural municipalities

reveals about 70 per cent of Saskatchewan farmland is farmed by those who own it. (The same is true for Manitoba, while the figure is slightly lower in Alberta, for example, at 65 per cent.) While average prices remain lowest in Saskatchewan at $580 per acre, that’s still $150 higher than five years ago, and according to Farm Credit Canada’s Farmland Value report, Saskatchewan farmland average values rose 11.6 per cent in the first half of 2011, the biggest jump in Canada. But that’s not simply a product of greater investment. “Increases in land values are likely due to a myriad of factors, including the recent upward trend in commodity prices, location (did I mention location?), land quality, other costs of production, policies, changes in the interest rate, etc.,” says Brady Deaton, economist at the University of Guelph in Ontario. The fact Saskatchewan land prices aren’t rising even higher has a lot to do with the fact interested foreign buyers are stymied by the province’s rules. Saskatchewan’s Farm Land Security Board ensures every land transaction adheres to the provincial Farm Security Act, says the board’s general manager, Mark Folk. Foreign ownership of farmland is heavily restricted and non-Canadian residents can’t own or have an interest in farmland over 10 acres. Any amount exceeding that requires an exemption from the board. “Most exemptions approved have been for non-agricultural use of the land or for nonCanadians purchasing land with the intention of immigrating to Canada,” says Folk. Companies purchasing farmland in the province must be 100 per cent Canadian owned and not publicly traded. Limited partnerships that have purchased land are required to have 100 per cent of the limited partners as Canadian or Canadian-owned companies. Besides monitoring Saskatchewan land transactions, the board can investigate and force the sale of land that is owned by foreign individuals or companies. That doesn’t mean no one tries to get around the rules. Carlberg says if someone wants to own land badly enough, they often can find a way. During the course of his

Continued on page 26 country-guide.ca 25

BUSINESS

Continued from page 25 research, he heard the odd story from realtors about backdoor agreements, whereby foreigners bypassed regulations by having locals purchase land on their behalf. “However, it would be unlikely that a large corporate entity or foreign government could or would do this,” Carlberg says. “It’s more likely to be individuals.” Contravening these strict regulations shouldn’t be taken lightly as the act contains provisions for a fine and/or imprisonment if convicted. There has been some pressure to change the foreign ownership rules, but Folk says no changes are being contemplated to the act. Although the Saskatchewan government may have seemed open to the idea at one time, Carlberg believes that the ruling Saskatchewan Party has no wish to alienate its rural political base. Having an investment fund from China compete with local young farmers looking to stay on the farm, start a family and support the rural community is not going to go over very well with the rural public, he points out. David Sparling at the University of Western Ontario is less sure about change not coming. “Saskatchewan is becoming much more open for business and much more interested in investment coming from around the world, both in its oil business, agriculture and mining businesses,” Sparling says. And if Saskatchewan’s farmers grow unhappy about their land being worth less than in the Prairie provinces that flank them, he says, “that may actually gradually change or loosen up (the rules) to some extent.”

MANITOBA AND ALBERTA Like Saskatchewan, the provincial governments of Manitoba and Alberta also limit foreign ownership, with Manitoba capping the amount at 40 acres and Alberta at 20 acres. According to a Manitoba government official, the Manitoba Farm Lands Ownership Act’s restrictions are intended to preserve farmland for use by present and future generations of Canadians. Just as in Saskatchewan, an exemption process exists for Manitoba and Alberta. In Manitoba, the Farm Lands Ownership Board (which administers the act) will consider factors like public interest, potential benefits to Manitoba and the specific circumstances of the applicant. But it’s currently mostly a moot point. In most Manitoba instances, retiring farmers end up selling to neighbours, making outside investment almost a non-issue, says Jared Carlberg, economist at the University of Manitoba. His report reveals a little over 80 per cent of farmland is being purchased by local farmers. “In Manitoba, there’s such a huge demand for land for expansion,” Carlberg says. “Times are good and land is valuable so it never makes it to market.” The Keystone province has the second-highest average land prices of the three Prairie provinces at around $1,150 per acre, and has experienced the largest dollar increase in prices over the past five years. Meanwhile in Alberta, oil leases, recreational use demand and the expansion of Edmonton and Calgary are competing against and limiting the impact of institutional investors. Alberta’s records do show that foreign owners control 334,083 rural acres in the province, but this isn’t all farmland. Exemptions are granted for purposes such as manufacturing, industrial, commercial, residential, and oil and gas development, as well as sand and gravel extraction, says Mike Berezowsky, a spokesman for the province’s Service Alberta Ministry. 26 country-guide.ca

“Investors have to date had the luxury of being very selective.” — Jared Carlberg Also, the Alberta cabinet can approve applications from foreigners transacting between family members, and developments “that may result in significant economic benefit to Alberta.” Alberta counties report the highest average farmland prices in the Prairies with an average of over $2,000 per acre. But many of the highest prices come from areas of significant development pressure or recreational demand, Carlberg says. It’s high prices such as those that keep out non-farmers, who appear less willing to compete with area farmers for available land, Carlberg says in his report. But should the returns become attractive enough to take the risk, investors will continue to put capital into farmland. “Non-farmer investors have to date had the luxury of being very selective about their investments,” Carlberg says. “As the stock of undervalued farmland dwindles, with considerable pools of capital at their disposal these investors will become more active in higher-valued markets.”

ONTARIO Ontario’s situation is altogether different from the Prairie provinces. Basically, the province is wide open to investors from anywhere in the world, but the investors aren’t buying. Nevertheless, most of its non-farming investors tend to be individuals. Only about 33 per cent of the farmland is rented, and retired farmers are far and away the biggest category of landowners renting property, according to a survey of farmers renting land in southern Ontario that University of Guelph economist Deaton co-wrote with colleagues James Bryan and Alfons Weersink. Approximately 20 per cent of rental properties are held by owners identified as being investment companies or owner-investors, and foreign land control was a meagre three per cent. “Active farmers play a surprisingly large role in the rental market, with both widow(ers) and retired farmers playing a large part in terms of the percentage of rental properties with cash rental rates,” the Guelph survey says in its examination of the percentage of rental properties. “The most important category of landowners who rent land to farmers in terms of number of rental properties are families or individuals who use the land as a place of residence.” Historically high farmland values in Ontario are making the province a harder place for companies to invest in, says Dave Sparling, business professor at the Ivey School of Business. Ontario had the second-highest increase in farmland values for the first six months of 2011 at 6.6 per cent, according to Farm Credit Canada. “When you’re looking at $10,000 an acre in lots of parts of Ontario, and $1,000 to $2,000 an acre in some parts of Saskatchewan, you can see why Saskatchewan’s getting more attention,” Sparling says. Yet while investors shy away from those values, farmers continue to buy. Sparling notes supply management plays a role in the province, as it means there’s more money in the farming community, which adds up to more money available to dairy and poultry farmers to purchase land. MARCH 1, 2012

BUSINESS

MIXED FEELINGS By Richard Kamchen racking how much land is being gobbled up by nonfarm investors is tough enough. Even harder may be the issue of trying to decide whether such non-farm ownership is good or bad for agriculture. At first blush, it seems clear that it’s better for farmers to own the land they farm, and to have access to the equity gains from rising land markets. But nonfarm investment in farmland is providing farmers a chance to expand their operations and capture economies of scale without having to acquire land themselves, says David Sparling a professor at the Richard Ivey School of Business at the University of Western Ontario. Sparling questions whether farms should differ from manufacturing and retail sectors, where leasing and not owning is par for the course in everyday business. “With land values and investment going up, farmers are starting to look at other ways of funding their business,” Sparling says. “If young farmers want to attract money that will help them farm, this is actually beneficial.” Sparling believes there’s a shift in the view of young farmers as they no longer feel they need to own everything in their operation and are willing to rent from investor landholders. While it isn’t for everyone, Sparling believes it is a business model that will expand in the future. “I don’t know many 30-year-olds with millions of dollars or access to banks that’ll lend that,” says Sparling, who says that rather than spelling the end of the family farm, non-farm investment may actually be beneficial. “It can help young people get into farming at a level that’s really serious and competitive globally that they couldn’t possibly do on their own.” At the University of Manitoba, economist Jared Carlberg disagrees. Carlberg dismisses such arguments, which he says mirror those of investors and investment partnerships. “Balderdash,” says Carlberg. “That is something that has to get said to make the notion of non-farmer ownership more palatable to the general public and some farmers.” The investment trend isn’t friendly to the MARCH 1, 2012

family farm, Carlberg says — particularly being “beholden to their corporate masters to make payments regardless of what happens to their own financial health.” Farmland is vitally important to the wealth of farmers. Not only is land a source of security for credit, it is also a source of increasing wealth because it tends to appreciate over time. Accumulated over their lifetimes, farmers can sell land to realize often very significant capital gains when they retire, Carlberg says. Farmers “already tried the serfdom thing and we didn’t like that. So people have a negative reaction to non-farmer ownership of farmland and I’m very sympathetic to that point of view,” Carlberg says. The National Farmers Union is of a similar mindset and says corporate and investor farmland acquisitions may be the beginning of a rapid move to a sharecroppers-and-serfs landownership model.

Farmers weigh in Edgeley, Sask.-producer Franck Groeneweg has mixed feelings. “On one side, for the land that I own, my balance sheet looks a whole lot better. But for future investment, it’s going to cost quite a bit more and the competition for that land is much more as well,” says the grains, oilseeds and pulses farmer. The ones who suffer are young farmers: “When land becomes a commodity that’s valued basically on who wants it the most, that’s when it gets really difficult for new entrants to get in,” Groeneweg says. Whether owning your own land or renting it from non-farm investors is good or bad depends on your objectives, Groeneweg says. For short-term profitability, renting land might make the most sense as it allows a farmer to spread fixed costs over more acres, he says, but if rental costs climb along with land values, that could threaten profitability, he adds. “I like to spread my risk a little bit, own some land and rent some land,” says Groeneweg, who, with his wife Kari, was selected Saskatchewan’s Outstanding Young Farmers for 2011. He adds he leans toward ownership, since long term it gives him the opportunity to increase his equity. Grains, oilseeds, pulses and special crops producer Ryan Maurer also sees

“It can help young people get into farming at a level that’s really serious.” — David Sparling positives and negatives in the emerging trend of outside investment. For farmers with business models that call for concentrating on production and renting land and leasing machinery, there’s a good fit. The opposite is true for farmers who wish to own their land. “It comes down to what is your business model? Do you want to take your cash and keep pouring it into operations and build a bigger operation faster? Or do you want to have ownership and build your acreage at a slower rate but take the appreciation out of the land?” asks Maurer, who farms in Grenfell, Sask. As for foreign investment, neither farmer favours it. “I don’t see the upside of it myself,” says Groeneweg, noting there are plenty of Canadian investors interested in Saskatchewan. In 2003, the province lifted a rule that had limited farmland ownership to Saskatchewan residents only, which allowed investment capital from Canadian citizens. Maurer, who won the Saskatchewan Outstanding Young Farmers award in 2010 with his wife Lauren, says that just like PotashCorp, Saskatchewan farmland is an important resource for the province and its people. He also believes food security issues could arise for Canadians if foreign investment buys up massive tracts of farmland. “Some of these countries have a lot of mouths to feed,” Maurer says. CG country-guide.ca 27

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business

Help wanted It used to be mainly the East’s hort sector. Now, red tape over foreign workers is causing red ink for farmers in the very heart of the country, like Saskatchewan’s Mark Knox By Anne Lazurko, CG Contributing Editor

30 country-guide.ca

3,500 each. Saskatchewan had 130, with all three prairie provinces at less than 1,500 combined. But this isn’t a contest to see who has the biggest numbers, Knox says. Labour shortages affect one farm at a time, and the damage goes deep wherever you’re located. “The bottom line is, to run my business I need workers,” Knox tells me. “If I can’t get any, I’m out of business.” In fact, Knox believes it can sometimes be an even greater challenge outside of the traditional areas. In Ontario, for instance, help is available through the foreign agricultural resource management services, FARMS, a non-profit authorized by Ottawa to help facilitate and co-ordinate the processing of requests for foreign workers. While there is no indication they will not help a grain farmer out west, the FARMS board of directors is made up entirely of Eastern interests and sectors, not one grain farmer among them.

A bigger challenge Honey is an industry that’s seen some pretty big challenges. Five years ago Knox lost 60 per cent of his hives and that much production to the still unexplained effects of the varroa mite which causes bee disease and death. With $400,000 in losses plus ongoing payments and labour costs, it was a huge hit. Extreme wet weather in the area last year meant slow, late crops and a shortened bloom, affecting production. While these events hit their operation hard, however, none of them has sent Knox packing his bee boxes. But a lack of workers might. Debra Hawer, project manager at Canadian Agricultural Human Resource Council, says the two agriculture-related programs under the federal Temporary Foreign Worker program are meeting some of agriculture’s labour needs, but aren’t the total solution. The shortage is hurting farmers across the country. The most recent federal projections for 2013 show 50,900 non-seasonal and 38,800 seasonal positions will need filling. The horticulture sector has the highest vacancy rate and highest projected need. At the same time, it’s interesting to note the surmarch 1, 2012

Photo credit: Woodland studio

ark Knox is a beekeeper. He and his wife Janice have been keeping bees and harvesting honey for over 25 years now in Saskatchewan, where bees are serious business. The Knoxes are serious too. With 3,500 hives, the Knoxes are among the 10 largest operations in the province. They run that business northeast of Nipawin, in the heart of canola-growing country and just on the edge of where agriculture gives way to the forest and lakes of the north. It’s beautiful country, and it’s a prime location for honey production. In all, some 36 commercial beekeepers in the area produce up to five million pounds of honey annually. At around $1.60 per pound that’s — well — a lot of honey. Canada is the world’s sixth-largest honey producer, with yields at twice the global average due to our long summer days and nectar-producing crops like canola, alfalfa and sweet clover. Saskatchewan farmers grow most of these crops and the province’s beekeepers produce 25 per cent of the national honey production. The Knox’s area alone accounts for 60 per cent of the provincial production. All this is to say that Mark Knox knows his business. He’s a director with the provincial beekeepers association, so he knows everyone else’s business too. And one of the biggest surprises about beekeeping is the number of people the industry employs. Knox needed 23 employees in 2011. He found 19. Only one was Canadian. Two Mexicans and sixteen Nicaraguans formed the core of his roster, brought in under different sections of the federal Temporary Foreign Workers program. Knox knows of only three — that’s three — commercial beekeepers in the entire province who do not hire foreign workers. It’s not that the others don’t want to hire local, they just can’t find anyone. Offshore labour has always been considered a challenge for Ontario and British Columbia’s fruit and vegetable farmers. And there’s no question they still have challenges. According to federal statistics, Ontario brought in 18,000 foreign workers through government programs in 2010, with B.C. and Quebec at roughly

business

veys also indicate a significant gap in the ag sector’s human resource capacity, citing only 25 per cent of employers have an HR plan, and up to a third aren’t doing anything in recruitment and retention. Don’t tell Mark Knox that. He spends what he considers an exorbitant amount of time on his human resource needs. Too much time, he says, and while he is very happy with the foreign workers he has hired, and while he has built lasting friendships with many, he’s not happy about the uncertainty he faces every year as he tries to get them to his farm. Knox hires under both the Seasonal Agriculture Workers Program or SAWP, and a new agricultural stream under Occupations Requiring a Lower Level of Formal Training. It’s a program called NOC C & D — (Note: I didn’t make that up, it’s the actual title) — which we’ll call NOC here for short.

Process, process, process... Applications for foreign workers go through at least three federal government departments: Human Resource Skills Development Canada (HRSDC), Immigration and Labour, and Border Services Canada. Under the SAWP, workers can be hired only from Mexico and Caribbean countries. Knox says it is the march 1, 2012

easier program to navigate because the foreign government is involved in the process. Once a Canadian farm is approved, the foreign government looks after finding the employees, conducting required checks, setting up transportation and ultimately guaranteeing the person who will be replaced in the event it doesn’t work out. The NOC program has no restrictions on country of origin, but much of the legwork is done by the farmer doing the hiring. Through a series of circumstances, Knox has hired mostly through the NOC program, mostly out of Nicaragua. In either case there are a series of steps to acquire workers. Knox starts the process in August for workers he expects to arrive the following spring and into summer as his harvest progresses. The whole thing hinges on an initial application sent to Service Canada and includes a completed labour market opinion (LMO). Through the LMO a farmer basically must prove how badly he needs people, how hard he’s tried to get them through advertising etc., and how few are available. If Service Canada is satisfied you’ve done all you can to hire locally, they send a letter of approval. Continued on page 32 country-guide.ca 31

business Another option Starting with Aussie farm kids, now Cascade is sourcing skilled farm workers from the U.K., Europe and beyond So where does a grain or livestock producer turn as labour pressures mount? The first step, says Craig Ference, may be to start climbing the skill ladder. Then look overseas. “Part of the reason grain farmers aren’t using the foreign worker program is because they have millions of dollars worth of equipment and need people with some skills and qualifications to run it,” says Ference, managing director of Cascade Recruitments in Kirriemuir, Alta. But going by Ference’s experience, that may be based on an invalid assumption. Offshore labour doesn’t have to be low skill. Ference runs a large grain and cattle operation in east-central Alberta, with land holdings throughout Saskatchewan and Alberta. He also is a partner in Cascade Recruitments, a joint venture with Positive Perfection out of Australia. The company recruits agricultural workers for operations in Western Canada using work holiday permits. Ference lived in Australia for a time and has been hiring foreign workers through both federal programs for his own operation. Four years ago he saw an opportunity to set up a business to recruit experienced help to work on large grain and cattle operations without the time and administration required by the federal programs. He knew Australian recruits would fit into farms in Canada. “It became a niche market,” Ference says. “In Australia they wanted the outside work experience and to see another country.” Ference branched out to recruit from other Commonwealth countries including Ireland and the U.K., mostly because it’s easy to get a visa and the two-year work holiday permits can be renewed. He has since gone into Scandinavian countries, and more recently Eastern Europe, though these require temporary foreign worker permits. Through Cascade Recruitment, the employer pays the recruitment costs, while the employee pays travel expenses. This way both are invested in the process, says Ference. Housing rental and wages are negotiated between employer and worker, although Ference does offer guidelines and recommendations. He discourages hiring through his agency or any foreign worker program if a farmer is simply looking for cheap labour. “We want to bring in more qualified people, so we want them paid well,” he says of his Australian recruits. And if hiring through federal programs, “I recommend you always go skilled, that way if they want to become a permanent resident, it’s easier to sponsor them because they are skilled.” In its fourth season, Cascade Recruitments brought in about 50 workers, the majority Aussies with a few Swedes and Ukrainians as well, about a third in each of the Prairie provinces and mostly on grain farms. As the livestock industry recovers, there is increasing interest from that sector. With hundreds of farmers looking for workers, Ference says he simply can’t find enough people to fill the demand. Ference fills his repeat business first and then works to find matches for new employers. Those coming on work holiday permits usually come from April to November and are 18 to 30 year olds with most in their mid-20s. He recommends they work hard during the busy spring and fall seasons and take time off to see the country in between. By contrast, Ference says workers coming through the Temporary Foreign Worker programs are more likely to be in their mid-30s, with more life experience. 32 country-guide.ca

Continued from page 31 According to Knox, step one took two to four weeks when processed in the Saskatoon, but since that HRSDC office was closed, applications are now run through Vancouver, with wait times of 12 to 14 weeks. “My business plan is based on labour and whether I can get labour or not,” Knox says. “Someone is making the decision in Vancouver… I’m depending on someone who doesn’t know anything about my business. So my business is always up in the air. It’s really hard on the nerves.” If the LMO is approved, the next step is to find employees and submit their names to Immigration and Labour for a work permit. That’s another four to eight weeks of waiting. Then, if they are approved, the worker’s last hurdle is with Border Services where they can still be sent back at whatever border crossing or airport they use to enter the country. If applications fail at any of these steps, Knox has to start over.

Vancouver, really? Other regulation changes have affected Knox. In the past temporary foreign workers could be eligible to work here for 48 months, but as of spring 2011 that’s down to one year. “The people who we invest in training are the first who can’t come back,” Knox says. As well, the amount he can charge for housing under NOC has dropped from $250 per month to only $30 per week. Under the SAWP, employers cannot charge for housing at all. Knox doesn’t know how the numbers are arrived at but points to his own experience in Saskatchewan where housing is at a premium in most communities. Without available housing he’s paying from $1,500 to $2,600 per month for motel rooms. Employers pay flight costs as part of the program. “I’ve spent $35,000 on flight tickets and haven’t gone anywhere,” Knox laughs. While the work is seasonal, his workers put in as many as 22,00 hours in that period, amounting to around $300,000 in wages for Knox. Some might argue that’s money lost to local workers. And Knox understands the federal government’s objective. “I understand Canadians come first, but at five per cent unemployment Saskatchewan can’t get much lower. Policies for the East have an effect on the West. It’s a federal government initiative so I understand they can’t do it regionally. I get it, but it’s frustrating.” While no one from HRSDC would speak with me, a written response indicated that each year over 20,000 workers enter Canada under the SAWP, with 80 per cent of those returning year after year. Debra Hawer at CAHRC says many farmers are aware of the program, but make a conscious management decision not to hire foreign workers citing factors like the high degree of administration required and the costs involved. Her organization is currently coming up with an online Human Resource toolkit which will include a section on accessing the temporary foreign worker programs, navigating the process and special considerations around them. Meanwhile, Knox is trying to sort out how he can keep his business humming in 2012. “There is room for expansion,” Knox says. “But I can’t spend money on capital expenditures if I’m not guaranteed a labour force.” CG m arch 1 , 2 0 1 2

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Business

Meet the

new boss If you’re looking to rent land from the new ag investment companies, you may have to convince Bryce Thompson that you’re the right farmer for the job. Here, he tells us how to do it

askatchewan farm boy Bryce Thompson walked into the boardroom of a skyscraper on Toronto’s Bay Street not knowing what to expect. He had an appointment to meet a wealthy landowner, that much was certain. But there was a kind of unreality about it, a clash of two stereotypes — a Prairie farmer and a Toronto investor. Would they even know how to speak the same language? It turns out they didn’t, which is exactly why the meeting went so well. “What is everyday conversation for us is new to them,” says Thompson, who emerged from the meeting feeling that his knowledge and experience had been highly valued. “They’ve never heard it before and they want to understand.” Thompson and partner Earl Smith had launched their Regina business called groPartners to specialize in what’s being called landlord management, linking landowners from across Canada to Prairie farmers. 34 country-guide.ca

Only in their second year of operation, the company now manages the lease agreements for about 40,000 acres, and also provides agronomic and financial consulting. Most of groPartners’ clients have made money in other industries and are investing in farmland because it’s safe, or sometimes because they have a family tie to the land. The landowners, not the farmers, pay the groPartners’ land management fees, so the owners’ interests are the company’s first priority. Generally such land investors want more than a rent cheque at the end of the year, however. They want a long-term relationship with the farmers they rent to, looking for someone who will care for their investment. “Renting land brings inherent risk in maintaining the farm,” says Thompson. “Properly managing the relationships with landowners helps reduce this risk.” Here are eight insights from Thompson about how to get picked to rent their land. March 1, 2012

Photo credit: Carey Shaw

By Maggie Van Camp, CG Associate Editor

Business 1. Build a farm resumé In some areas the competition for land this winter has been so hot, local farmers are joking that it’s contributing to global warming. For a recent land purchase in Saskatchewan, Thompson and Smith interviewed over 30 farmers and selected the top five to work with. Once they establish that a farmer is interested in farming the land, Thompson and Smith go through an extensive discussion regarding the farm’s current practices, infrastructure, equipment, human resources, financial situation and future goals. They quickly weed out farmers who aren’t using up-todate practices, tending to select higher-input farmers. They also assess the volume, type and quality of the farm’s equipment compared to how many acres it covers to help ensure timely operations on the land. Thompson says landlords want to know what crops are going to be grown and what inputs are planned, including rotations, fertility and weed control. Between Smith’s experience in agricultural loans and Thompson’s background as an agronomist, they can usually find out which farmers are well respected in an area. They make a point of trying to find younger, growing farms as they want to form relationships with the potential to last. Generally, farmers with some off-farm experience in other industries understand other people’s perspective better and are more willing to find a win-win situation, says Thompson. Farmers should tell landlords about their experience, course accreditation and education. Ohio State University’s fact sheet, Managing Landlord-Tenant Relationships: A Strategic Perspective, suggests providing landlords with a detailed resumé of the farming operation. This could include business objectives and philosophies, history of your business, education, tillage practices, equipment, land tenure, financial strength and relevant family information.

2. Communicate, communicate, comm... Thompson remembers one farmer bragging he hadn’t had to talk to a landowner at all through a five-year lease. Then he was surprised at the end of the term when the landowner switched to another farmer who had taken the time to get to know him. Thompson says most farmers are happy to communicate by text or email but most landlords want to talk to real people. “I create stability by keeping in touch with landowners,” he says. Communicating helps build and maintain trust with the landowner and increases the chances of a long-term relationship, but it does take time and patience. Thompson and Smith select renters who are willing communicators, have a positive attitude and, while they are already doing a good job, are still looking to learn and improve. The landowners Thompson deals with are very interested in agriculture but don’t have the time or March 1, 2012

the know-how to keep fully updated. They may read the headlines in the general press about high crop prices and food shortages but don’t necessarily understand how the commodity markets work, or the current costs and risks. In Thompson’s experience, they basically want to know enough to be sure the practices being carried out on their land are sustainable and productive. Also, most landowners want to believe the farmer looking after their land is a very good farmer, says Thompson. You don’t necessarily need to share your net worth, but be prepared to show where the money is coming from for next year’s inputs. The type of rental agreement usually determines the amount of communication required. With cashrent deals, Thompson contacts the landlords only a few times a year to let them know how the year is proceeding and to ensure things are in place for the following year. In agreements where the landowner is more involved, such as a joint ventures (like a share crop with the landowners carrying some of the input risks), they communicate more, sometimes up to weekly. This includes several updates in the growing season on crop and market conditions, so there are no surprises to the landowner at harvest. This is especially important when unexpected events such as hail, frost, insect or disease outbreaks change the forecasted production. “A conversation or two at harvest to let the landowner know how things are turning out is also important,” says Thompson. “These real-time updates maintain the landowners’ confidence.”

Out of one recent group of 30 farmers, Thompson found only five he was prepared to rent to Mostly Thompson works to his client’s goals but also tries to match those goals with the reality that farm productivity depends on weather, pests and more. “They come to us with a romanticized view of farming but soon realize that it’s a complex business,” Thompson says.

3. Make the owner feel like a farmer Understanding that for some landowners it’s not all business also plays a part. “The landowners want to ensure the land is well cared for and get a fair annual return,” says Thompson. “However, they also generally have an emotional attachment, a pride of ownership.” Accept it and consider it an opportunity, says Thompson. “Our experience is that it’s a good thing.” Many groPartner clients were raised on farms Continued on page 36 country-guide.ca 35

business Continued from page 35 and are looking for the emotional tie of owning land that they had as kids. If you take the time to explain modern farming practices, they’re more willing to enter agreements that help the farmer, and they will put value on the knowledge that their land is being cared for. Conversely if you’re dealing with someone with zero emotional attachment, they’re more willing to dump the farmer to move on to one who offers them a couple dollars more per acre in rent. In Thompson’s experiences, the more removed landowners are from the farm, the more objective they are about expecting it to produce a return.

4. Be flexible on agreement type Having lots of choices can be important, says Thompson. If farmers are flexible on the type of agreements they’ll enter into, they can increase their access to land. For example, he vividly recalls a farmer he tried to work with who was willing to enter into only one type of agreement. It didn’t fit with the client, so the farmer missed the opportunity to grow his farm in an area where more land is hard to access. In 1998, 60 professional farm managers responded to a mail survey sent to each of the 108 farm management companies operating in Illinois. They overwhelmingly agreed with Thompson that providing a menu of leasing options allows each party to express their preference and to negotiate the most satisfactory contract terms. Typically, agreements are either cash rents paid at a fixed rate, or they’re flexible cash-rent or crop-share leases which are based on a predetermined division of revenue from the crop. To figure out which type is the most appropriate, Thompson assesses the landowner’s risk tolerance, financial situation and basically what the landlord wants out of the deal. Is the landowner highly dependent on the rent payment for food and shelter, or are they highly leveraged? If so, they’re probably not in a position to share risk and so Thompson will recommend a fixed cash rent. If the landowner is financially secure and has a good understanding of the risks involved in farming, then a shared-risk agreement might be a good option. In Western Canada, share cropping, 36 country-guide.ca

(giving the landowner a percentage of the sales of the crops) is almost extinct. Instead groPartners’ most common agreement is a joint-venture agreement. The landowner shares the production costs and shares in the profits, exposing them to the same down-side risks and upside potential as the farmer. Also, the landowner is perceived as farming and can file taxes accordingly. However, Thompson is clear that tax management is not the main driver for landowners. “They see this as a way to help younger growing farmers access cash and share the risk with them and it exposes them to the full risk and reward of production farming.”

5. Be open to longer leases One of the biggest risks for farmers today is the loss of their rental land. Their machinery assets are tied to a larger percentage of leased land. At the same time demand is pushing up rental rates. Owners are concerned they’ll miss out on increases and farmers are afraid they won’t be able to afford higher rates if commodity prices go down and input costs increase. That uncertainty is often transcribed into shorter land lease terms. “The lengths of leases are probably less than they were 10 years ago,” says Thompson. Longer-term agreements help farmers manage their farm business with longerterm planning. Five years is groPartners’ most common agreement with hopes that it will be a much longer relationship. Thompson finds it much easier to deal with landowners who have the intention of owning the land for a long time frame.

6. Bring your numbers “Business-minded farmers recognize that in order for the agriculture industry to secure needed investment, landowners must receive reasonable annual returns,” says Thompson. “It should benefit all parties.” One of the keys to making this a winwin situation is to ensure that your numbers are crunched before you meet with the landlords. Having your average cost of production and current level of return along with the financial reality calculated for some alternative lease agreements will go a long way to netting an agreement. It will also go a long way to debunking misconceptions. Most landlords look to set a fair rate

based on what others pay in the area. Others will set rental rates on a rate of return versus the dollars invested in the land. “Some of the more aggressive landowners are trying to obtain over six per cent,” says Thompson. “With the current run up in farmland values, areas can be anywhere from three to five per cent range.” The vast majority of landowners want to see the farmer succeed, says Thompson. They don’t want to be trying to find a new farmer the next year. Part of the communication is to educate landowners that there are benefits in having the same farmer manage the land for a long time to ensure proper investment in fertility, weed control and other maintenance. “Landowners with a good understanding of farm economics will also consider what the true costs and profit potential of the farmer are and try to adjust for this,” says Thompson. For the landowners, having an intermediary sometimes increases confidence that a fair deal is in place, gives them confidence that the land is being properly maintained and allows them to enter into more complicated agreements. “If we were not involved they would not likely have either the time or understanding to enter into and maintain an agreement where production and cost risk is shared,” says Thompson.

7. Sign written agreements Written agreements are a necessity to ensure there are no misunderstanding. “It means we must discuss things,” says Thompson. This forced communication can include a clause to ensure the lease will continue for the duration of the contract even on death of the landowner. “With the amount of investment needed to farm today, if someone passes away or the farm is sold, it helps to have the farmer still tied to the agreement,” says Thompson.

8. Plan for the next generation Connecting with the next generation of landowners or future land fund shareholders is an often forgotten way to potentially extend the agreement. “Whether it’s a farmer’s grandchildren inheriting or outside investors who purchase farmland, the evolution of farming is dealing with people who are further removed from the farm,” says Thompson. “They’ll have a greater dependence on the farmer to make sure land is well looked after.” CG March 1, 2012

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business

Farm credit,

carbon style While it looks like free money, it takes discipline and lots of record-keeping to get the new carbon credits. Still, if there’s a cheque, and it’s got some zeroes… By Anne Lazurko, CG Contributing Editor With more farmers on the prowl to create new revenue streams, this might be the right time to take a look at an invisible commodity that farmers create simply by doing what they’re already doing. Grain farmers have long been adopting new technologies that enhance our soils and make them more productive. We have also been saving money by decreasing overlaps in field applications, and we’ve been getting better yields by strategically placing seed and fertilizer. What we don’t always think about is that these practices also keep carbon in the ground. They reduce fuel consumption too, and also make our nitrogen applications more efficient, all of which create potential carbon credits. The global carbon offset market has ballooned from $25 billion in 2006 to a whopping $144 billion in 2010, according to the World Bank. Mostly it is a direct result of government pressure on industry to reduce greenhouse gas emissions. The European Union dominates the market through its compliance kets, mostly found in North America. Federally, Canada has abandoned emissions

to climate change means Canada’s national offset system is being put on hold, at least for now.

targets as set out by the Kyoto Protocol. Indeed, the

That said, the provinces aren’t waiting on the

whole Kyoto foundation for our environmental policy

sidelines. Many are in the process of designing their

is now seriously in question, and while no one at

own greenhouse gas legislation complete with car-

Environment Canada would speak with me, I did

bon offset protocols that fit into provincial, regional

receive a statement indicating a “revised approach”

and even international cap and trade policies.

38 country-guide.ca

march 1, 2012

Photo credit: crystal puim photography

programs but there are also growing voluntary mar-

BUSINESS

THE ALBERTA STORY lberta has only 10 per cent of Canada’s population, but 40 per cent of our national carbon emissions. With those statistics in mind it isn’t surprising that in 2007 Alberta was the first province to introduce greenhouse gas legislation targeting utilities and other regulated companies known as large final emitters. These businesses can comply with the new law in three ways. They can implement new technologies that reduce carbon

“Having the cash up front is always better.” — Graham Gilchrist

emissions. They can pay $15 per tonne into a provincially administered technology and research fund. Or — since those options are complex, expensive and time consuming — they can purchase carbon credits from a third party. Enter the farmer. First, let’s remind ourselves of the biology. Plants fix carbon through photosynthesis. This creates organic matter. As organic matter decomposes it is converted to carbon dioxide which then goes back MARCH 1, 2012

into the atmosphere. If more carbon is fixed than released, there is a net reduction in carbon emission. As well, tillage introduces air to the soil, warming it up and creating greater carbon loss. That also means that if tillage is reduced, less CO2 is released into the atmosphere. By adopting reduced and notill practices, grain farmers are in a position to create agricultural soil sinks. Now they can turn those sinks into a commodity that other emitters are more than willing to pay them for. Alberta has a number of agricultural carbon offset protocols, but the tillage protocol is the oldest and most used to date. It is designed around the science of soil management. Graham Gilchrist is with the Farmers Advocate Office (FAO), part of the provincial Agriculture and Rural Affairs Ministry. He says the protocols are based on scientific reviews of total farm research. Individual farms plug their numbers into the resulting formula to determine how many credits they have as a result of a switch to new agronomic practices like zero till or reduced till. These credit numbers are then verified and the credits are sold to large final emitters — mostly utility and energy companies — who use them to offset their emissions. Sound simple? It’s not. Firstly, individual farmers don’t have enough credits to deal directly with the large final emitters who want to buy them in 100,000- to 500,000-tonne blocks. And secondly, the verification standards require producers “to have a robust data management system to pass the test of limited and reasonable assurance,” Gilchrist says. The entire agricultural offset system is a dance between large final emitters, farmers, and a buffering agent known as the aggregator. An aggregator puts together large parcels of farm carbon credits which are verified by a third party as having met the protocols. When the credits are deemed to be valid, they are then serialized and put on a provincial registry. At that point they are available for sale, with the aggregator negotiating the price. But we’re not done yet. Two years after the aggregator has bought your credits and sold them to a large final emitter, a government audit is conducted going right back to the original farm data. When a letter is received by the aggregator indicating that a certain pool of credits with a certain serial number is valid, “only then is the transaction absolutely complete,” says Bill Dorgan, president with AgriTrend Aggregation Inc. (ATAI). You might be forgiven for wanting to toss up your hands and say “thanks, but I’ll pass.” Before you do, here are some statistics. According Continued on page 42 country-guide.ca 39

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business Continued from page 39 to the FAO, 4.2 million tonnes of CO2 credits have been accumulated and retired by final emitters from tillage offsets since 2007. That’s $60 million trading via roughly 25,000 parcels on the registry by 2010. If you had a section of land in the market for 10 years, at $2,500 per quarter, that’s $10,000 on the table. There’s money to be made, but if producers want to play in this market, they have to have the data management and agronomic practices to enter the playground. “The final product is just data,” Dorgan says. “...compliant quality data.” That data collection starts on the farm. When ATAI’s carbon coaches meet with farmers they are looking for exact, precise and accurate information. They then convert that data into an offset that has value. Farmers then sign off that the generated data is true. “This is the law,” Dorgan says. “It’s not just a program.” While it is law, with protocols spelling out the details, there is no official list of verifiers, only guidelines indicating that a verifying team should include a professional engineer and a chartered accountant, which leaves it up to the aggregator to choose qualified and capable verifiers. “There is a lot of risk to the aggregator,” Dorgan says. “We have to make sure they verify to standards they understand.” Once a contract is signed with the grower, title to the offsets is relinquished to the aggregator. ATAI buys offsets for a dollar, Dorgan says, with trailing income post-sale. While each aggregator contracts differently, ATAI takes a percentage of gross sales, generating their fees out of the reconciliation of the sale. Because the legislation sets the value of credits at $15, that’s where the value caps out. And while Dorgan says the carbon market does not make ATAI profitable as a stand-alone AgriTrend entity, it is a useful tool for their agronomists out in the field, providing an additional service to farmers. And for the farmer? “It’s a new revenue stream not impacted by weather,” Dorgan agrees. “It is steady, stable and predictable.” It is also recognition of environmental responsibility. “This is nothing more or less than a reward for being a good steward,” Dorgan says. “It is also an opportunity for a grower to get the data history of his land.” 42 country-guide.ca

While these advantages might exist, at the FAO, Gilchrist has some cautions for farmers. He sees three areas in which they need to be well versed and aware.

• COMPLIANCE There are five main areas of evidence required for compliance under the Alberta tillage protocol. There needs to be proof there was a crop and proof of the true farm acres converted to no till. As well, farmers must also document use of the correct tillage instruments including the required spacings and number of passes. They must adhere to different calculations applicable to dry prairie or parkland zones, and indicate a clear line of ownership. With 40 to 50 per cent of land farmed by tenants, this last one can be a big stumbling block. “The landowner has the sink right, the farmer has the data right and they need to agree to create a credit,” Gilchrist says. “A handshake isn’t enough. You need a written agreement laying out a clause about carbon offsets. You need to be able to connect the final emitter back to the source of the tonne.” Some landowners waive the right to the credits in favour of the tenant who is, after all, making the farming decisions and keeping the data. Others want the money, while still others will split. Both Dorgan and Gilchrist agree the carbon offset must become part of land transaction and land-leasing agreements because without the landowner’s signature, nothing can happen.

• CONTRACTS “This is not a government program,” Gilchrist says. “It is a commercial enterprise, a sale between a power producer and a farmer.” The FAO became involved in the agricultural offset world when approached by farmers concerned about the contracts they were signing. Their goal has been to assure quality of the product and transparency of pricing for farmers. They’ve had some success, managing to get in early in the process with industry and farmers to help set some standards. “It’s not as tight as some farmers would like, but now they have an appeal process as well,” Gilchrist says. There are basically two kinds of aggregators, those who purchase directly from the farm and those who act as agents. It’s pretty obvious which Gilchrist prefers.

“Purchase agreements are clearest,” Gilchrist says. There are two types: outright purchase which might provide a lower price but is guaranteed, or share purchase which provides an amount up front followed by a percentage of final net. “As an ag economist I feel having the cash up front is always better. “We have concerns with some agency agreements where the fiduciary duty between agent and seller is not clear,” Gilchrist says. “They are undefined and open ended.” In either case, the FAO counsels farmers to be prepared, to know what they’re signing and to get help if they need it. To this end the FAO website has an extensive list of questions a farmer should ask about before signing a contract. It also sets out examples of producer favourable clauses for both purchase and agency agreements, and it asks industry and aggregators to use “plain English” in their documents.

• RISK “Have we weeded out all the unscrupulous dealers? No,” says Gilchrist. “It’s difficult to know without transparency.” The final risk in this whole game rests with the final emitter because companies are on the hook to produce something to Alberta Environment every year, Gilchrist says. But the risk to the farm is the lack of pricing transparency, something his office has been advocating for. “It is a bilateral market,” Gilchrist says. “You can’t gauge on a price basis whether you are getting a good or bad contract.” In a transparent market exclusive deals between aggregators and companies would be evident and others would know the resulting discount. As it stands now, there is a 40-cent spread in the aggregator’s cut on the sale of credits, with unique price quotes from each of the aggregators, according to FAO information.

• GOING FORWARD As of January 2011, new Alberta legislation is only allowing carbon credits on a forward basis, which means no more historical data. And because the Alberta auditor general’s most recent report asked for stronger evidence of verification, all credits will now be verified using reasonable assurance. That’s the same standard as a full financial audit. march 1, 2012

business Data collection and verification will presumably become more expensive, so the business model used by aggregators may change again. The Alberta tillage protocol and resulting carbon market for farmers is only one type of agricultural offset but it shows the complexity of the legisla-

tion and its requirements. In the meantime other provinces are looking at the Alberta model to design their own legislation and offset systems. In a world where ecological goods and services are increasingly part of common language this may be only a starting point for agriculture.

Carbon where you farm Alberta has led the way in greenhouse gas legislation, with mandatory emission reduction levels for industry and carbon offset protocols to help companies meet those targets. Many of the protocols target agriculture and present a unique, if complex, opportunity for farmers to enter the carbon credit market and be financially rewarded for good stewardship. Alongside tillage, Alberta has more recently adopted protocols around beef, dairy, and pork production, as well as agroforestry. All are developed through scientific research and most are a simple recognition of what producers have been doing all along: adopting new and existing technologies that cut costs by saving time, fuel, feed and other inputs. That the production decisions happen to produce carbon credits can be seen as a bonus. Graham Gilchrist with the Farmers Advocate Office in Alberta cites the example of ear tags used in the livestock industry. They were introduced to address traceability concerns, but the fact that they also provide real birthdates has allowed for a beef protocol to be developed. Early slaughter generates a certain number of carbon credits and the tag, with that birthdate, becomes part of the verification process. Saskatchewan has been working on its own greenhouse gas legislation. While Environment Minister Dustin Duncan did not respond to our request for an interview, the legislation is expected to be closely linked to that in Alberta. Bill Dorgan, president with AgriTrend Aggregation Inc. (ATAI) says his organization has been to several meetings with government and stakeholders in Saskatchewan and expects legislation and protocols to be similar. Two years ago Ontario’s Agriculture Ministry conducted a pilot project with 21 Ontario farmers to test the data march 1, 2012

collection, management requirements, and verification components of tillage protocols. They found that despite differences in soil type, crop rotations and fewer summerfallow acres in Eastern Canada, the reduced or no-till protocol would work. According to correspondence from senior communications adviser, Susan Murray, other agricultural practices show promise to mitigate emissions and/or sequester carbon on Ontario farms. They include anaerobic digestion of manure, reduced application of fertilizers, cultivation of perennial biomass crops such as tall grasses and shortrotation woody crops, and practices to retain and manage farm woodlots and hedgerows. Ontario’s work hinges on the development of “a cap and trade system that will work for Ontario,” according to Murray. To that end they are working closely with the Western Climate Initiative (WCI). WCI is a collaboration of independent jurisdictions working to identify and implement emissions trading policies at a regional level. Its members include British Columbia, California, Ontario, Quebec and Manitoba. Beyond that it is part of broader efforts with some western, midwestern and northeast states. That’s a pretty big region, making it more like a North American initiative without the participation of federal governments. But maybe that’s the way it will have to be done. Back in Alberta, Gilchrist says the federal policy to police emissions as opposed to implementing a cap and trade policy, has left the provinces to figure out how to adapt to attain their goals. But Gilchrist also sees the effects of environmental efforts moving agriculture way beyond carbon credits and their incidental benefits.

Is Wal-Mart watching? “It’s a good first look at how environmental goods and services would trade,” Gilchrist says of Alberta’s foray into the carbon offset market. “The interaction of the offset is a consequence of planning that we can participate in, but it wasn’t designed as an environmental effort within agriculture.” In other words, farmers are finding out if they qualify as opposed to looking for ways to qualify. “There is a crossover in the use of technology for good management which allows for data which can be used for assurance evidence,” Gilchrist says. This then creates credits. But he sees a different scenario coming down the pipes, one imposed by commercial considerations. If, for example, Wal-Mart requires evidence that a farm is ecologically sound before buying product from that farm, “it means another binder on the shelf,” Gilchrist says. That binder might need to include, for example, data on power consumption. On a large, multiple enterprise farm, that might mean submeters would be required in order to calculate credits. “It also means you may not or cannot sell your product without that binder.” Or perhaps the supply-managed sector will not allocate quota without evidence of a food safe system because that is what is required by the end buyer. Gilchrist cites a Japanese beef company that imports Alberta barley but requires paperwork and verification of all production practices related to their barley. “As ecological goods and services start to exist in real form there will be a need to conform as a farm if you want to play in that market,” Gilchrist says. “In those markets you will have to have the data and the systems.” Gilchrist believes farmers will adapt. “It’s no different than in ’07 when Alberta said ‘there shall be offsets.’ Everyone just had to figure out how to do it.” CG

country-guide.ca 43

machinery

Growing, growing, growing Check out the big grins on those CEOs at the farm machinery companies. They smashed Canadian records in 2011, and the global market is next By Scott Garvey, CG Machinery Editor

ow that 2011 is safely in the history books, the Association of Equipment Manufacturers conducted its annual tally of farm equipment sales for Canada and the U.S. To say the 2011 numbers look pretty good is an understatement. In Canada, sales of tractors and combines were even stronger than in 2010. Overall, four-wheeldrive tractor sales were up 1.3 per cent and combines climbed a substantial 7.3 per cent, which is even more impressive when you consider the 2010 sales numbers for both were up significantly that year as well, when dealers sold a whopping 13 per cent more four-wheel-drive tractors and 5.2 per cent more combines than they had in 2009. In total, Canadian farmers bought 1,342 articulated tractors and 2,701 self-propelled combines

last year. That’s a big jump from the 588 fourwheel-drive tractors and 1,464 combines they wrote cheques for in 2006, during the height — or depth — of the farm equipment buying slump. Sales grew too for all tractor categories last year, not just for four-wheel drives, with total numbers reaching 22,834. That’s a jump of 5.8 per cent from 2010. In fact, most of that growth was in the under100-horsepower segment, which has been slowly recovering from significant declines after recordhigh sales numbers in 2008. But big rigid-frame tractor sales caught some of the momentum too, selling more units for the year. All of this good news seems to have proven that all those optimistic predictions we’ve heard from executives at the Big Three equipment manufac-

White hot sales in Canada, huge new markets in China, untapped potential in Africa… it’s a great time for the machinery business

44 country-guide.ca

March 1, 2012

MACHINERY

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of the world that has been left out of the conversation is Africa. This continent may not hold as much promise of profit in the near term, but it does have 11 per cent of the world’s arable land. Now AGCO, for one, is casting its corporate eyes that way. The first AGCO Africa Summit was held in January in Berlin, Germany. “With its population poised to double in the next 20 years, it is a global responsibility to develop a new vision for agriculture in Africa,” said Martin Richenhagen, AGCO’s chairman, president and CEO at the opening press conference. “Our objective is to promote international dialogue to encourage global businesses to invest in the future of Africa.” Aside from being the first to really begin talking publicly about Africa, AGCO may have a leg up on the competition when it comes to forging relationships with the many governments there. Its Massey Ferguson brand has been doing business on the continent for about 50 years. In many cases, previous agricultural aid from Canada through CIDA (the Canadian International Development Agency) involved supplying farm machinery to the various national governments, and Massey combines built at the former Brantford, Ont., assembly plant were often part of those projects, so red machines are a familiar sight to most African farmers.

turers since 2008 were well founded. The execs all promised time and again that there would be long-lasting good times ahead. In 2011 a few began making even longer-term predictions of prosperity in the industry, and some are setting ambitious new growth records for the long haul. “All told, Deere’s recently revised strategic plan calls for total sales to double by 2018 from the base year of 2010 under normal market conditions,” said Samuel Allen, CEO of John Deere during a speech in Chicago last May. “That represents an average sales-growth rate of a little over nine per cent — compared with about seven per cent historically. This is a further testament to the scale of both the opportunities and the challenges ahead.” But as good as North American sales have been, they aren’t on a path for Deere to hit that target. So where will Deere achieve the growth that Allen is demanding? In a word, for Deere and others, the focus is on new markets. Deere will need to dive head first into the developing economies that all the major companies have been salivating over for a few years now. “At present, a little over one-third of our sales are made to customers outside of the U.S. and Canada,” says Allen. “That proportion is expected to reach about half by 2018.” Boosting sales in emerging-market countries is the key to the kind of growth Allen and his board of directors see for the future. “Consider that over half of the global population today lives in countries whose economies are growing at an annual rate of six per cent or more,” said David Everitt, Deere president of its worldwide agriculture and turf division, with specific responsibilities for North America, Asia, Australia, Sub-Saharan and South Africa. In Canada, we might be stuck in a mindset that says “developing” countries are poor. For farm equipment manufacturers, by contrast, “developing” means opportunity. To Everitt, for example, the key point is that 40 per cent of the world’s population lives in countries where their economies are growing at rates of eight per cent or more. “At Deere,” Everitt says, “we’re addressing the problem (of feeding a growing world population) by broadening our product lines and expanding our global presence, including some places where opportunity for improved productivity is greatest, like China, India and Russia.” CNH Global, parent company of Case IH and New Holland is also looking to those countries for future growth. It made this clear in a recent corporate release: “The extensive size of the agricultural and construction equipment markets in Russia, combined with the focus of the Russian government on developing these industries and the market position of the CNH brands, provides considerable potential for growth...” While much has been said recently of the BRIC countries (Brazil, Russia, India and China), one region

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MACHINERY Continued from page 45 “Large areas across Africa have suitable soil and climate for successful agriculture, but many areas are not yet cultivated or are not productive enough,” says Richenhagen. To help boost food production — and presumably equipment sales — AGCO has embarked on a trainand-supply project similar to what John Deere has done in the Gujarat region of India. A company press release describes it this way: “AGCO plans to fund the development of model farms and training centres in Zambia, Ethiopia, Morocco, Libya, Algeria and South Africa that will allow local farmers and dealers to be trained on new farming technology.” But it would be a mistake to think the manufac-

turers are in any way giving up on North America. They see room for continued growth in North America, which was confirmed in January when American Business Media asked management at a cross-section of companies that supply goods to agricultural producers what they thought of current and future prospects in the U.S. In all, 94 per cent of farm supply companies said they expected the situation 12 months down the road to be as good or better than what exists now. In Europe, the picture is similar. Farmers attending the Agritechnica machinery exhibition in Hanover in November were polled about their short-term buying intentions. The results suggest machinery sales are likely to continue to be strong through 2012.

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MACHINERY “On average, 43 per cent of all visitors rated their interest in buying as high to very high,” said Bernd Scherer, member of the executive board of VDMA, the German Engineering Federation. “More than 50 per cent of Germans rated their interest as high to very high, which is the highest of the European nations.” But in order for brands to capture new market share in western countries — or just to keep the customers they have — equipment manufacturers will need to stay on the cutting edge of emerging technologies. This comment from John Deere’s Everitt seems to indicate no one walking the halls in the company’s Moline, Illinois, world headquarters has overlooked that fact. “Spending nearly $3 million a day on research and development, we are committed to the advance-

ment of technology as the path toward more efficient equipment, utilization of inputs, and management of the harvested crop,” Everitt said. Similarly, AGCO’s senior vice-president and general manager for North America, Bob Crain, had this to say when he addressed roughly 1,700 dealers sitting in the Kansas City Convention Centre waiting to see the company’s 2012 equipment lineup back in August. “You will not believe what we have for you next.” After spending a few days at Agritechnica, the world’s largest and most forward-looking machinery exhibition, I’d have to say the new technologies about to become mainstream clearly give executives from any of the major brands the right to wear those smiles. With their ambitious sales targets, it’s clear there are interesting times ahead. CG

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country-guide.ca 47 1/27/12 2:49 PM

TOOLMAN

Is it market information, or only market noise? By Errol Anderson learly, times have changed. When it comes to market analysis, we’ve seen a complete transformation. My career began way back around 1980 with Alberta Wheat Pool and its internal publication called Market Update. This publication basically tried to figure out supply and demand tables while keeping tabs of the latest weather forecasts and factoring them into a sort of price balance. The publication originally didn’t make it out of the Calgary head office, but it’s interesting now as proof that a mere generation ago, market analysis was in its infancy and novel to many. Since then, markets have become a speculator’s dream — and in some cases a nightmare. The evolution of commodity funds has changed the nature of agricultural markets. Thousands of trades can occur in seconds. Price volatility has accelerated, and everyone involved wants a piece of the action. But as the trade volume gets turned up, there’s also a lot more of a kind of static that I call “market noise.” What is market noise? It’s market news that may talk about itself as if it's important but that really doesn’t affect market fundamentals. Commodity markets can be endlessly over-analyzed. Everyone throws in their two bits worth, with lots of room to spare for exaggerations and at times mis-truths, and in the end it creates a lot of buzz and no real impact. That’s market noise. Grain and livestock markets are no exception, which creates a challenge for you as a producer. You aren’t interested in the micro-second movement of markets, and it’s important to filter out some of this noise. You want to make a judgment that will best represent a solid risk management decision for your farm business. Something I have learned over the years is that the law of supply and demand ultimately rules market direction. In other words, fundamentals determine the ultimate market direction, and within this framework, technical analysis offers excellent tools to peg the timing of the entry and exit of a trade. But another thing I have learned with volatile markets is that there can be more noise than truly useful market information. For example, in the event of a drought somewhere in the world, markets typically overreact to the upside. Speculators pile into the market trying to get a piece of the action. Wild-eyed price expectations flood through the Internet in an effort to draw attention, which they do. In reality, however, true information about markets usually comes in much smaller doses. Often, 48 country-guide.ca

supply disasters or demand are vastly overstated. Markets during these violent pricing periods can either soar far beyond their real value or fall below. From a producer’s point of view, throwing out the market chaff and concentrating on the market grain is an important marketing skill. Always realize that if markets soar, there has to be a buyer on the other end willing to cough up the money. Remember too that markets can be highly emotional, and remember the golden rule that strong emotions have a short shelf life. So here’s a thought to keep in mind. If price expectations are too good to be true, they often are. Wild expectations that come to mind over the past year include talk of $6,000 gold and $10 corn. Anything is possible in markets, but market noise is easy to produce. Grain and livestock futures do spike from time to time. But during these explosive price periods, shelflife is often measured in days. A key to successful marketing is the ability to price production into these heated speculative-driven market spikes without getting caught up in the hoopla of the sky’s-the-limit price mentality. The same can be said for markets in collapse. Once the emotions of fear and panic stabilize, the price rebound begins. When market emotion settles down, the reality of true supply and demand fundamentals set in. My key technical analysis tool is a 15-year-old, broken transparent ruler. Identifying support and resistance lines and watching for trend line breaks is a fairly solid indicator of market direction. I’ve learned over the years to separate emotion from markets. This is an important skill as an analyst. Market noise can on occasion provide amazing profits for grain and livestock producers, at least for a little while. But it can cost us money too. Noise is a distortion and it can make or break a speculator quickly. As a business person, stay true to yourself and your operation. You will never sell at the top or buy at the bottom of any market without a good dose of luck. Always remember, when markets are too good or too bad to be true, they are. Let your experience and intuition lead the way. CG Errol Anderson is author of ProMarket Wire, a daily grain and livestock risk management report. He is also a registered commodity broker located in Calgary. He can be contacted at 403-275-5555. Email: prowire@shaw.ca. March 1, 2012

Put neuro-leadership to work for you

It’s easier (and more effective) than you might think By Pierrett Desrosiers

s an entrepreneur you are a leader. One of your important roles, therefore, is… to lead, which means you need to motivate others and increase teamwork. But are you sure you know how best to motivate? If not, the new field of neuro-leadership could help you. Neuro-leadership, a term coined by David Rock, applies the findings from the field of neuroscience to the practice of leadership. By doing so, neuro-leadership provides a scientific framework for understanding the practice of leading others. Neuro-leadership provides insights into how we think and why we act and react the way we do. Importantly, it also provides insights into how our leadership affects the brains of others. In other words, knowing more about both your brain and the brains of others can help you be a better leader. There are four domains of interest for the field of neuro-leadership: • Decision making and problem solving • Staying cool under pressure • Collaborating with others • Facilitating change As a leader, you control 50 to 70 per cent of the climate that influences your team. This is because emotions are contagious, and the leader is the thermostat for the team. Let’s examine the SCARF model developed by David Rock for getting along and improving collaboration with others. Our brain is wired to constantly scan for five social demands: Status, Certainty, Autonomy, Relatedness, and Fairness. This is why we react to perceived threats instantly and before the rational part of our brain reacts. We are much more sensitive, and react more forcefully, to perceived threats than to rewards. What happens when one or more of those five conditions are threatened? Your emotional brain takes over the resources that are required for thinking clearly, evaluating and planning. Instead you are left with three instinctual choices: fight, flee or freeze. Therefore, you have little or no access to your intelligence. The more you perceive a threat, the stronger the emotion and the stronger the reaction. The five elements of the SCARF model, below, are what the brain perceives, evaluates and responds to when interacting with others. Status relates to our perceived position within a situation relative to others. We’re constantly aware of it and measuring it. This is our social self-esteem. We have all experienced stating an opinion that was rejected, or being humiliated while part of a group. Because we react emotionally before rationally, the march 1, 2012

more our brain interprets a threat to our ego or selfesteem, the more destabilized we are. Our rational brains are hijacked by our emotional brains. Some entrepreneurs have told me that after being humiliated they have been affected for years. Certainty relates to the fact that the more uncertain we perceive our environment to be, the more stressed and anxious we become. Autonomy deals with our perception of whether or not we have choices that will let us control our environment and be accountable for our decisions. Relatedness or relationships: Are we inside or outside of the group? If the quality of a relationship is weak, or if conflicts are present, we are less productive. We are more stressed, more disengaged, less creative and more unsatisfied. Fairness is how we consider equity, or what is fair. As humans, we are highly sensitive to this aspect of our lives. As a leader what could you do to increase collaboration while keeping in mind this SCARF model? Status: With words and actions, preserve and nourish the status of others. As a leader, acknowledge your mistakes in a humble manner, thereby lowering how your status is perceived by others. It has been shown that just speaking to the boss or a person of higher status will generally activate threat responses in our brains. Certainty: Be clear and consistent in what you say and do, so your team understands both their roles and your expectations. Autonomy: Ask for ideas, and engage others in decision-making. Give them autonomy in their jobs related to their levels of competence. Doing so results in happier and more productive employees. Relatedness: Nourish relationships by being both respectful and empathetic. Put yourself in the shoes of others. Fairness: Preserve and promote fairness and be aware of every sign that could be interpreted as unfairness. Be transparent, ask questions and communicate with others in order to assess the working environment. All these discoveries about the brain apply to you, your family and your employees. As a leader, with the power to influence the climate of a team, use that influence positively to “raise the temperature” of your teamwork. CG Pierrette Desrosiers is a work psychologist, professional speaker, coach and author who specializes in the agricultural industry. She comes from a family of farmers and she and her husband have farmed for more than 25 years. (www.pierrettedesrosiers. com) Email: pierrette@pierrettedesrosiers.com. country-guide.ca 49

ACRES

By Leeann Minogue

The unexpected house guest onna heard a knock at the door and frenzied shouting. “Are you home? Can we come in?” Donna’s daughter-in-law Elaine was carrying her toddler under her arm. The little boy looked happy to see his grandma, but Elaine was red-faced and frantic. “That chimney! We’ll get rabies! In our own home.” Donna had never seen Elaine so worked up. She had no idea what Elaine was talking about, but she didn’t want to make it worse by asking. Donna helped the toddler take his coat off and took him in to the living room to the toy box. “Coffee’s on,” she called out over her shoulder as she left Elaine fuming in the porch. To Donna’s relief, her son Jeff, Elaine’s husband, came in soon after, with Donna’s husband Dale and Dale’s father Ed. “It was like an episode of Wild Kingdom,” Ed said, humming the theme tune from the corny 1970s wildlife show. “We didn’t have to use a tranquilizer gun,” Dale said. “That was the real thing.” It took Donna the better part of a pot of coffee to get the story. A raccoon had crawled in through the chimney in the old house across the yard where 50 country-guide.ca

Elaine and Jeff lived. Elaine had been playing with the baby in the living room when the raccoon leapt out, growled, and ran under the couch. Elaine had grabbed the baby and made a break for the door, running out to the yard to find Jeff so he and his father could get rid of the thing. Like Wild West heroes, they’d shown up with a gun and the dog. “This is the last straw,” Elaine said. “We can’t live there anymore.” When Jeff and Elaine had quit their city jobs to move to the farm last winter, Ed had bought himself a condo in town and they’d moved in to his farmhouse. “We’ve been over this a million times,” Jeff said. “I don’t know what to do.” Elaine wasn’t a complainer, but she’d never been crazy about the old farmhouse. It was drafty — even Ed would admit that — and Elaine had seen her share of mice, spiders, flies, frogs and even snakes in the house. “I’m just not sure it’s safe for the baby,” she told her husband. Jeff didn’t disagree. He just didn’t see an easy solution. Building a new farmhouse would be so expensive. It would be tough to find good contractors who would come out to the farm — Hanson Acres was in the middle of the oilpatch, and labour was scarce. They’d considered remodelling Jeff’s grandfather’s MARCH 1, 2012

acres house. But the old house had never been well-built, and they soon realized that fixing it up to a standard that would keep them happy in the long run would cost at least as much as building a new house. Then they’d looked at a farmhouse five miles down the road, when the neighbour sold his land. “But do we want to live over there on our own, when all the farm business will be going on in your parents’ yard?” Elaine had asked. “I know it’s not far, but we’d miss all the little things. Especially me. I’d be over there with the baby all day while you and your mom and dad make all the day-to-day farm decisions. If we’re going to do that, we might as well live in town.” Jeff understood. He wanted his wife to feel as much a part of the farm as he was. A few of the neighbours had installed ready-to-move houses on their farmyards. These houses seemed well-built. But even that would mean tracking down contractors to build a basement, and, of course, finding a way to pay for the house. The Hansons weren’t in financial trouble, but they didn’t have much spare cash. Spring rains in 2011 had kept them from seeding most of their 6,000 acres. To pay for a house, Jeff would have to take money out of the farm corporation. That would mean paying personal taxes, and finding a way to make things fair for his sister, who was still in university. Jeff’s grandfather’s house was a nightmare, but it was in the right place, and it was free. Elaine wanted to be reasonable. But this raccoon fiasco came on the heels of a visit to her younger sister’s new house in Saskatoon. While Elaine had taken agriculture in university, her younger sister had become a nurse. Now Jenny was working at the University Hospital, and she and her boyfriend had just bought a new house on the south end, in Stonebridge. “It doesn’t seem fair,” Elaine had said to Jeff the day they got home from Saskatoon. They were shivering under a blanket, watching TV in the living room while a breeze blew in through the chimney. “We went to school. We work hard. But we’re living like peasants and Jenny has a double oven and a walk-in closet.” “We have each other. And the wideopen spaces,” Jeff answered. Elaine had a sense of humour. She coped with the drafts and the cracked ceilings. But she’d reached her limit with this raccoon. march 1, 2012

“Jeff,” Elaine said. “We have to do something.” “You could make the kid a Davy Crockett hat,” Ed said. “Grandpa,” Jeff warned. “This might help. There’s a condo for sale in my building,” Ed said. “They’re not asking too much.” “Word must’ve gotten around about the neighbours,” Jeff mumbled. “They don’t want to live in town,” Donna said. “They moved out here to live on the farm.” Jeff’s mom was sympathetic. When she’d married Dale in the 1980s, Donna and Dale had built a new bungalow on the farm. “All those succession planning conferences you people go to, and you still can’t make this work,” Ed said, holding up his empty coffee cup hopefully. “Get your own. It’s in the usual place,” Donna told him. Dale hadn’t said much. Finally he spoke up. “What if you took this house?” That silenced everyone. “Where would you go?” Jeff asked. “Your mom and I could get a place in

town. Not the condo next door to you, Dad, but we could find something.” “You’d have to drive out here every day,” Jeff said. “And a house in town in the middle of an oil boom might cost as much as moving a new place out here.” “Dale and Donna are no different than us,” Elaine said. “They want to be here, where the business is.” No other solution was coming to mind. They were all quiet, thinking, and in the silence they all plainly heard the toddler’s first word. Elaine’s jaw fell. The Hansons weren’t above a few curse words, but this was not the word any mom would want to hear from her toddler. “There’s one for the baby book!” Ed said. “I tried not to say that in front of him,” Jeff moaned. Elaine reddened. “It might have been me… when I saw that raccoon.” “That’s it,” Dale said. “We’re moving in a new house for you two. Make appointments with the banker and the accountant. We’ll have to find a way.” CG

Are you having trouble managing your farm debt? We can help. Mediation may be the solution. The Farm Debt Mediation Service helps insolvent farmers overcome financial difficulties by offering financial counselling and mediation services. This free and confidential service has been helping farmers get their debt repayment back on track since 1998. Financial consultants help prepare a recovery plan, and qualified mediators facilitate a mutually acceptable financial repayment arrangement between farmers and creditors. To obtain more information about how the Farm Debt Mediation Service can help you: Call: 1-866-452-5556

Visit: www.agr.gc.ca/fdms

country-guide.ca 51

life

Stop that pain in the back Get into these easy habits to save yourself a backful of pain By Helen Lammers-Helps arlier this winter my back and neck hurt so much that I couldn’t sleep due to the pain, and I had no one to blame but myself. As in farm families across the country, I was spending too many hours hunched over my computer with posture that came right out of the “how not to do it” illustrations in any back pain guide. A trip to the chiropractor brought some relief, but the message has finally gotten through to me. If I don’t change my ways, I’ll be back in pain again. Of course, I’m not alone with my back pain. Some 80 per cent of Canadians will experience at least one significant episode of back pain at some point in their lives, and now that farmers are spending more time on their backsides — at the computer, on the phone, in a tractor seat and in meetings — they are quickly increasing their risks of the kind of chronic pain that starts in the office instead of in the field. Prolonged sitting in one position can put more load and stress on the lower back than either walking or standing, says Dr. John Papa, a chiropractic rehabilitation specialist in New Hamburg, Ont. People who sit for extended periods of time may also eventually adopt poor posture that includes losing the natural hollow of the lower back. They may also round their spines, or slouch forward with the upper back and shoulders, and they can start leaning forward with their heads, putting more angular force on their backs. “Even slight slouching — to one side, backward, or forward — puts cumulative compressive and stretching stresses on biological tissues that can cause significant back pain and chronic headaches,” Papa says. The good news is that by making some simple changes to your office setup, and by following some other simple strategies, your risks for this kind of chronic pain can be significantly reduced. Before you start, however, remember these keys to back health: 52 country-guide.ca

• Change your sitting position frequently to avoid cumulative strain on the back. • Get in the habit of doing some simple stretches. • Take regular breaks. How many breaks do you need? The answer is probably fewer than you might have guessed. Certainly it is a low enough number that you should be able to incorporate healthy habits into your daily routine without jeopardizing your overall efficiency. Papa recommends taking a 10- to 30-second standing stretch or posture break every 40 minutes. A lumbar support can also be used to help maintain proper posture. Even if you cultivate good habits, however, it’s still important to set up your workstation appropriately. Papa provides the following tips to help ensure you are working in a safe manner. • T he workstation or desk should be at elbow height. Using an adjustable chair can help. • Arms should be supported when keyboarding. • The upper third of the computer monitor should be at eye level for easy viewing. • Don’t cradle the phone between your head and shoulder. Use a headset or the speaker phone feature. • Watch your posture. When sitting, make sure your weight is evenly distributed on your seat and that your shoulders aren’t rounding forward. Avoid slouching. Your head should be balanced on your torso, not poking forward. Susan Wastell, an occupational therapist in Guelph, Ont., says the most common problem she sees in her work assessing client’s offices is the chair. Many chairs are too high or too low, and they have no arms or back support, she explains. “Too often we try to fit the existing office equipment rather than having equipment that fits us,” Wastell says. “It’s especially important for the chair to fit the individual.” March 1, 2012

life

Wastell recommends looking for a chair which is fully adjustable with angled arms for keyboarding. When sitting, your feet should be flat on the floor with hips, knees and ankles at 90-degree angles. “If you’re short, you may need a foot rest,” adds Wastell. A telephone book can be used as an inexpensive and convenient foot rest. The best way to find the right chair is to try them out. Ask the vendor about the chair’s features, with a focus on adjustability, continues Wastell. And remember, price isn’t a good guide to chair health. While there are some very expensive chairs on the market that are very good, not all expensive chairs are good for you. Conversely, it should also be possible to find a suitable chair for a more moderate price. Back in your office, be sure to keep things you use frequently such as the phone, the mouse and the stapler within easy reaching distance. While laptops are very convenient, they pose some concerns if they’re used more than a few hours a day. It’s a good idea to use an independent mouse instead of the trackball mouse on the laptop. Also invest in a separate full-size keyboard, says Wastell. If you’re using a laptop, remember that all the same rules apply regarding posture, chair height, and monitor height, Wastell adds. Getting regular physical exercise will also help prevent injury. Exercise strengthens the body and helps it to withstand these kinds of everyday stresses, says Papa, adding that a combination of cardiovascular, resistance and flexibility exercises is best.

Sometimes the effects of poor posture are offset by the body’s ability to compensate but this causes strain on the secondary muscles and can give rise to unbalanced movement patterns and joint mechanics. These then lead to secondary areas of pain, warns Papa. The main message is, be proactive. Don’t ignore early signs and symptoms such as stiffness, numbness, tingling, pain, headaches, or difficulty with movement, advises Papa. “Ignoring these symptoms may result in chronic pain down the road.” A health professional can determine the cause of your pain and prescribe appropriate therapy, exercises, and back-sparing strategies. Chronic pain is one of the leading causes of absenteeism in the workplace. That means it can affect your performance in the farm office too. Making even small changes such as purchasing a good office chair, adjusting the height of the monitor or using an independent mouse and keyboard for your laptop could prevent years of unnecessary pain. You can hire a professional such as Wastell to provide an objective eye to your office, but it’s also possible to make a lot of improvements on your own. Wastell recommends searching the Internet using the search terms “ergonomic office setup” for more information. As for me, I’ve already become more aware of my posture and I am trying to take breaks and stretch. Also on my agenda is to take a good look at my office chair and office equipment. It’s time to practise what I preach! CG

Your back’s comfort zone* GUIDELINES FOR SELF-ASSESSMENT How Are you Sitting?

How it Should Be

Possible Solutions

Sit down at your workplace, making sure you are all the way back on the chair seat

Back rest should be height adjustable

Use a back support cushion but watch that it is not too thick or that it pushes you too far forward in the chair

• Does your back touch the back rest? Are your lower and middle back supported?

Back should be supported almost to your shoulder blades Seat base should support your full thigh length — leaving sufficient room to bend knees. You should only have two to three finger widths between the back of your knee and the front of the seat

If you have very long legs, you may need an extra-deep seat panel If you never sit back in the chair, this may be an indication that the seat is too deep

Shoulders should be relaxed and not pulled up; ideally armrests are height adjustable

Try a back-support cushion

Elbow bend should be at about 90 degrees when your hands are in a neutral position. Your shoulders should be relaxed, not pulled up

Raise or lower your chair so that your handelbow-shoulder position is as described

• Does the seat base support at least 80 per cent of your thigh? • Does your chair have armrests?

What is your hand-elbow-shoulder position?

Keyboard should be just below elbow level What is your neck position?

Neck should be neutral, slightly bent forward The upper edge of the computer monitor (normal size) should be approximately at your eye level (looking straight ahead) If you wear bifocals, your monitor needs to be lower

Do your feet touch the floor?

Full-foot floor contact — no “toe touching”

If armrests are too high and fixed, it may be better to take the armrests off since constantly pulling up on shoulders is likely to result in muscle fatigue and shoulder and neck pain

If the keyboard is too high because it is sitting on the desk surface, a keyboard tray may be a solution Adjust monitor height using a box, ream of paper, phone book etc. or commercially available monitor positioners If your monitor is too high and cannot be lowered, raise your seat and adjust other items accordingly If not, use a foot rest. Easiest is a telephone book but there are many foot rests available commercially. Choose one that is flexible and allows different positions

*Courtesy of Wastell & Associates, Guelph, Ontario March 1, 2012

country-guide.ca 53

h e a lt h

To split or not to split? By Marie Berry any drugs are available in a variety of strengths, and sometimes there isn’t much difference in price between different strengths. For example, 30 tablets of a five mg and 10 mg tablet may have similar prices. It follows that by breaking the 10 mg tablets in half, you would have 60 doses of five mg while paying a lower price. But there may be problems. One recent report shows some of these. A woman who was taking the blood pressure medication lisinopril started with the dose of 20 mg twice daily. Then, when her physician lowered her dose to 10 mg twice daily, she had her new prescription filled. However, not wanting to waste the remaining 20 mg tablets, she cut them in half and put them in the same bottle as the 10 mg tablets. Later, her physician lowered her dose again to five mg twice daily, but she didn’t fill this prescription. She simply went back to her vial to break her tablets. This time, though, she didn't separate out all the original halves, so she ended up with pills that looked the same but had different amounts of the active ingredient. Unfortunately, she had to be admitted to hospital and no one was sure what dose she had been taking. The moral of the story is to be very careful if you are considering splitting tablets. Leave the original tablets in their original vials, and make a careful note of what you actually did, for example that you broke 20 mg tablets in half so that one-half tablet is 10 mg. Some tablets have an odd shape and do not break easily. In the example, lisinopril has an oval shape, not round, and breaking these tablets in half is difficult. The split tablet may not break evenly, so one half will contain more of the active drug than the other. Cutting tablets in half with a kitchen knife is never recommended as it is not accurate and can be difficult. Pill splitters are available which make the You may take blood pressure medication, but it may differ from what relatives or friends may take. With all the different choices of blood pressure medications, you want to may sure you are taking the best for you. Next month, we’ll look at the different types of blood pressure medication, and check some recommendations.

54 country-guide.ca

job a lot easier. If manual dexterity is a problem, your pharmacist may be able to split your tablets for you, but make sure that your label reflects that the tablets are already halved, or make a note that they are. In a study by the U.S. Department of Veterans Affairs, researchers found that two-thirds of people who were taking half tablet doses took too much medication because they forgot to split their tablets. So, if you are taking a half tablet dose, don’t forget to break your tablet. Be aware too that once tablets are split, they more readily crumble. Plus, splitting tablets can actually destroy some formulations. Capsules and gel caps obviously cannot be broken, but enteric coated and sustained release formulations should not be broken either. Enteric coated tablets have a specialized coating that releases their medication at the correct site in your gastro intestinal tract. For instance, enteric coated acetylsalicylic acid or ASA is coated so that on its way to the small intestine where it is absorbed, it passes through the stomach where it could cause stomach irritation. Sustained, extended, controlled, or slow-release formulations use technology to release specific amounts of their active ingredient(s) over time. By breaking these tablets, the technology is damaged and all the medication is released at once, which is not desirable Look for XR, LA, CR, XL, SR, or ER in the drug name. One example you may know is Oxyconti, where the “contin” refers to a sustained release formulation. This pain reliever is intended to be taken twice daily to control pain. However if it is broken, all the drug is released immediately. Drug abusers know this. They crush the tablets for an instant “high.” Sublingual or “under the tongue” tablets and orally dissolving tablets (ODT) do not break easily, but rather shatter or melt, and tablets that combine two or more ingredients may have specific layers or a core that can be damaged with breaking. While splitting tablets does seem a good idea, check with your pharmacist first to ensure it won’t damage your medication. Saving money is a good thing, but keeping healthy is even better! Marie Berry is a lawyer/pharmacist interested in health care and education. March 1, 2012

“I can forgive but I cannot forget.” A recent television documentary portrayed people who have suffered serious head injuries. A football player came to the defence of a person in a fight outside a bar. He was severely beaten with a heavy wooden stick and lost a year of league play. A young man was beaten in a home invasion and left with permanent brain damage. A woman was critically injured in a car accident. The driver was drunk. She needs permanent care. Their lives are changed forever. They will never enjoy normal life. They have good reason to be angry. The Bible talks about forgiving our brother and sister from our heart. This is not good news for those of us who have trouble forgiving. A woman, filled with long-term resentments, discussed her anger with her pastor. He listened carefully and agreed that she was right. She was justified in being angry. The pastor asked “What is being angry doing to you?” The woman poured out a litany of pains, health problems, loneliness and depression. Forgiveness was offered as a possibility but the woman was unable, or unwilling, to forgive. Her health and well-being continued in a downward spiral. When we refuse to forgive, the choice seems to be whether we will be right and miserable, wrong and miserable, or forgiving and peaceful. Jesus taught us to pray: “Forgive our trespasses, as we forgive those who trespass against us.” Life is not always easy. We are tempted to use vengeance and revenge as quick fixes for complex and profound problems. Jesus says it is better to forgive and heal the memories than to seek revenge. “… if anyone strikes you on the right cheek, turn the other also… if anyone forces you to go one mile, go also the second mile.” Parents are disappointed, offended and even hurt by their children. Without forgiveness, children cannot be raised well. Marriage cannot be sustained without mutual forgiveness. Without forgiveness injuries become wounds. Wounds sap our strength and destroy relationships. Until we find the capacity to forgive, we continue to be linked to the cause of our anger and our unforgiving emotions. Only as we forgive are we able to move on. We always have a choice; to forgive or not to forgive. When we forgive, we make the choice that heals. If we forgive the person who has wronged us before hatred destroys us, we are the winners. When we withhold forgiveness, we remain the victim. Forgiveness allows us to move beyond resentment and anger. We may never forget the hurt, but we can choose to forgive. Time heals memories. Time can dull the vividness of the hurt and the memory will fade. A wise man said “If a person hurts you, do not let them own you.” The door to peace is forgiveness but forgiveness is not an easy gift to give. For our own health, it is a necessity. Forgiveness involves intentional work. Archbishop Desmond Tutu, winner of a Nobel Peace Prize, says “to forgive is a process that does not exclude hate and anger. These emotions are all part of being human.” Tutu continues, “You should never hate yourself for hating others who do terrible things.” He explains: “When I talk of forgiveness, I mean the belief that you can come out the other side a better person. A better person than the one being consumed by anger and hatred.” Suggested Scripture: Sirach 27:30-28:11, Ephesians 4:25-5:2

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Rod Andrews is a retired Anglican bishop. He lives in Saskatoon. MARCH 1, 2012

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10,000 years of bad food Dan Needles is the author of “Wingfield Farm” stage plays. His column is a regular feature in Country Guide

ILLUSTRATION: RICK KURKOWSKI

y grandfather was a part-time medical doctor and a full-time food nut. He’s been gone for 40 years now but I still think of him pretty much every time I open the fridge. He hopped from one loony idea to another over the course of his career, lecturing his patients and every member of his family on water cures, spiritualism, socialism, vegetarianism and his own peculiar caveman’s guide to eating. This was a ruthless diet of only those wild, uncultivated things you could pick up in the woods, shoot with a bow and arrow or catch on a hook. Grandfather sure stood out in downtown Toronto in the 1930s. He was very tall and rail thin, with a bushy beard. In his shorts, without a shirt he looked like pirates had dropped him off on a tropical island about five years ago. He argued with everybody about everything, starting with his eminent professors at Harvard Medical School. “Fathead” is a term he introduced to the family a century ago and we all still use it freely to describe anyone who can’t see things the way we do.

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Grandfather’s basic theory was that the human species had evolved pretty well until it took a wrong turn about 10,000 years ago at the beginning of the Neolithic period. That’s when we started farming and everything since that moment has been downhill. Paleolithic man was about six feet tall, lean and fit, walked everywhere, felt great, and usually died accidentally, probably while trying to club something bigger than himself. He ate a hundred different things that he came across on those walks, all of them just as healthy as himself. Then some dangerous Neolithic genius in the Tigris-Euphrates river valley found that you could plant seeds in the ground and sit around and watch them grow into a large quantity of one kind of food that would last for months. This made life easier in some respects, because he could spend more time at rodeos and casinos, but it was a disaster for his physical health. Over the next 10,000 years he lost nearly two feet off his height, suffered chronic tooth decay and developed debilitating viral diseases from keeping too many animals in the house, and inflammatory ailments from eating too

much grain and dairy. His life expectancy dropped to about 30, he became ill-tempered because of his sore teeth, and very suspicious of the neighbours. Paleolithic man probably knew how to handle himself in a barroom brawl, but there is no evidence that humans organized into armies and practised warfare until they learned how to farm. Crops and animals had to be defended in a spiralling arms race that pushed humans into larger and larger settlements that could defend existing cropland and conquer new territory. Human history ever since the Neolithic age has been one of rising population, steady increases in food production and technology, and a parallel escalation in human conflict. Anyway, Grandfather would carry on like this until his guests were glaze-eyed and submissive and then he would set bowls of wild mushroom soup and boiled fish in front of them. After dinner he led them on a brisk walk through the woods on his property where he gathered mushrooms and shot starlings for the pot. A few years after Grandfather died (he was 83, to his credit), a Seattle gastroenterologist published a book called The Stone Age Diet that promoted exactly the same ideas. The Paleo Diet, as it became known, was the father to many modernday diets that try to reconstruct an idyllic past when we ate smarter and felt better. Conventional science, of course, dismisses all of this as rubbish. (This is what reputable science does best.) Study after study rejects the notion that returning to a hunter-gatherer diet will extend a person’s life. However, if you do follow the Xtreme Low-Carb Caveman Diet, there is pretty solid evidence that life will feel longer. Scientific mud wrestling aside, there does seem to be unanimous agreement that our physiology did suffer a noticeable setback in the Neolithic Age from which we have never quite recovered. Every time I see a National Geographic photo of a tall, lean, Masai cattleman trotting along in the dust behind his herd, I think of Grandfather and wonder if the old quack might have been on to something. March 1, 2012

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