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WESTERN EDITION

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November 2012 $3.50

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+PLUS REMEMBER LYLE VANCLIEF? ACTUALLY, HE NEVER WENT AWAY IF YOU AREN’T USING OPTIONS YOU MAY NOT REALLY BE MARKETING WILL HIGH LAND PRICES KILL THE LOCAL-FOOD SECTOR? Publications Mail Agreement Number 40069240

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NOVEMBER 2012

THE NEW CLASSROOM PG. 18 Mid-career business education is proving a critical performance indicator on more and more farms across the country. The question is, which program is best for you?

CALCULATED FARMING These two farm families are using financial analysis to make better decisions in volatile times.

YOUNGER AND BETTER As the Sheffield family shows, giving the kids a share of management power is good for the whole farm.

BY THEIR BOOTSTRAPS The best education can be the one you get working with your neighbours — if you can build the trust.

LOCAL SQUEEZE Will today’s skyrocketing land prices kill off the local-food movement?

GUIDE LIFE — BUY THAT MOTORHOME Being good to yourself actually helps your farm too, so be SMART about it.

STEPPING STONE To help him pay for the farm, this young Ontarian is buying the local farm-supply business first.

GUIDE HR — TOMORROW NEVER COMES Yes, we all procrastinate. But what if someone in your family just won’t get their work done?

WITHIN REASON A decade later, former ag minister Lyle Vanclief is still dominating Canadian farm policy.

EVERY ISSUE 10

MACHINERY GUIDE Today’s small tractors are getting so much more sophisticated, they can take on even the big jobs.

HANSON ACRES Something smells when the farm’s books come back from the accountant. Call it a high time on the farm.

GUIDE HEALTH Concerned about heart health? Then reach for your toothbrush, and the floss as well.

PETUNIA VALLEY In the valley, paper and ink can still outsmart the brainiest combine yield monitor.

MARKET SHOCKS Our Gerald Pilger sets out to learn why Canadian markets roll so much more wildly than in the U.S.

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DO YOU REALLY NEED OPTIONS? Probably yes, so our Errol Anderson says, don’t listen to those coffee shop grumbles.

NOVEMBER 2012

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CONTENTS

BUSINESS

country-guide.ca 3

desk EDITORIAL STAFF Editor: Tom Button 12827 Klondyke Line, Ridgetown, ON N0P 2C0 (519) 674-1449 Fax (519) 674-5229 Email: tom.button@fbcpublishing.com Associate Editors: Gord Gilmour Fax (204) 942-8463 (204) 294-9195 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 Cell (204) 227-5274 (204) 954-1414 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

If we had it to do over All we can predict about next year is that it will be unpredictable. I can’t think how young I was when I first heard this, but what the old-timer told me then seems as true now as ever. “The worst thing about agriculture is that it goes in cycles,” he said. “And the worst thing about cycles is that wherever you are in one, you think it’s going to stay that way forever.” I’ve mentioned him before in this space. When markets are down, we really only believe the news that means they’ll stay down. Conversely, when markets are up, we really only believe the news that means they’ll stay up. None of us would admit believing any such thing, of course. Still, the spreading certainty that farmland will keep appreciating at rates of 10 per cent and more for at least the next decade bears witness against us. When anyone objects, we simply respond that we are living in an unparalleled time. The old rules no longer apply, because now the world’s shortage of grain is permanent, not occasional. Still, not everyone agrees. One farm leader told me the other day that we need to support ethanol because it may be all that will prevent farm devastation. Farmers will inevitably outproduce the market, he said. They always have, and they always will, and when the bottom falls out of this market, it will collapse with a thud. Either he is right or he is wrong. I confess that I don’t know. I really don’t think you do either. So let’s think about the cost 4 country-guide.ca

of our not knowing. Let’s imagine for a minute that the 1980s never happened. Picture your farm instead as if the Russians had kept buying. Imagine too that there hadn’t been the financial turmoil, accompanied by the unbelievable spike in interest rates. In other words, imagine what would have happened if all of the optimists in 1979 had turned out to be right? It’s a good topic to while away a long winter’s drive back to the farm. How would your farm look different? Technology limited farmers’ growth option in the 1980s and would have been a real constraint on expansion even if grain prices had stayed stratospheric. Arguably, today’s technology is less restrictive now, so maybe you really can grow faster. We could debate it for hours. In this and future issues of Country Guide, however, you’ll see that farms that incorporate the younger generation in management and in decision-making are more productive and more profitable. It turns out that the true limit on success is our ability to get young people actively engaged on more farms. Ironically, farmers who get the next generation involved and who tap into their vibrancy, energy and talent are farmers who put themselves in the driver’s seat. Keep an open mind as you read these pages. But to us, it’s clear. If you want to win, the only sure bet is youth. Are we getting it right? Let me know at tom.button@fbcpublishing.com, or call me at 519-674-1449.

Advertising Services Co-ordinator: Sharon Komoski (204) 944-5758 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 Director of Sales and Circulation: Lynda Tityk Email: lynda.tityk@fbcpublishing.com Circulation Manager: Heather Anderson Email: heather@fbcpublishing.com Designer: Jenelle Jensen Contents of this publication are copyrighted and may be reproduced only with the permission of the editor. Country Guide, incorporating the Nor’West Farmer and Farm & Home, is published by Farm Business Communications. Head office: Winnipeg, Manitoba. Printed by Transcontinental LGMC. Country Guide is published 12 times per year by Farm Business Communications. Subscription rates in Canada — $33.60 for one year, $51.45 for 2 years (prices include GST). U.S. subscription rate — $35 (U.S. funds). Subscription rate outside Canada and U.S. — $50 per year. Single copies: $3.50. Publications Mail Agreement Number 40069240. We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage.

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

Call toll-free 1-800-665-1362 or email: subscription@fbcpublishing.com U.S. subscribers call 1-204-944-5766 Country Guide is printed with linseed oil-based inks PRINTED IN CANADA Vol. 131 No. 12 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.

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doing more. using less.

A series on being ready for the farming challenges ahead

potential solutions to the food-versus-fuel debate Options include using more crop waste, or using non-food crops

ot that it used to be called “biofuel,” but producing energy from cropland is hardly new. Until the mid-1940s, when the number of horses passed the number of tractors in North America, hay and oats were agriculture’s main source of energy. One estimate is that in 1915, 27 per cent of the acres in the U.S. were used to feed horses. Much of agriculture’s growth in productivity came from using those acres for humans and livestock instead. On the other hand, since they grew all their own feed, horse-powered farms were truly running on renewable energy. Gasoline- and diesel-powered farms are not. While there are different estimates of when fossil fuel will run out, we know it will run out sooner or later. We also know that burning fossil fuel contributes to global warming and climate change, to which agriculture is especially vulnerable. Hence the interest in alternative energy that is renewable and does not add carbon dioxide to the atmosphere. That’s led North

American farmers back into the fuel business. About 40 per cent of the U.S. corn crop is now converted to ethanol, which means that more than 10 per cent of U.S. cropland is now seeded to energy crops — less than in the old horsepower days, but still a lot of cropland.

A policy thAt worked Is it too much? World crop shortages in 2008 and this year have prompted debate, with some claiming that food that could be used by hungry people should not going into the gas tanks of wealthy North Americans. However, it’s worth noting that the policy to promote ethanol was largely put in place to increase the price by creating more markets for a persistent surplus. That policy has been highly successful, and whatever the use, food or fuel, farmers cannot continually grow corn at a loss. While controversial, one suggestion in the U.S. is to return to a system of holding buffer stocks to ensure constant supplies for all users, while protecting farmers from

Cattails can absorb nutrients from waste water and polluted lakes, and a Manitoba project is cutting and baling them to be burned for energy.

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excessively low prices and consumers from excessively high ones. Another potential solution to the food-vs.fuel conflict is not to use food crops for fuel at all. So far, the process for making ethanol is the age-old one of distillation, which needs high-starch grain such as wheat and corn to operate efficiently. But grain is only part of the plant. Several companies worldwide are working on “cellulosic” ethanol, which would allow it to be produced from straw, stover, wood waste and crops grown specifically for energy. For example, one project in Manitoba is harvesting cattails, which produce several tonnes per acre with no inputs — in fact, they can remove excess phosphorus and other nutrients which are causing excessive algae growth in Lake Winnipeg.

proven technology Crops such as cattails or willows don’t need experimental technology to be converted to energy. In Europe, willows, straw and municipal waste are burned to produce electricity or hot water which is piped to industry or to heat local homes and businesses. Some farmers in Western Canada are already growing crops, including camelina and carinata, specifically for companies manufacturing biodiesel, some of which has been blended with jet fuel and used on demonstration commercial flights. Pennycress, another high-yielding oilseed crop, has been tested in Alberta for the same purpose. Many farmers may not have heard of pennycress, but they know it by its other name — stinkweed. There’s no magic solution to the food-vs.fuel conflict, but if producing energy means adding more crops to the rotation and better use for crop waste, perhaps the conflict is considerably reduced.

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be ready.

opinion

BIG IDEA

Within reason

Photo credit: Bob House

Lyle Vanclief may not have been the most popular agricultural minister this country has ever had — but he is proving to be among the most influential By Gord Gilmour, CG Associate Editor They say a groundbreaking politician is one

Recent changes to agriculture income support

whose policies live long after they leave office.

programs show how the support for that view has

If that’s true, historians may do a lot of thinking

grown over time, so while current Conservative Ag

about Lyle Vanclief, Liberal ag minister from 1997

Minister Gerry Ritz is putting his own stamp on the

to 2003 when Canadian agriculture came to a

office, the framework of the discussion continues

crossroads, and then took a crucial turn on to a

to largely be the Vanclief model.

highway we’re still speeding on down.

Since leaving office, Ontario's Vanclief has mainly

Vanclief changed Canada’s attitude toward its

avoided the public eye, declining opportunities to

farmers. Under his leadership, Ottawa decided it

comment on issues of the day. He did however

would no longer backstop farms without any consid-

recently agree to speak to Country Guide about his

eration for their viability. Instead, farmers would first

broader philosophy, about the interplay of agricul-

and foremost have to demonstrate responsibility for

ture and government, and about the realities of his

their own business decisions.

time in office.

Country Guide: My impression — and correct me if I’m wrong — is that during your time as federal agriculture minister you very clearly stated there would be reasonable limits to the level of support agriculture could expect from government. Is that a fair assessment? Lyle Vanclief: I think historically there had been this viewpoint that anyone who wants to farm can and should be able to do so, and if they need assistance for any reason, government should be there. Now I understand that there are different emotions, obviously revolving around the fact this is food production, but would you make that same statement about any other business of any type? That’s always going to be a very difficult position to be in, politically, always looking for funding for what people would call a bailout. We tried to provide as much support as we could, but I think we were also quite clear when we told farmers they needed to look at their options for their businesses — and for some farms that included the option that they cease operations. I don’t think that’s any different than it would be for any other business in town. A business person — any business person — has to be prepared to look at their business in that way.

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november 2012

BIG IDEA

CG: Do you believe your approach encouraged a more business-like attitude to agriculture in Canada? LV: One of the things we thought was very important, and something that I and my staff put a great deal of effort into, was making sure that farmers were using the risk management tools that were available to them. I’ll tell you a brief story to illustrate this, and I’ll say right off the top that I farmed for 25 years myself, and the last couple of years we had some very difficult weather situations. They happen, they’re part of farming, and farmers need the tools to deal with them. I was out west one time in an area that was experiencing a weather disaster, and I went on a bus tour of the area, and the group included a farmer from the area. We were just wrapping up the bus tour and I asked him privately, “Did you take crop insurance?” and he said, “No, my family has farmed here for 100 years and we’ve had some bad crops, but we’ve never taken crop insurance.” To me that meant he’d chosen to assume that business risk, by choosing not to use that risk management tool. I’ll tell you, I had to bite my tongue pretty hard when we got back to the yard and the press was everywhere and he was talking about how much money he was going to be losing. So I do think that’s one thing that we put a lot of effort into when we designed the Agriculture Policy Framework and the programs like CAIS, ensuring farmers had business risk management tools and were using them. CG: That wasn’t always a popular message, especially in the West, where there was a very difficult period in grain production going on for years. At times you weren’t particularly popular — in fact you were quite unpopular. LV: I spoke my mind, certainly — perhaps at times I spoke too plainly. I know that wasn’t always popular, and particularly not in the West. With their grain economy, they were suffering some real challenges at the time. But it all comes back to the political reality and the political challenges — that’s a very difficult position to be in, especially when you look at the financial reality of the country at the time. But these pictures are never homogenous ones. There are always sectors that are doing well, and even in the sectors that face challenges there are people who continue to do well. You can see this reflected in the price of land. Even during the 1990s, when grain growers in the West were facing enormous challenges, the price of land in Saskatchewan still went up. There were obviously people out there who thought they could pay those prices and still make money doing so.

november 2012

opinion

CG: We forget just how dire the country’s balance sheet looked at the time the Chretien government took office in the early ’90s. There were huge deficits, the Wall Street Journal was calling the dollar the Northern Peso and we were in real danger of hitting the fiscal wall. LV: It’s certainly true that’s an important part of what was happening at the time, and it really did drive the view that agriculture couldn’t be seen as coming back again and again looking for funding. We had to move towards a more solid economic footing as an entire industry and we had to do so within that context. So what my staff and I worked on was an approach that I think largely survives today — though I have to confess I haven’t been following all the details — revolving around the five pillars. They were business risk management, science and innovation, food safety and quality, the environment, and finally industry renewal.

“ There’s a growing level of farmers... who have no appetite to be part of a system that supports farms that aren’t also viable businesses.” CG: Your time in the ag portfolio is often seen as the point when we stopped looking at farming mainly as a way of life and started looking at it as a business. Is that fair? LV: In some ways, but I think the piece that’s missing is the way the industry itself has grown and changed over the last number of years. Farmers today are far better business managers than they’ve ever been before. They have far better business management skills and they really have come to see farming as a business not a lifestyle. I think that’s probably the most significant change of all. I would say that there’s a growing level of farmers — or perhaps a better way to put it is a growing proportion of farm production, and by that I mean the farms that produce most of the output — who have no appetite to be part of a system that supports farms that aren’t also viable businesses. These are farm businesses that are very well run, that are using the risk management tools available to them, and they don’t want to see people rewarded for not doing the same thing and for failing to use the tools they have available to them. CG

country-guide.ca 9

Machinery

By Ralph Pearce, CG Production Editor

Small tractors under 120 hp are suddenly hot again, offering amazing adaptability for a thousand farm uses. It’s an incredibly variable category too, ranging from tractors that are basically motors on wheels to new designs that are crammed with all the electronics and engineering you might expect to find only in their more muscular siblings. Of course, this makes the farmer’s choice even more complex, so remember that appearances can be deceiving. These units may look small, but they can perform big.

new holland t5000 series  Designed for maximum versatility as well as for productivity and stamina, the light yet powerful T5000 series is equally at home taking care of the lighter side of farming, including mowing and spraying, or if it’s expected to do tillage or other heavier draft work. In the cab, the T5000 series also makes it easier to put these units through their paces, all with fingertip control from the 12x12 Shuttle Command transmission. www.newholland.na

massey ferguson 5400 

challenger mt400b 

Adaptability to match any need is the goal Massey Ferguson set for itself with its redesigned 5400 series tractors. These units offer functional styling, new cab suspension, a tight steering angle and the new-generation Tier III Perkins and AGCO power engines. The tractors also offer quicker responses to changes in field conditions with Massey’s High-Pressure Common Rail (HPCR) fuel injection system. www.masseyferguson.com

The message from Challenger is that when it comes to evaluating small tractors, what’s on the outside may look nice, but it’s what’s on the inside that really counts. Challenger says it brings plenty to the table, with strength and performance that starts with the power of the C4.4 ACERT engine. Plus, the MT400B’s AutoPower IV transmission provides precision, single-lever action, fingertip power controls and creeper and supercreeper options. Also check the MT400B’s mid-range class that offers lift to rival higher-horsepower tractors. www.challenger-ag.us

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November 2012

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Visit SyngentaFarm.ca or contact our Customer Resource Centre at 1-87-SYNGENTA (1-877-964-3682). Always read and follow label directions. Cruiser Maxx® VibranceTM Cereals, Rooting PowerTM, Vigor Trigger ®, the Alliance Frame, the Purpose Icon and the Syngenta logo are trademarks of a Syngenta Group Company. © 2012 Syngenta Canada Inc.

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12-09-29 12:36 PM

john deere 5e series 

case ih jxu

The new John Deere 5E series features added flexibility and a range of seven engine horsepower ratings from 45 all the way to 101 hp. These 5E series tractors have been redesigned and refitted, with new operator stations and new transmission options. There is also a lot of flexibility in how you set these tractors up. For example, you can choose from an open operator system or step into your new workspace with the comfort of a climate-controlled cab. Deere says its goal is to give you the choice. www.deere.com

Productivity, performance and power are the foundation of confidence, which is the goal of the Case IH JXU. Comfortable, accessible and easy to operate, the JXU boasts a proven track record and a range of engine sizes from 56 all the way to 83 engine horsepower. A good fit for diverse applications on dairy, livestock and grain farms, the JXU can also play a strong supporter role for machines with a little more heft. www.caseih.com

kubota m110xdtc

mccormick c-max (t3)

Kubota’s objective with the M110XDTC is ambitious, looking for a combination of formidable power, enhanced tractor operations, manoeuvrability and even a touch of luxury. Their answer starts with a range of power ratings from 97.7 engine horsepower to 107.5 hp in tractors built around a new electronic governor control system, including a clean-running Common Rail System (CRS), Intelli-Shift transmission and an enhanced operating system that keeps PTO revolution constant. Kubota also offers its exclusive bevel-gear front-wheel drive, which it says delivers a smoother ride without losing performance. www.kubota.ca

There’s a new level of economic functionality behind the wheel of the McCormick C-Max tractor. This class offers more than just a wide range of engine horsepower ratings, it’s also powered by the new, very reliable 1104D Perkins Tier III engine, with two turbo after-cooled designs. The engine specifications also feature an advanced fuel injection system that enhances combustion and engine efficiency. www.mccormickcanada.ca

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November 2012

business

Stepping stone

Elliott Miller is embarking on two succession plans at the same time, with one that’s on farm, and another that’s designed to get him there By Amy Petherick

14 country-guide.ca

Making “some day” come As an accountant and municipal councillor, Doug Miller has spent much of his life off the farm. In fact, it’s only been in the past year, since he has started his own accounting firm out of their family home, that he has been able to really focus on his farming interests. And Doug is frank about it. Not only is he not ready to retire, or even to slow down, he is simply having too much fun with his new independence and with being able to devote himself to the challenges of a farm. He’s in no rush to pass on his turn just yet. The good thing, Elliott tells me, is that this doesn’t come as a surprise. The Miller family works hard at keeping the lines of communication open. “At this point, we’d be willing to help back our sons to get financing, or provide equipment or labour, but we’re not ready to sell the farm or buy a house in town,” Doug explains. “I can maybe see selling some land within the family in 10 years and scaling back, but not quitting for quite a while.” Not surprisingly, at age 23, the idea of 10 years seems like a long time to son Elliott. Yet the more he thinks about it, the more he sees it as a long opportunity. And, in truth, Elliott was always the sort of kid who developed his own projects, supported by his family. At the age of nine, he started raising turkeys to save up for post-secondary school. When he was 16, he bought a beef herd from a neighbouring family. That worked out so well, the neighbours later decided to sharecrop close to 200 acres with him. Elliott tells me this venture has been a great experience, creating an environment that encouraged him to learn a lot

Photo credit: Holly Burgsma Photography

or years, Elliott Miller has known that he’d love to take over the family cow-calf operation at Lucknow, Ont. He just didn’t know that it might involve taking over Edgar’s Feed and Seed, a nearby farm supply business, along the way. To Elliott, it’s a simple matter of facing the big reality that if he and his fiancée Rebecca Richards want to farm, they’ll have to take advantage of every opportunity that comes their way to build capital. “It’s the only way to go forward, I guess,” Elliott tells me. “We’re not overly big, by any means, but we like what we do.” It’s a mouthful. Like a lot of other young wannabe farmers, Elliott had come up against several good reasons why his dream couldn’t come true. Farm capital needs are too great, for instance. And with today’s farmers living longer and wanting to do some retirement planning of their own, it’s tough to co-ordinate the needs of the two generations. But what Elliott is really telling me, in his own way, is that he decided he would find a way. He wouldn’t give in. That meant that Elliott had to get creative, because the financial implications of starting a farm are somewhere between a rock and a hard place. They won’t budge on their own. Indeed, Elliott’s parents have been clear about it. Even a herd of 70 cows, and a land base of 250 acres will require considerable investment from Elliott and his two brothers if they want to become partners some day. And there’s also that matter of timing again, with Elliott’s father Doug understandably injecting the phrase “some day” when he and Elliott talk.

November 2012

business

about managing crops in a short period of time. “I have also made a few mistakes,” Elliott tells, and then he goes on to add, “That is the only way I learn.” Maybe in this case, though, he is oversimplifying. As you’ll read, Elliott takes his education as seriously as he takes any part of his farm plan, and there’s no way he thinks he’s finished with learning yet.

The farm supply Then there’s the Edgar’s farm supply business as well, where Elliott started working seven years ago thanks to his mother, Amy. “He was looking for a co-op placement in high school and I suggested he go there,” Amy tells me. “I actually drove him in to meet Niel, but I never thought it would bloom into this!” Niel and Cathy Edgar say Elliott fit in right away. He was quick to get involved in all aspects of the business that sells feed for New-Life Mills and Jones Feed Mills, as well as retailing Hyland certified seed and also selling livestock and animal health products. As well, the business runs 300 acres of crop, hay and pasture. When Elliott finished his co-op term, he kept working through the summers and weekends, even en route to graduating from the University of Guelph in 2011. “He’s young and aggressive and thinks the way I think,” explains Niel. “He runs it like it’s his and I treat him like a son. That’s just the way it’s been.” Originally, the Edgars had planned to pass the family business down to their son, Todd, so he and Elliott could manage it together. But tragedy struck the family in 2007 when Todd passed away in a car accident. The blow was as severe as you’d expect, but having worked their whole lives to build the business from scratch, the Edgars weren’t ready to sell the business to just anyone — and Elliott still showed a lot of enthusiasm at work. “I knew his heart was set on being here, and I can’t work forever and neither can Cathy,” says Niel. “If he wanted it, we certainly wanted him to have it.” Not that choosing Elliott as their successor hasn’t come with its own challenges. The Edgars and Elliott agree there have been a lot of details to discuss, and Continued on page 16 November 2012

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Continued from page 15 they still have a lot more to work out. When farm businesses are being sold for a million dollars and your successor is only 23, some things just aren’t in the cards, says Niel. But he finds the harder issues to deal with don’t have anything to do with money at all. It’s the many little things, like whether the phone number will stay with the business or with the Edgars, that add up and make the transition so daunting. “I think the reason it’s a little more difficult for us right now is because our business is with our house too,” said Cathy. “It would be different if we didn’t live here.”

Making it official Elliott says the hope is to make the official transfer this coming January, but very little will change at first. Niel and Cathy will both continue to be an active part of the day-to-day operation of the business. Niel will still do deliveries, sell seed, and bale hay. Cathy will try to help out where she can, even if 16 country-guide.ca

Elliott brings in a computer system to replace all the work she’s doing now by hand. So while there are still myriad details to work out before January, the Edgars and Elliott feel that goodwill and good communication will help get them there as a team, no matter what the final arrangement is. “It’s hard to figure out the best way to manage it and switch it all over gradually,” says Elliott, adding, “It has to work for both sides.” Meanwhile, Elliott also recognizes the value of the education that he continues to get from the Edgars. Niel has taught Elliott a lot about selling and about the importance of providing good service. Now, Elliott is also participating in a new program with Hyland Seeds to help him continue to update his technical skills. It’s the sort of process he feels at home in. “Growing up, I was involved in 4-H beef and sheep clubs, and acted as a youth leader,” Elliott points out, and he continues to take advantage of opportunities. In August of 2011, he went to Calgary with the Canadian Cattlemen’s Association as part November 2012

BUSINESS of an international roundtable on the future of the beef industry, meeting with students from across Canada and around the world. This past August, as well, he was elected to a task force that is creating the framework for the Young Cattlemen’s Council (YCC). This group is focusing on giving young beef producers a better chance to shape policy development. Such programs help the industry, Elliott says, but also help the individual farm participants by creating more networking opportunities and more interactions. It will essentially try to bring young beef producers together to collaborate on different ideas within the industry. “I would also like to maybe pursue the Cattlemen’s Young Leaders (CYL) program, possibly the Beef Sense Program and potentially the Advanced Agricultural Leadership Program in the future,” Elliott adds, “pending time constraints, and life.” Meanwhile, Elliott also wants to further improve his management savvy so

he’ll be ready to eventually handle the bookwork without Cathy’s help. “I want to become more versed in business knowledge and accounting,” says Elliott. “My dad has been a big help that way with business information and how all those transactions work.” Doug and Amy, for their part, say that they have every confidence that Elliott will manage his finances just as well as he always has. Amy says that they always expected their kids to pay for their own vehicles, schooling and everything. The Millers felt it not only taught the boys how to take care of their own finances but helped inspire them to work hard. “I would say Elliott’s ambitious and demanding,” says Doug. “He’ll never have any poor help because the only people who will last working for him will be people who are ambitious and who like to help people.” Elliott is already relying on his fiancée, Rebecca too. While they would both like to farm alongside Elliott’s parents one day, for now Rebecca is very happy working as an agronomist for Cargill in

Clinton, and just pitching in at planting or harvest when Elliott’s too busy to drive a tractor himself over the sharecropped acres. With the business transfer set for this winter and the wedding date set for next year, Elliott says he has a lot to look forward to. He can’t say for sure if everything will work out according to plan and there’s still a lot of planning to do, especially as his brothers finish school and decide on their own career paths, but he remains as enthusiastic and optimistic about being in the agriculture industry as ever. Niel Edgar says that time will decide just how successful Elliott becomes but he expects to see a lot of good come from Elliott’s leadership. “I think success will be in the people we see coming in,” says Niel, adding a comment that has been echoed in generations of farm transitions all across the country. “I think it will be what he makes it,” Niel says. “It’s going to be different, but I don’t see anything but success for him.” CG

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Photo credit: Paper Moon Photography

“ Being with others, holed up away from our busy lives and examining our individual businesses, I was surprised at times how open and candid people could be.” — Margaret Hansen

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The

new classroom

For farmers like Margaret Hansen, farm education can take you way, way beyond how to grow a better crop By Anne Lazurko, CG Contributing Editor

o, which should it be? The afternoon workshop, or the four-day seminar? Or maybe the full four-year degree, or how about the one-hour online short course? All of us believe that we have to be at our best these days, which means we also believe in professional upgrading. But we believe too in efficiency, i.e. investing the right amount of time in the right places. Yet with such a wide array of educational opportunities on offer, how are we ever to make those right choices? Agricultural education in Canada has become a Boston Pizza restaurant of choices. Little surprise then that farmers find it difficult to navigate the menu, to discover the dish that will satisfy both their hunger for personal development and their specific tastes in farm management education. OK, you get the analogy. I started out to examine mid-career farmer education, thinking about the 40-something who realizes their human resource skills aren’t up to snuff. They find a two-hour session to hone those skills, hoping somehow that the minute they get back to the farm, they can make a couple of calls, interview the right people and get the very best one working the next day. It works with weed control and variety selection. Why can’t it work with business management? To be fair there are a host of quick options, including workshops, webinars and forums offered by everyone from FCC and Farm Management Canada to your local community college. They are designed to provide a quick glimpse, to suggest potential solutions, and to facilitate a brief exchange of information between farmers, advisers and industry folk. But let’s face it: quick and easy is no more rewarding in education than it is in food. While a one-hour online lesson in soybean seeding rates will probably suffice, the larger pieces of the puzzle — marketing, communication, human resources, leadership and financial management — require understanding complexities that go far beyond a short explanation. And for the farmers I talked to, acquiring the skills to manage it all has become the prerequisite to a successful farming operation. Some are willing to pay thousands of dollars to learn the finer points.

November 2012

None of them regret it. In fact, farmers like Saskatchewan’s Margaret Hansen say the programs they’ve completed are among the most empowering experiences of their farming lives Not only has she learned from top-level educators and business professors, Hansen says, it has actually helped her learn more from other farmers too. That, it turns out, is only one of the unanticipated benefits.

Leadership education In the eastern half of the country, meanwhile, Teresa Van Raay is another very busy farmer. She and her husband run The Whole Pig, a hog operation in southwestern Ontario near Grand Bend on Lake Huron. Technically a farrow-to-finish barn (they get their weaners from a single source), they raise 14,500 market animals annually which are sold within a 200-kilometre radius. Cropping 600 acres, they had just finished harvesting a fantastic soybean crop and the combine was heading into the corn when I spoke with them. The couple has four grown children at various stages in their lives, with one son currently employed on the farm. Teresa defines herself as an administrator, but a couple questions make it clear she does much more. No, she doesn’t work in the field or in the barns, but “does everything else that goes with the operation — marketing, social media, all aspects of selling the pork,” she says. It shows. Their website, thewholepig.ca, offers nutritional information, recipes and cooking options as well as new products. It’s all presented in a folksy “hey how’s it going” conversation about the crops, the pigs and options for local whole pig BBQs and other pork-oriented events. The 52-year-old Van Raay is also a director with Ontario Pork, sits on her local chamber of commerce, fundraises for local charities, and more. She Continued on page 20

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may not have always been so inclined to leadership, but in 2003 she completed the Advanced Agricultural Leadership

Program (AALP) offered by the Rural Ontario Institute. About half of the 30 students in AALP are Ontario producers, with the rest coming from agri-food and agri-

To Teresa Van Raay, a key learning is how much better you can get at persuading others

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PHOTO CREDIT: HOLLY BURGSMA PHOTOGRAPHY

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business sectors. The 48-day program is delivered over 19 months, and includes eight formal sessions held throughout Ontario, international tour opportunities, and a distance education component. Students pay $9,000. That’s a quarter of the tuition costs, with the rest covered by corporate sponsors and donors, but by the time you add in some travel expenses, it’s a hefty price to pay. Van Raay is glad she paid it. While the program offers much in the way of management skills she uses on her farm, it was in the realm of advocacy that Van Raay put her newfound leadership skills to use. Perhaps that’s because shortly after she completed AALP, her industry went into a seven-year slump. “One of the biggest take-homes was learning from classmates who came from varied careers in the agricultural industry and who were all at different points in their lives,” Van Raay says. “I could talk about the pork industry, like how to breed a sow, to people from FCC and the Royal Bank, while they talked about their jobs in relation to the producer.” It all helped Van Raay to see how the pieces of the industry puzzle fit together. Trips to the Ontario legislature and to Parliament in Ottawa gave her a sense of behind-the-scenes politics and the confidence to speak to her MP or MPP, important in her role with Ontario Pork. “I learned about the forces of change in society, about understanding and managing change, and how to influence decision-making,” Van Raay says. All of this to say, Van Raay learned there are different kinds of leadership and different ways of solving conflict, and that thinking beyond your own operation can only strengthen your ability to cope. Perhaps because the pork industry has been hit so hard of late, the skills she took home from AALP and uses to advocate for the industry don’t seem that far removed from those Van Raay uses to help manage her own farm. Negotiating feed contracts, an open mind to the people she works with including staff, bankers and accountants, the confidence to understand and deal with risk management, maintaining ethical convictions through a long series of setbacks — she’s managed to keep her head above the proverbial waters in a really rough sea and credits much of it to her leadership training. NOVEMBER 2012

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Farm business management education While the leadership theme runs through most business management programs, Syngenta’s Grower University gets down to the nitty-gritty of financials and business plans. Every year, 40 of Canada’s leading farmers are invited to attend this four-day, intensive farm management course at the Richard Ivey School of Business at the University of Western Ontario. The program covers financials and investment decisions, human resources, and the development of action plans specific to participants’ individual farms. Sessions are taught by distinguished professors from the school. It’s interesting to note that while the course offers so much in

terms of specific management, Margaret Hansen says that, like Teresa Van Raay, the “biggest specific take-home I got from it was understanding the importance of opportunities to network with peers, how beneficial peer-to-peer interactions are.” In what is still considered a unique situation, Hansen farms with her brother and cousin while her husband works in the oilpatch. The incorporated operation at Langbank, Sask. crops 9,000 acres of cereals and oilseeds. Mother to three young children, Hansen attended Grower University in 2011. It was a good option for her. “The format is great because it’s only a few days and a person can get away for that long,” she says. While Hansen has a B.Sc. in agriculture, she says the program helped sharpen her thinking around business management and business strategies. By understanding how to read and analyze financials and to identify opportunities and goals, participants of the program then set out to identify a couple of areas for improvement within their own operation and create an action plan to address them. They were asked to set out timelines, identify who might be required to help, and how they would follow through. The action plan was presented to breakout groups who provided feedback. “One of the most powerful things was receiving feedback from peers,” Hansen says. “Being with others, holed up away from our busy lives and examining our individual businesses, I was surprised at times how open and candid people could be.” Hansen says her work at Grower University provided a framework and strategies to implement ideas on her farm. It put her on the road to a formalized annual benchmarking process and it spurred her on to attend an FCC course on balanced management where she came to understand her farm’s weakness in human resource management. It appears the old adage, “the more you learn, the more you realize how much you don’t know” is illustrated by Hansen’s experience. Through personality assessments, Hansen gained insight into her own strengths and weaknesses and the types of people she needs around her. “You think about it in relation to family personality traits and how to interact with your farming partners,” Hansen says. “It promoted self-awareness. I’m a perfectionist and I analyze everything to death. It can make me indecisive. But if I’m aware of it, I can do more to seek personal change.” As a woman farmer living in an isolated area, Hansen appreciated the opportunity to discuss her business with farmers of similar size and challenges. It’s clear that, for Hansen, the personal interaction was paramount to the success of the program. And while webinars and online classes fill some gaps, she feels there is a real shortage of formal training that promotes such interaction. Continued on page 22

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The future of agricultural education: Is online all it’s cracked up to be? Heather Watson is self-professed “old-school.” She recalls her attendance at a young farmers’ forum a couple of years ago. “Guys were texting away on their iPhones and iPads and I was really appalled,” Watson says. “Then I found out they were actually connecting with people and sending tweets about what the speaker was presenting.”

Watson realized then the power of social media. “I can be at a conference and my 112 followers can be there with me,” she laughs. Watson is the general manager of Farm Management Canada, a national online organization that provides farm management resources to Canadian farmers. Supported by government, FMC also partners with industry and farm organizations to provide print, web, mentorship and workshop resources around farm business management. While their business is conducted online, Watson firmly believes that social media and social interaction are two distinct things

and farmers prefer the latter in at least some of their educational undertakings. “Farmers would rather listen to other farmers,” she says. She says that while workshops and conferences are usually well attended, the audience is usually made up of academics, advisers and industry people, rather than the target audience — producers. But Quebec has great success in attracting producers. “They have really good one-day conferences and they get 600 to 800 producers out.” Watson’s voice echoes my amazement. “It’s part of the Quebec culture. Face to face is where it’s at.” Perhaps they have the time. Watson

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says Quebec farmers are much more integrated with their advisers, trusting them to make some crunch decisions. “Outside Quebec farmers are being asked to be more self-directed learners, and it can be overwhelming.” FMC is not involved in direct delivery. As education providers such as FCC, FMC and the Canadian Young Farmers Forum found themselves tripping over each other, Watson’s organization focused its efforts on online opportunities such as webinars. She’s seen a steady increase in participation in this format with 122 participants and 12,000 subscribers to their newsletter, Canadian

Farm Manager. FMC has also developed a mentorship program to help young farmers build industry networks. Ironically she uses twitter to matchmake potential mentors and young farmers. Despite this online focus, Watson believes that mid-career farmers still prefer a workshop-style learning method. “It’s all about social interaction,” she says. “Some part of the process has to be in person.” And she sees gaps that need filling. “We have huge gaps in succession training… and advice on foreign labour, or information for immigrant farmers. They have nowhere to go for information.”

Still, FMC is filling the need for accessible, affordable training in many areas of farm business management. High-end, high-cost programs such as AALP and Grower University and the Canadian Total Excellence in Agricultural Management, offered until this year by the George Morris Centre (student cost: $8,000 plus travel), provide intensive training to small groups of what appear to be top producers. But let’s face it, not everyone has the time or money to participate. Enter public education systems.

Continued on page 24

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Beyond agronomy Steve Larocque has been an independent crop adviser for over 10 years, now managing 30,000 acres through Beyond Agronomy, his company in Three Hills Alberta. He also publishes Beyond Agronomy News, a weekly crop production and grain market newsletter with his wife Vanessa. He is a first-generation farmer, cropping a section of land north of Drumheller. With a B.Sc. in agriculture from the University of Lethbridge, and a diploma in crop advisory from Olds College, you might think he’d had enough of agricultural education. Not so. In 2007 he was a Nuffield Scholar, travelling to Brazil, New Zealand, Australia and the U.S. And he’s brought his experiences back to Olds College. Larocque is chair of the college’s Agriculture Industry Advisory Committee. In that capacity he’s helped to build field schools and seen a number of changes in the agriculture program at the college, particularly the amalgamation of

several diverse offerings into one agriculture management program. About 85 per cent of students in the agriculture program at Olds College are recent high school grads who attend fulltime programs on site. The other 15 per cent are adults and Larocque believes this group will be served by the evolution of online courses designed to fit the lifestyle needs of farmers and industry people. In fact the college now offers a certificate in agronomy wholly online. “Right now we’re geared toward agronomy, but we are going to see more risk management and commodity marketing around hedging and options,” Larocque says. “We’ll see a lot more of that pop up as tools, especially now the wheat board is gone.” Even further into the future he sees a different kind of evolution. “What farmers really need to know sometimes just gets hired out, things like marketing, risk management, agronomy,” he says. “They don’t need to be all things.” What they need to do is operate as a CEO. As farm scale has increased, the

farmer’s role has changed. “Now he needs to know how to manage a guy like me,” Larocque says. “To get value, to get the greatest use of my time and his dollar. There are ways of doing it. We need to understand the processes behind each one and how to do them well. Things like leading, guiding, being an employer. “Business management for farmers is more about being a farm leader: managing the people who are managing the people,” Larocque says. Clearly the jury is still out on whether those skills are better learned online or in person. Teresa Van Raay and Margaret Hansen both found the biggest take-home from the programs they attended to be the significant opportunities to interact with their peers. But both of these programs had a management and leadership orientation. Perhaps we’ll all need to start making time to go back to an actual school, not just sit in front of a computer. Because let’s face it, management doesn’t happen in a vacuum. Perhaps learning how to run our solitary farms cannot really be a solitary endeavour either. CG

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Two different financial approaches produce the same result — farmers with an ultra-sharp knowledge of where they’re going and how to get there By Maggie Van Camp, CG Associate Editor Volatility is sweeping across our industry like a wind over the ocean, and more and more Canadian farmers this fall are cruising with their sails full. Except, it would feel so much better if we didn’t know that when the wind blows this hard, it can also capsize us in an instant if we make one wrong turn. Maybe though, we have more control over the wind than we think. COUNTRY GUIDE talked to two farm families — one from a grain and oilseed operation in central Saskatchewan and the other from a sheep farm in Ontario — to see how they use financial analysis to chart a steady course. Over the years, their skill at making decisions based on numbers has helped these farmers thrive through some pretty choppy times. They have grown quickly in the last decade to reach what they figure is their efficiency sweet spot, where they can maximize the returns on their assets, time and skills, but all along the way they have kept a weather eye on production performance, and related it back to financial performance. But they’re “real” farmers too. Although financial numbers guide their decisions, as you’ll read, humility fuels their success.

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MARC AND HELEN CARERE “Either you are in the business or you are not,” says Marc. “You have to plan to get bigger, or plan to deal with being too small.”

he big kitchen is a hive of activity. Three of the Careres’ five children, all in their 20s, are raiding the fridge. A couple suitcases are packed at the door, because Mark and Helen are getting ready to jet away to the U.K. later today on a large-flock sheep tour. And just as I step into the house, Marc answers a call from the feed company, the dog tosses his voice into the chorus, and I reach for my notepad. Within moments, however, the conversation over the kitchen table on the Careres’ Lindsay, Ont. farm is all business, and it quickly becomes evident that over the 30 years that Marc and Helen have been farming, this table has been host to many financial discussions. In fact, Helen and Marc agree that their habit of bouncing ideas off each other, and their standard practice of thoroughly talking each financial decision through has sharpened their skills and spurred them to keep learning the business side of farming. It’s helped too that both their parents ran non-farm businesses and have mentored the Careres on business fundamentals. Yet farming is different. In a business context, says Helen, the return to capital is extraordinarily low for farming. But over the years, their land has been a good investment, counters Marc. It’s not just higher crop prices driving land values up in this area. As the first municipality outside the constraints of Toronto’s greenbelt, the Lindsay area has seen demand jump for land and development. Besides this is cottage country; 300 acres of the Carere farm have spectacular views of Sturgeon Lake. Even with nice lake sunsets, the Careres are clear that their land is a productive asset that they are not liquidating. The increase in value simply means more borrowing power for the farm. Originally, the Careres got into dairy farming, even though neither of them came from a farm. In 1995, with a strong return on investment for their quota and expansion too intimidatingly expensive, they sold their small dairy herd. Within a few years, they bought 300 sheep from Western Canada, and they also purchased some rental apartments. Helen stayed home with the children and the livestock, and Mark managed the units. When the BSE crisis rocked lamb prices, the Careres bought more apartments and now own and manage 23 units. They also rent out one surplus house on the farm, but say the apartment units pay better and usually have limited numbers of people living per unit. Helen says that Marc has a special knack for managing those properties, including the ability to pick tenants. “They (the units) must cash flow themselves,” says Marc. “But farming is different. That you can’t always cash flow.” With that in mind, the Careres continued to expand the flock to the point now where they have 900 ewes. They finish their NOVEMBER 2012

PHOTO CREDIT: CRYSTAL WHITEHEAD PHOTOGRAPHY

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own lambs to 100 pounds and have plans to eventually put up a new feeder barn with a central alley feeding system. They feel this size of unit maximizes their land base, facilities, family labour force and management, while at the same time providing good economies of scale, “It used to be that you needed 500 ewes for a family to live on. Now that’s at least 1,000 ewes, in our opinion,” says Helen. In typical eastern livestock-farming style, the Careres grow enough forages and grains on their 600 acres to be self-sufficient and any extra is sold as a cash crop. This year’s forage production is lower due to extremely dry conditions so they put up some corn silage. However, unlike many livestock feeders, when plugging in values the Careres use fair market value for forages and grains. “We’re currently feeding $300 grain to $130 lambs, and it just doesn’t work,” says Marc. Sheep producers evaluate performance many ways, including lambs per ewe. When the Careres bought their first flock, they wanted to measure ewe productivity and felt the most insightful way was to track the number of lambs marketed per ewe per year. Today, they participate in several sheep benchmarking groups. “The more we can arm ourselves with information, the better,” says Marc. For cost of production, they use three different templates — ewes, weaned lambs and whole farm. With that information they create budgets for each of these streams. Although they produce their own feed, they use fair market value for inputs and real market values for their production. This discipline helps them evaluate consistently, and to also find how much each stream contributes to their profitability. It also exposes the direct impact of the surprisingly high grain prices and lower lamb prices. “The challenge is that this happened so dramatically, so quickly,” says Marc. The day we sat down at their big kitchen table at the beginning of September, fair market value of Continued on page 28

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Is now the right time to expand the barn? The answer is in the numbers, say Helen and Marc Carere.

Continued from page 27 feed meant it cost the Careres $62 to feed lambs to 100 pounds. On their books their ewes were selling weaned lambs for about $2 per pound. So it was costing them $190 to buy the weaned lambs and to feed them, but they were selling for only $135. “This is extreme,” says Marc. “But we’ve been through good and bad times before and find it usually balances out.” The current debate over the kitchen table is whether they should continue with the planned further expansion despite these poor margins. “Do we step out today?” asked Marc. “Do we change our long-term plans for the short-term blip?” For these bigger, longer-term decisions, the Careres look to what Marc calls their default position, again based on numbers. “Can we get out of it? In the worse-case situation, would it wipe us out completely? We start there and work up.” Adding costly overhead isn’t something they take lightly, but it is a livestock operation, and it is a flock they’ve built up over many years. “In this business, you can’t change haphazardly,” says Marc. “We’re breeding now for January.” Basically they applied what they learned from dairy farming. Genetics selection is key, culling should be intensive, and you need to be committed to tracking production. They use RFID tags and

28 country-guide.ca

weigh weekly. “Having production data is critical,” says Helen, “especially when we’re looking back at the year’s financial statements trying to figure out what went wrong and what changes we can make.” With a year-end of November 30, they spend time in February and March doing a post-mortem and drilling down through their profit-and-loss statements to find areas of production where they can improve. From when they were dairy farming they used accrual accounting so they could get a clear picture of how the farm was doing. “Our inventories change all the time,” says Helen, who does the bookkeeping for the farm on Simply Accounting. It takes discipline to stay on top of the books, Helen says as we sit at the kitchen table, and you know from her voice how true it is. “Unlike livestock or kids, the books don’t cry when they’re hungry.” Still, it’s part and parcel of the fact that financial awareness forms the foundation for virtually every decision they make on the farm. Even when they make a decision that may not pay in the short term — such as continuing to invest in their barn expansion during a period of negative lamb profitability — they know exactly how big the hill is, and what will happen if they do or don’t make it to the top. Over the years, information has given the Careres the backbone to not back away from tough decisions. “I can’t stand not knowing,” says Marc. “At least with budgeting, you have a sense of control.” november 2012

BUSINESS

LANCE AND LANE STOCKBRUGGER The Stockbruggers’ financials prove the value of running used equipment for all but the most critical jobs

n 1995, brothers Lance and Lane Stockbrugger started farming with their neighbour’s equipment on one quarter section near Leroy, Sask. This year they grew 4,000 diversified acres of canola, spring wheat, winter wheat, barley, canary seed, peas and oats, and they own all their own equipment. It ain’t bad for a bean counter, because all through those years until this past spring, when he was finally able to follow his dream of farming full time and finding a better life balance with his young family, Lance also worked full time as a chartered accountant. Although he’s no longer in front of that computer screen all day, Lance hasn’t lost his passion for numbers. For the Stockbruggers, always knowing their costs and debt position gives them crucial help in marketing profitably, pre-buying inputs, and managing cash flow. Once a year, the Stockbruggers review the whole farm’s debt-to-equity and debt-to-asset ratios, plus their return on investment. They budget to allow for timely machinery replacements and capital purchases. “We always try to be sitting in a debt position so if land close by comes up for sale, we can buy it,” says Lance. Their year-end is in September, so in December and January the brothers look at their financial statements, seriously drilling down to look at causes. For Lance there’s a thin line between budgeting and crop planning. Projected cash flow statements on grain farms are often more useful than whole farm annual budgets, he feels. Lance uses cost of production and target yields to determine break-even prices for the coming year. All expenses on his financial statements are included, not just the variable costs. “I want a profit after all my expenses (including their labour) are paid,” he says. During their first few years of farming, the Stockbruggers aimed to gross $200 per acre for their canola, the generally accepted profit point for the crop. However, when one winter Lance actually worked out their own cost of production, he discovered they needed to make at least $225 per acre. “It was a lesson to me that we needed to get a better handle on our actual cost of production.” This cost-of-production information is their marketing base line. They make incremental pricing decisions throughout the calendar year and Lance tends to price into basis levels. Although he doesn’t necessarily market to a calendar, he generally makes sales following his cash flow needs. For example, he likes to tap into the bins in November and then again in January and move more in May, June and July windows, usually priced in advance. Lance keeps close tabs on their bank balance and operating line, as he likes to incrementally pre-buy inputs such as fertilizer. He pays for small supplies with a credit card, making sure to pay off the balance the next month, using their operating line if needed. Lance is a strong believer though in using their operating line for only direct costs, not for capital purchases. “Our operating line is key,” he says. “We tend to keep our supplier credit to a minimum.”

Five-year machinery plans slice their depreciation costs, not productivity

NOVEMBER 2012

Last winter, the Stockbruggers bought 1,200 acres, bringing their operation up to a size that maxes out their existing wellused equipment. In their area, drill size is estimated to be 100 acres per foot, says Lance. More land would mean they’d have to hire an employee to run a third combine, invest in a larger drill and look at their tractor horsepower. Plus, pushing beyond that equipment plateau would also push seeding deadlines. Lance tracks the depreciation of their mostly used equipment line to guide their decisions about when they should consider replacements. Pacing replacements helps them manage cash flow. For example, their drill was updated four years ago, so he knows they don’t need to look at this year. However their tractor is five years old so they’ll have to do some planning to replace it soon. “We have a five-year plan for equipment,” says Lance. As an accountant he appreciates that buying and running used equipment avoids the biggest depreciation hit, the first one or two years. Yet as a farmer, he appreciates that time is money. Swathing is one area that they cannot afford breakdown delays so they buy new swathers with warranty and nearby service, Lance says. “Both the swathers need to be running 24-7.” CG

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BUSINESS

When Brett Sheffield came back to join his father Lyn, the new partnership opened more doors than either had even dreamed of

32 country-guide.ca

NOVEMBER 2012

business

Younger

Photo credit: Personal Expressions Photography

Better hen Brett Sheffield graduated from high school in 2004, he wasn’t really sure what he was going to choose to do. But he was quite certain what he wasn’t. He wasn’t going to farm. After watching his father Lyn struggle all through the BSE crisis, Brett said to himself that if that’s what people mean by the farming lifestyle, he’d rather try his luck somewhere else. Besides, the farm near Pilot Mound in southern Manitoba was heavily into cattle, which didn’t interest Brett at all, and the small amount of grain land in the operation farmed wasn’t enough to support two families. So Brett decided to explore different options. He went to the University of Manitoba and studied physical education. Somehow, though, that didn’t work out either, and after two years Brett found he just wasn’t focused enough for university, so he decided to travel. Then, after working his way around Australia for a year, Brett attended Minot State University where he played hockey and studied business for one semester. But he still hadn’t found his niche, and in 2008 he decided to return to the farm and give that a try, still highly skeptical about farming as a career option. Today, though, he smiles when he remembers that 180-degree turn. “I am so thankful that I ended up finding my way back to the farm, because now I couldn’t imagine doing anything else,” Brett tells me. “Farming is what drives me. It has become my No. 1 passion.” Brett attributes a large part of his new-found enthusiasm for farming to the fact that he returned to the University of Manitoba, this time to enrol in its agriculture diploma program, which he will complete this fall. “The program showed me new ways to increase the overall profitability of our farm. It really opened my eyes to new ideas and concepts and it made me become extremely excited about agriculture and our future,” says Brett. “I can make different opportunities for myself and use my entrepreneurial mind to really expand and make things my own.” Brett has finally found his niche — a place where he can apply the entrepreneurial side of his nature and the business skills that he has learned through attending university to a farm enterprise that he finds exciting and rewarding. “I wanted to apply the business skills and what I had learned about fertilizers and soil science to help me improve productivity,” Brett says. “It made things more interesting when I realized all the things I could do and what I could do in the future. I had some really good

November 2012

By Angela Lovell mentors at the U of M and they helped me more than anything. Last year, for example, they helped me assess my equipment base before I went through a 700-acre expansion and they were the main reason that I felt I could make that expansion with the equipment base that I had.” In fact, Brett has been continually expanding and now farms 3,700 acres of grain land, which is a combination of land owned by Brett and Lyn and the land rented by Sheffield Farms, a recent business partnership between father and son that has merged the existing farm operations, except for the small cattle herd which Lyn retains as a separate venture. The partnership also shares equipment and facilities. Both agree the partnership works well. “My parents have always been extremely supportive and Dad considered me a partner since I returned to the farm,” Brett says. “This has allowed us to make decisions together, creating a strong partnership and a positive working environment.” In fact, you quickly get the sense that the partnership is crucial to Brett’s outlook in more ways than one. “My dad and I have a great partnership because our strengths and weaknesses are the exact opposite of each other,” Brett explains. “I don’t have the knowledge or the patience, so he helps me with the mechanics. And I really like spreadsheets and numbers.” “I think we are a pretty good match,” agrees Lyn. “I am a bit old fashioned and Brett’s up on the technology, and so together we bought some better equipment because sometimes you have to make better long-term decisions to be successful.” Unlike his parents, who followed the prevailing trend of their day and encouraged Lyn to leave the farm and do other things, Lyn is encouraging Brett to stay and he is doing everything he can to help. He admits he probably wouldn’t be doing that if he didn’t see more optimism in farming these days, but he also feels that a lot of that optimism is because of the next generation and the enthusiasm and energy they are bringing to family farms. “They add so much more energy and excitement and are interested in growing and trying new things,” says Lyn. The support of his parents has been important, says Brett, and so has their encouragement to be independent, which means he’s often thinking outside of the box and isn’t scared to take chances to build his own future. “When I came back we weren’t a large, established farm, so we have both been building together doing these Continued on page 34 country-guide.ca 33

business

“ The farms that have younger guys coming in are keeping up with technology,” says Brett’s father Lyn Continued from page 33 things, because with myself back both of us have been able to grow,” says Brett. “Rather than myself thinking of it as how can I take over my parents’ land, or my parents’ assets, I have been trying to build my own.” There are challenges, admits Brett. A big one is availability and cost of land, which has prompted him to negotiate longer-term contracts for the land he rents. “We work on a five- to 20-year plan,” says Brett. “To plan effectively, we need to know that we have agreements in place for four or five years.” Brett knows, however, that innovation is also key to developing a successful farm strategy and he recently formed a second farm business called Next Generation Farms, which he owns as a sole proprietorship, and which he is determined will be more cutting edge. “Next Generation Farms will be a grain farm, but it’s also going to focus on technology to help increase the productivity and profitability of all farms,” says Brett. He is currently developing several new technologies with a view to commercialization. One is a product to recapture phosphorus from fertilizer applications and apply it via irrigation. Another is a smartphone app to give farmers more options for on-site feedback from ag professionals. Brett is also partnering with Markus Haldosen, a Swedish friend and product design engineer he met while travelling in New Zealand three years ago. “We are working on products to help improve agriculture,” says Brett. “It’s so impor34 country-guide.ca

tant for farmers now... We need to know exactly what is going on with our crops and we need to know what products to apply so we can get the highest yields and the highest net income.” Brett tests the technologies on Next Generation Farms, where he is also focused on future sustainability. “It’s going to be more and more important to take care of our land base,” says Brett. “As farmers we are given the opportunity to use the land and we need to make sure that we do a good job of farming it so that we can feed nine billion people by 2050.” But as much as 27-year-old Brett has a great passion for farming, his entrepreneurial side has helped him explore other opportunities that appeal to his need for diversity and community. In 2011 Brett and his partner, Jen Avery purchased the Stay Fit Health Club in Pilot Mound. Jen, who grew up in the nearby community of Clearwater, is currently finishing up her studies in nutrition at the University of Manitoba and is responsible for the day-to-day operations of the gym. The couple decided to purchase the business for several reasons. “Keeping a gym in the community is important to us because it’s something we are interested in. It’s a hobby of ours and we are passionate about it,” says Brett. “We also felt it was an opportunity to appeal to the younger people in the community.” Brett’s entrepreneurship is appreciated by both his family and the community he lives in, and it’s also received some national recognition. Brett was named 2012 Student Entrepreneur Champion for

Central Canada in a program operated by Advancing Canadian Entrepreneurship (ACE), beating other students from Ontario and Quebec. In May he won the national title in Calgary and is now representing Canada in the Global Student Entrepreneur Awards in New York. “Sheffield’s determination and proven business achievements, such as expanding his farm and pioneering a second business while maintaining his honour roll status at school, are ideal qualities of a Student Entrepreneur champion,” said Amy Harder, president of ACE in a press release. Brett thinks his passion for the farm was a big factor in his win. “I love my farm, it’s not just a business other people run for me,” he says. Meanwhile, he is still driving back and forth to university — a round trip of about 360 km a week — and simultaneously running a second business. It’s enough to make you wonder how he finds time to sleep. “It’s a lot of driving,” Brett admits. “As soon as I finish classes on Friday, Jen and I drive home and then we drive back to Winnipeg at 5 a.m. on Monday.” Lyn, who is only 52 and isn’t planning on retiring any time soon, is excited about the prospect of farming alongside his son and watching him succeed. “The farms that have younger guys coming in are keeping up with technology and those farms seem to be progressing.” “There is a next generation of smart, passionate, educated young farmers who are coming back to run their farms,” agrees Brett. “Younger people are seeing the huge opportunities in farming.” CG November 2012

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business

By their bootstraps The numbers provide the muscle when this group of farmers gets together to lift each other’s business performance By Kim Waalderbos armers have a unique reputation for supporting each other, from helping one another at times of need to gathering to celebrate a milestone. Yet farmers also have an equally hard-earned reputation for being fiercely private, especially when it comes to money matters. Around Fredericton, N.B., however, a group of farmers has found that by breaking the old privacy taboo, they can benefit from a whole new level of support from their peers. But first, they had to breach the trust barrier. The Fredericton Dairy Management Group — or “bootstraps” as the group has also been dubbed — has been bringing area farmers together to share coffee and financial statements for more than 15 years. What started as a couple farmers who saw a win-win in sharing information has grown into a solid group of farmers that meets several times each year. Richard Boonstoppel currently chairs the group and has been involved with it since 1997, when he began dairy farming together with his wife Carol. He says the key to the group’s success is the people who are in the group and the trust they have in each other. “That this group continues to meet after 15 years says a lot about how the group works and the level of trust and comfort that exists,” Boonstoppel says. “We all have strengths and weaknesses, yet we’re able to talk about them and learn from each other.” The 14 farms within the group are all dairy farmers, yet their management styles vary considerably. Some are small herds in the region, others are large; some feed total mixed rations, others feed round bales; some house animals in tie-stall barns and others use free-stall barns; some milk with advanced technologies including robots; and others have incorporated various coloured breeds into their herds. Despite all these differences, the group strives to compare numbers as “apples to apples” in a confidential environment. On top of the management differences, a couple other factors add to the dynamic of the group. In some cases the farmers are rural neighbours. In others, it’s actually the second generation that is now representing the farm at group meetings, plus there are also family links, Boonstoppel says. “We have cousins, brothers, father and sons, and a father and daughter in the group, and no one bats an eye.” Since the beginning, the group has worked with a facilitator. Initially, it was a government extension agent, but as the agents 36 country-guide.ca

november 2012

business

Photo credit: Jane Breau / photobreau.ca

For Carol and Richard Boonstoppel, sharing their numbers with other farmers produces wins every year.

n ov e m b e r 2 0 1 2

were phased out or retired, the management group partnered with consultants, finding it was essential to have someone in that facilitator role if they were to continuously advance. Currently, the group works with advisers from the Fédération des groupes conseils agricoles du Québec — a Quebec-based organization that represents similar management groups in that province as well as in Manitoba and Ontario. Working with the Quebec experts has really helped the Fredericton farmers advance to the next level with their thinking and financial comparison. The Fredericton group strives to meet at least three times per year. In late winter, each farm submits its financial files to the Quebec facilitators for compilation, and the farmers get together to identify a topic as a special focus for the year. As examples, Boonstoppel says they’ve focused in past on purchased feeds, heifer raising, and veterinary and insurance costs as special topics. Then in early summer the group gets the compiled results from their Quebec advisers and meets to dig into the farm numbers. Finally each fall, the group usually meets to explore further topics of interest to the members. Meetings are generally scheduled at members’ farms, so the day can also include a tour. Boonstoppel says the special topic enables the farm members to dig into an area. One year when veterinary costs were the theme, the group invited the three area veterinarians to the meeting. “We were able to compare numbers and then get the perspective from our vets on what was driving differences in costs between farms,” he says, adding that it helped link what was happening with individual farm management and animal health status to the financial picture. To be part of the group, each farm pays a membership fee to help cover costs associated with resourcing the Quebec advisers. The difference is offset by funding from the New Brunswick Agricultural Council. Members must also agree that all information shared at meetings be kept confidential. In the early years, the farmers compared income tax statements, then it evolved to income and expense statements. Now, the group has received help from their Quebec advisers to develop a standardized chart of accounts, and

has worked hard to ensure each farm is recording their income and expense items the same way. When the management group was first formed, the facilitator would compile all the information and distribute it with letters assigned to each farm for anonymity. While it was great to see how one farm compared with others in the area, it didn’t help much to answer the questions about why one farm was doing better or worse in an area, says BoonContinued on page 38

The makings of a management group Based on the Fredericton group’s 15 years, Richard Boonstoppel offers these tips for building your own management group. 1. Get organized. Find some likeminded farmers who are also willing to be open and want to improve their businesses. Boonstoppel suggests starting with a smaller group, such as three to five farms, to help build a culture of comfort and trust before considering expansion. 2. Start meeting. Leave the financial numbers out at first, Boonstoppel says. Instead get comfortable talking with each other. Visit each other’s farms and be a fresh set of eyes to share a SWOT analysis (strengths, weaknesses, opportunities, threats). “It may feel awkward at first, but you have to push through it,” Boonstoppel says. “To build that trusting relationship takes time.” 3. Begin working On details. As you get comfortable talking with each other and learn to give and receive constructive ideas, start to at least track and even compare numbers on a small scale, maybe with something like a feed bill or your veterinary bill. 4. Seek a facilitator. Boonstoppel says there will come a point when the group needs an outside facilitator. “Our group would have hit a wall and died without it,” he says. This person can help the group gel, keep accurate records, and move ideas and topics forward.

country-guide.ca 37

business Continued from page 37 stoppel. The real turning point came after a few years when one of the farmers decided to speak up. “We’d had a tough year, and our numbers were the worst in the group that year,” says Philip Christie, another longtime group member. “So I shared our letter with the group and then spontaneously we went around the room with everyone identifying which letter they were. That’s when the learning really started.” Christie says his farm profitability and management capability have improved

greatly since joining the group. He found it particularly helpful when the current Quebec advisers toured each of the farms and made recommendations. His adviser had suggestions for how the Christie family could improve lighting for the cows, water flow rates, stall design and cow comfort. The adviser also helped them set achievable targets for their farm. By implementing those changes, the Christie family has improved milk production — and their financial performance. “We’re working with a barn that was built in 1981 and has limited expansion. It was a facility sized for the two of us and what we could do then, but now that we

have our own two kids coming along we need to optimize our current facilities to try and get enough dollars flowing through to do what we want to do for both generations to succeed,” Christie says. “We’ve got considerable potential still if we can feed and look after our cows well and manage the details. It’s the details that make the difference,” Christie says. For Richard Boonstoppel, their farm has benefited most from the networking about management styles and how they pay off. “Nobody can be good at all things, but you can see how the commitment of a farmer to certain aspects really puts milk in the tank,” he says.

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For his wife Carol, who looks after the financial records for their farm, attending the meetings really puts ideas into perspective. “You can explore why a farm is doing something a certain way, and maybe it’s a fit for doing something better on our farm too.” Nor is it only about exploring new ideas. Farms in the group have also been able to realize both small and large savings because of their networking. Boonstoppel describes how some farms switched their calf feed from receiving it in bags to larger totes and were able to save $90 to $100 per tonne. Christie adds as an example how one farm was able to shave $1,000

off the cost of their insurance policy without compromising their coverage, simply by knowing what the other farms were paying for equivalent coverage. So what’s next for this group? Christie says they hope to continue advancing their method of analysis and their use of tools, such as software programs to help. Together with the Dairy Farmers of New Brunswick and the New Brunswick Agricultural Council, the Fredericton farmers are currently in year four of a five-year commitment to roll the management group approach to other areas of the province, and potentially into other commodities. So far, two other

groups are already in development with interest from farmers in other areas too. The Dairy Farmers of New Brunswick is also hoping to establish a provincial cost of production based on the numbers being shared within the groups. Meanwhile, members of the Fredericton Dairy Management Group believe they have discovered the benefits in sharing and helping each other. Carol says that by helping each other, everyone gains. “We see value in keeping the dairy industry viable, so we have to stick together,” Carol says. “We will not survive if we fight amongst ourselves.” CG

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Local squeeze Will high land prices kill local food?

As Luke Petersen gets pushed farther from the city, the question is, at what point does local food stop making sense?

ore than ever before, American farmers are just as squeezed by climbing land prices as Canadian farmers, and on both sides of the border, there may be no sector that is feeling the pinch more than local-food farmers. Also on both sides of the border, it’s hard to see a fix that will help these farmers meet their ambitious growth targets. In fact, many may simply sell out instead.

40 country-guide.ca

“Land price is probably our biggest issue,” says Luke Petersen of Petersen Family Farms in Utah. “A dollar bill will hardly pay for the ground it occupies.” Petersen, 32, is married with three children and was born and raised at Riverton on a 350-acre hay and barley farm. Today, the family farm is just five acres, supplemented with 30 leased acres, all of it just west of the Bangerter Highway. But those 35 acres are farmed much, much more intensively than the old 350, and they’re all dedicated to local food. Income sources range from grass-fed beef to CSA (i.e. Community Supported Agriculture) vegetables, where consumers pay before planting for a once-aweek delivery of mixed veggies through the summer. The Petersens even rent out garden space, with a 200-square-foot plot fetching $85 to $105 for the season. As you would expect, it is a very diverse operation. The Petersens specialize in seedless watermelons, sweet corn, pumpkins, and tomatoes, but they also have laying chickens and they grow summer and winter squash, peppers, eggplant, carrots, beets, broccoli, onions, muskmelons, herbs, radish, spinach, and more. Also like many local-food operations in both Canada and the U.S., demand far outstrips supply for virtually everything they grow, so the most common sign you’ll see at the Petersen farm is “Sold Out.” It sounds like it should be a winning proposition. “Farming is something the community really values,” says Petersen. “My customers tell me every day how important what I’m doing is and to ‘never sell the farm.’” “That’s easy to say, but always in my mind I have to think about the difference between working and sweating to sell tomatoes for $28 a bushel or just selling my remaining five acres and probably never having to work again,” Petersen says. The value of their land has gone through the roof because of Riverton’s growth. The city in the north of the state has nearly doubled to 50,000 in the last decade, and it has been selected as one of CNN Money Magazine’s best places to live in the U.S. That’s good for food demand, but as nearby farmland gets paved over, local-food farmers in the area have had to lease or purchase farmland farther away from the city. Despite the long travel times, it’s the only land they can afford to farm. “The opportunity costs of farming ground worth this kind of money are astronomical,” says Petersen. “Most of my neighbours have sold off. November 2012

Photo credit: Petersen Family Farms

By Rebeca Kuropatwa

business

“We’re all worried about what land prices are going to do to our future,” Petersen says. “Right now, we just work our hardest and hope for the best. Some folks are trying to expand, but that means trucking equipment between random plots — sometimes 10, 20, or 50 miles apart — just to keep up with consumer demand and operation expansion.”

North of the border In Canada, the price of land varies regionally, of course, but there is still some link between the price of land and the value of the commodities it produces. At the very least, commodity prices are a lead factor in farm demand. That’s especially true in the Prairies, says Anko Sweep of Homelife Home Professional Realty Inc. “Most land prices are still set by what it can produce and therefore will go up if commodity prices go up.” Sweep, 47, moved to Brandon when he immigrated to Manitoba in August 2002, along with his two daughters. When he first arrived, he started up a cow-calf operation while also working for the same real estate firm that helped him buy the farm. He then began working as a rural realtor in May 2003. It’s harder now for new farmers to get a start the way Sweep did. It’s just too expensive, and even with the premiums from local food, it’s impossible to compete with buyers who often aren’t interested in farming at all. November 2012

“We now see many investors looking for land in Manitoba, investors from other provinces where land prices are way higher and where land prices are driven up by factors other than just what it can produce,” says Sweep. “It’s hard to compete with investors. They have money in their pockets and are ready to buy,” Sweep says. He wonders whether the trend is sustainable. “They are investors, and if the commodity prices go down, farmers won’t want to pay the rent that investors want to make.” But that’s a thought for another day. Few today are looking for the dream to end, Sweep says. “Right now, buying land almost looks like hype, and everybody is afraid of missing the boat.”

Changing landscape At the same time, local food has to coexist within an agriculture that is rapidly transforming itself. Ironically, this might be a lifeline for local food. At least, it might provide an example that local food can build on. In Alberta, Brian Otto, 64, is a third-generation farmer farming 4,300 acres of land, 1,760 of which he and his family own, 10 miles east of Warner. Born in Lethbridge, he and wife, Carolyn, rent their nonowned acres from three different landlords. Continued on page 42 country-guide.ca 41

business Continued from page 41 “Land that a farmer buys is an investment, just as buying a home in the city by urban residents is an investment,” says Otto, who grows a combination of wheat, barley, peas, mustard and safflower. “We have to remember that land values must keep pace with every other sector of the economy,” says Otto. “We can’t continue keeping the rustic picture of the old family farm as how we see agriculture today. It has changed and land values are part of that change. “We hear a lot about the survival of the family farm, but I look at the family farm today and it’s transitioning. I like to refer to this as the ‘changing landscape of Canadian agriculture.’ Family farms don’t necessarily have to own the land they farm, as it was in the past.” Is that bad news? Not necessarily, says Otto. “Investors are looking at land as a reliable, stable investment. These investors aren’t necessarily agriculture operators, so this land will be leased out to farm operators. “In our own case, we’re not interested in selling our farm as land values increase. We don’t see any more stable investment than the land we’ve spent our farming career paying for. I know many farmers feel the same way.” Still, as agriculture evolves, farms will be more based on long-term rental agreements with landlords, not on owning large tracks of land, Otto says, and as the next generation moves into agriculture, he sees this freedom from having to invest large sums of money in land easing the financial burden for young farmers. “The family farm is changing,” Otto says. “It’s now big business. We have to draw a new picture of the family farm. They will be larger, have more employees, and operators will be marketing farther from their local areas.” Otto isn’t pessimistic. Young farmers, he believes, will have “tremendous financial opportunities” going forward.

Hybrid operations Maybe in this kind of context, there are opportunities for well-designed hybrid operations. Doug Chorney, 47, is president of Keystone Agricultural Producers. He is married with one daughter, and has a University of Manitoba degree in agricultural engineering. 42 country-guide.ca

Chorney owns approximately 1,500 acres in East Selkirk, growing mostly grains as well as vegetables that are retailed through an on-farm store. “Recent commodity price spikes have attracted many new players, but time will tell if they stick with it,” says Chorney. “Many of us know this is a long-term business.” Chorney adds though that the problem isn’t just the price of land. It’s also the availability of land, and just as important, it’s the ability to know what’s actually going on in the land market. “The biggest change in Canada is speculative capital and foreign investors buying up farms,” Chorney says. “Rumours circulate about where the money is coming from when massive land-buying activity starts.” The rumours are understandable, he says, because often it isn’t possible to even know who the principals are. “They are often hidden from the public by having local farmers be the front for the outside investors,” Chorney says. “Foreign land ownership and full disclosure may be a major policy debate in the near future.”

Tough road ahead Dolf Feddes of Canadian Farm Realty was born in the Netherlands and immi-

grated to Canada 13 years ago. Today, his 500-acre farm located northwest of Carman, Man., has 20 beef cows, hay land, and pasture. “You’re probably looking at about $2,000 an acre for cultivated land in this area,” said Feddes. “The benchmark used to be $1,000-acre.” Feddes doesn’t see much potential for land prices to come back down. “A lot of it has to do with demand,” he explains. “It only takes a few, big aggressive guys in the area to push up the land price.” It can be very frustrating for the small farmer, he agrees, yet he also thinks the number of young people entering farming now is encouraging. Some are taking over from their parents’ family farm and others are just taking the opportunity when they see it. But it won’t be easy, Feddes says. “There are just too many higher bidders.” In the end, says Feddes, it may not be the farmer’s decision. It may be the banker’s. “Farmers are the ultimate optimists,” Feddes says. “They’ll do whatever they must to expand. It’s more up to the bankers, whether or not they’re willing to give more loans to farmers so they can continue investing and surviving.” CG November 2012

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management

Market shocks What happened to supply and demand? By Gerald Pilger arlier this fall I had a conversation with a very good, established, Alberta cowcalf producer concerned about the closure of Lakeside Packers and the recall of beef products due to E. coli contamination. He was really down. He told me of the losses he had incurred due to BSE in 2003, followed by more in 2008 as a result of high feed costs, and then by still more because of the American imposition of country-of-origin labelling in 2009. “This spring I really thought I had it made for once,” he said as he waited for Lakeside to get clearance to reopen. “Everything looked great. Cow numbers were down and more people are eating beef. I thought the lower supply and growing demand for beef would mean I would finally make money. But now, 40 per cent of our packing capacity has been shut down for who knows how long. What is going on in our industry? Maybe it is time to quit!” Like many producers, this cattleman is fiercely independent and a strong believer in a free and open market economy where prices are set by supply and demand. He is angry and saddened that the profitability of the cattle industry has been sucked out by

Farm prices in Canada get swamped by market shocks while U.S. prices keep sailing right along events he has absolutely no control over. He believes such events are becoming more common and he worries that future shocks will be even more devastating. Statistically, the cattleman is right about a decreased supply of beef. USDA statistics show that between Jan. 2009 and 2010 the Canadian beef herd decreased by 1.4 per cent to the lowest level in 15 years. In 2011 Canadian cattle numbers dropped a further two per cent and the U.S. beef herd also declined. But that inventory reduction paled in comparison to the market impact of the U.S. drought, and then got hammered again by the Lakeside Packers news. In effect, two developments that farmers have no control over totally overwhelmed the kind of moves that farmers had been making in response to market signals, and the bright future many cattlemen envisioned last spring darkened abruptly. 44 country-guide.ca

James Rude and Edgar Twine of the resource economics department at the University of Alberta attempted to quantify the actual impact such shocks have on the beef industry. In their recent paper “Effects of Market and Policy Shocks on the Canadian and U.S. Cattle and Beef Industries” which they presented in August at the Agricultural and Applied Economics 2012 annual meeting in Seattle, Washington, Rude and Twine analyze the impact of mandatory country-of-origin labelling (COOL), feed price escalation, exchange rate appreciation, and the economic recession on beef producers. Their results show that policy and market shocks can significantly impact prices and have long-term consequences to the beef industry — especially in Canada. Rude and Twine chose these four factors because they are what economists call exogenous shocks. Exogenous shocks are sudden events which have significant impacts on the economy or on an industry, producing abrupt changes in demand for a product, regulations, and/or cost structures. Often producers have little control over or recourse from such events. Of the four shocks studied, Rude and Twine found COOL and the hike in feed prices had the largest negative impact on the Canadian beef industry. The stronger Canadian dollar was significant but not as damaging. Surprisingly, the impact of the recession had a minimal impact on the beef industry. When the impacts of all four shocks were combined, Rude and Twine found only five per cent of the decline in revenues producers received as a result of these shocks could be attributed to the recession. Instead, 25 per cent of the decline in revenues was a result of the appreciation of the Canadian dollar, 32 per cent due to feed price escalation, and 38 per cent to mandatory country-of-origin labelling. Importantly, Rude and Twine found these exogenous shocks were much more damaging to Canada’s agricultural industry than they were to U.S. producers. The paper concludes: “Results indicate that the shocks have impacted both industries, but their impacts on the U.S. industry are relatively minimal. Whereas the impact of the economic recession is almost negligible, mandatory country-of-origin labelling, feed price escalation, and exchange rate appreciation have had substantially large impacts on the Canadian industry.” According to Rude, the primary reason Canada is hit harder by exogenous shocks is because it is much Continued on page 46 november 2012

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management Continued from page 44 more dependent on trade than the U.S. “The U.S. is such a big market,” he expalins, “that external shocks just don’t matter that much.” When asked if supply and demand can still be considered the primary determinant of cattle pricing or if it has been overshadowed by shocks, Rude answered, “The price of cattle was never determined within Canada. We have been price-takers for a long time.” If cattle producers have no control over pricing, they are very much at risk of large price swings due to shocks and forces over which we have no control. Other farm sectors are also at risk of large price movements as a result of exogenous shocks. “The pork sector has suffered from similar trade shocks — in fact more than the beef sector,” Rude pointed out. “You only have to look a couple of years back to see them really hurting. They haven’t had big events like BSE but swine flu is still somewhat of an issue and can affect consumer acceptance of the product.” There is a cloud bank of potential shocks on the horizon which have the potential to cause a huge drop in the prices of agricultural commodities in Canada. Rising interest rates, further appreciation of the Canadian dollar, California’s Proposition 37 calling for the labelling of GMOs in food products, relaxation or ending of the Renewable Fuel Mandate in the U.S., and new limitations on the use of pesticides and antibiotics are all examples of exogenous shocks with the potential to disrupt trade and pricing of Canadian agricultural commodities. Still scarier are shocks which we can’t even see coming, such as the damage to the flax industry over the discovery of the unlicensed variety Triffid in flax exports to Europe.

Managing policy and market shocks As a farmer, what risk management strategies do you have in place to protect yourself from exogenous shocks? Some producers will argue that you cannot protect yourself from unknown risks, yet these unknown risks are the ones which have the potential to cause the biggest losses to a business. Smart managers can use a variety of ways to protect against such shocks. The most basic protection is knowing your business and the industry well enough not to get overextended during the good times. It is highly unlikely the current drought-fuelled crop prices will remain this high over the long term. Can you still make the payments on the new equipment or land you are considering if we see a pullback in commodity prices closer to historical levels? There are risk management insurance products which can mitigate the impact of exogenous shocks. AgriStability introduced whole farm margin insurance to the farm sector. Producers enrolled in this program are protected from large price drops of the commodities they produce as well as large increases in the costs of inputs. However, AgriStability itself has become a victim of policy change and may no 46 country-guide.ca

longer offer the coverage and protection it originally did. Do you know the impact the proposed changes in AgriStability will have on your operation and does it still provide enough risk management to make it effective for your farm? If not, are there other government or private insurance products which are better investments than the revised AgriStability? The original risk management strategy used on farms was diversification. Yet many farmers continue to move away from that goal. Not only do most farms no longer have both crops and livestock, we now see specialization within livestock farms and a move to monocultures on cropland. Planting canola from one end of the farm to another may have been the most profitable scenario over the past couple of years, but it is also the riskiest not only from a production standpoint but also in terms of exogenous shocks. Should you be broadening the base of commodities you produce to mitigate the risk of a shock affecting one sector of the industry? Possibly the most important risk management strategy is also the most underappreciated and ignored. It is having a strong industry voice which is not only able to address the shocks but influence policy and mitigate the damage shocks can cause to the farm sector. In 2003, when BSE was found in Canadian cattle, the industry worked tirelessly to explain how low a risk BSE actually posed to consumers. As a result, consumers started buying again. Compare that to the E. coli discovery at Lakeside Packers this past fall. In spite of the fact that there are an average of 440 reported cases of E. coli 0H-157 every year in Canada — and there were only 15 cases that could be traced back to Lakeside — meat consumption dropped when the recall was announced. Furthermore, over one million kg of beef meat that was in storage at the plant and which was tested and declared safe by CFIA inspectors was landfilled due to the perception by consumers that all meat at Lakeside was tainted. Even the suggestion that this meat be given to the poor instead of thrown away raised a firestorm of protest. Where was the voice of agriculture explaining the risk of E. coli is negligible when meat is properly cooked, that the meat in storage had been tested and found E. coli free, and that the food we eat in Canada is likely the safest in the world? With the changes to the Canadian Wheat Board, grain producers have lost the most powerful voice they had in defending wheat and barley from policy and trade shocks. Can or will grain producers unite under an existing or new organization to challenge trade actions and promote policy, or has the grain industry simply fractured into more small self-interested groups focusing of just their part of the industry instead of the industry as a whole? Who, if anyone, are you supporting to represent Canadian farmer interests at the agricultural policy table? The answer to this question is likely the most important decision you make when it comes to managing the risk of market and policy shocks. CG november 2012

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management

Name to reckon with The new names on the signs at farm dealerships may seem trivial. In reality, their implications are huge By Scott Garvey, CG Machinery Editor t was part of a dark plan, really, a strategy to eliminate competition and drive up prices. That’s what most farmers across Canada thought just a decade ago as they tried to keep track of the number of local farm equipment retailers being swallowed up by the new generation of powerful dealership chains. And as those already large networks kept growing even larger, the suspicion and mistrust among farmers accelerated too. Today, however, the reality is that most of those small, rural locations are still open. Indeed, their service offer has generally been enhanced, providing a much different — and better — end to the story than many expected. Garrett Ganden, chief operating officer at Rocky Mountain Dealerships Inc., says his organization heard those farm concerns early. Convinced as they were that the dealership chain would prove its value over time, Rocky Mountain needed a strategy for keeping farmers open minded for long enough to give the front line a chance to show its stuff. As part of that plan, Rocky Mountain decided that in most cases it would allow its dealerships to keep their old names, hoping that this would help assuage local concerns. Now, says Ganden, the dealerships have had time to prove their case, and he believes most farmers see an advantage for their local dealer being part of a larger network. 48 country-guide.ca

“What you heard a lot of was, ‘they’re going to buy it and close it down,’” Ganden says. “When you go through the vast majority of acquisitions we’ve done, we’ve maintained that town’s dealership, and they (farmers) have seen the benefits. There are more parts on the shelves, more expertise, and the ability to get more iron versus what they used to have. “It took a few years to win them over,” Ganden says, but adds, “there is a benefit to having a larger dealer.” Now, in fact, the name issue has a different context. Today, management at Rocky sees its corporate name as an advantage, and the company is rebranding all its outlets. By the end of the year, all its dealerships will have a Rocky Mountain Equipment marquee over the front door, and all the various operating names currently under the company’s control will disappear. “We felt originally that (keeping original dealer names) was really important,” continues Ganden. “Rocky Mountain was a newer name in the marketplace, whereas Hi-Way was known. Miller was known, as examples. We did think it was important to get people comfortable with us, but we’re past that point now and we can go to the one brand. We’re in the process of rebranding all of the stores to be known as Rocky Mountain stores. The names of the past are all going away to provide clarity.” With 38 stores, Rocky has grown to become the November 2012

management

largest independent dealer chain in Canada, second only in size in North America to the giant Fargo, N.D.-based Titan network south of the border, which boasts more than 80. Whether or not a chain is as large as Rocky, Ganden believes the multiple-store business model is essential in today’s retail environment. It’s a widely held belief in the sector that the kind of resources multi-store operators can bring to the table are essential now both to dealerships and to the farmers who buy from them. That concept is something that Rocky’s management has firmly in mind, and it will play a key role in any move to expand outside of the Prairie region. Ganden says if the company expands outside its current operating region in the West, it will need to go into new territory with a big enough presence to get the job done by today’s standard. “Size matters,” Ganden says. “If you’re going to go into a new area — pick any region you want to talk about — you really need to have a five- or six-store complex together to make sure you have the right level of management. You have one person as a regional manager to have consistency throughout all those stores, you’ve got scale so you can have the expertise and the ability to draw on the different stores that are close to make sure you’re meeting the customers’ needs. Ganden shakes his head: “A one- or two-store operation in, say, Ontario, that’s tough.” But before the company sets its sights on another phase of expansion, Ganden says management is focusing on taking care of things at home, ensuring its current stores provide consistent service. In effect, it’s time to consolidate, and Rocky Mountain is implementing a methodical approach that ensures the firm protects and grows its existing outlets without jeopardizing them by expanding too fast. “If you add in too many (new stores), you put at risk the ones you have,” Ganden says. “You want to be careful. “Over the past 18 months we didn’t put the complete kibosh on any acquisitions, but we slowed considerably, so we could work with the managers in all the stores and work with all the employees to get them training so they could understand all the metrics that are required.” The company has also been working to improve the bricks and mortar at some of the locations it already operates. “We’re building two new stores right now to replace existing facilities, one at Grande Prairie and one in Medicine Hat,” says Ganden. “We’ve focused on that in the last little while to make sure we have the right facilities in the right spots as well.” Building new stores and improving service facilities allows those locations to improve local service, not only solidifying the chain’s market share but making it easier to grow its business in areas where it already has a presence. But getting qualified people to staff its outlets has been a problem. November 2012

“Some of the spots are constrained by facilities, some are constrained by manpower quite honestly,” notes Ganden. “(It’s) whether or not you can get enough technicians, parts people and sales people to support that infrastructure.” The company does a review of its stores about every six months and evaluates the situation at each location as it updates its strategic plan. Those reviews show that recruiting and maintaining staff remain challenges for Rocky Mountain, as they do for most businesses across the Prairies. And there has been little let-up in that persistent problem. “It’s not easing,” Ganden says. “It’s a constant challenge. The economy across the Prairies is strong, so people are getting pulled in a lot of different directions, and everyone is looking for the same skill set.” In some locations, the company has offered hiring bonuses as an incentive in attracting new hires.

Farmers are voting with their business in favour of the big chains, says Rocky Mountain COO, Garrett Ganden As the company considers future expansion into new territory, there are no immediate plans to follow in the footsteps of those dealer networks that have branched into other countries. Ganden doesn’t see that kind of move being right for Rocky at this stage. And when it comes to representing brands other than those under the CNH umbrella, it’s something the firm has thought about, but straying too far afield from its core lines could be a problem in creating the consistency that Ganden says the organization is trying to achieve. “It’s something we constantly evaluate,” Ganden says, not ruling out the option entirely. “What’s important to us is being able to provide the right product mix for our customers. We want to be there for them.” CG country-guide.ca 49

TOOLMAN

Do you really need options? Probably yes By Errol Anderson re there only some farms that can benefit from options? If you sit in a coffee shop, you might think so. Options get an unfair rap at times, but there is a place for options in any market plan. A “put” option can guard your unpriced grain against falling markets, while a “call” option can reopen a price ceiling after the grain has been sold. That means they can add tremendous flexibility to the farm manager. Does that mean you should expect to make a profit on every purchase? No. Put options for instance act as insurance policies, and like most insurance policies, if they don’t kick in, that’s actually good news. That means the price prospects for your grain in the bin are just fine. This year has been a case in point. Growers who purchased put options to guard against falling grain

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prices saw their premiums erode away. The U.S. drought took Canadian grain prices much higher than forecast. But some years, you really need that insurance. It may be your only path to profitability. Every farm business can add the use of puts and calls to their market plan. But like all things, options do have to be managed. Without care, options simply won’t be as effective. Learn the following strategies because there are times when the use of options is a huge benefit. For instance, in years when yields are low, put options can guard against a drop in the market without any obligation to deliver. This is a huge plus. When delivery isn’t obligatory, you can be more aggressive protecting your expected crop production. There’s no risk of the penalties that come with cash deferred delivery contracts. With call options, you can open up your price ceiling after your grain is priced and delivered. If prices

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November 2012

TOOLMAN plunge unexpectedly, your only risk is the price of the call premium, not the entire price loss of the grain. This is a big advantage that can cut price risk enormously while at the same time leaving you free to take advantage of a rally, should the futures spike higher, even after your grain is already priced and the cheque in the bank. Another big plus. Here are some more pointers to enhance your success with options. Buy quality, not quantity. One mistake many growers make is purchasing inexpensive, out-of-the-money options. Here’s an example. Let’s say March canola is trading at $600 per tonne. You are storing unpriced canola, but you’re concerned that canola may break down some time due to global financial uncertainty. March canola $600 (at-the-money) put options are trading for $15 per tonne. But you decide to buy March $570-per-tonne put options for $5 per tonne instead. Should canola break down $20 per tonne, the March $570 put premiums may only appreciate by about $5 per tonne. The March $600 premium would advance by about $15 per tonne from $15 to $30 per tonne. If you have a

set amount of money to purchase options, it is often better to cut your order down, but purchase better-quality options. In other words, buying 100 tonnes of March $600 puts may actually outperform owning 300 tonnes of March $570 puts. Plus you’ll save on broker commission fees. Also, be wary of time decay. In the last month of an option’s life, the premium can erode quickly due to “time decay,” so as a rule of thumb, don’t hold options until expiry. If you own a March canola $600 put and the market slides quickly to $580 per tonne, your option premium value is made up of the $20 per tonne you are in the money ($600-$580) plus time value. Your option premium may actually be worth $30 per tonne. The extra $10 per tonne is time value. As the option nears expiry on the third Friday of February, the time value will eventually erode to $0. If you own an option, therefore, it may be best to sell it three to four weeks prior to expiry. This will help ensure you capture the time value left rather than allowing it to expire. Consider using a combination of U.S. options for your non-covered Canadian grains. For example, soyoil options are an

effective replacement for canola and flax. Corn options can be an effective replacement for barley, feed wheat or oat sales. Soymeal options are an effective replacement for feed pea sales. To me, anyone can use options as a farm management tool. Options inject cash flow more quickly into the farm business. They also clear bin space. Plus, you can use options to replace poorer-quality grain, and you can also use them as a price parachute for your unpriced grain. Plus you have no physical grain delivery obligation and there is no risk of margin call. As a buyer of options, your risk is limited to the cost of the premium plus broker’s commission. Options also allow you to remain disciplined in your farm market planning through periods of high volatility. In these times, that’s an advantage worth looking at, no matter what the coffee shop says. CG Errol Anderson is a commodity broker located in Calgary and authors PROMARKET WIRE, a daily grain and livestock risk report. He can be reached at 403-2755555 or email prowire@shaw.ca.

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Tomorrow never comes Is there anything you can do if someone in your family is a perpetual procrastinator? By Pierrette Desrosiers, psychologist and coach

t’s normal to put some things off. We all do it, saying things like, “I’ll have to get that done, get this fixed, clean up the shop…” Yet what is a small flaw without much consequence for most of us can be a real problem for others, maybe even some in your family. According to Joseph Ferrari, 20 per cent of the adult population suffers from chronic procrastination. There is no reason to think that farmers are different, and in my practice, procrastination is one of the many problems that I meet. Procrastination is the pathological tendency to constantly put off doing certain things (things that don’t give us immediate gratification) until tomorrow — or the next day, or month. The consequences can be severe and may result in financial, relationship, health, or psychological problems.

The consequences of procrastination: • Economic: We’re inefficient. It takes us longer to get everything done, which means we get less accomplished in a day. In a profession like farming, that can mean we miss critical deadlines for seeding or for getting the crop priced. It can also mean our bills get paid later, which leads to added interest charges, and suppliers who aren’t as eager to do business with us. • Relationships: We are always late for appointments, which results in conflicts. • Psychological: We worry about things piling up and our self-esteem suffers. •H ealth: We will exercise, or change eating habits, or quit smoking, or go to the doctor… tomorrow. Procrastinators have been found to be the least healthy.

The main causes of procrastination: • A lack of planning and vision: Procrastinators tend to see the end without the process. They only think about the goal to be reached and don’t consider the steps along the way. The goal appears to be impossible to attain, so they keep delaying the required action. • Perfectionism: They want every part of the work to be perfect. “If I can’t do it perfectly right away, then I might as well do it later,” they think. The fear of failure is always present. The fear of being judged, seen negatively, or having limits set on their aptitudes paralyses them. • A rebellious spirit: “You’re not going to make me do anything how or when you want it done. I’ll do it my way and only when I feel like it.” • A quest for adrenaline: Procrastinators will say they 52 country-guide.ca

work better under pressure, and that it adds spice to their lives. • I mmediate gratification: People often procrastinate because they simply don’t like doing a particular task. They then become the “spoiled child” and appear to have won in the situation. There are also five common lies that procrastinators tell themselves. Sometimes in fact they believe the lies: • Procrastinators overestimate the time they have left to perform tasks. “I still have plenty of time,” they say until it is too late. • They underestimate the time it takes to complete tasks, saying, “It will not take me long.” • They overestimate how motivated they will feel the next day, the next week, the next month, saying, “I’ll feel more like doing this tomorrow.” • They mistakenly think that succeeding at a task requires that they feel like doing it. “I don’t feel this now.” • They mistakenly believe that working when not in the mood is inefficient. They say, “I work best under pressure.”

Dealing with procrastination: • Analyze the costs compared to the benefits: Contemplate the positive aspects of accomplishing a task now against what it will cost you to draw it out. • Establish a plan: Determine the goals you want to reach. Break each of them up into smaller steps. Calculate the time it will take to reach each of the goals you have set. Schedule a time to start and finish each step. • Allow for obstacles: Make a list of the problems that may arise in completing the tasks and determine strategies you can use to counter them. • Don’t wait until you feel like doing it: It is rare that we get excited about doing something boring. Make a commitment to yourself to get it done. Don’t let your inner child win. Motivation comes with action, not the reverse. • Reward yourself: Give yourself some kind of a reward when you complete the task. And don’t delay this reward! 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. November 2012

w e at h e r NEAR NORMAL

MILDER THAN NORMAL

NEAR NORMAL TEMPERATURES NEAR TO BELOW NORMAL SNOWFALL

M Ja spe ild nu lls ar y

l sta w a o C / sno rain

BRITISH COLUMBIA

Nov. 25-Dec. 1: Variable temperatures trending to the cold side. Periodic rain west, changing to snow inland. Dec. 2-8: Frost threat southwest as fair skies interchange with some rain. Seasonal elsewhere with intermittent snow. Dec. 9-15: Windy at times with fluctuating temperatures. Fair but snow on a couple of days, mixed rain southwest. Dec. 16-22: Variable weather and temperatures. Windy. Occasional coastal rain, heavier snow inland. Dec. 23-29: Fair skies interchange with occasional snow, mixed with rain on the coast. Seasonal Blustery. Dec. 30-Jan. 5: Often dull and wet on the coast with some rain or snow. Scattered snow inland. Seasonable. Jan. 6-12: Mostly cold and at times windy. Scattered snow and rain on the coast. Patchy snow elsewhere. Jan. 13-19: Fair but unsettled on a couple days with coastal rain and fog changing to scattered snow inland.

L MA ION R T NO ITA AN CIP H T RE ER E P D L G MI ERA V A

M Sn ild speowy lls

C Sn old per owy iod s

d Mil wy o Sn riods e p

Changeable south with a few higher windchills and scattered snow. Jan. 6-12: Cold, clear most days except for minor warming in the south with some snow and drifting. Jan. 13-19: Higher windchills and often fair aside from scattered light snow on a couple of occasions.

Dec. 9-15: Fair with seasonal to mild temperatures but a disturbance brings snow, gusty winds on one or two days. Dec. 16-22: Fair and mild days interchange with colder, snowy ones. Blustery at times. Higher windchills. Dec. 23-29: Fair overall but unsettled on a couple of days with snow and gusty winds. Variable temperatures. Dec. 30-Jan. 5: Colder with a few high windchill days. Fair but some light snow and drifting on a couple days. Jan. 6-12: Cold but minor warming brings scattered snow and blowing on two or three days. Clear, cold north. Jan. 13-19: Temperatures fluctuate but average near or a bit above normal. Scattered snow and drifting.

November 25, 2012 to January 19, 2013

ALBERTA

Nov. 25-Dec. 1: Colder with higher windchills. Variable cloud with heavier snow, drifting in many areas. Dec. 2-8: Cold throughout but milder surges in southern areas bring snow on two or three occasions. Blustery. Dec. 9-15: Seasonal with a possibility of chinooks south. Colder, windy outbreaks bring some snow. Dec. 16-22: Cold and fair but a couple of milder, windy days in the south bring snow and drifting. Dec. 23-29: Unsettled at times with changeable weather. Some snow and drifting south. Higher windchills. Dec. 30-Jan. 5: Clear, very cold north. November 2012

SASKATCHEWAN

Nov. 25-Dec. 1: Mostly cold with higher windchills. Occasional heavier snow and drifting on two or three days. Dec. 2-8: Fair overall apart from a couple of stormy days with snow and blowing. Variable temperatures. Dec. 9-15: Fair with normal to milder temperatures. Scattered snow, chance heavy in a few areas. Dec. 16-22: Expect snow on a couple of days, interspersed with clear, colder days and higher windchills. Dec. 23-29: Unsettled on two or three days with snow and blowing, otherwise fair with seasonal temperatures. Dec. 30-Jan. 5: Colder with higher windchills at times. Fair skies alternate with spotty snow and drifting. Jan. 6-12: Cold air dominates but slight warming brings occasional snow and blowing on a couple of days. Jan. 13-19: Mostly settled aside from light snow and drifting on two or three days. Temperatures vary from cold to mild.

November 25, 2012 to January 19, 2013 NATIONAL HIGHLIGHTS Highly variable conditions are anticipated during these short days of winter as disturbances bring stormy weather to many areas of the country. Despite alternating mild and cold periods, temperatures should average close to normal over the large portion of Canada stretching from British Columbia across the Prairies to Northwestern Ontario. Somewhat milder than normal temperatures are indicated for most of Ontario, Quebec and the Atlantic provinces. Snow and rain totals are expected to average close to normal in most areas.

MANITOBA

Nov. 25-Dec. 1: Mostly fair with some snow, chance heavy in places on a couple days. Variable temperatures. Dec. 2-8: Temperatures on the cold side and fair but look for a couple of milder, snowy days and brisk winds.

Prepared by meteorologist Larry Romaniuk of Weatherite Services. Forecasts should be 80 per cent accurate for your area; expect variations by a day or two due to changeable speed of weather systems. country-guide.ca 53

ACRES

By Leeann Minogue

The smell of success When Elaine gets back from the accountant, the men learn whose number is up he men had heard Elaine’s SUV turn into the yard, so they weren’t that surprised when she opened the door of the Hanson Acres seed-cleaning plant a few minutes later. Inside, her husband Jeff and his father Dale and grandfather Ed were hard at it, changing some conveyor belts so they could start running their soybeans through the machinery. The men were happy to see Elaine. It was time to take a break, they figured, and Elaine and Jeff’s little boy was almost always a fun diversion. Besides, there was always a chance Elaine had brought some treats home from town that would go well with afternoon coffee. Then they saw the look of frustration on Elaine’s face, and the way she was holding the toddler straight out in front of her, as far away from herself as physically possible. “Jeff,” Elaine called as she trudged in. “I’m going to need help.” “Phew,” Ed said. “What you need is a clothespin for your nose. I can smell that kid from here.” “Going to take two to change this diaper?” Dale asked. “It’s not just the diaper,” Elaine said. “I 54 country-guide.ca

stopped in at the accountant today and picked up our year-end books.” “Oh, good,” Jeff said. “Everything look OK?” “Well, it did when I picked it up,” Elaine answered. “But the baby wanted to ‘help’ when I was carrying the books and the groceries into the house. I only turned away from him for a second, but he managed to get hold of the shiny USB stick that the accountant sent home with our stack of file folders.” “Shiny,” Conner gurgled, corroborating his mom’s story and grinning at his dad. “By the time I got close enough to grab it, he’d jammed it straight into his diaper.” “Shiny,” Conner said again. “Not anymore,” Dale said. “There’s no way anything in your diaper could be shiny, kid.” “So much for this being a more convenient way to do the books,” Elaine said. “I bet this almost never happens at those Fortune 500 companies,” Jeff said. “Once we dig the USB out of that diaper, I don’t know if we’ll be able to save the files,” Elaine said. “And all our year-end entries are saved on them!” “If we can’t salvage it, we’ll call the accountant,” NOVEMBER 2012

acres

Jeff said, taking the toddler from his wife’s arms. “She has kids. She’ll understand.” “I think the kid knows what he’s doing,” Grandpa Ed said. “That’s exactly the right place for most of the high-tech stuff we have around this farm.” Dale ignored this. Ed was as addicted to progress as anyone on the farm. There was no point needling his father about the 25-kilowatt generator he’d just gotten Dale and Jeff to install in his condo in town. “Just in case the power goes out,” Ed had said. “I’ll want to be independent.” “Independent?” Dale had said, incredulous. “You could power your whole condo building with that thing.” “That’s exactly why the Condo Board isn’t complaining about the installation,” Ed had replied. But today Ed was taking a different tack. “Look at us. We’ve even got a computer running this cleaning plant! One night you’ll come in here a little tired and get the screen mixed up with a game of Pac-Man. You’ll be shooting soybeans out the top of the spout, aiming at owls.” “I don’t want to say you’re not up with the times, Grandpa,” Jeff said. “But nobody plays Pac-Man anymore.” “That’s not true,” Dale said. “Donna just downloaded an app for her iPad.” “Pac-Man!” the toddler blurted out, as if he’d been playing it too. “App. Eye pad. I don’t even know what you people are talking about anymore,” Ed said. “All I’m saying is that we’re just one power surge away from a complete breakdown around here. “And don’t even get me started about what’ll happen around here when the big solar superstorm finally hits,” Ed was saying to the room in general. “Satellites will go down. The power will go out. Permanently. Nobody’ll be mocking my generator then. Heck, they won’t be able to. Their phone won’t work. You young people won’t know what to do without your computers and your Internets. No more texting. You’ll have to steer without GPS. “Yup. While you young people are standing around staring at your blank screens, guys like me’ll be running the world again.” With that, Ed’s rant trailed off, and November 2012

“ Yup. While you young people are standing around staring at your blank screens,” old Ed said, “guys like me’ll be running the world again.” he gazed off into a corner, imagining just how much better things would be in this version of the future. Jeff interrupted the dream. “What are you talking about, Grandpa? Solar superstorm? Have you been watching cable news again?” “I can use the Internet too, you know,” Ed said. “I read about this online.” “See?” Dale said. “Computers can’t be that bad, if you can use them to research important news like this.” Ed made a snorting sound, probably intended to bring the conversation to an end while he was still close to being ahead. Then Elaine’s cellphone rang. She rummaged around in her large diaper bag until she found the ringing phone, then stepped out of the building to take the call. “Technology’s not that bad, there’s just too much of it,” Ed said. “That’s the problem. People are always taking phone calls. Or fiddling around with their phones while you’re trying to tell them something.” Ed looked accusingly at Dale. “Are you still mad about that?” Dale said. “Give me a break.” “I was trying to tell you something important.” “If gossip from Wong’s Café is important, you must be the most VI of all the VIPs in town,” Dale said. “And I wasn’t sending texts to everyone in the province. Donna wanted to know what we wanted for dessert tonight, and I sent her a two-word reply.” “A generation that has to use a phone rather than walk 100 yards to have a discussion like that won’t last two hours after the solar superstorm.” “If that’s the way you feel about it, I’ll walk over to the house and tell Donna you don’t want any apple pie after all,” Dale told his father. Luckily, Elaine came back in the door before this could get any more serious. “Great news,” she said. “It was the accountant.”

“That’s a sentence you don’t hear very often,” Dale put in. “Turns out the new intern in the office made a few errors when he input our yearend adjustment entries. They wanted to make sure they caught me before I downloaded these ones from the USB. They’re putting together an updated file — we can pick it up the next time we’re in town.” “Whew,” Jeff said. “That’s a relief.” “Should we even bother cleaning up the USB in the diaper? Or just throw it out?” “Throw it out!” Dale, Jeff and Ed all shouted at the same time. Jeff swung Conner toward Elaine, hoping to pass him off. “Nice try,” Elaine said. CG

Trait Stewardship Responsibilities

Notice to Farmers

Monsanto Company is a member of Excellence Through Stewardship® (ETS). Monsanto products are commercialized in accordance with ETS Product Launch Stewardship Guidance, and in compliance with Monsanto’s Policy for Commercialization of Biotechnology-Derived Plant Products in Commodity Crops. This product has been approved for import into key export markets with functioning regulatory systems. Any crop or material produced from this product can only be exported to, or used, processed or sold in countries where all necessary regulatory approvals have been granted. It is a violation of national and international law to move material containing biotech traits across boundaries into nations where import is not permitted. Growers should talk to their grain handler or product purchaser to confirm their buying position for this product. Excellence Through Stewardship® is a registered trademark of Excellence Through Stewardship. ALWAYS READ AND FOLLOW PESTICIDE LABEL DIRECTIONS. Roundup Ready® crops contain genes that confer tolerance to glyphosate, the active ingredient in Roundup® brand agricultural herbicides. Roundup® brand agricultural herbicides will kill crops that are not tolerant to glyphosate. Genuity and Design®, Genuity Icons, Genuity®, Roundup Ready®, and Roundup® are trademarks of Monsanto Technology LLC. Used under license. country-guide.ca 55

10623A_MON_GEN_stewardship_legal_countryguideresize.indd 8/9/12 10:29 1 AM

LIFE

T A H T Y BU

E M O H R O T MO

A richer, more rewarding lifestyle for you is actually good for your farm, so be SMART about it By Helen Lammers-Helps armers are notorious for their work ethic. In fact, sometimes they’re so busy working they don’t take time to reward themselves for their hard work. Or, they only reward themselves when they have a good year financially. It turns out this may be short sighted, hurting our businesses as much as it hurts us as individuals. Although farmers have been raised to think it’s selfish to pursue their own goals, Jim Soldan, an agricultural business adviser in Chilliwack, B.C., says it’s good for our farms. When we take time away from the business, we can see our farms with fresh eyes when we return, he says. “You will see things you would not have seen otherwise,” Soldan says. Besides, having hobbies and interests outside the farm will also help you weather the ups and downs of farming, Soldan adds. “It gives your brain a rest from the thing that’s consuming you.” It’s also important to spend time with your spouse to keep the marriage strong. Gerry Friesen, a former hog farmer and stress management consultant in La Salle, Man. agrees. “Farmers find it hard to separate work from play, and many men think, ‘If I work harder I’ll succeed.’” Unfortunately, when you’re stressed you tend to make poor decisions and your relationships suffer. Paying more attention and talking with friends and 56 country-guide.ca

family lets you work on issues before they get too bad, Friesen says. This isn’t only important for older farmers, stresses Soldan. Younger farmers need to establish a healthy work-life mindset too. Many farmers hit the proverbial wall when something bad happens, says Pam Paquet, a psychologist and business consultant in Port Coquitlam, B.C. An accident, a death, or another crisis forces them to make the time to reflect on what’s important. “Personal goals can be born out of crisis,” she explains. Some people wait until the taxes are done to look at the bottom line to see if they can afford to take a trip or buy the motorhome they’ve been wanting. Paquet warns against this approach. “Don’t let the farm’s financial statement be the driver of your personal goals and objectives,” she says. “This approach isn’t usually very fulfilling.” Paquet recommends taking the time to develop personal, social, and family goals along with setting goals for the farm business. “If we don’t set goals for our personal lives, then life and its busyness will take over,” Paquet says. “Defining separate goals for different areas of your life will give you clarity for why you’re doing what you’re doing.” Paquet uses the example of a farmer couple who want to buy a motorhome. She recommends digging a little deeper to understand the motivation for wanting the motorhome. Is it so they can spend more time NOVEMBER 2012

LIFE

with their family? Or so they can escape the winter? Is it simply to get away from the farm for a rest, or to meet new people and make new friends? Once you figure out what you really want, she recommends working backwards to figure out how you can accomplish it. She also advises setting up a tier of goals — Plans A, B and C. If that same couple wants to purchase the motorhome to spend more time with the family, then the goals might look something like this. Plan A is the motorhome, Plan B is a tent trailer and Plan C is to rent a cottage for a week. “This way it’s not an either/ or,” Paguet says. “It gives you some wiggle room. If you can’t afford the motorhome, then you haven’t failed because you can still accomplish Plan C.” In order for goals to be achievable, they should be SMART, says Paquet. SMART is an acronym that’s useful for setting meaningful goals. S stands for specific. In the case of the motorhome, which motorhome do you want? M stands for measurable. When will you buy it? After harvest? In the spring? A stands for attainable. Is it realistic? R stands for relevant, and T for time bound. For example, is there a pressure to buy the motorhome now because the kids are getting older? Similarly, Friesen stresses the importance of making sure the goals you set are achievable. Failing to achieve a goal can create more stress, he explains. He also says it’s important to realize that achieving a goal may not bring the happiness that we anticipated. Write down your goals to “kick up the level of commitment,” adds Paquet. Use your creativity to find ways to maintain your motivation. If you want a motorhome, go to the dealership and get a brochure for the one you want and hang it on your NOVEMBER 2012

office bulletin board. Or tape a picture to your bathroom mirror so you see it every morning. Friesen agrees. “Don’t just write down your goals and then stick them in a drawer and forget about them,” he says. “You need to review them from time to time.” Soldan recommends developing a plan to achieve goals in increments. If the plan is to spend more time with family, start with a picnic, then a three-day retreat and then take the vacation to Costa Rica, he says. “Build on accomplishments.” What if you really don’t have a clue about what gets you excited besides farming? There are several ways to explore what you’re passionate about. Some people will want to do the work on their own using webinars and templates available on the Internet or by reading books, says Paquet. Others will prefer to work with someone face to face who will guide them through the process. A therapist or a life or business coach can help in this case. Also highly recommended is GOALS: SETTING AND ACHIEVING THEM ON SCHEDULE, by Zig Ziglar. It’s published by Simon & Schuster and is also available as an audio book. Soldan adds a word of caution about finding the right balance. While he’s seen a lot of older farmers with lots of money and no understanding of how to spend it on themselves, he’s also seeing a trend of younger farmers placing too much emphasis on pleasure. That’s not good either. It’s a balancing act, but by setting meaningful personal goals, you can ensure you lead a life you find personally satisfying, no matter what is going on with the farm, the weather or the markets. CG

RESOURCES Goals: SETTING AND ACHIEVING THEM ON SCHEDULE, by Zig Ziglar (Simon & Schuster). (Also available as an audio book.)

country-guide.ca 57

h e a lt h

Dental health for your heart By Marie Berry

he link between dental health and heart disease is your newest reason for good dental hygiene. At one time dental disease, lost teeth, and dentures were the norm. George Washington had wooden teeth, and you probably have aunts, uncles, and grandparents who have false teeth. Today, however, people are keeping their teeth longer, and hopefully healthier. Tooth decay, also known as caries, is a disease process that dissolves the tooth enamel and affects the dentin or tooth interior, leading to a cavity. Bacteria are the No. 1 cause of tooth decay, but other factors are also involved, such as diet, saliva flow, tooth placement, tooth surface, plaque, and tartar. Normally your mouth has bacteria in it such as Streptococcus mutans and lacobacilli. These bacteria live in plaque, the sticky substance that adheres to your tooth surfaces. If carbohydrates from your diet are left stuck to your teeth, the bacteria in the plaque feed on these foods. The bacteria then produce acid which causes tooth erosion and decay. If left unchecked plaque proliferates with more food debris and bacteria leading to even more decay. In 24 to 36 hours, if left alone, plaque calcifies and becomes tartar. Obviously, a diet high in carbohydrates, especially sugar, increases your chances for tooth decay because the bacteria thrive on these foods. Saliva flow plays a role, because if it is abundant, it will wash some of the dental surfaces, preventing adhesion of plaque and its bacteria. Tooth position is important too, because teeth that are close together or that have irregular surfaces are more difficult to clean, thereby increasing the risk for cavities. Periodontal or gum disease is the primary cause of tooth loss after age 35. It affects the tissues that support the teeth and results when plaque and its bacteria remain in contact with the gums for long periods When we shop for a multiple vitamin, we’re confronted with rows and rows of products. Which, if any, are the best choice for us as individuals? The advertisements don’t seem to help. Next issue, we’ll look at the science of multiple vitamin formulations, and which ones are suitable for which people. 58 country-guide.ca

of time. The gums can become dark red and may bleed when eating hard foods or brushing your teeth. Inflammation or gingivitis is the result. If you have periodontal disease your risk for heart disease such as coronary artery disease is twice as great. There are two theories about this link. It may be due to the bacteria in the plaque entering your bloodstream when you brush or eat, or alternatively it may be toxins or particles produced by the bacteria that get into circulation. Once in the bloodstream, the bacteria and/or toxins and/or particles cause inflammation in blood vessel walls. This can then contribute to atherosclerosis, and it is atherosclerosis that increases your risk for cardiovascular disease and stroke. Good dental hygiene is paramount not only in preventing tooth decay and gum disease, but in ensuring good heart health. Brushing after eating, in the morning, and before bed is ideal to remove food debris, plaque, and bacteria. Make sure you brush all tooth surfaces with a soft-bristled toothbrush. Use an up and down motion at a 45- degree angle and change your pattern each time so that the spots you may have missed last time will get brushed next time. Brushing should take you two to three minutes, and remember to change your toothbrush every three months or after you have had an infection. Flossing removes material from between your teeth and should be done at least daily. You need to floss between all your teeth as well as your back molars. Interdental brushes are also available for use between your teeth, but remember they may not be able to get as deep between your teeth as floss does. If you floss first, and brush second, you will remove all the debris from your flossing. Smoking increases your risk for dental problems and ideally, you want to quit, but if you do continue, make sure that you have regular dental checkups and good dental hygiene. If you have diabetes, you have an increased risk for tooth decay and gum disease. However with good control of your diabetes, these risks will be reduced. Also be aware that some drugs, most notably drugs like phenytoin used for seizures, contribute to gum disease. When it comes to dental health remember that beauty begins with a smile, and a smile is always better with teeth. Brush often, and floss daily! Marie Berry is a lawyer/pharmacist interested in health care and education. November 2012

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“We are gathering in the backyard before dinner. Would you like to join us?” Stepping onto the deck, a designer landscape greets me. Our host, Eric, is a botanist and landscaper. He describes the fruit trees and plants he is nurturing: apple, strawberry, chokecherry, raspberry, black currant, saskatoon and others. When I compliment him, he replies, “It takes a vision. You need to know what you want to create.” I thought about this the next morning at church. The preacher quoted Psalm 90:12, where we are counselled to “number our days.” “Assuming you reach age 75, which census statistics tell us is the average life span for both men and women, you will live for about 27,375 days. That sounds like a lot, but the days pass quickly.” Counting our days is not as important as making our days count. We make our days count by determining our central purpose in life and by giving ourselves to that purpose. University of Pennsylvania psychologist Martin Seligman said, “Human beings want to have meaning. They do not want to wake up in the morning with a gnawing realization that they are fidgeting until they die.” Our central purpose is the thing that keeps us from fidgeting our lives away. Maybe our central purpose is pleasure and self-gratification. Perhaps our central purpose is status seeking and power. Maybe our primary goal is keeping up with our neighbours, retiring early, or doing good works in our community. Whatever we choose, our central purpose is the benchmark we use to measure the success or failure of each one of our 27,375 days. During her sermon, the preacher argued that the secret of success is service. She used the example of Dave Thomas, the founder and former chief executive officer of Wendy’s fastfood restaurants. Dave Thomas was a remarkable success story. Adopted as a child, he never finished high school. In his book, Well Done!: the Common Guy’s Guide to Everyday Success, Dave says he has a photograph of himself in his MBA graduation outfit — a snazzy knee-length work apron. He claims to be the only founder among America’s big companies whose picture in the corporate annual report shows him wielding a mop and a plastic bucket. That wasn’t a gag. He calls it leading by example. At Wendy’s, he says, MBA doesn’t mean Master of Business Administration. It means Mop, Bucket, Attitude. It means a commitment to service. We exist to serve, not to be served. That is the secret of happiness. Albert Schweitzer was a famous medical doctor and missionary in Africa. He said, “There are two kinds of people. There are the helpers, and the non-helpers.” The happiest people are those who understand life is about serving. The unhappiest people are those who think life is about being served. Jesus selected a child as a way of saying to his followers, “You are to serve those who are helpless, regardless of their age.” A group of European theologians visited Mother Teresa in Calcutta. They wanted to know the secret of her success in caring for people who were unable to help themselves. Mother Teresa took them to one of her child-care centres and picked up a child who was playing in the mud. She gave the child a kiss and waited for her guests to do the same. None of them did. We serve God best by assisting the helpless and those with the greatest need. Suggested Scripture: Psalm 90, Mark 9:33-37 Rod Andrews is a retired Anglican bishop. He lives in Saskatoon.

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country-guide.ca 59

Va l l e y

Keeping track of things in agriculture

ILLUSTRATION: RICK KURKOWSKI

Dan Needles is the author of “Wingfield Farm” stage plays. His column is a regular feature in Country Guide couple weeks ago I asked Bert Pargeter, the Combine King of the Valley, how the harvest was going and he just shrugged, the way he always does when you ask him for details about progress in the fields. He and his brother run a fleet of combines that account for about half the total farm output for Persephone Township. “So how do you keep track of things to know how you’re doing?” Bert smiled. “I guess we have a system now. Roseanne tells me we’re up about 20 per cent over last year.” “Really?” I said. I could just imagine Roseanne’s high-tech tracking system. She sits at the heavy end of the teetertotter in the Pargeter family agribusiness. Although she started life as a city girl she has taken to farm management like a duck to water. She’s a magician with a spreadsheet and, back in 1999, when she put the numbers together to persuade Bert and Bob to give up the cows and concentrate on the crops, Bob said confidentially to me, “That girl can read a balance sheet like poetry and tell you when it doesn’t scan.” She’s wired into everything, too and even writes her own software. I assume she wrote the program that tracks the yield monitors from three combines, breaks it down by crop and spits out a daily printout with a year-over-year comparison. 60 country-guide.ca

“Not so,” said Bert. “Her system is a lot simpler than that. You see, Roseanne drives the truck for us and when she’s sitting out at the edge of the field waiting for the grain buggy she reads her historical novels. When yields are high she doesn’t get a lot of reading done because the truck fills up pretty fast. Over the years it’s got so she can estimate the harvest within plus or minus three per cent based on how many novels she gets through.” Imagine that? It reminds me of another low-tech tracking system I picked up many years ago in conversation with a leathery little Australian who worked as a boundary rider in western Queensland. I met him while tending bar in a little pub on the edge of the Simpson Desert. He had come in for a little R&R after six months alone in the outback on horseback, riding fencelines on a vast sheep station, checking for holes and shooting dingos. This was back before the days of battery-powered wristwatches and one day, as I poured beer into the little man, I asked him how he kept track of time in the bush. “That’s a problem,” he confessed. “For a while I had a system. On Sunday, I put seven stones in my right pocket and every day I would move one stone to the left pocket. When all the stones were in one pocket, I knew it was Sunday.” “That sounds like a good system,” I said.

“No, it wasn’t,” he said. “You see, there were times when I would forget to move the stone. And that would throw everything off. So I thought about it for a bit and I asked myself, ‘What don’t I forget to do?’” I could just imagine this man riding around for weeks in the dust and the heat with just a horse for company, muttering, “What don’t I forget to do?” I wondered how he kept his sanity. At any rate, one day while riding along, he was struck by an inspiration. He drew his horse up short and said out loud, “I don’t forget to eat!” So, he sat down the following Sunday night and baked up a big damper bread, the traditional unleavened bread of the outback that is wrapped around a stick and baked in the hot coals of a campfire. He cut six notches in the damper to give him seven pieces, and he would eat one piece of it every day. “When it was all gone I knew it was Sunday.” “That sounds like a great system,” I said admiringly. “No, it wasn’t!” he snapped at me. “The very next day, I met another bloke on the track and I invited him to sit down to supper with me that night. He bit into that damper bread and I watched him eat Monday, Tuesday and the best part of Wednesday before I snatched it away from him!” november 2012

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