Farmforum summer 2008

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INSIDE: Farming outside the box

p. 8 Farm Thefts Rise In Step With Prices

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FarmFORUM

volume 22 | issue 3 | Summer 2008

contents >> PRINT TECHNOLOGY

BUSINESS

PRODUCTION

FARM LIFE

FarmFORUM www.farmforum.ca Publisher Bayer CropScience

COVER STORY

Editor Sherry Butt

Place your machinery order early

10

Now is not too soon to start looking for new equipment for 2009.

8

14

6

Farm thefts rise in step with prices

Get ready for a revolution

Homeschooling goes mainstream

High commodity prices mean farmers need to protect the fruits of their labour.

The face of farming is changing. And what’s happened in the last decade is just the beginning.

Homeschooling offers plenty of flexibility, which is a good fit for farming families.

4 Editor’s note: the times they are a-changin’ 18 How do you defer income? Carefully: tax strategies for higher incomes 20 The making of a canola hybrid: higher yields are the big payoff for growing hybrid canola.

22 Farming outside the box: land ownership not a priority for these OYF national co-winners

contents >> WEB

FarmFORUM.ca

Associate Editor Dave Wreford Contributors Cindy Bablitz Kieran Brett Scott Garvey Kevin Libin Kate Rowland Clare Stanfield Graphic Design Aaron Mumby Design Farm Forum is published seasonally by Bayer CropScience.

Contact Farm Forum at: Bayer CropScience #100 - 3131 114 Ave. S.E. Calgary, AB T2Z 3X2 T. 1 888-283-6847 F. 1 888-570-9378 E. farmforum@bayercropscience.com www.bayercropscience.ca Contents of this publication are copyrighted and may be reproduced only with written permission of the publisher, Bayer CropScience.

The views expressed are not necessarily those of the publisher.

Publications Mail Agreement Number 40743517 Registered in Canada Copyright 2008 Website www.farmforum.ca Return undeliverable copies to: Bayer CropScience #100 - 3131 114 Ave. S.E. Calgary, AB T2Z 3X2

Look south for used equipment

Where have all the students gone?

Watch delivery dates on late-year equipment buys

The U.S. is a good place to look for used equipment.

Enrolment in ag sciences is down.

Equipment must be “available for use” to be eligible for first year depreciation.

www.farmforum.ca/usedequipment

www.farmforum.ca/agstudents

www.farmforum.ca/equipmentbuys

On the cover Dean Stockman of Beechy, SK, ordered his new high-horsepower tractor last October, but he had to accept an alternative tractor in order to get delivery in time for Spring seeding.

Farm Forum.ca | 3

s h o r t ta k e s

There is more on farmforum.ca Traffic on farmforum.ca is growing. We’ve now had visitors from 47 different provinces and states, from as far away as Alaska, Florida, Maryland and California.

The top stories viewed on the website are the GPS story we did in the very first issue, Fieldwork goes hands off, followed by our ethanol story, Ethanol plants gobble grain and then by our Outstanding Young Farmers’ features.

Looking at reading habits by subject matter, stories relating to technology and business are read most followed by stories about production and life on the farm.

The website is the place where Farm Forum adds depth to the print content and helps you navigate to extra resources.

Make sure you subscribe to the newsletter we send out after every issue of Farm Forum by signing up on the website. It’s quick and easy to use and tells you what’s in Farm Forum at a glance. Articles in the newsletter are linked to the website and in a click you’re reading information important to you. FF

Summer is here You’ve done your best tto ensure your crops had the best start possible. It’s now up to Mother Nature to provide the best growing environment possible.

The seed sown, the fertility of the land and vital inputs only make up part of the equation in the success of a season. The other part belongs to the hands at work — the ones who manage the farm.

To help you succeed today and in the future, we are investing in Canadian agriculture with new infrastructure to support our InVigor hybrid canola franchise and our crop protection formulation facility in Regina. Innovation is the foundation for competitiveness and growth, and thus, our company’s success into the future. That is why we have introduced over 20 new products in the last five years and plan to continue this trend with over 40 products in our pipeline over the next five years.

As you continue to produce the food, feed and fuel for our nation, we will continue to provide you with the world’s best crop production technology to ensure you reap what you sow.

We hope you enjoy this issue of Farm Forum and find ways to apply it to your farming life. Happy farming. FF

4 | Farm Forum | Summer 2008

Editor’s Note There is no escaping change.

It is inevitable. Like it or not, if we are to grow and prosper we need to continually change the way we think and do things. Perhaps Bob Dylan expressed it best in his 1964 song The times they are a-changin’.

If your time to you Is worth savin’ Then you better start swimmin’ Or you’ll sink like a stone For the times they are a-changin’.

In this issue we talk about powerful economic forces that are changing the face of agriculture. Starting with our cover story about the new reality of buying farming equipment. No longer do dealers keep a deep inventory of large tractors, combines and seeding equipment on their lots. If you want something you need to put in your order early and expect to wait.

With prices of grain and oilseeds looking like they’ll remain high, farmers need to think about protecting their assets as explained in our story Farm thefts rise in step with prices.

And, with higher incomes, it’s time to think about some innovative tax strategies that will keep more money in your pocket instead of in government coffers. Our story on how to defer income will give you some pointers.

In our trends story, three industry observers give us their take on what’s going to happen in agriculture over the next 10 years. They all agree that even though there are tremendous challenges, the industry is ready to relinquish the status quo and do things differently.

When it comes to education, farming families are a great fit for the homeschooling trend that’s been steadily on the rise over the last decade or so.

We explain this fit in our Farmlife story, Homeschooling goes mainstream.

And, we all know that the best way to learn is by example. In this issue’s Outstanding Young Farmers’ profile, we learn from a Saskatchewan farm family how thinking outside the box can be a great formula for success.

Indeed, the times they are a-changin’. FF

Innovation to Grow.

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Every year, Bayer CropScience devotes considerable resources to research and development in an effort to bring cutting edge technologies and crop solutions to the marketplace. This reinvestment strategy provides our partners, Canadian growers, with a wider range of product choices and a means to increase their productivity.

bayercropscience.ca or 1 888-283-6847 Always read and follow label directions.

Bayer CropScience is a member of CropLife Canada.

07/08-8576-01C

fa r m l i f e

Marten does some reading from his favourite perch, his bedroom window seat.

By Cindy Bablitz

Homeschooling goes mainstream There is a movement some dub the Homeschooling Renaissance. It’s happening in the city and in the country worldwide. In North America, some estimates claim the numbers of homeschoolers represent two to four per cent of all school-aged children and most agree the population of students learning at home is increasing by around 10 per cent per year.

Maryann Borch and her husband Kevin are raising and schooling four “free range” sons — Forest, 17, Garnet, 15, Marten, 13 and Rigel, 5 — on their small farm southeast of Edmonton.

“We looked into school when Forest was ready for kindergarten,” explains Maryann. “Even though we lived about two minutes from the school, the bus ride was about 45 minutes each way, just because of how the route went.”

Driving her eldest to school herself meant gearing up and packing along two younger siblings. That’s when the idea of homeschooling began taking root.

There are as many reasons to homeschool as there are parents who choose that option for their children. For rural families, the commuting question can be a factor. But, like their urban peers, rural homeschoolers nod to the attitude that learning is a lifelong activity that isn’t con6 | Farm Forum | Summer 2008

fined within the walls of an institution.

“For us, homeschooling isn’t about schooling,” says Maryann. “It’s about learning through life. The learning opportunities on our farm and in the many communities with which we’re involved are unending.”

One of the obvious benefits of homeschooling, particularly for farming families, is the freedom to work around seasonal demands on time. This freedom also translates to the flexibility of being able to travel to places of interest when they’re not crowded with tourists who have to travel when school is out, at Christmas or spring break, and in the summer.

The family regularly spends months at a time in Central America. In Guatemala, Nicaragua and Costa Rica, they live and learn with local families developing Spanish as a second language and “playing at the beach all afternoon.”

Homeschooling is legal and viable in all provinces and territories in Canada.

And, with online access to an unlimited spectrum of virtual and hard copy resources, more and more rural families are opting for a learning life at home — and away.

Learning together and building a life together as a family began losing favour only during the Industrial Revolution

when business barons such as Andrew Carnegie, John D. Rockefeller and Henry Ford made the call for factory workers who were compliant, obedient and consumer driven. Institutional schooling became an efficient method of training future employees and customers and schooling has continued to play this role right down to the present.

The surge of interest in homeschooling reflects a back-to-the-basics mentality now gaining momentum not only in education but also in the complementary arenas of agriculture, nutrition and global sustainability. It follows that homeschooling is increasingly seen as a good fit with rural family farming life.

Today, a google search of “homeschooling” turns up some 9.8 million links. Still, accurate numbers of students learning at home are hard to pinpoint as registration regulations and tracking codes vary significantly from province to province. The question is further clouded by the advent of distance learning — accessing curriculum, teacher support and testing via the internet, from remote locations. Many homeschooled kids who use distance learning schools and tools are often not counted as “homeschoolers” since they are, technically, registered with institutional schools. A thorough search

Road maps to homeschooling

Con Tanasiuk photography

The Borch family L to R: Rigel, Forest, Maryann, Marten, Kevin and Garnet dian homeschooled student is regularly involved in eight social activities outside the home. Canadian homeschooled children watch less television than other children, and they show significantly fewer problems than public school children when observed in free play.”

“The socialization concern that so many people unfamiliar with homeschooling have is such a myth, I hesitate to even mention it,” laughs Maryann. “It ought not even be legitimized with an acknowledgement because the myth of lack of socializing has nothing to do with the activity of homeschooling and everything to do with people’s fears.”

Homeschooling is a natural fit for rural families. It alleviates the need for children to spend long hours of their day on the bus, it permits freedom to accommodate seasonal, not to mention daily fluctuations in workloads and it nurtures a family bond that is vital to maintaining the spirit of the family farm. FF farmforum.cA

for numbers might turn up some 1.5 million students learning at home in North America in 2008; some estimates double that figure.

Anyone with a strong desire and commitment can homeschool. A study reported in The Fraser Institute’s report Home Schooling: From the Extreme to the Mainstream, 2nd edition, showed that homeschooled children of families with low levels of education perform significantly higher academically than schooled peers with similar family backgrounds.

“One study we reviewed found that students taught at home by mothers who never finished high school scored a full 55 percentage points higher than public school students from families with comparable education levels,” reports Claudia Hepburn, co-author of the of The Fraser Institute’s report on homeschooling.

Perhaps the most common misconception about homeschooling concerns socialization. It’s sometimes assumed that kids who don’t attend conventional schools socialize less with their peers and communities at large. In fact, almost the opposite is true. The free schedule of homeschooling affords abundant opportunities to socialize in a wide range of places and situations. And, unlike schools, where children are segregated by age, homeschooling encourages contact throughout the community with children and adults of all ages.

“Homeschooling parents choose to homeschool for a variety of reasons, but I have never heard any homeschooling parent say that the reason they want to homeschool is to isolate their child from all of society,” says one homeschooling dad.

Hepburn adds, “The average Cana-

for more information visit us online online articles Provinces set homeschooling rules www.farmforum.ca/provincialhomeschoolrules Help is close for homeschooled families www.farmforum.ca/homeschoolfamilysupport additional resources Homeschooling Methodologies: Charlotte Mason www.farmforum.ca/charlottemason Classical Education www.farmforum.ca/classicaleducation Montessori www.farmforum.ca/montessori Moore formula www.farmforum.ca/mooreformula Unschooling www.farmforum.ca/unschooling Waldorf www.farmforum.ca/waldorf

While many people lump “homeschoolers” in one basket, quite apart from “schoolers,” often there is more overlap in those two groups than between the varying methodologies employed within the umbrella term “homeschooling.”

A homeschooling methodology is a philosophy, or road map, of how structure and learning is viewed and implemented by homeschooling families.

“School-at-home” homeschoolers employ often identical curriculum, textbooks, workbooks, assignments, grading systems and testing as are used in schools. On the other end of the homeschooling methodology spectrum is a term coined by John Holt — unschooling — which is also known as child-led, delight-driven, or whole life learning. Sometimes, unschooling families will refer to their “free range children.”

School-at-home homeschooling conveys an implicit agreement with bureaucratic policy makers who determine what a child should be learning at any given point during their K-12 years, while unschooling conveys a significant philosophical departure from mainstream thinking as pertains a child’s capacity to negotiate their own learning path.

Between school-at-home and unschooling are dozens of varieties of homeschool methodologies that fall closer to or further away from either end of the spectrum. This site, www.farmforum.ca/homeschoolingmethodologies offers a brief primer on some of the more popular methodologies.

The websites listed under Additional Resources to the left provide more detailed information about several of these methodologies. FF

Farm Forum.ca | 7

business

Farm thefts rise in step with prices

With grain and oilseed markets on a high, farmers need to become more vigilant in protecting the fruits of their labour By Kevin Libin

T

In the U.S. alone, agricultural losses from theft top US$5 billion annually.

8 | Farm Forum | Summer 2008

he high value of agricultural commodities is a boon not just for farmers but also for thieves in rural Canada. And that signals a need for tighter vigilance to make sure crops don’t end up paying off for robbers. Across the country, farmers are reporting a rise in raids on their bins and trucks as criminals cash in on record commodity prices.

“We’re being more cautious these days,” says Lawrence Penner, a grain grower near Kola, MB who had a truck filled with 650 bushels of canary seed stolen from his farm in February. Whoever did it, brought the truck back. But the seed, ready for sale and worth nearly $10,000, was gone. This was no easy job, says Penner, who believes the culprits had the equipment and knowhow to move large quantities of grain. “I suspect it was driven out to a secluded location and reloaded onto a different truck,” he suggests.

Earlier that same month, RCMP investigated a canola heist in Tuxford, SK. Farmer Doug Froelich lost 1,200 bushels, worth about $16,000. The bin was located on land that Froelich farms, but is not connected to his home property.

The problem is not confined to Canada. Kansas police have offered a reward for information to help solve nearly a dozen wheat thefts in that state this year.

Bandits have been driving trucks up to unsecured bins and using augers to unload a fortune worth of grain. In Cali-

farmforum.cA

fornia and Florida, bee farmers report Maureen Fitzhenry. She adds, however, nearly $400,000 in stolen hives in the last that because wheat and malt barley fall year and investigators in Washington are under the CWB system, they’re harder to looking into a series of hay scams. Cali- sell on the black market in the west.

Of course, grains and oilseeds are not fornia’s almond producers have watched entire truckloads go missing this year af- alone in having seen sharp price increases ter prices reached triple what they were over the past year or so. As farmers are only too well aware, inputs such as ferjust a few years ago.

The soaring value of their crops has tilizer and fuel are much more expensive farmers taking more precautions than than they were last season. Farm equipever before. Lynn McLean, a grain pro- ment and parts have also become more ducer near Rosetown, SK, spent the win- valuable. All are potential targets for freeter plowing large piles of snow across the loaders out to get something for nothing. ©iStockphoto.com/SN Studio Farmers should driveway of his farm do their best to to deter break-ins. make life harder for Like many farmthieves, says Dan ers, he often has to Melnyk, an RCMP leave his farm unconstable in Moose attended for hours Jaw, SK. Whenever at a time — long possible, he advises, enough for robbers store grain near to get in and out — home and keep bins while taking loads well lit and locked. of grain into town.

Those precautions “If I’m away aren’t always possomewhere it sible, though, and wouldn’t take long no bin will keep out to come in and load a truly determined up a semi. I’m just thief. “If someone making it a little really wants in, he’ll more difficult,” says get in eventually,” McLean.

Melnyk says.

Penner’s canary That’s why he’s seed wasn’t insured.

High crop values have farmers taking telling farmers in And until recently, more security precautions. the area to use a he says, it was comproduct commonly mon for farmers in his area to leave their bins unlocked. But called “grainfetti” — tiny, specially coded people are being careful now that grain paper chips mixed with threshed grain to prices are double or triple what they were make it easily traceable to the owner in just a few years ago. Penner says he’s lock- case of theft. In reality, there’s no way to ing up his grain, installing surveillance completely ensure that grain won’t end cameras and making sure he doesn’t leave up being stolen, he says. But farmers can make sure that if it ever happens to them, keys in unattended trucks anymore.

In the U.S., according to a report from there is at least a fighting chance of catchthe Urban Institute, a Washington, D.C. ing the crooks. FF think tank, annual agricultural farm — Kevin Libin is an Alberta-based losses from theft are about US$5 billion, writer with The National Post. though the actual number is likely higher since many cases are unnoticed or unrefor more information visit us online ported. Large-volume producers, with online articles High commodity prices attracting more thieves several storage sites, might not notice a www.farmforum.ca/highprices few thousand missing bushels for months, Update your insurance policy giving thieves ample time to relocate and www.farmforum.ca/insurance sell their plunder. additional resources Canada’s handling and transportation U.S. Department of Agriculture security checklist www.farmforum.ca/securitychecklist system leaves growers sitting on the bulk Urban Institute brief on agricultural crime prevention of the country’s grain inventory. “Onwww.farmforum.ca/urbaninstitutebrief farm storage is a very large and imporCountry Graphics Design and Printing, tant part of the Canadian system,” says makers of “Cropgard” www.farmforum.ca/cropgard Canadian Wheat Board (CWB) official

Micro-ID keeps thieves at bay For years, sales had been slow for Ron Kroeker’s “Cropgard” coded flakes. But business is picking up as farmers consider the graintracking product as a way to protect their increasingly valuable inventory from thieves.

“We’ve been selling it for 20 years, but it wasn’t a very popular item in recent times because grain prices were so poor,” Kroeker says.

“Now that the prices have increased dramatically, however, there is a lot of fear of theft and, in fact, quite a bit of grain has been stolen.” The number of customers for his product increased fivefold over the past year, he says.

Like the serial number on your car, Cropgard makes grain traceable back to its owner, explains Kroeker, who markets the product through his company, Country Graphics, in Rosenort, MB. Thousands of tiny quarterinch flakes of newsprint are marked with a unique tracing number. Farmers toss the flakes — also known as “grainfetti” — a handful at a time into grain as it is emptied into bins.

When buyers find the squares, they can call Kroeker who traces the number back to his registry and confirms that the individual who sold the grain was indeed its rightful owner; not someone unloading stolen goods. A five-pound bag of flakes, costing about $70, is enough to mark 50,000 bushels.

The system seems to work, but Kroeker has yet to hear of anyone actually catching a crook through Cropgard. As far as he knows, no marked grain has ever been stolen — thanks, he’s convinced, to the large decals he provides for customers to put on their bins telling would-be thieves that the contents are marked. The warnings alone seem to be enough to convince robbers to move along. “It’s the decals that do the job,” he says. FF

Farm Forum.ca | 9

If you need to have a new tractor, combine or seeder ready to roll for the 2009 season, now isn’t too soon to start looking cover story

By Scott Garvey

10 | Farm Forum | Summer 2008

Photo courtesy Case IH

T

he bright economic outlook is prompting many farmers to check out their local machinery dealerships. They’re finding bare lots. Even with the money in hand, many producers looking to update or replace aging equipment are having a tough time tracking down new machines to buy.

They’re being hindered by their own success. The global surge in demand for new tractors, combines and seeding equipment has created waiting lists of customers. Taking delivery of a new high-horsepower tractor could now involve a wait of six months or more, depending on the brand. Adding to this demand pressure is the way most dealers now operate. Due to the high value of today’s equipment, few are willing to stock large inventories.

Instead, they prefer to sell primarily on the basis of new factory orders.

According to John Schmieser of the Canada West Equipment Dealers Association, the evolution in farming, increasingly dominated by large-scale producers, is part of the reason for that. Large-scale operators tend to take a long-term approach to production scheduling, including the way they buy machinery. “Dealers are talking with customers 12 months in advance (of a purchase),” says Schmieser.

“That’s where the planning comes into it.”

Factory ordering of new equipment after making deals with producers had been working well — until demand exploded and production lines couldn’t

With demand high for tractors, combines and seeding equipment, farmers need to plan their purchases well ahead of the growing season.

[

Place your machinery order

[

Farm Forum.cA | 11

12 | Farm Forum | Summer 2008

Although grain producers are willing to spend on new machinery, livestock producers are not. As a result, sales of haying implements and other livestock-related machinery have fallen.

No shortage of forage equipment While sales of tractors and equipment used for grain production have soared, the machinery most commonly used by livestock producers has been moving off dealers’ lots at a much slower pace. Livestock producers are on the outside looking in on the crop boom that is driving the demand for high-horsepower tractors and combines, and that has created a split in the machinery market.

Adam Reid, advertising manager for Winnipeg-based Buhler Versatile, says while the company is working at capacity to fill sales of its Buhler Farm King grain augers, there has not been a similar increase in demand for haying equipment. That difference is representative of what’s happening across the market.

“The situation is the same for both Canada and the U.S.,” says Reid. Apparently, American livestock producers are as reluctant to make new machinery purchases as their Canadian counterparts.

Doug Heritage of Miller Farm Equipment, a Case IH dealer in Moosomin, SK., has also noticed a difference between the grain and livestock sectors. He says sales of 100 to 150 hp. tractors (sold primarily to livestock producers) have not significantly increased. The dealership can easily supply tractors in that horsepower range on relatively short notice.

When it comes to used machinery, the situation is similar. “The misconception is that all farm machinery is going up in price,” says Simon Wallan of Richie Bros. Auctioneers. According to Wallan, the auction company has seen an eight- to 10-per cent increase over last year in used grain equipment prices, but that has not carried over into equipment used by mixed farmers. “We’re seeing almost the exact opposite — high single-digit percentage declines — for livestock-sector machinery,” he adds. All of which means it’s becoming a buyer’s market for haying and forage equipment. FF one. “I made the deal (for my tractor) last October. My dealer phoned me back the next day and said if I’d made the deal a couple of days earlier, we could have got you a tractor. But now we won’t be able to get you one in time for seeding.” Fortunately for Stockman, the dealer had another, similar tractor already in the pipeline as part of a stock order. Although it was not equipped the way Stockman wanted, he was able to negotiate a deal for that unit instead.

Stockman wasn’t in dire need of a new tractor. “Very rarely do I keep a tractor so long that I’m desperate,” he says. Had he been unable to get delivery of an alternative tractor in time, he could have updated and extended the service life of the old

one. With new equipment in short supply, more producers might have to take that route, at least in the short term. FF farmforum.cA

keep up. And small dealer inventories left no cushion to soften the impact of production shortfalls.

Most dealers saw the difficulty coming and tried to make their customers aware of the changing environment. “At first some guys didn’t believe us when we told them they had to put their orders in early.

They just thought we were trying to pressure them into making a deal,” says Alvin Hebert, a sales rep with R.G Mazer Group that operates a chain of CNH dealerships across Manitoba and Saskatchewan. But the reality, he adds, is that short-term delivery of most new grain-sector machinery is now virtually impossible.

It’s a global phenomenon. John Deere’s Waterloo, IA plant, for example, builds the company’s big 7030-, 8030and 9030-series tractors for shipment all over the world. Besides producing tractors for the North American market, the plant exports about a third of its output to more than 130 countries. And with farmers everywhere realizing the benefits of increased grain and oilseed prices, demand for John Deere products has also risen globally.

Other manufacturers have noticed the same world-wide surge in large-tractor orders. For example, Eric Allison, director of sales for Buhler Versatile in Winnipeg, estimates 50 per cent of his company’s 4WD tractor production is currently shipped out of North America.

As manufacturers scramble to ramp up tractor production, their inability to get components, especially large tires, is hampering their efforts. “Our standard tires are in short supply,” says Allison.

“We have had tractors starting down the assembly line in the morning without tires.” To get tractors delivered to customers as quickly as possible, the company has been asking dealers and producers if they’ll accept tractors with the smaller, available tire sizes rather than those originally specified.

The shortage of large tractor tires has affected all manufacturers. Kevin Miller of Miller Farm Equipment, a Case IH dealer in Moosomin, SK, says four new 4DW tractors were recently delivered to his dealership equipped with only single tires, leaving them unusable. Getting these tractors field-ready calls for some creative thinking. “We’ll try to make one out of two,” he says.

As end users, more than a few producers have found themselves caught in the crunch. Dean Stockman of Beechy, SK. is

Photo courtesy new holland north america

cover story

for more information visit us online online articles Look south for used equipment www.farmforum.ca/usedequipment Machinery production capacity ramps up — slowly www.farmforum.ca/production additional resources Canada West Equipment Dealers’ Association www.farmforum.ca/cweda Buhler Versatile www.farmforum.ca./buhlerversatile Case IH www.farmforum.ca/caseIH John Deere www.farmforum.ca/johndeere Ritchie Bros. Auctions www.farmforum.ca/ritchiebros

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01/08-6922D

Production

Get ready for a revolution

The face of farming is changing. And what’s happened over the past 10 years, say these industry observers, is just a foretaste of what’s to come By Clare Stanfield

Rob Saik, CEO Agri-Trend Group of Companies

We’ve all heard it: farmers are getting older, farms are getting bigger, young people aren’t returning… the generalized forecast for agriculture can sometimes seem a little gloomy.

But talk to those working the front lines of primary food production, along with research, technical, finance and other farm service providers, and you get a different picture.

Asked what they think Canadian agriculture will be like in 10 years time, these people recognize the challenges, but also see an industry ready to shuffle off the status quo and do things differently. Here are some of their thoughts: Rob Saik, CEO Agri-Trend Group of Companies Ten years ago, Agri-Trend began as an independent agrology consultancy. Today it encompasses three different companies designed to help growers capitalize on opportunities, and Saik is constantly scanning the horizon for the next big trend.

“One thing I’m keeping my eye on is societal change and the shift toward green-based economies,” he says. He describes this environmentally-friendly approach to the way things work in terms of red-box and green-box solutions.

At its simplest, red-box solutions solve 14 | Farm Forum | Summer 2008

Ed Lefsrud, President Canadian Seed Growers’ Association

Ross Bricker, President and CEO AVAC Ltd.

a specific and immediate problem such as As he sees it, “there’s going to be a lot drought relief. Society sees the need and of change in agriculture in the next 10 supports government aid programs to years.” Hang on to your hat. help farmers but it’s a one-off solution.

Green-box solutions take the long view Ed Lefsrud, President to change with the societal goal of being Canadian Seed Growers’ Association Ed Lefsrud started farming in 1965, more environmentally conscious.

Take the desire for green space versus and has been a seed grower since 1970.

In that time, he’s seen a urban sprawl as an exlot of change from his ample. “People say they’d As farmers we have 4,800-acre farm near Vilike to see more green king, AB. For him, labour space between Calgary the land and we availability and mentorand Red Deer. If that’s have the knowledge ing the next generation the case, then policies are two issues among need to be put in place to to grow crops — many that will shape the pay farmers for land they what we need is a future. could otherwise sell to deLefsrud sees the very modern version of velopers,” says Saik. “Sonature of farm work ciety often says agriculture the harvest brigade. continuing to change as should do this or that, but farms get bigger and refarmers need to get paid. I think people are becoming more willing quire more business management. “Farmers are going to have to get comfortable for this to happen.”

Saik predicts new trends in food pro- at the desk and know the work’s getting duction: “I see a day when we don’t buy done outside,” he says.

The question is: who’s doing the grain based purely on grades, but on nutrient density. On the management front, work? “As farmers we have the land and farmers are going to continue to sur- we have the knowledge to grow crops — round themselves with outside expertise. what we need is a modern version of the On the carbon offsets debate, agriculture harvest brigade.” He sees this as a public has to become more forceful in helping responsibility, and envisions a time when people-rich industries, like oil and gas, to mold policy.”

share human resources in off-seasons.

An aviator, Lefsrud is inspired by that industry’s emphasis on mentoring younger generations into the business. “I talk about this all the time,” he says. “How to get the old guys to encourage the young guys.” For him, this is critical for agriculture’s path forward, and he sees the recent increased public attention on agriculture and food as a positive step in this direction. “There is a pride of ownership in the industry. Agriculture has a sweeter ring than it did four or five years ago.”

farmforum.cA

©iStockphoto.com/Andrey Prokhorov

Ross Bricker, President and CEO AVAC Ltd. Ross Bricker still lives on his century family farm. He spent time in biotech research, policy and ag finance before moving to AVAC, an organization specializing in early stage, value-added opportunities in agriculture.

Bricker sees a significant trend toward outside investment in agriculture, in land primarily, and this could be a big stabilizing force for primary producers.

“There will continue to be a change in ownership structure, with more absentee landlords,” he says. “Agriculture is the buzzword in finance right now.” Private and institutional investors are always looking for high returns and reasonable risk, he notes. “They see agriculture as undervalued, so it’s a viable buying option for them.”

He says this will help primary producers who want to expand. “If I’m a farmer with 3,000 acres and want to grow, the decision for me is: do I borrow to buy land, or do I go with investors looking for a trusted partner who will look after their investment — the land?”

The change in ownership structure, says Bricker, is driving increased sophistication in decision-making and management. Is it a sea change? Yes and no.

There are still family farms, says Bricker. They’re just bigger and have better cash flow. FF for more information visit us online online articles High prices boost production www.farmforum.ca/production Where have all the students gone? www.farmforum.ca/agstudents additional resources Agri-Trend group of companies www.farmforum.ca/agritrend Canadian Seed Growers Association www.farmforum.ca/seedgrowers AVAC Ltd. www.farmforum.ca/avacltd

The future looks digital Rob Saik, CEO of the consultancy Agri-Trend, says one of the strongest forces driving change in agriculture is technology. And he doesn’t just mean bigger, more sophisticated equipment. He means the entire digital age. It has arrived at the farm gate, and if you’re ready for it, it could change everything you think you know about farming.

“One of the main agents of change is pure technology,” he says. “Some people can grasp it and deal with it. Others will say it’s too much for them.”

He calls it the digital farm — a collection of bits and bytes that represent everything from a farm’s boundaries and GPS coordinates to soil types, amounts of solar radiation and moisture received, crops raised, and inputs used currently and in the past.

“Soft” farm details, such as management decisions, market information, dates — almost anything you can think of that has anything to do with producing crops or raising livestock — can flesh out the digital profile of a field or entire farm.

“Digital technology will be able to track all those activities and information, and generate a digital shadow of the farm,” says Saik, adding that the more information you have, the sharper the shadow. “It’s the degree of sharpness that indicates value to the farm.”

That’s quite a concept to wrap your head around, but it does make sense. “Long after the tractor has left the land, you can imagine a field as layers and layers of data substantiating how a crop was grown.”

If information is power, then the digital farm is the ultimate power for farmers, Saik believes. He offers this example: It’s 2018 and two farmers have land to sell.

One of them has a digital farm revealing everything about the land from average rainfall to heat units to crop varieties grown over the years. The other has paper records of the previous few years that show only what was grown, when and with what inputs. “Which one,” asks Saik, “do you think will sell for more?” FF Farm Forum.cA | 15

Nothing outperforms.

16 | Farm Forum | Summer 2008

Always read and follow label directions. InVigor速 is a registered trademark of Bayer. Bayer CropScience is a member of CropLife Canada.

1 888-283-6847 www.bayercropscience.ca or contact your Bayer CropScience representative.

Farm Forum.ca | 17 09/07-6081-01C

business

How do you defer income?

Carefully

By Kieran Brett

©iStockphoto.com/Cstar Enterprises LLC

that’s specific to your own business and personal situation.)

Defer grain sales until 2009 Canadian farmers, unlike most other business owners, can have their income taxed on a cash basis or an accrual basis. With cash-basis accounting, taxation occurs only when cash is received from a sale.

Farmers cherish the flexibility that cash-basis filing makes possible. Among other advantages, it allows delivery of grain in one year while deferring tax on that income to the following year. For example, you could deliver grain in October 2008, but defer payment until January 2009. Friesen cautions that this strategy applies only to grain, though some producers defer sales on agricultural commodities that are not eligible.

“A sale of cattle technically cannot be deferred,” he says. “Farmers are offside on this provision on occasion, and it has attracted the attention of Canada Revenue Agency.”

Higher incomes mean farmers need to do some tax planning now.

Keep your 2008 tax bill under control with these classic strategies. But don’t wait until December.

Start planning now

I

t’s the kind of problem prairie farmers have looked forward to having for a decade or more. With prospects for generally good moisture and strong crop prices in 2008, many grain and oilseed growers could pull in the biggest incomes they’ve seen in years. The problem? Many will be paying substantially more income tax, too.

At the Saskatoon, SK office of chartered accountants Meyers Norris Penny, partner and tax specialist Ron Friesen is ready to help. He knows farm clients will be looking to keep their 2008 tax bills

18 | Farm Forum | Summer 2008

manageable, and income deferral strategies will certainly be on the menu.

“The idea of deferring income is to get more of your income into a lower tax bracket,” says Friesen.

While the classic income deferral strategies are generally well-known to producers, each carries short- and longterm risks that producers can’t afford to ignore. Friesen offers these strategies and, for each, outlines rules to observe and pitfalls to avoid. (Before implementing any of these moves, be sure to obtain qualified tax planning advice

Buy 2009 inputs in 2008 By the fall of each year, grain and oilseed growers have a good idea how their income and expenses are shaping up. To reduce current-year income, farmers filing on a cash basis can pre-buy the following year’s seed, chemical and fertilizer.

“This one has been very successful for many farmers,” says Friesen, “especially when input prices are rising.” But there’s no guarantee that fertilizer prices will always be higher in the spring than the previous fall. One of these days, Friesen suggests, many farmers will wind up on the losing end of a pre-buy transaction.

Pay your bills A third deferral technique is based on the fact that, under cash-basis accounting, accounts payable are not deductible until they are paid. If you have equipment repaired in December, for example, don’t wait until January to pay for it. If you pay by December 31, you can count the repair cost as a current-year expense, potentially reducing your tax payable.

Before making late-year equipment deals, be sure you need the equipment.

Income deferral strategies have long had a place in farmers’ tax-saving arsenal, and Treherne, MB producer Brent Metcalfe believes he’s tried many of them.

The key to trimming income without hurting the farm? Metcalfe believes his decisions should make business sense first, and tax sense second.

“Things like pre-buying inputs or deferring sales can be useful in the short term,” he says, “as long as you’re getting the cash flow to keep you going. Not all financial institutions will be with you on that.”

Producers are used to seeing fertilizer, for example, cost more in the spring than the previous fall. This relates to supply and demand issues, as well as spring distribution bottlenecks. To Metcalfe, a late-year fertilizer buy can make sense even before considering its tax advantages. Factor in the income deferral, and it’s a slam dunk.

He notes that the price of a ton of phosphate more than doubled in a matter of months, jumping from $600 in the fall of 2007 to $1,300 in May 2008. Still, what if the price actually fell between fall and spring?

“You run that risk,” says Metcalfe, “but more years than not, it’s cheaper in the fall. “The price of fertilizer seldom declines between fall and spring.”

If ever there was a tax-saving trap, in Metcalfe’s view, it’s late-year machinery and equipment buying. The idea is to lock in the initial depreciation this year rather than next. But considering the costs involved, Metcalfe maintains that tax savings should carry relatively little weight in big-ticket purchase decisions.

“You’d better need that piece of equipment for operations, not for tax deferral,” he says. “But if you really are planning to purchase it anyway, then you might as well have the benefit of the depreciation this year.” FF

ing regulations, these and other deferCarry forward past years’ losses New regulations will make it easier to use ral strategies can potentially reduce a previous business losses to reduce the tax farmer’s income for 2008. Many such techniques, however, bite on current income.

Photo courtesy Meyers Norris Penny have a tail-wags-dog “Recently, the carryaspect that Friesen finds forward provision for troubling. Just because losses has been extended a strategy like deferring significantly,” says Friessales can save tax in the en. “You can now carry short run, that doesn’t forward for 20 years, mean it’s smart in the instead of seven (as in long run. the past), losses that oc“I can see deferring a curred in 2006 and later sale if it made sense for tax years.” business reasons,” says How do you know Friesen, “but when does if you have losses to it make good business carry forward? If you’ve sense to collect a receivworked with the same Ron Friesen of able 365 days after you accountant for a numMeyers Norris Penny. accrued it?” ber of years, they’ll have Accustomed to the that information. You benefits of cash-basis can also check previous Notices of Assessment, Friesen notes, or ask Canada accounting, many farmers will be stratRevenue Agency for what’s called a multi- egizing this summer about what to prebuy this fall, and which sales to delay year data form.

Despite their risks and accompany- until 2009. These approaches have a

role to play, but many farmers continue to ignore a strategy Friesen believes has much greater benefits: incorporating the farm business.

“When you talk to farmers, they’ll often tell you that incorporation is expensive to get into, hard to get out of and difficult to deal with,” says Friesen.

“I will tell them it’s just the opposite. If we get a decent crop this year, income deferral alone will not be enough. As a tax planner, my view is that 99 per cent of farmers should incorporate their farm businesses.” FF

farmforum.cA

Photo courtesy bayer cropscience

Farmer focuses on cash flow

for more information visit us online online articles Watch delivery dates on late-year equipment buys www.farmforum.ca/equipmentbuys Investment tax credits: for those with the deepest pockets www.farmforum.ca/investmenttaxcredits additional resources Myers Norris Penny library www.farmforum.ca/mnplibrary Should you incorporate your farm? www.farmforum.ca/incorporate Farm Forum.cA | 19

bp u rs o idnuecstsi o n

The making of a canola hybrid

Every new canola hybrid is the product of a complex and expensive breeding process.

The payoff: improved productivity that’s driving open-pollinated varieties into the history books By Kieran Brett Amazing things happen when you plant hybrid canola seed. Because today’s hybrids are far more vigorous than old-style, open-pollinated canola, the young plants emerge more quickly and in better shape.

Even when conditions are less than perfect, the plants’ hybrid vigor makes the best of it. Come harvest, your hybrid canola will yield more than any openpollinated variety. In fact, over the past decade, the performance of hybrids has made open-pollinated canola an increasingly rare sight in Western Canada.

What is a hybrid?

A hybrid is a cross between two genetically different inbred parent (male and

Canola hybrids such as Bayer’s InVigor series yield more than openpollinated varieties.

20 | Farm Forum | Summer 2008

female) lines. Half the resulting hybrid’s genetic make-up is supplied by the female parent and half by the male. That’s where the hybrid vigor comes from. The benefits of hybridization include more robust plants, better agronomic characteristics, and higher yield.

Because canola is normally self-pollinating, its male and female parts are on the same flower. So creating a cross-pollinated hybrid is more complicated than with corn where male and female organs are physically separated. Canola breeders need to prevent the female parent line from making pollen so it doesn’t fertilize itself. Creating this so-called male sterility trait is tricky and can be done in different ways.

Inside two systems: Bayer and Pioneer The process used for Bayer CropScience’s InVigor hybrids started at the University of Ghent in Belgium in 1989. There, researchers found ways to stop pollen from being produced on the female (male sterile) plant. The only source of pollen would then be from the male plant selected by the plant breeder to make the hybrid.

Bayer’s proprietary system creates a female plant that does not produce pollen, and a male plant that does produce pollen and restores fertility. When crossed, the two produce a hybrid.

This system allows development of parental lines in all genetic backgrounds, enabling plant breeders to develop superior hybrids for commercial canola growers. This flexible system provides InVigor breeders with virtually unlimited combinations of genetic material. Parental lines can thus be farther apart genetically, which increases the level of hybrid vigor in the offspring seed.

“Much of the success of the InVigor system lies in the fact that it is very environmentally and genetically stable,” says Stewart Brandt, Bayer CropScience plant breeder and manager of breeder operations in Saskatoon. “This means we can produce our hybrids in virtually any background, which allows us to make any hybrid cross we want.”

Dave Charne, research director with Pioneer Hi-Bred, explains that Pioneer’s hybridization platform is known as OGU-INRA, a French-Japanese system adapted by Pioneer to make it suitable for canola. This system is also based on achieving male sterility, but the technology is different.

Pioneer’s Cytoplasmic “Male Sterility” (CMS) method of hybridization controls fertility at the cellular level. Through CMS, breeders can produce female plants that either don’t produce pollen, don’t release pollen or whose pollen won’t result in self-fertilization. The use of different lines allows breeders to switch fertility off while hybridization is taking place, then switch it back on for field production.

Stewart Brandt, plant breeder and manager of breeder operations at Bayer CropScience’s Saskatoon facility.

Hybrid seed production Just as hybrid plant breeding is more complex than open-pollinated, hybrid seed production is likewise significantly more demanding.

InVigor seed is grown by seeding alternating bays of the male and female lines. Male plants produce pollen and are tolerant to the herbicide Liberty. Female plants contain the male sterility gene, which also is linked to the Liberty tolerance gene. So, Liberty can be applied to the entire crop to keep it weed-free.

Application of Liberty also completely prevents the female from producing pollen. If the female plants did not have the male sterility gene, they would also not have the gene for Liberty tolerance and would be controlled by the herbicide application. This extra level of genetic assurance helps achieve an exceptional level of hybridity.

Lionel Lamont, Bayer’s manager of canola business operations for North America, explains that producing InVigor seed is a three-step process. The first step, called pre-basic seed production, happens in isolated cages or tents. Each plant is individually tested as it grows to ensure that it has the correct genetic profile.

The second step, called basic seed production, is a highly controlled production process using isolated small-field plots to ensure the plants’ superior genetic profile continues in the field. Field-scale Certified seed production is the third step. Here, Bayer agronomists work closely with seed growers to achieve purity.

“We grow the pre-basic in pollination control cages or tents, the basic in British Columbia, and the commercial Certified seed in the Lethbridge region,” explains Lamont. “These areas provide relative isolation from foreign canola pollen, which reduces the risk of outside pollination. They also have access to irrigation and a slightly longer growing season.”

From initial genetic screening to the intricacies of plant breeding and the exacting standards of seed production, hybrid canola is the work of hundreds of skilled and dedicated people. Their efforts are rewarded when commercial growers pay premiums for the seed to improve their chances of harvesting high-yielding, highmargin crops. FF farmforum.cA

Photos courtesy bayer cropscience

Charne says a key issue in hybrid canola seed production is that even the smallest quantity of pollen at the wrong time is enough to create undesirable selfpollination. As hard as plant breeders work to achieve hybridization, the canola plant’s physiology is pulling in the opposite direction.

An individual canola flower, he explains, develops a pod with 30 to 40 seeds. The same flower has six anthers, which can produce something on the order of 20,000 pollen grains. With the canola plant going all-out to self-pollinate, achieving 99 per cent sterility isn’t good enough.

“The challenge with hybrids is that you have to shut down pollen production completely,” he says. “If 20,000 pollen grains come from a flower, and there’s even 1 per cent pollen leakage, that’s 200 grains of pollen.”

for more information visit us online online articles Why hybrid vigor is a one-time event www.farmforum.ca/onetimeevent Does straight-cutting suit hybrids? www.farmforum.ca/straightcutting additional resources Bayer CropScience InVigor canola hybrid www.farmforum.ca/invigor Pioneer Hi-Bred www.farmforum.ca/pioneer

Bayer CropScience canola breeding trials.

100-bushel canola?

Stay tuned As much as yields have improved thanks to hybrids, canola still isn’t the poster-crop for genetic improvement.

That’s corn.

Dave Charne, research director with Pioneer Hi-Bred, explains that in the mid-1920s, the average corn yield was 25 bushels per acre. Hybridization, ongoing plant improvements and better agronomic practices drove average yields to 150 bushels per acre by 2005. Call it a six-fold yield increase in 80 years.

Could the same happen with canola? While he’s not making any promises, Charne notes that hybridization has brought about two distinct yet related improvements. First, the initial wave of hybrids brought a dramatic one-time jump in canola yields. Second, building on this, hybrid breeding is allowing breeders to improve canola yields more quickly than they could with open-pollinated lines. It seems likely, then, that the hybrid-driven increase in canola yields is far from over, with a long-term doubling very much in the cards.

“Is this possible? I believe it is,” says Charne. “There is no reason why, over the long term, we can’t at least double yields solely through the continued progress of hybrid breeding.” FF Farm Forum.ca | 21

fa r m l i f e

Laura and Norman Shoemaker at work on their farm in Mossbank, SK, which has been in the family since 1917.

Farming outside the box

Land ownership is not a priority for this young farm couple who figure available capital works harder on the operating side of their business By Kate Rowland From the beginning, Norman and Laura Shoemaker set out to create a profitable business with extremely limited capital. In little more than a decade, they parlayed their agronomy skills and family farm into a 17,000-acre operation at Mossbank and Grand Coulee, SK. And they recently teamed up with Grand Coulee-based Wigmore Farms. This new partnership lets the Shoemakers offer a wide range of complementary agri-services to their fellow farmers.

Back in 1993, Norman and Laura, newly married and with ag diplomas from the University of Saskatchewan, returned to Norman’s family farm at Mossbank to work with his parents.

The land has been in the family since 1917. Norman and Laura are the fourth 22 | Farm Forum | Summer 2008

generation to farm it.

For the next six years the farm ran as a partnership. Then in 1999 it was incorporated to facilitate the generational transfer to Norman and Laura. As part of their business plan to increase available capital, the pair sold then all but 960 acres of their farmland to Assiniboia Farmland Limited and rented it back.

“We were actually the first to sell to the Assiniboia Farmland group. People certainly wondered what we were doing,” Laura says. Today, though, more and more farmers are looking at land as a commodity. “It is a good way for farmers to diversify their holdings and gain more operational capital,” she explains.

“Separating land ownership from farming spreads risk, and has made it easier

for us to transition to what we’re doing now.” The Shoemakers hope to continue building on the relationship they have established with Assiniboia, Laura adds.

In 2002, using their agronomic training and experience to increase profit margins, they became pedigree seed growers.

Last year the Shoemakers had more than 5,000 acres in seed crops, primarily barley, chickpeas, lentils, wheat, canola and winter wheat. They manage rotations so that crops are pulled into seed markets rather than pushed into end-use markets.

In January this year the Shoemakers linked up with Greg Menzies’ Wigmore Farms Ltd. “We were looking at expanding our operation. We’ve known Greg for some time. The world of agriculture is fairly small, especially in Saskatchewan.

Through mutual friends, we got talking,” Wigmore Farms’ multitude of services — from input sales to crop processing Laura says.

Norman now manages the farm op- to export marketing — the world is now erations division and Laura runs the crop open to the Shoemakers’ products. The Mossbank operation production products produces field peas, division.

Following the purchase of Dean Last year the Shoemakers lentils and durum while Grand Clarke Agri Services, had more than 5,000 acres wheat, Coulee produces with six Saskatchin seed crops, primarily lentils, chickpeas, ewan locations, Wigmore can offer chemibarley, chickpeas, lentils, canola, and durum.

As well, Laura says, cals, fertilizer, custom wheat, canola and win“we have a new hard application services, winter wheat variety fuel and lubricants, ter wheat. They manage — Ptarmigan — that agronomic support rotations so that crops are has some very good and more. characteristics.”

Laura sees their agpulled into seed markets Their goal with the ronomic background rather than pushed into new business is to creand education as critiate a value chain. “We cal to their success. end-use markets. supply the inputs and “It’s being able to do a good job with what you’ve got. You have grow the product, then we process, marto maintain that,” she says. “You also ket and export it,” says Norman. “We are have to know your limitations, and not branding our product through the entire value chain.” get ahead of yourself.”

Growth aside, one thing the ShoemakWith two farm sites (Grand Coulee and Mossbank, 140 km apart) and ers still struggle with is finding farm help.

The Shoemaker family at home L to R: Norman, Laura, Neil and Megan.

Being closer to the city with the Grand Coulee operation does provide access to a larger seasonal labour pool, however.

And participation in a larger organization opens up more doors through staff sharing and cross-training opportunities with Wigmore Farms’ different divisions.

The Shoemakers’children (10 and 12 years old) are also being exposed to new ideas and new opportunities. “This shows them there’s a lot more to the business of farming than cropping land,” Laura says.

“To be involved in agriculture doesn’t mean you have to be a primary producer.

They get to understand that by seeing the whole picture.”

–Norman and Laura Shoemaker were national co-winners of the Outstanding Young Farmers’ program for 2007. FF farmforum.cA

Photos courtesy the Shoemaker family

The Shoemakers accepting their Outstanding Young Farmers’ award, last fall, as 2007 national co-winners.

for more information visit us online additional resources Outstanding Young Farmers’ Program www.farmforum.ca/oyfcanada Assiniboia Farmland group www.farmforum.ca/assiniboiafarmland Wigmore Farms Ltd. www.farmforum.ca/wigmorefarms Farm Forum.ca | 23

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