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CROPS GUIDE

NOVEMBER 2012

CONTENTS

EVERY ISSUE

4

Editor’s note

6

Gleanings

A recent GMO study might be bad science but it’s good marketing.

What’s happening in the grain industry.

14

More than 1,000 words

22

Crop protection

30

Machinery

32

How barley becomes beer.

FEATURES

COVER STORY

18

Grasslot

10

21

Road show

24

Markets

The carnage in the red meat industry indicates growing demand destruction for grain.

Cigi puts the new crop front and centre with information seminars in key markets.

A whole new kind of “green” paper

12

THE NEW ICE CONTRACTS FOR THE FORMER BOARD GRAINS NEED LIQUIDITY TO ENCOURAGE VOLUME — AND VICE VERSA.

TURF WAR THE COMMERCIAL GRAIN COMPANIES AREN’T FALLING OVER BACKWARDS TO TAKE CWB CANOLA DELIVERIES.

A Winnipeg entrepreneur says he’s building a market to set the stage for a straw paper plant in Manitoba.

Don’t fear the death of innovation in ag chemicals.

Does it make sense to move towards controlled traffic farming?

Forget the woodlot, agriculture fibre could be the future of on-farm energy.

CATCH 22

26

One grower can make a difference

The Canola Council of Canada says only growers can prevent chemical residue problems.

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CROPS GUIDE

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NOVEMBER 2012

3

EDITOR’S NOTE

PL A N NIN G T HE NE X T CRO P — A ND BE YO ND

www.agcanada.com

Pay attention

B

y now you’ve no doubt heard that GMO crops are giving us all tumours.

Or at least that’s the media and activist interpretation of a recently released and very controversial study that showed elevated levels of tumours in lab rats.

Predictably the organic industry is making hay with the news, claiming this proves that there are many unanswered questions about GMO crops.

I’m going to ignore the science for the purposes of this column, and will simply note it’s a single, unreplicated study.

Instead, I’m going to spend a bit of time encouraging you to put your emotions away and take a long, hard look at what’s now being done with this information — and what that might tell you about the future.

First and foremost, you are going to have to accept that every time something like this comes up, one of your competitors is going to try to take advantage of it. It might be infuriating to, but if you didn’t see it coming, you need to go try and buy a truck or car.

I did recently, and it was an interesting experience. If I believed any of the salespeople I spoke to, I was lucky to have come to see them, because other than their fine automobiles, there wasn’t anything out there except a lot of unsafe junk.

That is, in fact, pretty much the entire essence of marketing; convincing potential customers that your products are better and safer than the competition.

The eternal conundrum of Prairie grain growers is that most are commodity growers.

While there are certainly compelling arguments about why the industry has developed that way — distance to market, for example — I do think the whole industry needs to take a long, hard look at this mindset and admit it is in many ways an Achilles heel.

It’s a model that essentially accepts right from the start that you will be receiving lowest-commmon-denominator pricing for your products. Call it the grain farming equivalent of minimum wage. It also accepts that your products will be generic and interchangeable with those coming from competitors.

I’m not for a second suggesting that Prairie grain growers should look at this and as a group switch over to organic production. But

I am saying that you should look at what the organic growers are doing and recognize that effort could be reproduced again and again.

I can even think of one obvious niche that’s ripe for exploitation without even breaking a sweat — and the food industry is even setting the table for it to happen. It’s the fundamental disconnection between consumer perceptions of farms and the reality out in the field.

For most urbanites the concept of “farm” conjures up an image of something like the small mixed farm my maternal grandparents were running back in the 1970s when I was a little kid.

It was picturesque, welcoming and an anachronism even then. A better picture of what the new farm model looked like was down the road a few miles at my paternal grandparents’ place, where my father had returned from the agriculture college at the University of Saskatchewan. Things were proceeding at a much more scientific pace, with a move to a grain-only operation, larger equipment and a bigger land base — typical evolution in other words.

So can someone explain to me why when I go to the store I’m bombarded with images more appropriate to the distant past of red barns and the like? And why the largest agribusinesses out there are anxious to wrap themselves up in the flag and call themselves such-and-such farm?

The answer, of course, is that it sells and these sophisticated companies know it. My question to you though, is whether it’s a gigantic leap to imagine a future where smaller farmers — what we would consider lifestyle operators — begin marketing under a banner claiming they were “traditional family farms?”

Unless commodity growers can get their heads around this challenge they’re going to face the death of a thousand cuts, as their market becomes more segmented and specialized.

I don’t want to suggest this is inevitable, but rather to encourage growers — and their associations — to consider the implications of this trend. They need to do a better job of understanding what consumers want, communicating what they’re doing and — perhaps most importantly — do a much better job of actually listening to consumers rather than “educating” them, which is really a code word for bringing them into line.

If you’re not willing to take up this challenge, I suspect you won’t like the results. ■

G O R D G I L M O U R gord.gilmour@fbcpublishing.com 4 CROPS GUIDE

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NOVEMBER 2012

EDITORIAL STAFF Editor: Gord Gilmour (204) 294-9195 Fax (204) 942-8463 Email: gord.gilmour@fbcpublishing.com REGULAR CONTRIBUTORS Brad Brinkworth Richard Kamchen Jay Whetter

David Drozd Gord Leathers Rebeca Kuropatwa

Ron Friesen Warren Libby

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PRINTED IN CANADA Vol. 01 No. 06 website: www.agcanada.com The editors and journalists who write, contribute and provide opinions to CROPS GUIDE and Farm Business Communications attempt to provide accurate and useful opinions, information and analysis. However, the editors, journalists, CROPS 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 CROPS 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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Gleanings gr a in

indus t r y

ne w s

Industry Notes

FNA seeks farmer investment for N fertilizer plant

Richardson to boost West Coast port grain storage Grain handler Richardson International has applied for permits to boost its Port Metro Vancouver terminal’s grain storage space by about two-thirds.

The Winnipeg company, currently Canada’s second-biggest grain handler, plans to build an 80,000-tonne capacity concrete grain storage annex at its Vancouver port site.

After it takes down its current steel storage bins at the site, Richardson said this $120-million expansion project would net about 70,000 tonnes of new storage, bringing the terminal’s total storage capacity to 178,000 tonnes.

“Increasing storage capacity at our Vancouver terminal is critical to our business,” Darwin Sobkow, Richardson’s vicepresident for agribusiness operations, said in a release.

Richardson’s Vancouver terminal is now running at “maximum capacity,” the company said, handling about three million tonnes of grains and oilseeds per year.

The company’s grain handle is also expected to rise in coming months through its planned acquisition of 19 Prairie elevators now owned by Viterra, Canada’s No. 1 handler.

Pending approval from federal antitrust watchdogs, that sale — part of a $900-million deal with Viterra’s proposed new owner, Glencore International — would put Richardson near the No. 1 spot among Canadian handlers.

Given “growing global demand,” Richardson said, it expects to be able to handle over five million tonnes per year with this additional storage capacity in hand.

The company recently spent $20 million to improve rail receiving capacity and increase “operating efficiencies” at the Vancouver terminal, reconfiguring its rail yard and adding a second rail unload pit and rail car indexer.

With those upgrades complete, Richardson said, it can double the number of rail cars it unloads at the terminal to 300 cars a day on a double track, up from 150 on a single track.

The proposed storage expansion project will also include new distribution equipment and an upgraded dust filtration system, the company said.

6

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A major buying group for crop inputs has set up a new partnership aiming to bring in Canadian farmers as the owners of a new nitrogen fertilizer manufacturing plant.

Saskatoon-based Farmers of North America (FNA) recently launched FNA Fertilizer Limited Partnership (FNA FLP) to run what it calls “ProjectN,” which will now seek seed capital to build and operate such a plant.

FNA itself would not be the owner of such a plant, but instead is “organizing and providing the catalyst to see a fertilizer plant built,” spokesman Bob Friesen said in a release. “Participation in fertilizer manufacturing will allow farmers to capture more of the value chain.”

FNA, which began importing offshore nitrogen for its members in 2001, said Wednesday that its ProjectN working group has already run a review of the nitrogen fertilizer sector, considering natural gas pricing, plant scale, market demand, competitive supply and “other indicators framing the business case for a new development.”

FNA ran its initial engineering feasibility study for such a plant in 2010, and found in a separate 2011 survey that fertilizer is an “investment priority” for 74 per cent of FNA members.

“The business case is compelling,” said Friesen, a former president of the Canadian Federation of Agriculture and CEO of FNA’s Strategic Agriculture Institute (FNA-STAG). “The real question is if and to what extent farmers want to gain a return on investment to offset the high cost of fertilizer rather than merely paying for it.”

Whether farmers take part in ProjectN or not, they’ll be the ones who indirectly pay for any new fertilizer plants in the future, as part of the base cost of their fertilizer, he said.

Since North America now imports almost seven million tonnes of fertilizer per year, FNA said, farmers are obviously “paying for all the plants that now exist and the profits they make.”

FNA FLP’s goal, FNA said, will be to bring farmers in as equity owners of a new N plant through committed purchase contracts for the plant’s products.

The new company’s business plan “provides a unique form of stability and risk mitigation to underpin the success of the project, while providing farmers a certainty of supply of a key farm input.”

If ProjectN gets a strong response to its seed capital raise, “concrete announcements” on the plant’s scale and exact site would follow in a “relatively short time frame,” Friesen said.

Once the engineering work is completed, land secured and regulatory approvals obtained, FNA FLP would move to raise equity for the plant, seek out operating partners and arrange financing for the build.

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Viterra – Glencore deal close to closure Still waiting on one last regulatory approval, Canada’s biggest grain handler and its proposed buyer now expect to seal their deal by mid-November at the latest.

Regina-based Viterra and its suitor, Swiss commodity giant Glencore International, said Wednesday that they have now extended the “outside date for completion of the acquisition” to Nov. 15.

Apart from the usual closing conditions, the companies are waiting on just one last regulatory approval, from China’s Ministry of Commerce (MOFCOM), as per that country’s Anti-Monopoly Law. Viterra’s assets in China include a jointventure investment of up to US$25 million in a canola-crushing facility in Fangchenggang, commissioned last year. Viterra also runs a trading office in Shanghai and a representative’s office in Beijing.

Once MOFCOM’s approval has been received, Viterra and Glencore said, the two

companies will announce a specific closing date on which the formal acquisition will take place.

The two companies, which announced plans for Glencore’s friendly $6.1-billion takeover bid in March this year, said they “continue to engage with MOFCOM to ensure approval as soon as possible.”

Canadian agribusinesses Agrium and Richardson International are still set to buy a number of Viterra’s ag retail, grain-handling and processing assets from Glencore, in deals worth $1.8 billion and $800 million respectively.

Those deals also require approvals, not yet granted, from Canadian authorities. Calgary-based Agrium, for one, recently said it expects to complete its deal for the bulk of Viterra’s Canadian and Australian farm supply stores by the end of 2012 or in early 2013.

Successful conclusions to those sales aren’t required for Glencore’s takeover of Viterra.

Cargill plans major canola crusher in central Alta.

U.S. agri-food giant Cargill plans to build a second Canadian canola-crushing and processing plant in central Alberta in time for the 2014 harvest.

Cargill brass were at Camrose, Alta. recently to launch work on an 850,000-tonne-per-year crush plant just south of the community, about 80 km southeast of Edmonton.

“The facility will have the capacity to process both conventional and specialty canola seed, which will enable us to significantly increase our contracting programs in the area,” Ken Stone, Cargill’s commercial manager for Canadian canola processing, said in a release.

A spokesperson for Cargill, which already runs the largest canola-crushing plant in Canada at Clavet, Sask., said the company expects to source canola within a 300-km radius of the new facility.

Cargill’s fellow processing giants Bunge and ADM operate crush plants respectively at Fort Saskatchewan, Alta., about 100 km north, and at Lloydminster, Alta., about 225 km east.

“Canola continues to be a very competitive crop for the Canadian grower and Camrose is an excellent location for value-added canola processing,” Mark Stonacek, president of Cargill’s North American grain and oilseed business, said in the company’s release.

In 2012-13, he said, canola acres in Canada were over 21 million, indicating the canola industry “will continue to grow, driven by competitive access to a large North American livestock industry for canola protein meal and continued strong demand for canola oil.”

Cargill’s other facilities at Camrose include the animal nutrition plant it built there in 1982, a Cargill AgHorizons grain elevator on the north side of town and an office for the company’s specialty canola program.

Give us your input If you have a milestone you feel should be noted in our regular Gleanings column, please send the information, along with an electronic photo of any individual noted in the item, to Crops Guide editor Gord Gilmour at: gord.gilmour@fbcpublishing.com.

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CROPS GUIDE

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NOVEMBER 2012

Appointments

Burrows named Cigi Director, Client Relations and Communications The former director of branding for the Canadian Wheat Board is the new director of client relations and communications for Cigi, the former Canadian International Grains Institute.

Dave Burrows joined Cigi September 24, the organization said in a recent media release.

Burrows brings over 30 years of marketing, client relations, branding and strategic planning experience to his new role. At the CWB he developed branding campaigns domestically and in international markets to promote Canadian wheat during his eight years there.

Prior to his experience with the CWB, Burrows held senior positions in strategic planning, client services, branding and marketing for McKim Communications, Palmer Jarvis DDB, the Winnipeg Free Press and Hershey Canada Inc. As director, client relations and communications, Burrow’s responsibilities include developing strategic business, marketing, branding and communications plans that will support industry and farmers in the promotion of Canada’s field crops as well as managing Cigi’s growing list of commercial business relationships and partnerships.

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COVER STORY

open market

Catch 22 ICE searches for volumes; awaiting evolved cash market

By Richard Kamchen

W

innipeg’s IntercontinentalExchange (ICE) launched milling wheat, durum and barley futures last January in anticipation of an open, freely traded wheat and barley market in Western Canada but, since that time, industry high hopes for success have been diminished.

“I’d be happier if there were higher volumes, there’s no question about that,” says ICE president and chief operating officer Brad Vannan.

ICE launched its new markets last winter to demonstrate the ability and support to provide open-market pricing, with the full understanding that initially, achieving a truly independently priced physical market while the Canadian Wheat Board still had a monopoly would be extremely difficult, Vannan says. The task would be just that much more challenging given wheat isn’t forward priced like canola as quality can vary so much more at harvest time.

But Vannan adds any disappointment he’s had has been curbed by the beginnings of growth and activity in the milling wheat contract, which is quoted actively and whose prices are accurate to the marketplace.

Vannan insists there remains considerable interest in ICE’s wheat mar10 CROPS GUIDE

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NOVEMBER 2012

ket, but would-be users are keeping their distance, at least for now.

“It’s unusable,” says commodity broker and trader Ken Ball of Union Securities. “It would be perilous for me to take my customers into a market like that, because with the low volumes and open interest, we could get trapped for weeks and weeks possibly and never be able to get out of that position if we needed to.”

Before even considering entering an order in milling wheat, Ball says he’d need to see the market consistently trade 500 to 1,000 contracts daily, with an open interest of at least several thousand contracts.

Although many traders would willingly participate, they’re first waiting to see significant volumes before taking the plunge.

“If there’s no liquidity, people don’t trade it. But if people don’t trade it, there’s no liquidity,” says Jonathon Driedger, senior analyst with FarmLink Marketing Solutions.

Certainly not helping matters is the fact domestic grain companies are perfectly content using U.S. markets, which have the liquidity necessary to easily get in and out of positions, notes analyst Errol Anderson of ProMarket Communications.

“They’re dealing with U.S. buyers now; they’re used to dealing with their U.S. contracts,” says Anderson.

“I hate to say it, but there just isn’t a whole heck of a lot of need — when you’re talking to an American buyer, he won’t think in Winnipeg wheat.

He’ll be thinking Minneapolis or Kansas City or Chicago.”

Everyone in the know points out the difficulty of creating successful new markets, explaining even huge exchanges have tried and failed on that score numerous times.

Exchanges like London and the CME have attempted to launch futures contracts of commodities that are much larger than even our wheat market — which has the added burden of competing contracts in the U.S. — and have failed miserably, despite multiple resources and commercials at all stages of the supply chain, Driedger says.

“Many, many more new contracts fail than succeed. You kind of have the deck stacked against you from the start regardless,” says Driedger.

“I’m sure some of the commercials here would rather see a contract traded domestically that they can deliver against and there’s less basis volatility. But at the end of the day, unless a lot of them are actively trading it and you’ve got activity on both the buy and sell side of the market, it’s going to have a tough time getting its legs underneath it.”

And the days of getting commitments from grain companies to

PHOTO CREDIT: VICTORIA ANNE PHOTOGRAPHY

trade a new contract, as happened when canola was first introduced, are long gone.

At that time in the early 1960s, the scores of grain companies in existence agreed they’d all trade a certain number of canola contracts every day, and every night have x-amount of open positions on the books. After a couple months, liquidity developed, speculators were drawn in, and the canola market became functional.

Fast forward to today, where most of those grain companies no longer exist, and futures activity has gone from face-to-face transactions on a trading floor to the anonymity of computer screens.

“It was easier then, to get everybody to participate: they’re right there in the pit together,” says Ball. “But now, it’s all invisible, and it’s going to be harder to put pressure on people to get involved if they’re not right there.”

Many U.S. exchanges offer incentives to local traders to participate and thereby bolster volumes, and ICE is doing likewise.

“We provide a separate fee category for what we call liquidity providers, so those traders pay much lower fees — in fact, right now, for the new products, it’s free,” says Vannan.

That alone, however, won’t be enough to get the new markets going.

“It can help facilitate, but it’s more like the grease in the wheel rather than the wheel itself,” says Driedger.

HORSE BEFORE THE CART Vannan agrees, explaining that liquidity providers need someone to trade against for the contract to be

relevant to them. He points out the physical — or cash — market, which remains in its infancy, will need to mature first before futures have a chance of taking off.

“You have to understand we didn’t have an open cash market until August 1,” says Vannan. “We haven’t had a freely traded wheat market in 70 years, and so it’s going to take a little bit of time for that marketplace to develop.”

The Prairie wheat and barley cash market has undergone a massive upheaval, something the industry is still working through. The CWB is still involved by offering pooling and flat pricing, but various grain companies are also competing for farmers’ grain. And adding another dimension to the changed playing field is Glencore’s acquisition of Viterra.

Moreover, with the U.S. drought causing grain prices to soar, farmers have delayed selling their crops.

A number of farmers forward priced a significant portion of their canola — evidenced by record open interest in ICE’s canola contract in August — meaning those farmers have good cash flow and can afford to be patient and study their options. On top of that, they’ve been busy harvesting and determining the quality of their crop.

“The cash market’s still evolving and the futures market is derived from the cash market. So you need to be able to allow that cash market to evolve a little bit before there’s a clear understanding of what the distinction within the Canadian market is,” Vannan says.

But getting the cash market to that level of development could easily take

“I’d be happier if there were higher volumes, there’s no question about that.”

— Brad Vannan, COO, ICE two crop years, Vannan says the big grain traders have told him. And that’s why ICE is willing to be patient and not throw in the towel prematurely.

“If you see that there is growth and that the contract is moving forward, there’s something to be said for being patient. If we didn’t see that contract was making any progress at all, we might take a different view of it going forward,” Vannan says.

His confidence in milling wheat in particular becoming an active and successful market in Winnipeg reflects his belief in how much more relevant it is

Continued on page 12

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Continued from page 11 to domestic players versus competing U.S. markets. Whereas most U.S. markets were created over a century ago around the principle of pulling grain into the centre of the continent to the Mississippi River, the Canadian system is the opposite, where grain is moved to the outside, either to the St. Lawrence Seaway or the West Coast.

“That creates a different pricing mechanism,” Vannan says, adding that growing conditions and harvest timing in Prairie spring wheat-growing areas also differ from those in the U.S. As corn and soybeans move into traditional U.S. spring wheat acres, Canada becomes an even more important world supplier of spring wheat, he adds.

“We’ve got a contract that’s specifically designed for the Canadian marketplace, and we’ve got the Canadian marketplace becoming a more important source of supply for hard red spring wheat out of North America. So we’re better positioned going forward because we’ve designed a contract that’s really a 21st century contract, and one that was meant to integrate into the grainhandling system that we have today, not one that we had a century ago.”

DIVERGENCE Significant divergence between the western Canadian cash situation and U.S. futures could also play a major role in attracting more business to the Winnipeg futures.

“There’d be some trade starting to develop, absolutely,” says Anderson. “And there’d probably be some potential spread trading between our market and the U.S. A situation like that could possibly give our market a kick-start, which we badly need.

If we can just get it, then suddenly everybody will start promoting it to their people and we have a market.”

Vannan notes the French futures exchange Matif ’s wheat market experienced just such a divergence years ago, which resulted in a moribund European contract gaining popularity very quickly.

“When you saw there was a fundamental difference in how the European wheat was moving from the way North American wheat was moving, that’s when the trading community saw a lot more value in having a distinct futures market,” Vannan says.

But while Driedger admits such divergence could spur some activity, he doesn’t believe it would provide any guarantees of success.

“If there’s markets out of line, a lot of that work can be done through cash spreads rather than necessarily having a whole lot of futures transacted. A lot of that can just be done by commercials arbitraging cash markets if spreads get out of line,” Driedger says. n 12 CROPS GUIDE

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COVER STORY

open market

Turf War Major handlers reluctant to sign on for CWB canola collection

T

he former Canadian Wheat Board is plunging into canola marketing this crop year, but its efforts may be stymied by resistance from elevator companies.

While CWB reached handling agreements with all western Canadian grain companies for farmers’ deliveries of wheat, durum and barley contracted with the CWB, the same is not true for canola. Viterra, Richardson International, Cargill, Louis Dreyfus and Paterson Grain are not on board to accept farmers’ deliveries of canola on behalf of the CWB, leaving only 42 Prairie delivery points and one in B.C. available.

Brian Gwyer, CWB director of oilseed and pulse trading and sales, didn’t want to put a target on CWB canola sales this year, but conceded it would be better if the CWB had more elevator coverage.

The potential extra expense and time on the road to reach elevators that will accept canola contracted with the CWB may dissuade farmers from pooling their canola, says Keystone Agricultural Producers president Doug Chorney.

“That really cuts their market share to just the areas around those delivery points,” agrees University of Saskatchewan agricultural economist Murray Fulton.

Western Canadian Wheat Growers Association president Kevin Bender expects the CWB’s canola program will be small, especially if there are handlers that aren’t going to participate.

“I suppose there are still the smaller companies and the inland terminals,” adds a market analyst who wished to remain anonymous. “However, I still wonder how many of those will want to give up bin space for CWB canola. Hard to say.”

But Derek Brewin of the University of Manitoba’s agribusiness and agricultural economics department, points out it took the CWB some time to negotiate its elevator agreements on wheat and barley. He also notes that canola is a very different market than wheat, with less quality variation and a huge domestic crush demand that doesn’t exist for wheat.

“Viterra, Richardson, Cargill, and Louis Dreyfus are involved in domestic processing and probably don’t value the CWB’s co-ordination or any foreign customer base in the canola market,” says Brewin. “They probably do value these things in wheat — we’ll see if that can be an advantage for farmers in the long run. The CWB seems to be managing wheat quality values better than the trade so far this year.”

By Richard Kamchen And while 42 delivery points isn’t a lot, it still represents about 20 per cent of the total number of elevators, which may still be enough to cover a significant number of farmers.

“So the CWB might have some negotiating power for rail service and export customers,” Brewin says.

Longer term, the elevators’ reluctance to deal with the CWB on canola may be a foreshadowing of things to come. The CWB has five years to transition into a new entity, be it corporate or farmer owned, but either way, the existing grain companies would still have an added competitor to face, meaning it’s not in their interests for the CWB to be reasonably strong, says Fulton.

“They wouldn’t be able to bid on it because of competition issues, so that really means (it’s) the likes of Bunge that could come in and purchase it, which would be good for the industry as a whole, but wouldn’t be good for those that are in the business right now,” says Fulton.

The latter would also be true if the CWB became a farmer-run operation. “I wouldn’t think that would be particularly attractive to the existing firms… There has been a sense among some people, in the short run, there’s no advantage to the existing firms handling grain for the wheat board. The long-term profit incentive doesn’t look much better.”

“It’s one of those things where it’s a painful death and it’s going to take an extra year or two. I don’t think they’ll be in it (marketing in general) for very long,” adds Errol Anderson of ProMarket Communications.

POOLING ADVANTAGES Like with wheat, the theoretical advantage the canola pool offers farmers is in helping them manage their risk, while also allowing them to spend more time on their crops as opposed to chasing commodity futures, according to CWB president and CEO Ian White.

“A big advantage to contracting with CWB is that farmers can sign first and choose their grain handler later. That means they can shop their grain around to get the best possible deal on handling and elevation fees.”

A segment of farmers has demonstrated an interest in the CWB pooling canola, going back to 2006 and the Manitoba Canola Growers Association’s annual meeting, when a resolution was passed on alternative ways of marketing canola in order to shake up low prices and slow export sales.

Rick White, general manager of the Canadian Canola Growers Association lauds multiple selling options for farmers.

For some farmers, pooling may be an attractive option if they don’t have the time to market all of their grain themselves and are receptive to passing off some of that work.

But White, who has a 3,000-acre grains and oilseeds farm in southeast Saskatchewan with his wife, notes that while canola can take time to market, farmers have demonstrated the skills to do it.

He adds farmers don’t need to rely on the CWB to attain an average price either.

In this debate there are always growers who will use the CWB, and those who won’t touch a board contract if it was written on a gold slab.

“For other farmers, they can dollar-cost average their sales across the year without the CWB if they wanted to.”

Pooling may attract farmers during times when prices are down but the grower believes they will climb higher, says Western Canadian Wheat Growers Association president Kevin Bender. But with prices as strong as they’ve been, farmers have been trying to lock them in, especially those who believe values will fall. Also limiting interest in the canola pool is the fact many farmers would have sold canola prior to the CWB’s announcement, Bender says “The majority of farmers are more likely to take the cash price spot market or basis contract approach to pooling their risk,” says Chorney. “But good for (CWB) for trying it out. Even if we don’t participate in the pooling program, having the wheat board

out there setting prices makes the line companies more accountable, and any time you get more competition for our grain to be bought, it’s a good thing for farmers.”

The anonymous market analyst hadn’t heard of much farmer interest in the canola pool, but believes there will always be some who’ll find the averaging approach a pool provides appealing.

“As such, I can’t see why some growers won’t put a portion of their production into the pool; if for no other reason, to see how it goes and to see how the results compared to their own marketing,” the market analyst says. “Of course, in this debate there are always growers who will use the CWB, and those who won’t touch a board contract if it was written on a gold slab. That issue will impact how much of the market the CWB finally attracts.”

CWB’s pooling option offers value for both customers and farmers, says Gwyer.

“We have customers who are canola customers as well as wheat customers that have long-term relationships with us.

Essentially, customers want to deal with somebody they have experience with, so there’s a large number of our customers who’ve always wanted to buy canola from us.”

For farmers, pooling becomes a much more attractive option during periods of particularly volatile markets, he says.

“We’ve had a summer and fall where prices went mainly up, but I think farmers are already seeing that prices can move quite a lot on canola… In a volatile market with a lot of uncertainty, it’s a hedge for people to use,” Gwyer says, but adds he wouldn’t ever recommend anybody put 100 per cent of their grain into a pool.

The CWB’s Harvest Pool sign-up deadline is October 31. The marketing period runs from harvest to June 30, 2013. Initial payments for canola equal approximately 75 per cent of anticipated final Harvest Pool returns. ■

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CROPS GUIDE

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NOVEMBER 2012 13

MORE THAN 1,000 WORDS

Barley I 

The good folks at the Canadian Malt Barley Technical Centre (CMBTC) pilot brewery in Winnipeg were extremely helpful and guided him through the intricate world of brewing and malting.

For those who aren’t familiar with this operation it’s a unique asset for the Canadian malt barley industry.

Their claim to fame is their ability to take your malt barley and from it produce any beer in the world to the spec of the brewing company. They’re an essential technical resource to prove to customers that your products will work in their recipes.

t’s said that a picture is worth 1,000 words and as part of our ongoing effort to present Crops Guide readers with a clearer view of activities in the agriculture world, we sent photographer Charles Lumsden on a freelancer’s dream assignment — a brewery tour.

1

2

3

Malting: The starting point is fresh malt (1) which is steeped in warm water for a day or two to bring it to the required moisture level (2). It’s then transferred to the sprouting vessel (3) where cool, moist air is blown through to encourage sprouting (4). The final malting stage is kiln drying with hot air which produces a finished malt (5) in this case a standard malt for a pale lager.

Brewing: Taking it to the next step, the malt barley may, depending on the recipe, be mixed with other grains like ground wheat (6), corn (7) or rice (8).

5

4

A cereal cooker (9) is then used to cook a mash.

6

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8

9

10

11 14

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13 15

The next stop is the mash tun (10) where water is added and the mixture is heated. This stage is where enzymes in the malt break down the starch into fermentable sugars, typically maltose, forming the liquid basis for beer, known as a wort.

17

From there it’s on to the lauter tun (11) where the liquid is separated from the spent grain.

In the kettle (12) hops are added (13) and the wort is sterilized by raising its temperature to stop the enzymatic action.

A whirlpool tank (14) is then used to separate the remaining vegetative matter from the wort which is then cooled (15).

16

The wort is then placed in the fermenter (16), where yeast is added.

It consumes the sugar in the wort over the course of the next seven to 14 days, and produces ethanol as a byproduct of that process.

Bottled beer (17) is then pasteurized (18), while draft beer (19) is not.

18

19

to beer

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15

E C N A FORM

S L A E H R E G HI C PER

T H RIG

T S S O R C A

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bioenergy

grasslot One Ontario vegetable grower is using marginal land to grow energy grass — call it a new take on the old woodlot practice. It’s part of a growing interest in energy-only crops

By Gord Leathers

O

ilmen say energy comes out of the ground and New Energy Farm’s Dean Tiessen of Leamington, Ont. concurs — but with a crucial difference.

A greenhouse vegetable grower, Tiessen heats his buildings by burning the woody stalks of Miscanthus giganteus, a perennial grass that he grows on some of his marginal land.

It’s early days yet, but more and more observers think purpose-grown energy crops may be the future of farming energy, rather than simply repurposing food crops.

“It’s truly an amazing crop,” Tiessen said. “About 40 per cent of our operating cost is energy because of where we’re located. We take this wonderful energy grass, use it as fuel and turn it into tomatoes for both domestic and export consumption.”

Energy is a tricky issue. We’re completely surrounded by it but it’s difficult to secure a ready source of usable, storable and transportable energy. For the last 100 years we’ve been using fossil fuels, the diesel that feeds the tractor, the natural gas that heats the buildings, runs the boilers and fuels the crop dryers and the gasoline that powers the small trucks or quads.

Natural gas and petroleum are a stored chemi18 CROPS GUIDE

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NOVEMBER 2012

cal form of solar energy captured by green plants in another age of the planet, pressed and processed for billions of years. It’s stored geologically until we extract it, refine it and sell it. Fossil fuels have served us well but they also present us with two tightly related problems.

The first is the cost. Basic economics states that the price will always trend upward as the demand outstrips the supply. It’s a finite resource so the more we use, the less we have — and we use an awful lot.

The second problem goes to the very heart of how we power our society, because fossil fuels are a dense package of energy that are easily contained, relatively safe and very portable. They’re very good at what they do and we’ve developed effective technology that uses them very well.

Over the next century, as the supply drops, it will be both economically beneficial, as well as socially and environmentally responsible, to find workable alternatives. It’s doubtful that we’ll find a straight replacement so we’ll depend on a combination of different methods and this will still include petroleum. For Tiessen’s farm, energy grass is a good fit.

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BIOENERGY

Continued from page 18 “It’s a carbon-neutral opportunity but the main thing is it’s economical,” he said. “A lot of our focus has been on economics but there’s also significant reduction in environmental impact and we need economical solutions that will reduce environmental impact without inhibiting economic growth.”

Tiessen is essentially employing a plant to capture solar energy through photosynthesis and store it as a carbohydrate. When he burns the grass the energy is released as heat and used to keep the greenhouse at the perfect temperature for growing those tomatoes.

It’s a variation on an older idea when farmers relied on the woodlot, a small patch of forest within the family holdings, to provide some timber as well as firewood.

Energy grass is simply a wood substitute.

The Europeans started using M giganteus as a fuel source in the 1980s and they’ve found it can grow up to 10 feet tall in one season with a yield of 10 tons per acre with relatively little input.

“This is a small boiler system in Germany that is creating heat to dry paint as an industrial process as well as to heat a day-care centre and six homes,” Tiessen said. “And there’s a small farmer in the area who’s growing the grass. He operates this boiler and he’s created a nice little local utility.”

Burning the grass is a handy way to use locally grown energy. But, if you want to bat in the bigger leagues and market the product on a larger scale, you have to be able to convert a lignin/cellulose stalk to something more storable and more transportable. There are two ways you can do that, according to Tom Voigt, a turf grass specialist with the extension department at the University of Illinois.

“You want to densify the material so that you can get as many BTUs per truckload as you can move,” he says. “It has to be chopped up. In some places people make pellets or briquettes and these are a couple of different ways to handle it.”

Transporting unprocessed stalks means a lot of the package is made up of air. We’re not interested in filling up a lot of premium transport space with air. A forage chopper will take that out and make the fuel denser and this may be suitable for shorthaul transport.

The future of biomass energy is deeper and more complex than that. A really good, and much more versatile fuel would be suitable for applications beyond boilers. We need to get it into gas tanks. We have to find an energy-efficient way to break those long chain polymers like lignin, a major component of wood, and cellulose, the principal component of plant cell walls. In an ideal world we’ll break the long chain molecules into short chain carbohydrates and these can be fermented into an alcohol.

“British Petroleum who is funding a big renewable energy project at the University 20 CROPS GUIDE

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NOVEMBER 2012

It’s a carbon-neutral opportunity, but the main thing is it’s economical. A lot of our focus has been on the economics.

— Dean Tiessen, New Leaf Energy Farm of Illinois and the University of California Berkeley,” Voigt says. “They’re looking at liquid transportation fuels and, as part of this project, we’ve developed one of our biggest experiments, a 320-acre energy farm.”

The farm is an initiative of the Energy Biosciences Institute, the formal partnership between the University of Illinois, UC Berkeley and British Petroleum (BP). The idea is to find what plants will provide the highest yields of energy stock with the lowest inputs, what rotations of different crops will work most economically and different methods of processing biomass into usable energy. There’s also tremendous potential to take land that’s not suitable for food crops and put it to work.

“The United States has pulled upwards of 800 million acres out of agriculture and put them into protected lands or what they would call CRP lands and CRP lands are usually paid by the government for some-

one to keep it out of agriculture,” Tiessen says. Those lands were set aside because they weren’t agriculturally productive.”

These lands can be productive with the right kind of crops and the long-term, perennial energy crops may be the way to do that without compromising food production.

There are scientists looking at species such as switch grass or recreating a native prairie system, a stable, low-maintenance polyculture. Voigt says there’s a long way to go but it’s a step in the right direction.

“I think from an energy security point of view, being able to produce an energy crop means that we’re not as dependent on countries that don’t necessarily like us and that’s a positive No. 1. No. 2, we’re looking at a method of rejuvenating or upgrading the rural economy and that’s certainly a positive. We see this as maybe a way to provide good opportunities in rural areas for collegeeducated agriculture kids.” ■

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PRODUCT PROMOTION

Road show Cigi new crop seminars promote Canadian wheat to customers

BY ELLEN GOODMAN, CIGI

S

tarting in November Cigi will deliver a series of new crop information seminars to customers of Canadian wheat. With participation from the Canadian Grain Commission and Canadian grain exporters invited to join the missions, Cigi technical staff will meet with customers in Southeast Asia, Europe, Latin America, and North Africa.

“This year will be very different from the past when we travelled with the Canadian Wheat Board to deliver crop and processing information to their customers,” says Earl Geddes, Cigi executive director. “This time we’ve invited a number of Canadian grain exporters and their customers to the seminars.

“The industry has made it clear they want to be involved in the process so their participation this year is important so they can provide input in the future,” he says. “We are covering a lot of area and this is the first time Cigi is initiating these seminars on our own.”

Geddes stresses that the seminars are cus-

tomer focused, targeting buyers of Canadian wheat who are willing to pay the most for quality, and that other competitors such as the U.S. are undertaking similar efforts.

“This is about Canada putting its best foot forward and making sure the information customers receive is what they need to make constructive decisions about buying western Canadian grain. We have a significant range of participants expected at these meetings, usually industry players at the senior level, the most important buyers. ” He says farmers may be interested to know that Canadian grain companies buying their wheat for export are active in this type of wheat promotion, aside from conducting any of their own direct-marketing activity.

“What’s also different this year is rather than doing company-specific new crop seminars, Cigi will be holding regional seminars inviting all customers from the same area,” Geddes says.

“This effort is more about wheat promotion, market development and customer care.”

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Ashok Sarker, head of Cigi Milling Technology, who has participated in new crop missions since they started in the mid-1990s, says the seminar information is crucial to buyers and millers as their customers expect the same flour quality from year to year.

“It’s the obligation of millers to fulfil their customers’ requirements and grain buyers from milling companies to make sure that millers are happy with the purchases,” he says. “This is a very involved and complicated process because there are a lot of unknowns during new crop. Customers want information on the quality of Canadian grain as soon as possible so they can put the pieces together to get the best deal. They want to know about the (flour) processing qualities — not just about protein, grade, and class — and wherever possible to find out about how to optimize the processing of wheat from a given crop year so they get the most out of it.”

The new crop assessment done by Cigi’s technical staff provides customers with an early look at quality information in advance of the annual CGC harvest assessment. Four major grain companies are submitting grain samples to Cigi, covering five regions in Western Canada, from which the composite samples will be created. Portions of the original samples will be analyzed at Cigi for the companies and the rest will be used for the new crop composite samples to determine wheat quality characteristics by class, grade and region.

“Dealing directly with the grain companies instead of receiving the samples just from the CWB as was done in the past is the only change with this testing,” says Sarker. “We will analyze and evaluate the composites for end-use quality as we have done before. This way we can continue to provide the customers of Canadian grain with the same level of information, with the same speed, detail and regional breakdown, and give them a good overview of the quality of the new crop.”

He adds that the first-hand information is also valuable for Cigi to access throughout the year for technical programs and customer assistance.

“What we’re doing is very important for customers as they won’t miss one step in this whole process,“ says Sarker. “They saw us at the last new crop seminars with the CWB and are seeing us again which gives them confidence the system is working well and is going full steam ahead as it always has.

We’re maintaining that continuity with customers which is important for them.” ■ CROPS GUIDE

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NOVEMBER 2012 21

CROP PROTECTION

Innovation… alive and strong Warren libby President of Savvy Farmer

Recent developments in the crop protection industry should help alleviate concerns that innovation in the sector is on the wane

C

anada has an extremely demanding regulatory system for crop protection products, which is a good thing in terms of producing safe and effective products with minimal environmental impacts.

Where it can be a bit more burdensome however, is when this high bar limits the number of tools you find in your chemical toolbox when it’s time to hit the field and grapple with the production challenge of the day.

This rigorous registration system works against broad labels that cover a wide variety of crops, as each crop frequently requires its own separate data and research, under local conditions.

This tends to encourage companies to take a strategic approach, and apply for a shallow label to get their products onto market more quickly, and only then work towards adding more crops and pests to the label after their product is out and generating revenue.

From a producer perspective this can make for real frustrations. For example soybean growers in the Red River Valley of Manitoba might look just a few miles to the south and see producers spraying a product they’re only legally allowed to use on canola or edible beans.

For these reasons the next time you run into your local BASF representative, it might not be a bad idea to give them a little pat on the back. The company not only registered its new fungicidal active ingredient fluxapyroxad here in Canada, it also went the extra mile to create and register several end-use brands that targeted multiple crops right from day one.

BASF has registered six products containing fluxapyroxad, and by my count, these products can be used on over 150 different crops to control a wide spectrum of diseases. Chances

are very good that there will be a fluxapyroxad product for a crop you will be growing in 2013.

Our understanding is that BASF has chosen the brand name XEMIUM for these new products, which have both preventative and curative activity. As a result Xemium can control diseases through several stages of the fungal life cycle including spore germination, germ tube growth, aspersoria formation and mycelia growth.

Xemium is labelled to control a

innovative products here in Canada.

I think that BASF’s introduction of Xemium proves that theory wrong, since this one is definitely innovative and looks like a real winner.

Another factor that’s beginning to dissipate is the “Roundup effect,” as its been dubbed, which refers to the efficacy and affordability of glyphosate products. Because they, in tandem with herbicide-tolerant crops, were so cheap and effective many say they discouraged companies from making new investments in herbi-

The next time you run into your local BASF representative, it might not be a bad idea to give them a little pat on the back. broad range of diseases belonging to the following major classes: Ascomycetes, Basidiomycetes, Deuteromycetes, and Zygomycetes. These groups include blights, moulds, rusts, leaf spots, mildew, and even seedling diseases, covering several of the key disease groups affecting many crops.

One of the key claims of Xemium is that it exhibits outstanding mobility in both the plant and its roots. It enters the “plumbing system” of the plant, providing plant-wide distribution. This feature should provide some forgiveness for less-than-perfect application techniques. Perhaps even more interesting is the claim that rainfall can somehow revive Xemium to give continuous protection during prolonged disease periods. If true, this feature in itself should be worthy of giving Xemium a try next season.

In recent years there has been a lot of talk that the invasion of so many generic brands will mean that the big discovery companies will no longer be interested in registering

cide products, and some companies even halted for a time their discovery programs aimed at identifying new chemical compounds that could form the basis for the next generation of active ingredients.

Today, however, glyphosatetolerant weeds are a real threat to this product’s long-term efficacy.

The appearance of glyphosate-resistant kochia in Alberta and giant ragweed in Ontario underlines the importance of new research, and crop protection companies have begun to respond with a greater focus on new products.

It may take a few years, but I fully expect that this work will result in another flush of innovative weed-control products arriving on the Canadian market. n Warren Libby is president of Savvy Farmer, a web-based service for farmers and crop protection dealers. He previously held leadership positions in several crop protection companies and is the former chairman of CropLife Canada.

Do you have a crop protection issue you’d like Warren to write about?

Send any suggestions to gord.gilmour@fbcpublishing.com.

22 CROPS GUIDE

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NOVEMBER 2012

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Crops Guide

Agri fibre

A whole new kind of “green” paper

E

xcess cereal straw has been a problem in southern Manitoba for as long as they’ve been growing wheat, oats and barley in the region.

That’s hardly surprising because the Red River Valley was a tall grass prairie zone, where outsized biomass was fostered by higher annual rainfall than the rest of the Prairies.

For growers that’s meant a serious management challenge year after year as they’ve struggled to incorporate the residue or resorted to burning.

It’s a situation that’s caused more than one entrepreneur to look at the waste fibre and see an opportunity.

Notably a now-defunct strawboard plant at Elie, Man. attempted to convert straw to building materials.

The key problem there was a

In 2012 Savvy Farmer will bring users even more valuable information. To learn more, please visit

www.savvyfarmer.com

typical cart-and-horse conundrum familiar to any entrepreneur — how to build a market for an untried product. One Winnipeg-based entrepreneur thinks he’s found the key to this challenge in a cereal-straw based paper that’s currently being manufactured in India.

Jeff Golfman, co-founder and president of Prairie Pulp and Paper, is bringing “Step Forward” paper to market across Canada throughout Canada to prove there’s a market, a crucial hurdle to clear the way to building a production facility in Manitoba.

“To build a straw-based, tree-free paper mill in Manitoba, we need to have sales numbers of Step Forward paper reflecting a public demand for it in Canada,” said Golfman. He anticipates achieving that demand within a couple of years.

Photo credit: www.prairie-paper.com

By Rebeca Kuropatwa

Step Forward paper is now available in Staples outlets across Canada and a U.S. launch is planned. Backers say this Indianmade product will help develop a market for the new product which may result in a Manitoba paper plant in the future.

Prairie Pulp and Paper is a research, development, sales, and marketing company led by Golfman, former Manitoba finance minister Clayton Manness (chairman),

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24 CROPS GUIDE

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NOVEMBER 2012

a U.S.-based venture capital group and a consortium of public sector, R&D scientists, engineers, as well as marketing, sales, and agricultural experts.

A key investor and champion of Step Forward paper is actor Woody Harrelson, who has been a friend and business partner of Golfman’s for 14 years.

“Woody has been an environmentalist and activist for many years,” said Golfman.

“What is particularly important to him is saving trees from being cut down.”

Golfman says the project is a win-win for everyone — from farmers reaping extra income, to spared trees, low-carbon footprint, and Canadians enjoying affordable, quality paper, something he insists is going to be important well into the future, regardless how communications technology evolves.

Although today’s world is a digital one, society continues to go through hard copy paper as much as ever.

“Making paper from renewable agricultural fibre simply makes sense.”

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— Jeff Golfman, president, Prairie Pulp and Paper “The paperless office is a myth,” said Golfman. “People still like reading books in traditional paper format. Finding an alternative paper source makes so much sense.

We’re saving trees from being cut down by using wheat straw instead of forest fibre.”

Golfman (44), who was born in Vancouver and raised in Winnipeg, has been on the forefront of working to make the world a bit greener with past projects like founding Winnipeg’s Blue Box curbside recycling program, youth environmental education, and organizing environmentally themed events.

Golfman said he became interested in paper from agricultural fibre because it seemed like an obvious alternative to harvesting trees: “Making paper from renewable agricultural fibre simply makes sense.”

The current formulation of the paper is 80 per cent wheat straw and 20 per cent Forest Stewardship Council-certified wood fibre. Golfman says it’s aimed at home and office use as well as the commercial printing market. With worldwide patents pending on its process, Golfman sees the potential to establish Canada as an international leader in agricultural fibre paper production.

“The straw we buy from farmers is what is left over after food has been harvested — it’s agricultural waste turned into something very useful,” he said.

The straw fibre paper was launched nationally in Canada in August through 335 Staples business supply stores and a U.S. rollout is currently in the planning stages. ■

2012 TRIAL WIN RATE

Even under the severe weather conditions of 2012, 74-44 BL consistently out yielded competitors.

2012 YIELD COMPARISONS* L Series 74-44 BL

40.6 43.2

N = 55

2 YEAR YIELD COMPARISONS** L Series 74-44 BL

42.8 44.9

While no one wins them all, in FACT™ trials conducted by farmer co-operators, DEKALB won its fair share. Consistent yield performance under adverse conditions, that’s the complete package.

N = 67

www.DEKALB.ca

*Source: 2012 Monsanto Field Scale Trials as of October 3, 2012. **2011-2012 Monsanto Field Scale Trials. DEKALB represented by 74-44 BL; InVigor by L150, L130 and L120. Individual results may vary, and performance may vary from location to location and from year to year. This result may not be an indicator of results you may obtain as local growing, soil and weather conditions may vary. Growers should evaluate data from multiple locations and years whenever possible. Always follow grain marketing and all other stewardship practices and pesticide label directions. Details of these requirements can be found in the Trait Stewardship Responsibilities Notice to Farmers printed in this publication. DEKALB® and Design and DEKALB® are registered trademarks of Monsanto Technology LLC. Used under license. InVigor® is a registered trademark of Bayer. ©2012 Monsanto Company.

CROPS GUIDE

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NOVEMBER 2012 25

canola

One grower can make a difference The responsibility to abide by pre-harvest intervals and other pesticide label requirements falls to all growers as well as retailers and custom applicators.

Canada’s canola industry depends on a proactive approach B Y j ay w h e t t e r

T

hink countries turn a blind eye to trace amounts of unapproved products or pesticide residues? Think again.

Ever since European test labs discovered an unapproved genetically modified trait in a Canadian flax sample in 2009, the Canadian flax industry hasn’t been the same.

Flax sales to Europe before the discovery of Triffid in shipments were 400,000 tonnes per year, and now they’re 30,000 tonnes, reports the Flax Council of Canada. A good portion of that drop is because of Triffid.

Herbicide-tolerant flax variety Triffid was developed in Saskatoon but never commercially produced.

It was deregistered because customers didn’t want it. Yet, almost a decade after the breeding program shut down, trace amounts of seed with Triffid genes were found in Canadian flax delivered to Europe.

The European Union closed its doors to Canadian flax, and then implemented testing of all shipments before sales could resume.

Testing continues to this day.

This is not a food safety issue, but it’s still a very costly trade disruption, the Flax Council of Canada reports.

Pesticide residue on seed can also lead to trade disruptions. Just ask edible bean growers. In the mid2000s, a delivery of pinto beans from Alberta to the U.S. was detected

“We want to be proactive when it comes to providing safe food and meeting key markets’ food safety rules,” Rempel says. “Everyone, including every individual canola grower, has a responsibility to protect our markets. This is the motivation behind the Canola Council’s Export Ready program. We want to prevent trade interruptions.”

Get to know each product’s PHI An important restriction for each pesticide is its pre-harvest interval (PHI), which is the minimum days between pesticide spraying and when the crop is swathed or straight combined.

“The name pre-harvest interval

Paying attention to pre-harvest intervals will certainly be a bigger concern for growers.

— Stan Jeeves, director, SaskCanola with 0.021 parts per million (ppm) of vinclozolin — the active ingredient in Ronilan. This was well within the Canadian maximum residue limit (MRL) of one ppm, but Ronilan was not licensed in the U.S. for use on pinto beans. In that case, the approved MRL for vinclozolin on pinto beans in the U.S. was zero.

“The case helped propel the harmonized approach that U.S. and Canadian regulators take in setting MRLs on a continental basis, but at the time it caused a disruption in trade as buyers and sellers on both sides of the border stepped back to determine what the impacts were on them,” says Mark Goodwin, pest management co-ordinator for Pulse Canada.

For the canola industry, given its size and value to Canadian farmers, any market disruption could be very costly, says Curtis Rempel, vice-president of crop production for the Canola Council of Canada.

26 CROPS GUIDE

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NOVEMBER 2012

is confusing because growers often think of ‘harvest’ as combining,” says Rempel, “but the PMRA definition of harvest is the removal of a crop from its base — the cutting.”

Each product has its own PHI. For example, the PHI for chlorpyrifos (the active ingredient in Lorsban and its generics, Citadel, Pyrinex and Nufos) is 21 days. You can’t apply Lorsban on canola if you expect to swath within three weeks. In that window, you would have to switch to another product with a shorter PHI. Pre-harvest interval also varies by crop. The PHI for Lorsban on cereals is 60 days. The PHI for Matador is 21 days on peas and seven days on canola, to give another example.

There is science behind all of these numbers. Health Canada, which oversees pesticide registration, establishes a product’s PHI based on data submitted by the registrant. This data must demonstrate

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.

Pre-harvest intervals for canola Fungicides

Insecticides

Astound

35 days

Decis 5EC

Lance

21 days

Furadan

60 days

Proline

36 days

Lagon/Cygon 480-AG/Cygon 480 EC

21 days

Quadris

30 days

Lannate

Quash

45 days

Lorsban/ Citadel/Pyrinex/ Nufos

Rovral

38 days

Malathion 500/85E

Serenade

0 days

Vertisan

21 days

Matador/Silencer Monitor Pounce/Perm-UP/Ambush Ripcord Sevin XLR UP-Cyde

7 days

8 days 21 days 7 days 7 days 10 days Can only be applied prior to 6-leaf stage 30 days Can only be applied to seedlings 30 days

Continued on page 28

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.

CROPS GUIDE

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NOVEMBER 2012 27

CANOLA

Continued from page 27 that the maximum residue limit — the amount of pesticide remaining on a food product — for a particular active ingredient will not be exceeded when the appropriate PHI is observed. Data is based on residue studies from supervised field trials.

PHIs are a function of a pesticide’s use pattern — application rate and timing, for example — and of the amount of pesticide residues that can be allowed on the crop at harvest. The PHI for the same product can vary from crop to crop for several reasons, such as tolerance of the specific host crop to a pesticide, the method of application, or the biology of the target pest on different crops.

It’s about pesticide residues on food All major markets for canola, including Canada, have maximum residue limits (MRLs) for pesticide on food. If a particular shipment has more than the accepted MRL, the load can be rejected and all other shipments may be subject to close scrutiny. Each pesticide has its own MRL.

“The name pre-harvest interval is confusing because growers often think of ‘harvest’ as combining, but the PMRA definition of harvest is the removal of a crop from its base — the cutting.”

— Curtis Rempel, CCC vice-president

Applying a fungicide, insecticide and herbicide at the right rate and at the right time, according to the label, will help ensure that pesticide residues remain below MRLs. The pre-harvest interval is part of this. Spraying after the PHI has closed increases the risk of trace pesticides showing up in seed.

“As yield potential and heavier crops are leading to more fungicide use, paying attention to pre-harvest intervals will certainly be a bigger concern for growers,” says Stan Jeeves, director with SaskCanola and grower from Wolseley, Saskatchewan.

Shipments are tested often, and technology can detect extremely small amounts — one part per billion (ppb) or lower. To put one part per billion in perspective, it’s the equivalent of about nine seeds of canola in a “Super B” grain trailer. When a producer delivers canola, many delivery points keep a representative sample of every load. If an issue arises, either domestically or at a destination port, the problem can be traced back to those samples. Liability can be assigned.

“Canadian canola growers have a reputation for supplying healthy food to their neighbours here in Canada and to customers around the world,” Rempel says.

“This reputation is highly valuable and worth maintaining. Part of that maintenance work includes following pesticide labels for pre-harvest intervals.” ■ Jay Whetter is communications manager with the Canola Council of Canada. He’s also editor of the CCC’s free CANOLA WATCH agronomy newsletter. Go to www.canolawatch.org and find the sign-up box down the right column.

Farmers have been telling us that when it comes to growing canola they are looking for more than yield.

with outstanding yield potential, DEKALB brand canola hybrids also offer strong agronomics, an enhanced disease package, ease of harvest, and the superior weed control of the genuity® roundup ready® system, to provide the total offering.

Visit DEKalB.ca for more details.

Always follow grain marketing and all other stewardship practices and pesticide label directions. Details of these requirements can be found in the Trait Stewardship Responsibilities Notice to Farmers printed in this publication. DEKALB and Design®, DEKALB®, Genuity®, Roundup Ready®, and Roundup® are registered trademarks of Monsanto Technology LLC, Monsanto Canada, Inc. licensee. ©2012 Monsanto Canada, Inc.

28 CROPS GUIDE

|

NOVEMBER 2012

Paul RoEmmElE,

DEKALB growEr sincE 2010 cLArEshoLm, AB

NEWS BRIEF Flax sector slowly recovers from Day of the Triffids Expected 2012 tonnage down 44 per cent from 2009 total By: Phil Franz-Warkentin • Commodity News Service Canada

make it easier for Canada to consistently ship to the EU without fear of an unexpected positive result.

In the meantime, Canada is sending more flaxseed to the U.S. and China, said Hill. In China the demand is largely on the industrial side, but

Canada’s flaxseed industry continues to make

Of those samples testing positive now, the inten-

progress eliminating traces of genetically modi-

sity of contamination is also much smaller than in

fied Triffid seed from the country’s crop, but there

2009, with the overall amount of Triffid in the tests

Canada is also working on developing markets for flaxseed for human consumption.

Canada in 2011-12 exported a total of 256,800

is still work to be done given Europe’s very tight

that are positive very close to the 0.01 per cent

tonnes of flaxseed, with less than seven per cent

allowances for the gene.

detection level called for by the European Union.

of that destined for Europe, according to Canadian

Triffid, a genetically modified flaxseed variety, was

In order to see the food market reopen in

Grain Commission data.

In 2008-09, the last full crop year before

bred in Saskatchewan in the 1990s for tolerance

Europe, the percentage of samples testing positive

to soil residues of sulfonylurea herbicides, but was

for Triffid will need to decline further still or changes

the Triffid issue came to the forefront, Canada

deregistered in 2001 and never commercialized.

to the protocol itself will need to be made, said Hill.

exported 530,200 tonnes of flaxseed, with Euro-

There is now a 0.01 per cent allowance for

pean business accounting for about 80 per cent

Traces, however, found in Canadian shipments to Europe in 2009, effectively shut the door to what had

Triffid, but if that allowance were 0.1 per cent, Hill

been the largest market for Canadian exports.

estimated there wouldn’t be any samples testing

In the aftermath of the original discovery, testing protocols were put in place in an effort to

positive at all.

“We’re making progress, but the question is,

of the total.

Canadian farmers grew 518,200 tonnes of flaxseed in 2012, according to the latest production report from Statistics Canada. That compares

eliminate Triffid from Canada’s flaxseed crop and

‘Can we make enough progress for shipping to go

with the 930,000 tonnes grown in 2009 prior to

reopen export markets.

back to the way it was before Triffid?’” he said.

the Triffid issue.

“We have seen the incidence of Triffid go

At 0.01 per cent, it is very hard to get consis-

Seeded area of about one million acres in 2012

down,” said Will Hill, president of the Flax Council

tent results, with multiple tests of the same sample

was up from the 695,000 acres seeded in 2011,

of Canada.

sometimes getting a positive result, and sometimes

but still well off the 1.7 million planted in 2009.

Currently, about two per cent of all samples

not. Efforts between Canada and the European

Given the increasing demand internationally for

were showing traces of Triffid, which compares

Union were still underway in an attempt to estab-

the healthy attributes of flax, Hill said the industry

with 10 per cent when testing first began with the

lish a more trade-friendly testing routine, he said.

could sustain acres of 2.5 million to three million if

2009-10 crop, said Hill.

Allowances closer to 0.1 per cent would also

the European situation were to sort itself out.

CROPS GUIDE

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■

NOVEMBER 2012 29

Machinery

Lessons from Australia on controlled traffic farming A Canadian team went “Down Under” to learn about the benefits of this unique approach first hand

By Brad Brinkworth, Meristem Media

I

s controlled traffic farming (CTF) a viable option for Western Canada?

One of the best ways to get a window on the benefits of this unique approach to farming is to visit Australia, a world leader in CTF where about 20 per cent of cropped production is now under some form of this system.

That’s why a team of 11 Alberta farmers, agronomists and government persons, with support from the Alberta Crop Industry Development Fund (ACIDF), spent two weeks in eastern Australia.

“The trip was undertaken to advance our knowledge of CTF and jump-start the process of assessment of the system for our own production here at home,” says Peter Gamache, project leader at Controlled Traffic Farming Alberta. “We wanted to see first hand how this was working and hear directly from the Australian producers and others who had bought into the concept. We thought, ‘We don’t have to reinvent the wheel.’”

Peter Gamache, project jeader at Controlled Traffic Farming Alberta

“ If we can get any kind of results similar to what Australia is seeing, we’d be foolish not to have explored and tried this approach.”

30 CROPS GUIDE

|

NOVEMBER 2012

What resulted was an eye-opening experience and a new appreciation from the team for an innovative approach worth exploring further for Western Canada.

CTF 101 CTF is a concept that has been around a long time but in the mid’90s was researched and adopted largely by the Australians, though there is rising interest in a number of other production areas around the world, most notably in Europe.

In simplest terms, CTF is based on the idea of minimizing the impact of field vehicles on the land by confining them to the least possible area of permanent traffic lanes. At a basic level, this can mean simply reducing random traffic in the field or shifting to interrow seeding. At the other end of the spectrum, producers fully embracing the approach have implemented full CTF cropping systems using the permanent parallel wheel tracks called “tram lines.”

“Much of the time and energy we put into soils is to undo the compaction damage we have caused by driving machines all over them,” explains Gamache. “As machines are getting heavier and heavier, this damage is more extensive and is extending deeper and deeper into the soil profile. The more we can minimize that damage, the more healthy and productive our land base will become.”

While the concept may be simple, it does take a lot of thought and good planning to implement, says Gamache. “As with most benefits, there is some price to pay, and with CTF this is largely associated with the need for an improved and more sophisticated level of management.”

In addition, some modification of machines will be necessary. For example, this generally means altering wheel gauges, adding markers, or perhaps extending unloading augers on grain harvesters. Eventually it will mean matching implement sizes to the tram line.

Substantial benefits At least in theory, the opportunity for benefits with CTF appears substantial. “All the main benefits are related to reduced compaction,” says Gamache. “With a CTF approach, it is possible to leave 80 to 90 per cent of fields permanently without compaction.”

CTF slashes equipment and fuel costs, and is a big time saver for producers. It also boosts soil health and productivity, resulting in higher yields, lower inputs and healthier, higher-quality crops.

Additional practical benefits of having permanent traffic lanes include the ability to get in sooner after a rain and operate more effectively under a number of tough conditions.

The approach is also a logical fit with various forms of precision guidance systems. The combined approach further improves efficiency and accuracy, while adding to typical precision systems the core CTF benefits related to reduced soil compaction.

“At the end of the day the goal is to boost farm sustainability and farm profit,” says Gamache. “Like with anything, the decision to get into this system depends on the situation of each individual producer, the investment requirements and the specifics on the anticipated returns.”

Separating crops and wheels One way to look at CTF is as a whole farm approach to the separation of crops and wheels, says Gamache.

Appropriate agronomy and management is used to maximize the potential of both the cropped and wheeled areas for their specific purposes.

As much as possible, producers practise repeated use of the same wheeled tracks for every operation.

Over time, that means aiming for equipment with the same wheel track, but perfection off the top is not expected.

Gamache points out that even with two different track and

“Aussie rules”: Five key lessons implement widths, the percentage wheeled can be reduced 30 to 40 per cent. “CTF is one of those things where you can approach it in degrees and get more into it over time. There is a benefit to whatever degree you can reduce compaction.”

Aussie benefits The Australians have identified a number of specific estimates of the benefits they have realized under CTF. These include: • Ten-15 per cent increase in yields • Up to 50 per cent better yields during drought • Up to 15 per cent improved nutrient use efficiency • Ten-25 per cent reduced pesticide and crop protection costs • Up to 50 per cent reduced fuel usage • Lower machinery capital investment • Positive impact on crop grades over time “One thing we came away with, if we can get any kind of results similar to what Australia is seeing, we’d be foolish not to have explored and tried this approach,” says Gamache.

Opportunity for Western Canada Exploring the viability of CTF is the reason Controlled Traffic Farming Alberta was implemented.

Over the past several years, CTF Alberta has co-ordinated research and data collection on CTF options, including working with a number of co-operating producers in the province who are exploring the use of this approach.

To date, CTF is at a very early exploratory stage in Western Canada. About a handful or two of producers are known to be using it in Alberta and there is rising interest, says Gamache.

“Our purpose is to get a handle on the basics of CTF and how it might be best applied here. A big focus is looking at the economic viability of it and learning as much as we can so our knowledge can reduce some of the risk for early adopters.”

It’s an early time, but also an exciting time, he says. “In some ways, it reminds me of when we were first looking at direct seeding.” ■ Meristem is a Calgary-based communications firm that specializes in writing about western agriculture, food and land use. More articles at www.meristem.com.

Are you looking for…

Peter Gamache and the Canadian team that visited Australia to learn about controlled traffic farming (CTF) came away with a number of key insights. Here are a few leading examples: 1. Don’t need to jump in overnight. “You can progress over time as you begin to match up equipment widths, axel widths, those kinds of things,” says Gamache. “It can be a gradual process.”

2. Cost is not prohibitive. CTF equipment setups don’t have to be expensive. Many of the Australian farms invested less than $15,000 to get into CTF and some took a few years while cash flow allowed.

3. Don’t have to be perfect. CTF can be adopted across the spectrum from a little bit to a lot, says Gamache. “There are always purists who think you have to do things to the full extent.

But it’s really up to the individual — it’s OK to move forward at whatever pace and whatever degree you want to.”

4. Lots of options. CTF opens up a world of precision application opportunities. Examples range from inter-row seeding and inter-row spraying herbicides, to on-row spraying of fungicides and insecticides, in-crop fertilizer banding, and strip-till banding fertilizer in the fall.

5. Fuel savings a big deal. CTF can reduce fuel use by 30 to 50 per cent or more, with big savings during harvest, says Gamache. “Consider the difference when you drive a loaded combine weighing over 60,000 lbs. across a soft field and then drive it across a pair of hard-packed tram lines. The difference in fuel use is pretty significant.”

Support the Wheat & Barley Check-Off. The check-off enables Western Canada’s farmers to continue funding variety research and market development in the open market.

This voluntary check-off of $0.48/tonne of wheat and $0.56/tonne of barley will be shown as a Deduction of Levy on your Cash Purchase Ticket upon grain delivery at a Canadian Grain Commission licensed company.

wheat barleycheckoff.com

These funds will be delivered to three important groups that work together to support your farm’s future. Visit their websites to learn more:

westerngrains.com

cmbtc.com

cigi.ca

CROPS GUIDE

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NOVEMBER 2012 31

MARKETs

Bitter medicine

By David Drozd Senior analyst and president, Ag-Chieve Corporation

32 CROPS GUIDE

They say nothing cures high prices like high prices. Right now the livestock sector is taking its medicine and grain growers should consider the implications

T

here’s no question that grain growers have been enjoying a nice run of decent prices, including record-high corn and soy prices recently.

Certainly there have been occasional retracements as the market has pulled back, but the news has been generally exciting for growers.

Other sectors of agriculture however, are suffering greatly, and none more so than hog producers.

Near-record-high feed costs and a slowing economy are forcing Chinese hog producers to sell their herds.

Here in North America liquidation is also occurring as farmers decide to exit the business and preserve their equity rather than continue to erode it by producing at a loss while hoping for better times ahead.

Cattle producers, particularly in the U.S., have also faced growing challenges. The same drought which sent corn and soy prices higher has also seriously damaged pastures in the region. Those same higher grain prices have also pushed feedlot cattle purchases sharply lower, with August purchases at the lowest level since 2005, according to the recent USDA cattle-on-feed report.

This carnage in the red meat industry is unpleasant, certainly, especially when the implications to individual farm families and operations are considered. As a lifelong member of the agriculture industry, growing up on the farm and farming for 17 years, I know the stress that times like these can generate for our rural neighbours. It forces hard decisions and unpleasant questions — none more so than the most daunting: “Can I afford to ride out the storm?”

The answer will for at least some, unfortunately, be no. And it’s in these intensely personal and difficult decisions that the grain industry can see some of the first glim-

|

NOVEMBER 2012

merings of what will ultimately bring their sector ’s prices back down to earth. It’s frequently said that nothing cures high prices like high prices, and this is a clear illustration of what that homily looks like in real life.

Back to the USDA numbers, the September 21 cattle-on-feed report paints a stark picture. Placements in August totalled just two million animals, a full 11 per cent below the 2011 mark, and the second-lowest cattle placements for the month of August since the series began in 1996. Consider the implications of this trend for a moment. While it’s only the second consecutive month so far, placements for July and

the years, you’ll find little new here. But it’s so important to take a measured and planned approach to your grain marketing that I’m going to ask your indulgence one more time, as I run through it.

The most important elements of any marketing plan are to know your cost of production and to be prepared to execute your plan and make sales when you’re in a position to lock in those profits. Too often farmers wait for higher prices, only to sell into a falling market.

Better to sell incrementally and actually lock in profits.

In a market like today’s one of the most important issues is to not allow yourself to be lulled into a

For grain growers, these numbers should serve as a type of warning.

August suggest a 10 per cent lower feed demand than a year earlier.

The USDA hog numbers are no more encouraging, showing hogs being rushed to market in the latter half of the summer. The USDA “ L i v e s t o c k S l a u g h t e r ” re p o r t released September 21 shows a 2.8 per cent increase in the number of hogs processed from January to August 2012, compared to the same period in 2011.

For grain growers, these numbers should serve as a type of warning. It will take time for the effects of this activity to filter through to grain prices, especially given the effect of the U.S. drought on grain stocks. But filter through it will.

Now more than ever is the time to carefully construct a marketing plan that enables you to take advantage of the higher prices now, while preparing your business for the inevitable moderation in prices.

If you’ve read this column regularly, or sat through any of my presentations at farm meetings over

false sense of security. Even when market fundamentals support prices, there will always be seasonal lulls and market adjustments. I also can’t overstate the importance of understanding that new crops are harvested every six months somewhere in the world and how that can impact your prices.

Over time the hog and cattle sectors will both heal, though it will unfortunately be too late for some farm families. Your job over the coming months and even years is to prepare your farm and family so they’re best positioned to weather any changes in market conditions.

One of the best ways you can do that is by taking advantage of this period of higher prices to execute a disciplined marketing plan that takes these profits out of the theoretical realm and puts them firmly in your hand.

It’s having these resources that will give a farm a much better opportunity to hang on waiting for better times. n

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® The Cargill logo, VICTORY and VICTORY HYBRID CANOLA logo are registered trademarks of Cargill Incorporated, used under license.

InVigor® is a registered trademark of the Bayer Group.

Genuity®, Genuity and Design®, Genuity Icons, Roundup Ready®, and Roundup® are trademarks of Monsanto Technology LLC, used under license.

Always follow grain marketing and all other stewardship practices and pesticide label directions. Details of these requirements can be found in the Trait Stewardship Responsibilities Notice to Farmers printed in this publication. ©2012 Cargill, Incorporated. All rights reserved.

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