November • December 2014
The official publication of the U.S. Canola Association and Northern Canola Growers Association
SMART FARM MANAGEMENT Maintaining Cash Flow and Growing Money
LET THE PROFIT POSSIBILITIES
FLOW.
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*Risk is lower compared with commodity canola due to an “Act of God” clause for Nexera contracts. ®Trademark of The Dow Chemical Company (“Dow”) or an affiliated company of Dow ©2013 Mycogen Seeds. Mycogen Seeds is an affiliate of Dow AgroSciences LLC. S38-331-001 (09/13) BR 010-13422 MYCOCANL3052
NOVEMBER • DECEMBER 2014 VOL. 9, NO. 4
WWW.USCANOLA.COM EXECUTIVE EDITOR Angela Dansby angela@uscanola.com
features
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MANAGING EDITOR Alison Neumer Lara alison@uscanola.com
Grower’s Choice: PLC or ARC? Deciphering 2014 Farm Bill Safety Nets
ASSISTANT EDITOR Molly Collins molly@inkovation.biz CONTRIBUTING WRITERS Kim Anderson; Michael Boehlje; Barry Coleman; Sheri Coleman; Eric A. Devuyst; Jon Dockter; Tom Hance; Ryan Larsen; James Mintert; Ron Sholar; Karen Sowers; Andrew Swenson; Dale Thorenson
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Canola Makes ‘Cents’ in Southern Plains Economic Benefits of Wheat-Canola Rotation
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PUBLISHER Issues Ink 1395-A S. Columbia Road PMB 360 Grand Forks, ND 58201-9901 tel: 877.710.3222
Examining Sources of Farm Equity
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Low-Cost Production Managing Your Farm Business in an Economic Downturn
OWNED BY U.S. Canola Association 600 Pennsylvania, SE, Suite 320 Washington, DC 20003 tel: 202.969.8113 • fax: 202.969.7036 www.uscanola.com Northern Canola Growers Association 2718 Gateway Ave, #301 Bismarck, ND 58503 tel: 701.223.4124 • fax: 701.223.4130 www.northerncanola.com
Piggybacking on Net Worth
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Mapped: Canola Genome to Speed Improved Traits Complex Sequence of Genes Reveals Crop’s Potential
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REGIONAL AFFILIATES Great Lakes Canola Association www.agry.purdue.edu/ext/canola
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Canola Crush Plants Spark Acreage in Southeast Slow but Steady Crop Growth Boosts Rural Economy
Great Plains Canola Association www.greatplainscanola.com
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Minnesota Canola Council www.mncanola.org
Timely Biotech Trait Approvals in Question
Canadian-European Union Agreement Positions Canola for Export
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Washington Forecast Perspectives on Mid-Term Elections
U.S. Canola Digest is published four times a year in January/February, March/April, September/October and November/December by the U.S. Canola Association (USCA) and Northern Canola Growers Association (NCGA). Subscription is complimentary to all USCA and NCGA members and other qualified members of the U.S. canola industry. Reproduction of contents is forbidden. Copyright 2014. Postmaster: Send address changes to Northern Canola Growers Association, 2718 Gateway Ave., #301, Bismarck, ND 58503. or email lcoleman@ndpci.com
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on the cover
departments
Maintaining cash flow is critical when crop prices are down and farm margins are tight. That means investing less in equipment and machinery and becoming a low-cost producer.
Winter Reads for Work, Play and Gifts
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Editors’ Letter USCA Update NCGA News PNW News
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GPCA News MCC News Quick Bytes Canola Cooks
editors’ letter
Getting Down to Business IT’S WINTER, so now is the time to plan for the next year and take a good look at your balance sheet. To help you do so, this issue of U.S. Canola Digest features a top team of agricultural economists with farm business management advice. Read tips on becoming a lowcost producer, earning more from canola-wheat rotation, choosing the right crop insurance program and managing farm equity. We also discuss the potential of the new canola genome map, mid-term elections, and acreage in the southeast due to new crush plants. Across oceans, we examine challenges for canola and other biotech crop exports in Europe and China.
Managing in a Downturn
Bumper crops have driven prices down, leading to tight operating margins for growers. What do you do to remain a successful low-cost producer? There are five strategies to success, according to agricultural economists at Purdue University. The first step is to protect your working capital, which is the difference between current assets and current liabilities. Don’t destroy it by overinvesting in equipment and machinery. To learn more and maintain cash-flow, turn to page 16.
Rotating Wheat-Canola Makes ‘Cents’
Growers almost tripled returns per acre with a wheat-canola rotation in the Great Plains, note Oklahoma State University professors. The switch takes money and time, plus additional equipment, but a 15 percent yield increase and better control of weeds and diseases makes canola an appealing rotational crop for wheat growers. Learn more about the economic advantages on page 10.
Farm Bill Choices
Now that the 2014 Farm Bill is in full gear, important deadlines are approaching for insurance coverage programs. The Price Loss Coverage will be relevant to base acres, not current planted acres. The county version of the shallow loss revenue program is Average Risk Coverage. Learn more on page 8 about the best option for your farm. Also check Quick Bytes on page 30 for upcoming deadlines for reallocating base acres.
Farm Equity
Do you understand the sources of your equity or net worth? If not, you might not have as strong of a position as you thought. According to an agribusiness expert at North Dakota State University, farmers have recently been relying more on their retained earnings to build net worth than asset evaluation. Walk through more financial analysis on page 12.
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Canola Genome Map
A team of international researchers uncovered the genome sequence of canola and published their findings in the journal Science in August. This research will allow scientists to accelerate canola plant breeding and develop useful traits such as higher oil content and improved stress resistance. Discover more for yourself on page 18.
Southeast Rising
The southeastern U.S. is slowly increasing canola acreage as more crush plants crop up. AgStrong is building oilseed processing plants in Georgia and Kentucky to create opportunities for canola farmers and reduce travel time to sell the seed. The more grower interest piques in the region, the more infrastructure to support it is expected. Travel to the southeast on page 20.
Mid-Term Elections
The Republican domination of Congress following November elections suggests disapproval of President Obama, gridlock and bipartisan fighting. It is now hoped that things can get done on Capitol Hill, moving forward farm bill measures, ag trade policy and most importantly, a budget to keep the government operating. Read more about election results on page 24.
Delayed Biotech Crop Approvals
Canada and the European Union finally completed a free trade agreement which paves the way for zero tariffs on Canadian canola oil imports and faster approvals of new biotech traits in canola. While the agreement bodes well for expanding canola exports to Europe, the Canola Council of Canada is cautiously optimistic due to historic delays with biotech approvals there. Adding pressure to this effort, the U.S. Canola Association and other members of the U.S. Biotech Crops Alliance recently wrote the European Commission about completing import authorizations for eight new biotech traits for canola, soybeans, corn and cotton that received positive safety assessments from the European Food Safety Authority. Delaying approvals could have a serious impact on European livestock and poultry industries, which are 70 percent dependent on feed imports, as well as to consumers in the form of higher food prices. Feed on these topics in a feature on the trade agreement and USCA Update on pages 22 and 4, respectively.
Quick and Sweet
Quick breads such as muffins and tea cakes are easy to prepare and showcase the season’s flavors. Find a recipe for Pumpkin Gingerbread Muffins made with canola oil on page 32. As 2014 comes to a close, let us count our blessings … and our seeds! Happy Holidays,
executive editor angela@uscanola.com
managing editor alison@uscanola.com
Canola Expo 18th Annual
Langdon Activity Center Wednesday, December 10, 2014 9:00
Registration/View Exhibits/Sign up for Door Prizes
9:05
Welcome Jon Wert, NCGA President
9:15
Farm Bill Informational Update ND Farm Service Agency Staff
9:45
Clubroot in Canola Ron Beneda, NDSU Dan Orchard, Canola Council of Canada
10:30
Exhibitor Break
11:15
NCGA Annual Business Meeting NCGA Board of Directors and Staff
12:00
Complimentary Lunch/View Exhibits
12:30
Keynote Address -- Oilseed Markets Jerry Gulke - Gulke Group
2:00
Drones in Agriculture -ND Research Results John Nowatzki, NDSU
3:45
Door Prizes Giveaway
4:00
Show Closes
Keynote Speaker
Jerry Gulke Gulke Group
Gold Sponsors
Platinum Sponsors
***One lucky winner will get this Arctic Cat 550 ATV donated by NorthStar Agri Industries*** For more information, contact the NCGA office at 701-223-4124 or visit the website at northerncanola.com
usca update
National Research Funds Awarded USCA Acts to Advance Biotech, Rail Shipping DALE THORENSON
T H E U . S . D E PA R T M E N T O F AGRICULTURE’S National Institute of Food and Agriculture announced Oct. 1 the distribution of regional grants totaling nearly $769,000 for the FY2014 National Ca nola Resea rch Progra m (NCR P). Lead institutions receiving funding were: Alabama A&M, Kansas State University, North Da kota State Universit y and Oklahoma State University. The NCRP funding is authorized by the supplemental and alternative crops program on an annual basis through the federal appropriation process. Funding for the NCRP for FY2015 was included in the Senate Agriculture Appropriations Sub-Committee report last summer. However, Congress has yet to pass any final FY2015 appropriation bills. Instead, a Continuing Resolution (CR) was passed in September that lasts until Dec. 11, 2014 to keep the federal government operating in the interim. Congress returns for a lame-duck session after the general election. The FY2015 appropriation bills will need to be addressed at that time, either through passage of another CR lasting into the new year or a larger FY2015 omnibus appropriations bill.
Approvals of Biotech Traits
The USCA and other members of the U.S. Biotech Crops Alliance (USBCA) wrote the European Commission in late September, urging the completion of import authorizations for eight new biotech events for canola, soybeans, corn and cotton – all of which have already received positive safety assessments from the European Food Safety Authority (EFSA). “We urge the European Commission to respect the EU’s obligations under the WTO to make timely regulatory deci-
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sions on new biotechnology applications,” the group stated in the letter. “The time required for EU decisions on new biotech crops has only lengthened in recent years and no authorizations have been issued since November 2013. Several of the eight products have been before the European Commission since the end of 2013 and were submitted to EFSA more than five years ago. In addition, some of these products are already being grown in exporting countries under stewardship programs. “Timely action now by the Commission to provide final authorization will ensure that there is no risk of disruption to the essential supply of feedstocks needed by the EU’s livestock and feed industries. Any disruption would have a serious impact on the livestock and poultry industries and feed processors in Europe, which are 70 percent dependent on imports of protein, as well as to consumers in the form of higher prices.”
market access and Chinese biotechnology policy a top priority at the 2014 Asia Pacific Economic Cooperation Leaders’ Summit, hosted by the Government of the People’s Republic of China. The groups noted that grain exports of soybeans and corn to China were valued at over $17 billion in 2013 and that 90 percent of the corn and soybean acreage in the U.S. was planted to biotech varieties. The groups also said that “the U.S. agricultural crop value-chain currently faces serious challenges in providing for predictable and stable trade to China due to the inability to secure timely import approvals for new biotechnology products and a growing concern that factors other than science are being used as justification to reject applications. In some instances, this has created a situation where U.S. exports of agricultural crop commodities have ceased or are in jeopardy of being rejected.”
Biotech Crop Exports to China
DA L E T H O R E N S O N I S A S S I S TA N T D I R EC TO R O F T H E U. S . C A N O L A ASSOCIATION IN WASHINGTON, D.C.
In a letter to President Obama last month, USBCA members urged him to make U.S.
National Canola Research Program Awards FY2014 EXPANSION OF CANOLA PRODUCTION IN THE SOUTHEAST Investigator Institution Ward, R. N. ALABAMA A&M - NORMAL, AL
Amount $139,473
DEVELOPMENT AND MANAGEMENT OF CANOLA IN THE GREAT PLAINS REGION Investigator Institution Stamm, M. KANSAS STATE - MANHATTAN, KS
Amount $210,000
NORTH CENTRAL CANOLA RESEARCH PROGRAM Investigator Institution Jenks, B. NORTH DAKOTA STATE - FARGO, ND
Amount $210,000
EXPANDING ACRES & IMPROVING WINTER CANOLA PRODUCTION IN THE SOUTHERN GREAT PLAINS: A SYSTEMS APPROACH FROM PLANTING TO POST-HARVEST Investigator Institution Amount Post, A. R. OKLAHOMA STATE - STILLWATER, OK $209,451 Total Awards: $768,924
U. S . C ANOL A D IG EST NOVEMBER • D ECEMBER 2014
Getting Railed: U.S. Freight Service Needs Overhaul Surface Transportation Board and Senate Weigh In TOM HANCE
U.S. RAIL CONGESTION ISSUES continue for farmers and grain processors, as well as for other industrial goods and even passenger trains. For example, Amtrak officials report that the latter are now late 60 percent of the time compared to 35 percent one year ago. Service disruptions in freight transportation have prompted continued efforts by agricultural groups and other stakeholders to improve service and communication from rail companies. In addition, the U.S. Senate has steamed ahead with proposed legislation to reauthorize and empower the Surface Transportation Board (STB) to improve rail service. The STB has already responded by beefing up rail service reporting requirements.
lish an arbitration process for rail disputes and establish firm time frames for cases to be considered. The bill was passed by the Senate Commerce, Science and Transportation Committee on Sept. 10. While the outlook for the bill passage is dim, ag groups have been meeting with Senate offices to discuss the measure and broader transportation issues. Several senators, including some from agricultural states on the Commerce, Science and Transportation Committee, raised concerns with the bill during the hearing and mark-up. Rail companies are actively working against the potential legislation.
STB Crack Down
On Oct. 8, the STB announced it will now require expanded reporting of rail service metrics on a weekly basis – including for the first time for non-agricultural products – and extend reporting to all Class I railroads. Weekly reporting requirements previously applied only to BNSF and Canadian Pacific Railways for grain and fertilizer. The new STB order expands reporting of detailed rail service metrics to Union Pacific, CSXT, Norfolk Southern and Canadian National – the remaining four of six Class I carriers operating at the congested Chicago gateway. Some of the reporting requirements apply to coal, crude oil, ethanol, automotive, intermodal and manifest traffic. Railroads are required to start reporting the new service metrics as of Oct. 22.
Senate Pressure
Senators Jay Rockefeller (D-WV) and John Thune (R-SD) introduced a bill (S. 2777) to reauthorize and improve the STB. The bill would give STB the authority to initiate investigations, estab-
and Congress to consider impacts on urban and rural communities when developing a national freight strategy and reauthorizing the surface transportation programs. Highlights from the GAO report include: DOT projects that total tonnage of freight moved annually in the U.S. will increase 51 percent from 2007 to 2040 from nearly 18,900 million tons to over 28,500 million tons. In 2012, the U.S. transportation system moved 19.7 billion tons of goods, valued at more than $17 trillion, according to the DOT. Freight travels over an extensive network that consists of approximately 4 million miles of highways and roads and 140,000 miles of rail lines, as well as inland waterways, pipelines and airways. Although 2013 STB data were not available, data from the Association of American Railroads show that the total number of carloads in 2013 continued to climb toward 2007 levels.
Waterway Infrastructure
Rail Research
The Government Accountability Office (GAO) recently released a report on how commodity flows are affecting local freight-related traffic congestion in 12 areas of the country. The report was originally requested by Senator Max Baucus (D-MT). It calls for the Department of Transportation (DOT)
Following successful enactment of the Water Resources Reform and Development Act (WRRDA) earlier this year, agricultural stakeholders are now actively working on implementation of infrastructure projects for priority waterways and policies included in the WRRDA. A joint letter from agricultural groups to the White House called for funding in fiscal year 2015 and 2016, including money for the Navigation Ecosystem Sustainability Program (NESP) on the Upper Mississippi River. Authorization and Congressional support for the NESP was reaffirmed in the WRRDA and now focus turns to the Administration and U.S. Army Corps of Engineers to implement the program and project funding. Funding for NESP was last appro-
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usca update
priated in 2011 and under current law, it could be de-authorized if it does not receive funding by FY2016, undoing years of multi-state collaboration and study. Groups are urging the Administration to prioritize construction funding for NESP in the FY16 budget request to immediately undertake navigation efficiency improvements and upgrades to locks, including design and construction of new and larger locks on the Upper Mississippi River, if feasible. The governors of the Upper Mississippi River Basin Association (MN, WI, IA, IL and MO) also wrote on Aug. 20 to President Obama in support of funding for this program. Waterways stakeholders are also pushing for support among Congressional appropriators for provisions in the
WRRDA to provide more Harbor Maintenance Trust Fund (HMTF) dollars for their intended purposes. The House and Senate appropriations bills
if there is an FY2015 omnibus appropriations bill instead of a Continuing Resolution that would keep funding at FY2014 levels.
Truck Weight
for FY2015 provided increased funding for HMTF functions, though the House levels are higher and efforts are focused on securing the House funded levels
Reauthorization of the STB will be on the Congressional agenda in 2015 and stakeholders continue to advocate for provisions to increase truck weight limits on interstate highways to 97,000 pounds with the addition of a sixth axle. Congress temporarily extended the current surface transportation programs and work will not resume on a new bill until the next Congress. TOM HANCE IS A POLICY EXPERT AT G O R D L E Y A S S O C I AT E S I N WASHINGTON, D.C.
Photograph Yellow, Win Green Enter the sixth annual U.S. Canola Digest photo contest for the opportunity to win cash prizes and have YOUR photo published in the magazine! Check out www.uscanola.com for submission details – and make it snappy! The deadline for submission is Jan. 1, 2015.
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regional news
Annual Canola Expo and Research Conference Acreage Up in North Dakota BARRY COLEMAN AND SHERI COLEMAN, B.S.N., R.N.
THE NORTHERN CANOL A GROWERS ASSOCIATION (NCGA) will hold its 18th Annual Canola Expo on Dec. 10, 2014 in Langdon, N.D. The keynote speaker will be Jerry Gulke of the Gulke Group, who will highlight major factors expected to influence agricultural markets in 2015. In addition, Ron Beneda, North Dakota State University (NDSU) Cavalier County extension agent, and Dan Orchard, agronomy specialist with the Canola Council of Canada, will address clubroot concerns. North Dakota Farm Service Agency personnel will also provide information on the new farm bill for growers. John Nowatzki of NDSU will give an update on drone research in North Dakota. The NCGA also will hold its annual membership meeting that day. Special thanks to NorthStar Agri Industries, which will be giving away an Arctic Cat XR 550 XT EPS ATV to one lucky grower at this year’s Canola Expo! The winner must be present to win.
Canola Research Conference
The NCGA will hold its 8th Annual Canola Research Conference on Nov. 20 in Fargo, N.D., for growers, members of the research community and the canola industry. The purpose will be to review findings of recent canola research projects in the region and to gather feedback from grower representatives in charting new areas for research. Fifty growers, researchers and industry personnel are expected to attend.
North Dakota Canola Acreage
The total canola acreage in North Dakota in 2014 was 1,172,000 acres – up 27 percent from 2013. The weather in 2014 was much more conducive to timely planting than the prior year. A cool summer also resulted in
Canola Acres in North Dakota by County 2013 2014 Adams 9,304 8,310 Barnes 114 225 Benson 7,032 6,832 Billings 562 471 Bottineau 39,043 57,640 Bowman 5,611 5,442 Burke 44,707 56,165 Burleigh 6,450 5,636 Cass 23 3 Cavalier 193,429 280,365 Divide 11,521 15,800 Dunn 4,867 5,335 Eddy 856 1,267 Emmons 839 710 Foster 543 534 Golden Valley 1,899 955 Grand Forks 2,060 3,200 Grant 4,309 3,088 Griggs 675 427 Hettinger 62,113 49,986 Kidder 1,997 1,900 Logan 395 McHenry 20,733 33,350 McIntosh 736 85 McKenzie 7,642 10,342 McLean 65,281 72,280 Mercer 13,242 11,761 Morton 1,362 2,462 Mountrail 66,798 77,485 Nelson 13,261 13,625 Oliver 3,964 2,923 Pembina 4,851 6,090 Pierce 19,828 22,306 Ramsey 35,582 42,014 Renville 39,043 64,828 Rolette 33,444 62,252 Sheridan 9,063 13,616 Slope 8,527 10,133 Stark 13,762 6,047 Steele 622 550 Stutsman 1,130 811 Towner 50,866 86,135 Walsh 17,518 25,570 Ward 60,449 71,880 Wells 918 1,410 Williams 21,749 29,901 Total 908,325 1,172,542 * Orange denotes record acreage.
excellent flowering for the crop. Condition ratings were high the entire growing season, finishing with 87 percent of the crops rated good to excellent. Cavalier County reported the highest increase in acres in 2014. Harvest reports from all areas of the state indicate canola yields will be near record yields again this year.
Agribusiness Event
In October, the NCGA helped sponsor the Bis-Man Chamber Harvest Ag Mixer, which brings together regional business leaders, chamber members and the North Dakota agriculture community. Several hundred people attended and had the chance to learn firsthand about canola. The NCGA distributed educational items, along with gourmet-flavored canola oils and copies of “Canola Gourmet” cookbook. The event closed with a grand meal made with products grown and raised in North Dakota.
Culinary Forum
For the fourth year, the NCGA participated as a sponsor at the Flavor, Quality and American Menus Leadership Forum hosted by The Culinary Institute of America in St. Helena, Calif. The invitation-only conference brings together leaders in American agriculture and the food and beverage industries. Topics include food and flavor trends, and how those developments shape the future of agriculture and specific crops. The program aims to provide a forum for sharing ideas and strategies on how best to feed U.S. consumers. B A R R Y CO L E M A N I S E X EC U T I V E DIRECTOR AND SHERI COLEMAN, R.N., B.S.N., IS ASSOCIATE DIRECTOR OF THE NORTHERN CANOL A GROWERS ASSOCIATION IN BISMARCK, N.D.
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Grower’s Choice: PLC or ARC? Deciphering 2014 Farm Bill Safety Nets ANDREW SWENSON, M.S.
PRODUCERS WHO HAVE GROWN CANOLA in the past are considered a winner in the 2014 Farm Bill because the price protection program, Price Loss Coverage (PLC), has a strong support price for minor oilseeds. The support price, called the reference price, is $0.2015 per pound for canola, flax, sunflower, safflower, mustard and crambe. However, this is not an incentive to produce minor oilseeds during the five-year period, 2014 to 2018, of the farm bill. PLC program payments will be made on base acres, not current planted acres. The payment rate is the amount the national marketing year average price (MYA) is less than the reference price. The payment rate is multiplied by the payment yield, base acres and 85 percent to determine the producer’s total PLC payment for the program crop. The PLC program has the added benefit of being simple compared to other safety net options in the farm bill. Reference prices are fixed by law for the duration of the bill and so
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are base acres and payment yields after landowners make the one-time decision on whether to reallocate base acres and update payment yields. The only moving part year-to-year in the payment equation is the MYA price. Canola base acres are necessary to receive canola-derived payments from either the PLC or county version of the shallow loss revenue program, Average Risk Coverage (ARC). Base acres for oilseed crops are a relative newcomer to farm policy. The 2002 Farm Bill introduced them by allowing producers to update their bases and add oilseeds. The 2014 Farm Bill does not allow landowners to increase the total base acres of a Farm Service Agency (FSA) farm, but gives the opportunity to reallocate base acres between program crops. The reallocation is by strict formula; the landowner does not have the flexibility to pick and choose how to reallocate base acres. A landowner can either keep the existing base acres or reallocate base acres according to the farm’s average crop mix in the 2009 to 2012 time period.
NOVEMBER • D ECEMBER 2014
Current price projections suggest corn and canola are the most valuable base acres in North Dakota. There is incentive for the landowner to reallocate base acres if it will increase corn and canola base acres at the expense of those for other crops such as wheat.
Base Acre Reallocation
In general, there are two theories on base acre reallocation. Some producers may prefer to have base acre crops which mirror their current rotation. This could be considered a truer safety net because revenue shortfalls on planted acres would likely be somewhat offset by government payments on base acres of those crops. The other theory is to choose the set of crop bases which are likely to provide the greatest payments, regardless of the current crop rotation. Producers with canola history are in an enviable position because canola base acres fit either theory. The first two decisions landowners must make under the 2014 Farm Bill are whether
to reallocate base acres and update payment yields. The deadline is February 17, 2015. The decision whether to update payment yields is the easiest of the farm bill. It’s a nolose proposition. You have a choice between keeping the existing payment yield, associated with the now defunct counter-cyclical payment program, and calculating a new one which is 90 percent of your actual crop yields on the farm during the 2008-2012 time period. You get the higher of the two. It is a one-time update and crop-by-crop decision. For example, you could keep the old payment yield for barley but update the yield for canola. Yields have been trending higher so in most cases, the farm will end up with higher updated yields for the PLC program. In some situations, there will be a large increase from updating a yield because a crop was only planted in one or two years during the 2008-2012 period, but had great yields. For example, one North Dakota producer only grew wheat in one of the five years and had an 80-bushel winter wheat yield. Therefore, his average wheat yield over the entire 2008-2012 period was 80 bushels. A factor of 90 percent is used for updating so the new PLC wheat yield would be 72 bushels, which doubled the old payment yield of 36 bushels for this farm. In this example, the high payment yield may affect the decision whether to keep existing farm base acres, dominated by wheat, versus reallocating base acres and gaining soybean base.
Increasing Payment Yields
Most canola growers should be able to substantially increase their payment yield. Producers in Cavalier County had some of the highest counter-cyclical payment yields in North Dakota, averaging 1,232 pounds per acre. In comparison, the average county yield from 2008-2012 was over 1,800 pounds. Therefore, the average Cavalier canola producer would increase the payment yield over 30 percent to about 1,620 pounds (1,800 times the 90 percent update factor). Individual producers with a 2008-2012 five-year farm average of 2,222 pounds per acre could update their yield to 2,000 pounds. Payment yields are only relevant to the PLC program. However, land owners should update PLC payment yields whether or not a base crop is enrolled in the PLC program. The higher yields will go “on the books” at the FSA office and may be beneficial in some future farm bill. The land owner does not have to
prove yields to update the PLC yield but will need verification that they are accurate if spot-checked by FSA. Therefore, land owners should get yield verification from renters. A rational goal of base reallocation and updating yields would be to increase canola base acres and payment yields, respectively, to benefit from the strong reference price of $0.2015 per pound. The U.S. Department of Agriculture is currently projecting a $0.173 per pound MYA price. This would provide a 2.85-cent PLC payment rate per pound and $38.76 payment per canola base acre, assuming a payment yield of 1,600 pounds. The total payment calculation is (reference price – MYA price) x payment yield x base acres x 85 percent.
“On cash-rented farms, owners and operators should coordinate their efforts to improve their chances of getting the best base reallocation and program election combination.” The only years in history where the canola MYA price exceeded the reference price were 2011, 2012 and 2013. The PLC program would have generated a payment in all other years. The PLC payment rate is the reference price minus the higher of the MYA price and the national loan rate. The maximum PLC payment rate for canola and all other minor oilseeds is 10.06 cents a pound; the difference between the reference price, $0.2015, and the national loan, $0.1009. Therefore, the maximum payment per base acre, assuming a 1,600-pound payment yield, would be $160.90 x 85 percent.
PLC vs. ARC
Operators have until March 31, 2015 to choose between the PLC and ARC programs. There are two ARC programs available. ARC County uses county yields of base acre crops and ARC Individual uses farm yields of planted crop acres. An operator can choose between ARC County and the PLC program, crop by crop, within an FSA farm. However, if the ARC Individual program is chosen, it applies to all crops on the FSA farm.
In concept, the ARC program is simple: a revenue shortfall triggers a payment. In reality, it is complicated. There are four moving parts to the equation: Olympic five-year moving averages of yields and MYA prices are used in a calculation of revenue guarantee and current year yield, and MYA price determines actual revenue. All four of these components can change in direction and intensity year to year. The combination of these movements makes ARC predictions difficult. ARC payments are capped at 10 percent of the revenue benchmark. PLC payments are not as restricted, but the probability of ARC payments may be higher for certain crops. Currently, it looks like ARC payments are more probable with corn and soybeans than with PLC. However, severe price declines over an extended period of time would favor PLC. The first decision, whether to reallocate base acres, is intertwined with the later decision of program election. Interestingly, the landowner makes the base reallocation decision and the operator makes the program election (ARC or PLC). Therefore, on cashrented farms, owners and operators should coordinate their efforts to improve their chances of getting the best base reallocation and program election combination. The first step is to determine the best choice, ARC County or PLC, for each base acre crop under the two base acre scenarios: 1) keeping the existing base or 2) reallocating base acres. The expected total payments from keeping the existing base or from reallocating base can then be compared. Lastly, the ARC individual program for the farm can be analyzed to compare it with the winner of the aforementioned contest between keeping existing base and reallocating it. North Dakota State University has an Excel spreadsheet available at www.ag.ndsu.edu/ farmmanagement/farm-bill that provides users the optimal decisions regarding base reallocation, updating yields and program selection (ARC County versus PLC) to maximize payments under the 2014 Farm Bill given the projected 2014-2018 county yields and marketing year average prices. Of course, no one will be able to accurately project future yields and prices for five years, but users can enter different price and yield scenarios to help determine the safety net that may be best for them. ANDREW SWENSON, M.S., IS A FARM AND FAMILY RESOURCE MANAGEMENT SPECIALIST IN THE AGRIBUSINESS AND APPLIED ECONOMICS DEPARTMENT AT NORTH DAKOTA STATE UNIVERSITY IN FARGO, N.D.
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Canola Makes ‘Cents’ in Southern Plains Economic Benefits of Wheat-Canola Rotation ERIC A. DEVUYST, PH.D., AND KIM ANDERSON, PH.D.
SOME WHEAT PRODUCERS IN THE GREAT PLAINS have almost tripled their net return per acre by implementing a wheatcanola rotation system. That’s because this system has facilitated weed and pest control and increased wheat yields. Higher returns relative to costs has made it a sound business decision. Canola production would not have occurred without producers realizing significant economic advantages (more money in their pocket) from inserting canola into the wheat production system. Oklahoma State University prepares canola budgets annually and every budget for the last nine years has projected improved economic returns from a wheat-wheat-canola rotation over continuous wheat. For example, research shows that rotating wheat and canola every other year (wheat-canola) resulted in a 15 percent per acre yield increase and a higher percentage
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control of weeds and diseases (Bushong et al., 2012). Producers now commonly rotate wheat with canola in alternating years. Tables 1 and 2 show a comparison of continuous wheat (grain only) versus a wheat-canola rotation and wheat (grazing and grain) continuous wheat versus a wheat (grazing and grain)-canola rotation.
Yield and Price Advantage
A producer with an expected continuous wheat yield (grain-only) of 40 bushels per acre can expect a wheat yield of around 45 bushels when grown in rotation with canola and a canola yield of 47 bushels. Assuming 2015 local harvest prices of $5.12 per bushel for wheat and $8.87 per bushel for canola, the wheat-canola rotation has a projected net return of $112 per acre compared to continuous grain-only wheat at $38 per acre (Table 1).
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The wheat-canola rotation system increased net returns $74 per acre over continuous wheat. Even if the wheat yield boost is zero from the canola rotation, the wheatcanola rotation would be projected to outperform continuous wheat (not shown). In some areas, stocker cattle may be grazed on wheat pasture from mid-November to around March 1. Stocker returns usually more than offset the added production costs and reduced grain yields associated with grazing. The 2014-15 wheat planted acres are expected to be higher than in 201213 and a higher percentage of the planted acres are expected to be grazed. With lower corn prices and a smaller calf crop, 201415 wheat forage rental rates are expected to be about 50 cents per pound of gain (Table 2). At two pounds of gain per day, a stocking rate of two acres per head and 50 cents per pound of gain, wheat pasture owners
Table 1. Grain-Only Continuous Wheat and Grain-Only Wheat-Canola Budget Comparison
Continuous wheat
(40 bu/ac) Revenues Wheat sales @$5.12/bu $205 Canola sales @$8.86/bu - Total revenue (weighted average) $205 Cash expenses Wheat $167 Canola - Total expenses (weighted average) $167 Returns to land, fixed costs, $38 labor, and management
an MYA price of $8.86 per bushel would result in a PLC of $1.215 per bushel. With a yield of 47 bushels, the producer could expect a payment of about $57 per acre. While our budgets do not explicitly incorporate government payments, it appears that these programs encourage producers to adopt canola.
Wheat-canola (45 bu/ac and 47 bu/ac) $230 $417 $324 $176 $247 $212 $112
Table 2. Dual-Purpose (Grazing and Grain) Continuous Wheat and Dual-Purpose Wheat-Canola Budget Comparison
Continuous wheat
Wheat-canola
(35 bu/ac) (39 bu/ac and 47 bu/ac) Revenues Wheat sales @$5.12/bu $179 $200 Canola sales @$8.86/bu - $417 Stocker weight gain @$0.50/lb gain $50 $50 Total revenue (weighted average) $229 $333 Cash expenses Wheat $204 $209 Canola - $248 Total expenses (weighted average) $204 $228 Returns to land, fixed costs, $25 $104 labor, and management
can expect about $50 per acre for 100 days of grazing. For this scenario, the budget projects a $25 per acre return for continuous wheat with grazing and a $104 per acre return for a wheat with grazing-canola rotation system (Table 2). The wheat-canola rotation system increased the average per acre return $78 per acre. Even without 15 percent higher wheat yields from the wheat-canola rotation, wheat-canola expected returns are higher than with wheat-grazing alone.
Farm Bill Factor
The current farm bill allows producers to enroll in either Agricultural Revenue Coverage (ARC) or Price Loss Coverage (PLC). ARC is based on county-average historical revenues and current year revenue. So rather than being tied to an individual farm’s revenues, it is tied to the county’s results.
This situation makes predicting program payments somewhat difficult given that both yields and prices must be considered. For example, even in a loss price year, a county with yields at or above historical average might not receive ARC payments. PLC payments are more straightforward to anticipate. If the national marketing year average (MYA) price falls below the reference price (set by Congress) for wheat or canola, then enrolled acres receive a payment. The scenario in our budgets has a local wheat price of $5.12 per bushel assuming a MYA of $5.42 and a $0.30 basis. Since the wheat reference price is $5.50, a payment of $0.08 per bushel is expected. At 40 bushels per acre, the producer could expect about $3.20 per acre. At 45 bushels, the payment is $3.60 per bushel. Canola has a reference price of $20.15 per cwt (or $10.075 per bu). If the producer has canola base acres,
“The wheat-canola rotation system increased net returns $74 per acre over continuous wheat. Even if the wheat yield boost is zero from the canola rotation, the wheat-canola rotation would be projected to outperform continuous wheat.” Converting a continuous wheat production system into a wheat-canola or wheatwheat-canola system takes time and money. Additional equipment (swather, combine head, planter-if no till, etc.) may be required. Some producers have tried custom planting and harvesting. A very short period is available for harvesting and many producers say a combine head is essential. The learning curve for producing and selling canola is also steep. Production and soil fertility practices differ from wheat. Producers have several methods available to plant and harvest canola. The procedure may differ by location. Producers who have implemented the rotation system made the decision that canola would be a long-term program and it was worth the time and investment. For the most part, it has proven to be a wise decision. ERIC A . DEVUYST, PH.D., AND KIM ANDERSON, PH.D., A R E B OT H PROFESSORS IN THE DEPARTMENT OF AGRICULTUR AL ECONOMICS AT OKL AHOMA STATE UNIVERSIT Y IN STILLWATER. ANDERSON IS ALSO AN EXTENSION AGRONOMIST.
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Piggybacking on Net Worth Examining Sources of Farm Equity RYAN LARSEN, PH.D.
I SPENT A SHORT TIME WORKING AS A COMMERCIAL LENDER in a small, rural bank. As a new lender, I was encouraged to grow my loan portfolio. With that goal in mind, I perhaps was a little too eager to approve any loan request that walked through my door. Fortunately for me, my boss was a seasoned lender and was able to guide me toward making wise credit decisions. At one point, a farmer approached me about a loan request and brought in his financial statements for me to examine. I looked at them and was impressed with his net worth. He had experienced cashflow issues during the past few years, but his net worth position helped overcome those issues. I put the loan package together and
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presented it to my boss, but she quickly noticed a problem. I was using market values to calculate net worth. The farmer had a tract of land that bordered prime recreational land. Based on the current economic conditions, the land was valued extremely high. Basing the land on agricultural values versus recreational values, the farmer’s strong net worth quickly disappeared. I realized then the importance of understanding sources of equity or net worth. The most basic accounting equation, which underpins the balance sheet, is assets minus liabilities equals net worth or owner’s equity. Net worth is an indicator of wea lth a nd f ina ncia l position. However, net worth is complicated because of the problems caused by changes in asset values.
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To understand this better, it is helpful to identify the composition of net worth. It is composed of three pieces. The first is contributed capital. This can be thought of as the money invested in the business by the owner. The second piece is retained earnings, defined as the accumulated net earnings of the business that have not been withdrawn or distributed. The final piece is valuation equity. This is the change in asset values often defined by the difference between market and cost values. This quick accounting 101 lesson is necessary to illustrate one of the threats facing farmers. They have been able to strengthen their balance sheet, thanks to favorable prices and growing conditions combined with sharp increases in land
values. Researchers at the Federal Reserve Bank of Kansas City have noted that the U.S. farm balance sheet is the strongest it has been since the 1970s. As we look at the current situation, land values have increased dramatically throughout the Midwest. Average land values in North Dakota went from $670 per acre in 2007 to $1,910 per acre in 2013. We also have seen farm assets go from an average of close to $1 million up to $1.9 million. At the same time, the average producer’s liabilities have stayed relatively constant. During the past few years, farmers also have seen a dramatic change in net worth. The average net worth went from $600,000 in 2007 to just more than $1.3 million in 2012. The question becomes: Is that change in net worth driven by changes in asset values or retained earnings? In 2007, the average net farm income was $192,200. In 2012, the average was $367,317. With this increase in farm income, have farmers been putting those earnings back in the farm or has the change in net worth been driven by appreciating farmland values? At North Dakota State University, crop economist Frayne Olson and I have
“During the most recent time period (2007 to 2012), farmers are relying more on retained earnings to build net worth than asset revaluation. In other words, most farmers have been using their earnings wisely.” analyzed data from 1998 to 2012 to help find the answers. We divided the data into two time periods: 1998 to 2006 and 2007 to 2012. The shift that occurred in agriculture in 2007 would provide a reference point. Based on our results, farmers during the most recent time period (2007 to 2012) are relying more on retained earnings to build net worth than asset revalu-
ation. In other words, most farmers have been using their earnings wisely. Perhaps a partial explanation for this change could be lenders shifting focus to earnings-based decisions versus assetbased decisions. The 1980s farm crisis illustrated the dangers of asset-based lending decisions. Although proper assets must be in place to justify a credit decision, lenders also are requiring sufficient earnings/cash flow to secure credit. So what does this mean for the future? What happens if land prices fall? What happens if prices do not rebound? I wish I had a crystal ball and could forecast the future accurately. Although I am unable to forecast the future, I believe we can agree that commodity and input prices will continue to be volatile, which highlights the need for sound financial management. The hope is that farmers, lenders and researchers can use the lessons from the 1980s f inancial crisis and the recent agricultural boom to avoid any future crises. RYAN L ARSEN , PH . D., IS AN A SSISTANT PROFESSOR IN AGRIBUSINESS AND APPLIED ECONOMICS AT NORTH DAKOTA STATE UNIVERSITY IN FARGO,
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Low-Cost Production Managing Your Farm Business in an Economic Downturn JAMES MINTERT, PH.D., AND MICHAEL BOEHLJE, PH.D.
CROP AGRICULTURE IS ENTERING A NEW ERA. Prices for corn, soybeans and wheat have all declined precipitously since the drought-induced peaks of 2012. Bumper crops in 2013 and 2014 pushed crop agriculture from a tight supply-demand balance and record high prices to a situation where attention is now focused on crop surpluses and declining prices. The result will be a sharp decline in crop farm revenue over the next several years, resulting in very tight operating margins.
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Successfully navigating an era of tight margins requires renewed focus on managing every aspect of your business. One of the keys to long-run success in a commodity business is pretty straightforward: be a lowcost producer. And given the downturn in prices for most crops, holding your costs per bushel down will be especially important. Being a low-cost producer is easier said than done, however, since many of us think we are already operating at the lowest possible cost. The first thing to do to change your
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mindset: every morning, remind yourself that your number one job is to lower your costs. It’s an everyday job and if you’re not thinking in these terms already, you should start today! Many people don’t focus their attention on managing the cost side of their business, instead focusing their attention on increasing volume and revenue. But lowering production costs consistently, over a long period of time, can make a big difference. Rarely do big cost reductions come from a
single management change. Instead, significant changes in production costs result from a combination of small changes over time which, compounded, add up. Keep that idea in mind as you read the remainder of this article, which provides five strategies you can follow to help you manage your way through the economic downturn in crop agriculture.
1. Protect Your Working Capital
Working capital is the difference between current assets and current liabilities. During the boom times in crop agriculture, many farms drew down their working capital to purchase assets, including machinery, buildings and land. With strong operating margins, farmers were able to rebuild their working capital the following year. But now that margins have tightened, that approach will not work. If you have already destroyed your working capital position, you need to think strategically about how to rebuild it. But if you still have a strong working capital position, the first thing to do is protect it! Protecting working capital will be a challenge for many farms, in part because sellers of farm machinery, buildings and related equipment will offer what appear to be attractive terms. Sales of new farm machinery are already declining and many dealerships have burdensome used equipment inventories. To market this inventory, dealers will cut prices and offer liberal terms. But you need to remember not to destroy your working capital just to get what appears to be a good deal.
2. Hold on to Cash and Restructure Debt
Cash provides your first line of defense against financial stress, serving as a buffer. Cash provides you with flexibility to pursue unforeseen opportunities that sometimes arise. And having cash on hand helps mitigate risk. This is the time to build cash reserves. If you don’t have adequate cash reserves, talk to your lender about restructuring your debt. Don’t wait until you have a problem, do it now while your financial position is strong. Restructuring debt will be important because, in recent years, many farms have financed long-term capital purchases with relatively short-term debt. For example, many land purchases over the last decade were made with 10- or 15-year mortgages. That was not a problem with the strong farm
incomes we had in recent years, but with much tighter operating margins in the years ahead, it will put a strain on your cash flow and make your farm less resilient to stress. Now is also the time to restructure debt because long-term interest rates are still near historic lows. Odds favor interest rates moving higher over the next several years so locking in current rates makes sense. If you have any variable rate loans outstanding, convert them to fixed rate loans to take advantage of current interest rates. When refinancing a land purchase, your focus should be on the repayment terms. With low interest rates available and prospects for tight operating margins, it makes sense to refinance land purchases for as long as possible – 20 or even 30 years. The lower payments associated with a longer repayment period will make your farm more resilient to stress. So don’t hesitate, do it now!
3. Increase Your Asset Utilization
Increase the use of your capital assets, which is often referred to as increasing your asset turnover. How? Hold off on purchases of new equipment and try running your existing equipment over more acres. Doing that, and ensuring that field operations are still conducted on a timely basis, might mean running a second shift. Before dismissing that idea as unworkable, consider that few other businesses would make the large capital investments in equipment that we make in agriculture and then leave their equipment idle for seven to 10 hours a day. Although not every farm operation is suited to roundthe-clock operation, integration of GPS systems and auto-steering into today’s machinery makes double-shifting your equipment a much more realistic option than in the past. Sharing some equipment with another farmer is also a way to more effectively use your assets. For example, you might be able to share a combine with another farmer and spread the cost of that machine over a greater number of acres, which effectively increases your farm’s asset turnover. Leasing equipment, instead of buying it, can also help in some circumstances. If you really need a new or different piece of equipment, you can often lease it with a lower cash commitment than a purchase. This is another way to preserve cash and increase your asset turnover.
4. Buy Right
When many farmers think about increasing their operating margin (the spread between the revenue from selling their output and the cost of the inputs required to produce it), they first think about increasing the price received for the crop(s) they raise. But the first, and most important, marketing decision you make isn’t what you sell your product for, it’s actually what you pay for your inputs, especially land. If you pay too much for cash rent or purchase land at too high of a price, you become a high-cost producer before you even pull the planter or drill into the field. Focus on buying things right and it will help increase your operating margin year after year.
5. Emphasize Better Execution
To be a low-cost producer, you need a systematic way of doing things. Most successful businesses follow a set of standard operating procedures (SOP). And they communicate the SOPs to their staff so they execute it daily on every routine job. Following a SOP ensures that the job is done right and doing the job right helps reduce costs per bushel. Some farmers resist use of SOPs because of variability in weather, field or crop conditions. But the reality is that your SOPs should be robust enough that they anticipate changes in conditions and encourage members of your team to make the right decision for the conditions at hand. Following SOPs can make your farm more efficient, responsive and help you achieve your goal of being a low-cost producer.
Position Your Farm for Success
The next several years will be challenging for U.S. crop producers. Lower commodity prices will lead to much tighter operating margins than in recent years. And some farms will struggle to survive because they are not prepared. But if you take steps now to position your farm for this tighter operating margin environment, you will be positioned not only to survive, but actually thrive in the years ahead. JAMES MINTERT, PH.D., IS DIRECTOR OF PURDUE UNIVERSIT Y ’ S CENTER F O R CO M M E R C I A L A G R I C U LT U R E AND PROFESSOR OF AGRICULTURAL ECO N O M I C S I N W E S T L A FAY E T T E , I N D. M I CH A EL B O EH L J E , P H . D., I S DISTINGUISHED PROFESSOR OF A G R I C U LT U R A L E C O N O M I C S AT PURDUE AS WELL.
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Mapped: Canola Genome to Speed Improved Traits Complex Sequence of Genes Reveals Crop’s Potential ALISON NEUMER LARA
WITH THE C ANOL A G ENOME sequence in hand, scientists will now be able to accelerate the plant breeding process and provide growers with a more robust and profitable crop, researchers said. The discovery, published in the journal Science in August, revealed one of the most complex and dense DNA sequences – 101,000
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genes or four times as many as humans. Brassica napus (canola) resulted from the merger 7,500 years ago of two parent species, Brassica rapa and Brassica oleracea. Researchers first sequenced each of these progenitors, which simplified the task and allowed scientists to identify changes in canola. “Most of the parental genes are conserved
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as duplicate copies,” explained lead author Boulos Chalhoub of the National Institute for Agricultural Research in France, who managed an international team of 80 researchers from more than 30 institutions. “Canola didn’t undergo massive gene loss,” he said. “This presents an advantage for diversification of the species.”
It also underscores the scientific and economic importance of mapping the canola genome. Genetic insights will speed the development of crop traits like improved oil and protein content and nitrogen use efficiency, Chalhoub said. Other potential improvements include resistance to drought and diseases as well as inducing canola to flower at specific times, noted Andrew Paterson, cocorresponding author of the study and director of University of Georgia’s Plant Genome Mapping Laboratory. The latter trait may be especially relevant in places like Georgia, where mild winters may cause plants to break dormancy too soon. “The idea would be to enforce the f lowering time [or] biological clock so the plants don’t make a foolish mistake, genetically speaking,” Paterson said.
Waiting Game
Such improvements, however, are years down the line. “Much as with mapping of the human genome, it was a while before we started to see it impact medicine,” Paterson said. “There are large and real benefits from the canola genome sequence but they are 10-20 years away.” Still, that’s much faster than without the key the sequence provides, researchers said. “This gives us a scaffold to look for information on,” explained Paul Raymer, professor of plant breeding and genomics at the University of Georgia. “The goal is to link specific segments of DNA to important traits … and with the whole sequence, it allows us to position them very quickly.”
Scientists will be able to identif y more plant biomarkers and where they are located. Coupled with the computing ability to quickly process massive amounts of DNA information, breeding efficiency will increase by order of magnitude. For example, instead of spending seven years on laboratory and breeding work before field trails, the development process could be reduced to two years before field testing, estimated Lorin Debonte, assistant vice president of research and development for Cargill’s specialty seeds and oils. “In two to four years, our knowledge base will double,” he predicted, with significant gains in eight since trialing is a four-year period. “This opens up our understanding of the plant architecture. You can start to see how the characteristics interplay.” And that means an opportunity to develop more complex traits. “We can now design and stack traits more effectively,” Debonte explained. “We’ll be able to meet some more of the environmental challenges with stress resistance and ensure uniform plant production from year to year.” Debonte also noted the potential for higher yields and oil and protein content. Higher protein would open up opportunities in the canola meal market. “We have not explored the potential of what canola can do,” he said. But the ability to create canola varieties with more oil, protein, sustainability and profitability sounds like a recipe for longterm success. “Plant breeding is going to be a lot of fun over the next couple of decades,”
Wait, Who Was First? IN 2009, BAYER CROPSCIENCE announced it had sequenced the entire genome of canola, Brassica napus, but it was both a proprietary line and what Bayer termed a “draft” genome sequence. Since then, “the raw sequence data were re-assembled a few times with more powerful and higherresolution bioinformatics tools, which resulted in a so-called ‘pseudochromosome’ version,” explained Bayer spokesperson Richard Breum. “This is a linear sequence of all 19 individual chromosomes with occasional gaps. The genome was also fully annotated, i.e. all putative [presumed but not known] genes defined.” In the meantime, Bayer has continued to sequence many more proprietary lines of canola, which is not public information like the research published in Science in August 2014.
Raymer concluded. “We’ve got a big world to feed and now we’ve got the tools to do it. It’s going to make things faster.” ALISON NEUMER LARA IS MANAGING EDITOR OF U.S. CANOLA DIGEST.
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Canola Crush Plants Spark Acreage in Southeast Slow but Steady Crop Growth Boosts Rural Economy MOLLY COLLINS
IF YOU BUILD IT, THEY WILL COME … especially when it comes to farmers, it turns out. In the southeast, growers are slowly warming up to the idea of canola rotations, prompted by the opening of regional oilseed processing plants that provide local outlets for crop sales. But the first step is convincing growers to take the initial leap of faith, said Chris Johnson, director of economic development in Johnston County, N.C., where canola is beginning to get a foothold. Farmers might grow canola and find it profitable compared to other winter crops, but they’re cautious about investing too much money in a new crop that would require excessive transportation or other infrastructure to sell it, he explained. They don’t have storage facilities or a way to get it from field to crush. Additionally, with minimal research f u nd s c ompa re d to ot her c a nol agrowing regions, the southeast has slowly expanded its production via trial-anderror to mitigate financial risk, said Brian Caldbeck, an agronomist with Caldbeck Consulting. “We’re not going to grow a crop unless it makes a profit,” he said. “Profitability is the bottom line.” A n in f ra st r uc t u re inve st ment, therefore, helps positively inf luence growers’ decisions, Caldbeck noted. “Farmers vote with their localities. When they see something nearby where they can sell their crop, it will encourage them to support that particular crop.”
‘Strong’ Influence
Enter AgStrong LLC. For the last eight years, the company has been working with local farmers to create a network of oilseed production acres. As canola produc t ion g row s, A gSt rong look s at which areas would be best ser ved
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“Crushing facilities are being built in the region by companies such as AgStrong, which provide local delivery points and markets for the winter canola.” by an oilseed processing plant, which reduces farmer transportation costs and encourages more acreage. Then it builds. A gSt rong’s f irst cr u sh pla nt wa s established in Bowersville, Ga., and a new 23,000-square foot facility is slated to open this fall in Trenton, Ky. The latter plant will process 150 tons of canola seed a day and is expected to add oil refining by 2017. The project, which costs $7.3 million, will provide 25 full-time jobs. “AgStrong is pleased to have helped effect a steady and sustainable growth in the production of canola here in the southeast,” said Robert Davis, CEO and president of AgStrong. “We are privileged to have been part of introducing the production of canola to many innovative a nd ha rdwork ing fa rmers a nd feel satisfied with the fact that many farmers here have adapted canola as an important part of their rotations.” That slow but steady growth in winter canola acreage is due to several reasons, said Dale Thorenson, assistant director of the U.S. Canola Association. “First of all, producers are finding out that the crop yields well and can be grown as a winter crop that allows doublecropping of soybeans after the canola is harvested in late May to early June,” he said. “Second, crushing facilities are
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being built in the region by companies such as AgStrong, which provide local delivery points and markets for the winter canola.”
Strengthening Infrastructure
AgStrong is looking to expand into other southeastern areas where sufficient canola acreage exists. One community that is hoping to catch their eye is Johnston County, N.C., which has more working farms than any other county in the state, according to Johnson. “Joh nston C ou nt y ha s a rich agricultural history, is a great intersection of urban and rural [communities] and has a great transportation system via roads and rails,” said Johnson, who has been working closely with the North Carolina Cooperative Extension to encourage canola production and draw the attention of companies like AgStrong. He also aims to encourage the growth of local canola-related businesses like Green Circle North Carolina to keep money in the county. The recycling company turns used cooking oil from local restaurants into biodiesel for school buses. “By using [canola oil] twice, we’re getting more use out of it and helping local economies grow,” Johnson said. “We’re helping restaura nts, fa rmers and the environment. It’s an innovative approach.” Johnston County is still awaiting word on whether an AgStrong plant is in its future, but with the introduction of a canola oil processing plant, the “canola circle” would be complete from farm to fuel. Moreover, it would be local, meaning more money in growers’ pockets and more reasons to keep planting canola in the region. MOLLY COLLINS IS ASSISTANT EDITOR AT U.S. CANOLA DIGEST.
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Canadian-European Union Agreement Positions Canola for Export Timely Biotech Trait Approvals in Question ANGELA DANSBY
THE CANADA-EUROPEAN UNION (EU) summit on Sept. 26 in Ottawa marked the end of negotiations of a bilateral free trade agreement that should open both countries to billions of dollars in tariff-free trade. The Comprehensive Economic and Trade Agreement (CETA) will significantly boost trade, including Canadian canola exports to the EU. The ratification process of CETA, which was five years in the making since May 2009, is now underway. CETA will become
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effective following legal review and approval by the European Council and Canadian Parliament. The Government of Canada noted that the pact “will provide Canada with preferential market access to the largest and most lucrative integrated market in the world, a market of more than 500 million consumers that generates almost $18 trillion in economic activity annually.” In fact, a Canada-EU study forecast that CETA could boost
Canada’s income by $12 billion a year and bilateral trade by 20 percent. “CETA will eliminate tariffs for Canadian goods entering the EU market, providing them preferential access not enjoyed by our competitors in other countries, which still face tariffs,” stated the Government of Canada. “CETA will also guarantee Canadian service suppliers secure preferential market access. These improvements to our trading relationship with the EU will give Canadian businesses – from farms to engineering consultancies – new opportunities to increase their exports of world-class goods, services and expertise.” The EU has 28 member states covering most of continental Europe from the United Kingdom to Croatia. CETA is the largest trade agreement in Canada’s history and Canada is the first G7 country to sign such a pact with the EU. CETA is “by far Canada’s most ambitious trade initiative, broader in scope and deeper in ambition than the historic North American Free Trade Agreement,” said the Government of Canada. “It will open new markets to our exporters throughout the EU and generate significant benefits for all Canadians.”
“To date, the European Union has limited imports of canola or other biotech crops due to its slow approvals of biotech traits – a non-tariff trade barrier in various countries.” Canola Factor
Short-term, CETA will result in zero tariffs on canola oil imports to Europe along with omission of 99 percent of all tariffs between the two economies. Long-term, Europe could become a major customer of Canadian canola as the agreement creates new market access opportunities in services and investment. “Tariffs on canola oil entering the EU will be eliminated immediately upon implementation, which is expected in early 2016,” said Patti Miller, president of the Canola Council of Canada (CCC). The CCC estimates that this could provide the opportunity for exporters to increase sales by up to $90 million per year. Expected to benefit the most from an agricultural standpoint are the provinces of Alberta, Saskatchewan, Manitoba, Ontario and Quebec, according to the Government of Canada. When CETA comes into force, almost 94 percent of EU agricultural tariff lines are to become duty-free, including canola oil (3.2 to 9.6 percent). Canada’s agricultural exports to the EU between 2011 and 2013 were valued at $2.5 billion per year on average, led by wheat, soybeans, other oilseeds and canola oil. Without CETA, Canadian agricultural exports face EU tariffs averaging 13.9 percent. CETA also allows for an “attempt to prevent or resolve nontariff barriers that may arise” on agricultural exports like new biotech crop traits. The CCC is cautiously optimistic that CETA
will reduce biotech-related non-tariff barriers and prompt the EU to live up to its commitment of approving biotech traits in a timely manner. “In addition to tariff free access, our industry is encouraged by commitments to find solutions to trade uncertainty and disruption related to biotechnology,” Miller said. “We are pleased that the EU has agreed to approve new traits as quickly as possible – this will help our growers have timely access to new technology that conserves resources, improves sustainability and increases profitability.” To date, the EU has limited imports of canola or other biotech crops due to its slow approvals of biotech traits – a non-tariff trade barrier in various countries. The canola industry has made significant investments in new biotech traits so timely and predictable approval processes encourage more investment, Miller said. A biotechnology working group will be tasked under CETA to address the timeliness of approvals for biotech products and development of science-based policy, such as for low level presence of biotech traits. With 90 percent of Canadian canola exported as seed, oil or meal, creating stable and open trade around the world is a priority of the CCC’s strategic plan, “Keep it Coming 2025.” Free trade agreements like CETA improve market access to help meet this goal. ANGEL A DANSBY IS EXECUTIVE EDITOR OF U.S. CANOL A DIGEST.
The Right Choice Program PLANT TWO OR THREE PROSEED VARIETIES ON YOUR FARM AND PROSEED WILL REWARD YOU!
PRO LEVEL
45 qt. plus 20 qt. YETI COOLER
3 VARIETIES OF THE SAME CROP 400 TOTAL SOYBEAN • 150 TOTAL CORN 45 TOTAL SUNFLOWER • 40 TOTAL CANOLA (2 VARIETIES)
GOLD LEVEL
35 qt. YETI COOLER
3 VARIETIES OF THE SAME CROP 240 TOTAL SOYBEAN • 80 TOTAL CORN 25 TOTAL SUNFLOWER • 20 TOTAL CANOLA (2 VARIETIES)
GREEN LEVEL
20 qt. YETI COOLER
2 VARIETIES OF THE SAME CROP (Must be a new customer) 200 TOTAL SOYBEAN • 60 TOTAL CORN 20 TOTAL SUNFLOWER • 16 TOTAL CANOLA
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Washington Forecast: Perspectives on Mid-Term Elections GORDLEY ASSOCIATES
NOVEMBER’S MID-TERM ELECTION “tsunami” resulted in the Republican takeover of the Senate by winning multiple Senate seats held by Democrats and also an increase in Republican control of the House. What does this mean for agriculture priorities, including canola, in the 114th Congress? While the changes suggest a repudiation of President Obama and some of the policies enacted or proposed by Democrats, most notably Obamacare, exit polling also showed voters expressing disapproval of gridlock and partisan fighting in Washington and a desire for Congress and the Obama Administration to work together to get things done. A president’s party usually fares poorly in mid-term elections, particularly in a president’s second term, and the political map, with Democrats defending 21 of 33 Senate seats, favored Republicans. However, the margin of victory in states that were considered “close” in pre-election polling was much higher in many races, and Virginia, which was not supposed to be in play, turned into a real cliffhanger. The question now is whether those who won this year and the incumbents who face re-election in 2016 read the results in a way that motivates them to press their leaders to work together and reach compromises on issues that have been stalled by one or both parties for years. The Republicans will have 23 seats to defend compared to nine for the Democrats. The fact that 2016 is also a presidential election year will compress these decisions into a short timeframe – from January to around August 2015. The Republicans have a stronger hand to play now and may be willing to work across the aisle rather than forcing their priorities into confrontational budget reconciliation packages, which require only 51 votes to pass. For the Obama Administration, we’ll see whether they use the president’s executive authority to make regulatory policy changes that aren’t subject to Congressional approval. Or the president may decide that engaging the Republican leadership is important in making his last two years relevant in the
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political process as the 2016 sweepstakes begin early next year.
Short-Term Implications
As for the political terrain ahead in the short-term, the “lame duck” session will likely be shorter than if control of the Senate had been in doubt. Republicans will want to defer most issues on their agenda to January, when they take control of the chamber. Since this fiscal year’s appropriations remain unfinished, Congress will need to pass omnibus legislation or more likely a Continuing Resolution (CR) to keep the government running beyond expiration of the current CR on Dec. 15. They may also take up a tax extenders package that may include an extension of the biodiesel tax credit, at least retroactive to the beginning of 2014, but significant tax reform legislation will likely be pushed into next year. For 2015, the critical question will be whether the president and Congress begin to negotiate on key issues in good faith and actually move and enact legislation. If not, Republicans will consider whether to force their priorities through the Senate in budget reconciliation packages, which only require 51 votes. A second question is whether they will craft these packages in a way that forces a presidential veto or if they include “mustpass” measures in them, including an increase in the federal debt limit. The latter will be reached in March and when borrowing authority will become critical in July. It’s possible that the farm bill, particularly Supplemental Nutrition Assistance Program (food stamps), could be subject to the reconciliation process if the House and Senate Agriculture Committees are directed to identify and provide savings to include in a budget reconciliation bill. Farm groups have traditionally opposed efforts to re-open the farm bill. Regarding agricultural trade issues, ef forts will continue into 2015 to conclude the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership agreements as well as to obtain Congressional approval of Trade Promotion
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Authority (TPA). While Administration officials have stated that extension of TPA could follow conclusion of the two trade deals, it would be much harder to make the decisions required at the end of negotiations if TPA is not already in place. The Renewable Fuel Standard (RFS) and support for biofuels is probably not strengthened with the Republican majorities, but it should not be in grave danger either. It will continue to be a regional issue within the Republican caucus and not likely repealed or significantly reduced. The Environmental Protection Agency is expected to finalize the 2014 RFS volumes in November. Higher livestock prices and lower corn prices will reduce the pressure from anti-RFS factions and energy policy will be focused on the Keystone Pipeline, expanded domestic oil and gas production, and potentially allowing exports of U.S. oil. The outlook for transportation policy is not expected to be dramatically different in 2015 following the election results. Reauthorization of the highway bill will be on the agenda and could get tied to energy issues and/or budget and reconciliation packages as Congress seeks revenue sources to cover the costs of the bill, which is popular on both sides of the aisle. Reg u lator y issues, including t he proposed rule defining “Waters of the United States,” should be low-hanging fruit for a Republican Congress. The comment period for the rule closes Nov. 14. Congress can choose to either include an appropriations rider in the FY2015 omnibus appropriations bill to prohibit funding to advance the rule, or they could pass legislation through the authorizing committees. Other regulator y issues that have been important to agriculture, such as the permitting rule for pesticide applications over water, could finally be overturned through the agriculture committees. GORDLEY A S S O C I AT E S IS A G O V E R N M E N T R E L AT I O N S F I R M FOCUSED ON AGRICULTURE ISSUES IN WASHINGTON, D.C.
Bookbreak
Winter Reads for Work, Play and Gifts MOLLY COLLINS
AS WE RETREAT INDOORS for the winter and take a much needed break from the season’s hard work, now is a perfect time to prep for the coming year. Below is a list of books both old and new recommended by U.S. Canola Digest contributors that provide tips, history and inspiration for everything from cooking to finance. Add one to your own reading list or pick up a holiday gift for your favorite farmer.
AGRONOMY Canola and Rapeseed: Production, Processing, Food Quality, and Nutrition (2012) Usha Thiyam-Hollander, N.A. Michael Eskin, Bertrand Matthaus For those interested in the biology behind canola and rapeseed oil, this book touches on information presented at a workshop in 2010 at the University of Manitoba in Winnipeg. It covers topics including the historical development, properties and performance of canola; extraction and application of canola protein; and high omega-9 canola oils and their future applications. It goes into great depth about the potential for this important crop. Fungicides for Field Crops (2013) Daren Mueller, Kiersten Wise, Nicholas Dufault, Carl Bradley, Martin Chilvers If you are looking to expand your understanding of fungicides to put them to better use, this book highlights past knowledge about the products and recent developments. There are 131 color photographs to aid in diagnosing disease symptoms plus contributions by 40 professionals from 20 universities and other organizations.
BUSINESS PHILOSOPHY The Black Swan: The Impact of the Highly Improbable (2010) Nassim Nicholas Taleb An interesting look at influences on the world that can shape the future, Taleb discusses how such events cannot be predicted, called Black Swans after a 17th century philosophical idea. Instead of accepting this extreme motion of life, we as a society create stories to describe why these life-altering events occur. The Upside of Turbulence (2009) Donald Sull Even in business, change is inevitable, and this book discusses how it is the only reliable aspect of the business world. Sull explains how rapid, unpredictable changes influence society’s ability to create value through new opportunities, emphasizing agility and improvisation.
WORLD FOOD POLICY Agriculture and Food in Crisis: Conflict, Resistance, and Renewal (2010) Fred Magdoff and Brian Tokar Despite the advances in agriculture throughout the world, hunger and food insecurity are still major issues in many nations. This book has a collection of contributions from scholars about the disparity in food distribution due to capitalism and what can be done to improve the situation. Stuffed and Starved: The Hidden Battle for the World Food System (2012) Raj Patel There is a problem when there are more starving people in the world than ever before, while simultaneously an obesity epidemic is compromising the health of the world population. Patel investigates how such a discrepancy can occur throughout the world, visiting supermarkets in California and coffee farms in Africa.
NUTRITION & COOKING My Perfect Pantry: 150 Easy Recipes from 50 Essential Ingredients (2014) Geoffrey Zakarian Iron Chef Geoffrey Zakarian provides his list of 50 essential ingredients to keep stocked in the pantry. He then uses them to produce simple recipes, like grilled salmon with almond tarragon romesco. Included in his pantry is always canola oil, using it for everything, from fish to dessert. The Skinnytaste Cookbook: Light on Calories, Big on Flavor (2014) Gina Homolka This new cookbook provides healthy recipes that are still delicious and cheap to make. Homolka provides a list of tips to keep your pantry full of healthier items. For oils, she suggests heart-healthy options like canola, which is high in monounsaturated fat. She’ll teach you how to cook anything from chicken to vegetarian dishes to light sandwiches. MOLLY COLLINS IS ASSISTANT EDITOR OF U.S. CANOLA DIGEST.
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regional news
Crop Conditions Vary in PNW Region Invests in Conferences, Research KAREN SOWERS, M.S.
“CROPPING CONCEPTS – FEEDING FARMER INNOVATIONS” is the theme of the 2015 Pacific Northwest Oilseed and Direct Seed Conference scheduled for Jan. 20-22 at the Three Rivers Convention Center in Kennewick, Wash. The three-day conference will highlight cropping systems in dryland and irrigated regions of the Pacific Northwest (PNW), specifically focusing on 1) production innovation and strategies; 2) soil health and quality; and 3) marketing and economics. Oral and poster presentations, a trade show, and demo and diagnostic sessions will feature strategies and innovative ideas to improve crop production and ultimately, generate positive income. Speakers will include PNW producers, industry members, university faculty and graduate students, and several invited speakers from across North America. Early registration is open and conference information can be found at css.wsu.edu/biofuels or directseed. org/events. Discounted registration is available for members of the U.S. Canola Association.
Crop Conditions
Dry planting conditions in August and September may play a role in how many acres of winter canola were seeded in the PNW. Summer fallow acres in eastern Washington and Oregon may be down due to the dry and hot summer, while farms that received isolated rains had sufficient moisture for crop establishment. “We’re probably down 50 percent of winter canola acres in eastern Oregon compared to last year,” said Don Wysocki, associate professor and extension soil scientist at Oregon State University (OSU). “This is the toughest year we’ve had for seeding in a long time and the market isn’t as strong. We badly need a rain on the canola that is established.” In the deep well irrigated areas of east central Washington, producers are reporting poor to average stands of winter canola due to strong
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winds and dry conditions after establishment. One producer reported the loss of half a circle of winter canola due to horned lark birds eating the emerging seedlings. In Idaho, acres of winter canola for 2015 in the northern part of the state appear to be stable and the crops on the Camas Prairie are well established, according to Jim Davis, a research scientist at University of Idaho. He added that spring and winter canola yields in northern Idaho were generally good in spite of the dry spring and summer due to some timely summer rains. In the Willamette Valley of northwest Oregon, winter canola yields ranged from 3,500-5,000 pounds per acre. The 2015 crop, limited to the state-mandated total of 500 acres, was seeded and has emerged.
Willamette Valley Update
Willamette Valley Oilseed Producers Association members have been actively involved with the Oregon Department of Agriculture’s Blackleg Advisory Committee, charged with helping write a new administrative rule with stronger blackleg protections. The anti-canola group in the region alleged last year’s 500 acres of canola caused the valley-wide blackleg outbreak, although all canola seed planted was tested and treated. Moreover, infections did not present themselves until spring, indicating infection from spores in the environment. The association also held its annual meeting in mid-September. A variety of speakers discussed agronomics, current research at OSU and policy issues, including a grower panel and a local dairy farmer who relies on canola meal as part of feed rations.
Washington Oilseeds Cropping Systems Project
The Washington State Oilseeds Cropping Systems (WOCS) research and extension project was initiated in 2007 with funding from the state legislature to evaluate alternative
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crops with the goal of dramatically increasing biofuel crop production. Washington State University and the Washington Department of Agriculture recognized that cropping systems research was key to overcoming the knowledge gaps and other limitations to producing oilseed crops across the state. During the last seven years, the breadth and scope of what the WOCS project team has accomplished has resulted in 21 peer-reviewed journal publications, one patent, 10 extension publications, 123 abstracts and presentations at regional and national conferences and workshops, four to six field days and tours each year, a dedicated website and an annual oilseed production and marketing conference. The conference began in 2011 and has developed into a major annual event, drawing nearly 500 participants in 2014. Additionally, the WOCS team has trained 11 graduate students and five post graduate research and extension associates and has involved 15 state faculty, seven U.S. Department of Agriculture (USDA) Agriculture Research Service scientists and 12 technicians. Research projects have more recently focused on spring and winter canola and camelina, with topics including fertilizer timing and rates; benefits of multi-year rotations containing oilseeds; canola variety performance; and herbicide efficacy. According to USDA statistics, Washington canola production tripled from 15,000 acres in 2012 to 45,000 acres in 2014, partially attributable to the WOCS research and extension activities and products. The WOCS team’s goal is to help Washington and PNW oilseed producers continue to increase canola and other oilseed yields by providing relevant information. KAREN SOWERS, M.S., IS AN EXTENSION AND OUTRE ACH SPECIALIST IN THE DEPARTMENT OF CROP AND SOIL SCIENCES AT WASHINGTON STATE UNIVERSITY IN RICHLAND.
regional news
Region Endures Ongoing Drought Canola Outlook Still Strong RON SHOLAR
“EVERYBODY COMPL AINS about the weather, but nobody does anything about it,” said Charles Dudley Warner in the late 1800s. More than a century later, that’s still pretty much the case. Farmers can’t do anything about the weather itself, although there have been attempts over time to do so. Cloud seeding – a form of weather modification in which substances are added to the air to change precipitation type and amount – is perhaps the most notable but few would argue that this practice has produced any meaningful results. Lately, talk in the Great Plains has turned to drought mitigation strategies because the dry weather continues to be uncooperative and unrelenting. The so-called “current” drought actually started in October 2010 and has persisted four full years. Drought mitigation conversations typically center on forage and livestock production; developing strategies for field crops is a much murkier and doubtful proposition. In the southern Great Plains, winter crops are the drought-mitigating strategy. These crops need rainfall during the cool weather months but over the long haul, winter crops have been more reliable than summer crops and particularly so west of Interstate 35. This history emphasizes why canola is so badly needed in the region. Simply put, winter crops have a greater chance for success than summer crops. That is highly unlikely to change. Meanwhile, a dry planting season in 2014 left canola growers in the southern Great Plains in a quandary about whether to plant into dry soil and hope for rain or
to wait until after the rain starts. Growers decided to try some of both practices. The unfortunate drought, coupled with falling commodity prices, have been challenging for growers. But at the end of the day, canola has proven its worth in the region.
“In the southern Great Plains, winter crops are the drought-mitigating strategy. These crops need rainfall during the cool weather months but over the long haul, winter crops have been more reliable than summer crops.” New Board Member
Northstar Agri Industries joined the Great Plains Canola Association’s board of directors this year as an industry member. Representing the company is Jay Bjerke who has more than 15 years of experience working with canola. From 1998-2001, Bjerke was the east European production lead for Monsanto. In that role, he worked in Poland with winter rapa (as canola is called there), where it was not uncommon to see yields of 6,000-7,000 pounds per acre. This is a target he’d like to shoot for in the Great Plains.
“After watching winter canola in the region progress from test plots to full scale production over the last dozen years, I am convinced that winter canola offers the best solution available to the many challenges Oklahoma and Kansas farmers face today,” he said. From 2001 to 2007, Bjerke was North A merican canola/ sunflower production lead for Monsanto. As such, he was part of the original team that worked with Dr. Tom Peeper and Mark Boyles at Oklahoma State University in introducing and conducting the first field tests on commercial winter canola in the region. From 2008 to 2011, Bjerke was canola product manager for Land O’ Lakes, working with the Answer Plots system, testing winter canola varieties and conducting fertility, rotational and plant population trails. In 2012, he assumed his current role as agronomic services manager at Northstar, where his duties include high oil contract ser vicing, variety and agronomic research, and event coordination. “It is a truly unique situation when growing a crop such as winter canola not only makes a great return for the farmer, but also increases the yield and quality of winter wheat the following years,” Bjerke said. “We are just at the beginning of tremendous growth in winter canola acres in the region. Personally, I think the southern Great Plains will become the largest area of canola production in the USA within the coming decade.” RON SHOLAR IS EXECUTIVE DIRECTOR O F T H E G R E AT P L A I N S C A N O L A ASSOCATION IN STILLWATER, OKLA.
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regional news
Canola Trials & Research Progress JON DOCKTER
T H E M I N N E S O TA C A N O L A COUNCIL’S (MCC’s) annual winter meeting will be Dec. 16 at Gene’s in Roseau, Minn. The event will include educational sessions followed by an evening of socializing and entertainment. The conference is free for producers, university personnel and sponsors who preregister. Watch your mail for a pre-registration form!
Crop Research Grant
The MCC was awarded a Minnesota Department of Agriculture crop research grant entitled “Agronomic Value of Crop Rotations in NW Minnesota.” Growers want to know if soybean and canola can work together on a rotational basis as they are two of the more profitable crops competing for acres in northern M i n ne s ot a . Si nc e b ot h c rop s a re moderately susceptible to sclerotinia, many growers have avoided planting them in a close rotation. However, there is some evidence of an advantage to growing soybean on canola ground or vice versa. This project, recently underway, will investigate the synergism of canola and soybean in a crop rotation compared with wheat. Although a multi-year project, a progress report will be presented at the Dec. 16 meeting.
Canola Production Centre
T h e 2 014 M i n n e s o t a C a n o l a Production Centre (CPC) was hosted by Magnusson Farms in Roseau, with a satellite site in Hallock, Minn. Trials were spearheaded by Nancy Ehlke, Donn Vellekson and Dave Grafstrom of the University of Minnesota and included: • Pre-Harvest Desiccants and Straight Harvest Trial • Nitrogen Rate, Source and Timing Trial - 23 treatments (92 plots) • Intensive vs. Trad it iona l C a nola Management - 8 treatments (32 plots)
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• Aster Leaf hopper-Aster Yellows Early Alert System in Canola Due to the late spring, all small plot canola trials were planted on May 29, 2014, with a base fertility program of 30-3030-30s applied to the entire area. The Pre-Harvest Desiccants and Straight Harvest Trial will evaluate the potential for pre-harvest desiccation and straightharvesting of canola grown in Minnesota environmental conditions. Treatments consist of conventional swathing, straight-harvesting preceded by a desiccant application (Reglone) and straight-harvesting alone. The plot size for this project was 400’ x 30’ laid out in a strip-plot design with replicates. Plots were fertilized at recommended rates for a 2,000 pound per acre yield goal. The Nitrogen Rate, Source and Timing Trial will evaluate canola yields from multiple rates of nitrogen applied PPI and at 3-5 leaf stage of growth and to evaluate the effectiveness of 100 percent standard urea, urea + Agrotain Ultra and Environmentally Sensitive Nitrogen. PPI rates of urea (46-0-0) nitrogen were added to the desired nitrogen rate of 0, 45, 90, 135 and 180 pounds per acre. PPI rates of a 50/50 blend of urea and a coated nitrogen product ESN (44-0-0) were 0, 45, 90, 135 and 180 pounds per acre. A series of PPI and post-nitrogen (urea) plus nitrogen treatments were also included. The treatments were 45 pounds nitrogen applied PPI followed by an additional 45, 90 or 135 pounds nitrogen per acre. Three post- emergence nitrogen (urea) treatments were applied on June 23 (3-5 leaf) at rates of 45, 90 and 135 pounds per acre. Intensive vs. Traditiona l Ca nola Management will compare intensive to traditional management strategies for canola production in northwestern Minnesota and determine the utility of remote-sensing technology as a tool to detect early season nitrogen deficiencies. The treatments included no fungicides; Quadris at 2-leaf stage; Proline
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at first petal fall; Priaxor at 80 percent bloom; Proline and Priaxor at appropriate growth stages; Quadris and Proline at appropriate growth stages; Quadris, Proline, and Priaxor at appropriate growth stages; and Quadris, Proline, Priaxor and insecticide applied with each fungicide at appropriate growth stages. Aster Leafhopper-Aster Yellows Early Alert System in Canola will use national weather service data to determine when wind currents are favorable for leafhopper flights into the Minnesota and North Dakota canolagrowing regions. It will also coordinate a leafhopper scouting network to determine the onset and frequency of aster leafhopper flights into the region; determine percentage of aster yellow phytoplasma in these early f lights of aster leaf hoppers by sending insect samples to an approved laboratory to determine infectivity level; and coordinate a communications plan to notify growers and industry partners on the movement of aster leafhoppers into the region. These four trials were funded by the National Canola Research Program. Data are currently being analyzed and will be presented at the Dec. 16 meeting. A complete report will be available at that time.
Variety and Systems Comparisons
A 2014 variety and systems trial compared agronomic characteristics and developed economic criteria (i.e., yield, contribution margin, quality, lodging resistance, harvestability, disease resistance) for the selection of canola varieties grown in northern Minnesota. These varieties included 21 Roundup Ready®, four Clearfield® and three Liberty Link®. This trial was also conducted at the CPC and results will be available at the Dec. 16 meeting. JON DOCKTER IS ASSOCIATE DIRECTOR OF THE MINNESOTA CANOLA COUNCIL IN ST. PAUL, MINN.
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quick bytes
capitol hill
agronomy
The U.S. Canola Association – in addition to 12 other national agricultural producer, biotech, s e e d a n d g ra i n h a n d li n g , processing and expor t organizations – signed a letter urging President Obama to take strong action to advance t rad e at N ove m b e r ’s A sia Pacific Economic Cooperation Leaders Summit in China . The groups are advocating for improved U.S.-China relations on agricultural biotechnology and trade, stressing the importance of an open export market for U.S. grains and oil se e ds . Curre nt Chinese practices, the letter said, “has created a situation where U.S. exports of agricultural crop commodities (to China) have ceased or are in jeopardy of being rejected.”
The most recent USDA crop production report for 2014 forecasted 2.52 billion pounds of canola, which will be the largest production on record if realized. The report shows an increase of 14 percent from last year. While the area planted, 1.71 million acres, is down 2 percent from a June estimate, it is a 27 percent increase from last year. The October yield forecast was 1,622 pounds per acre – 126 pounds below last year’s yield but will be the fourth highest on record.
The U. S . Depar tment of A g r i cu ltu re’s ( U S DA’s) Farm Service Agency (FSA) a n n o u n ce d key d ate s fo r risk management programs, inclu ding A gr iculture Risk Coverage (ARC) and Price Loss Coverage (PLC). Until Feb. 27, 2015, land owners can visit their FSA office to update yield history and/or reallocate base acres. From Nov. 17, 2014, to March 31, 2015, producers can make a one-time election of e it h e r A RC o r PLC fo r 2014-1 8 cro p ye a r s . Fro m mid-April through summer 2015, producers need to sign contracts for 2014 and 2015 crop years. Payments for the 2014 crop year, if necessary, will be in October 2015.
Dr. David L. Katz, founding director of Yale University’s Prevention Research Center, stood up for canola oil and plant biotechnology in U.S. News & World Report. “For those who disagree about canola, it’s not because they know something I don’t know; I have Google, too. It’s because they believe something I don’t believe,” he said, noting that genetic modification is their principal concern. “Information is not knowledge; information must be interpreted to be knowledge. Expertise facilitates interpretation.” To this end, Katz uses canola oil himself because of its healthy fats and high smoke point.
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his health, he said in Parade magazine. The experience inspired him to open a resort where others can learn how to maintain a healthy lifestyle while relaxing in the beauty of Tucson, Ariz. One tip Zuckerman offered for well-being: “be picky about fat” for a healthy diet, listing canola oil as a good option. Chef Ed McFarland, of Ed’s Lobster Bar in New York City, knows his way around a grill, especially when it comes to fish. He emphasized in Forbes. com that a hot grill top is key to properly cooking fish. “The hotter that grill top is, that’s what’s creating that sear and will keep the skin from sticking,” he said. To grease the grill, he recommended using a small amount of canola oil, which has a high heat tolerance and won’t mask fish flavor like olive oil.
nutrition and cooking
Owner of celebrated spa Canyon Ranch, Mel Zuckerman, was 50 years old and overweight when he decided to take control of
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oil around the world Australia’s first dual herbicidetolerant canola varieties will be released in 2015. Pacific Seeds will sell canola seed w ith both glyphos ate and triazine tolerance. Australian farmers are excited for the new technology, which will provide flexibility for herbicide rotations and help prevent weed resistance to them.
latest industry news A canola crush plant reopened i n Nor thwood , N . D. , af te r
closing in 2009. Prairie Pre mium Oil mana ge me nt has taken over the facility and begun crushing both stored and new canola seed. The plant can crush up to 7,000 tons of canola per month and is running at 94-95 percent of capacity. About 5,000 tons of oil has already been shipped out of the plant.
about events The National Canola Research Conference was Nov. 4-5, 2014 in conjunction with the American Society of Agronomy, Crop Science Society of America and Soil Science Society of America’s annual meetings in Long Beach, Calif. Scheduled presentations included: “Opportunities and Challenges for Developing an Oilseed to Renewable Jet Fuel Industry,” “Desiccant Effect on Canola Seed Moisture, Yield and Quality” and “Broadening of Genetic Diversity in Spring Canola.” The Northern Canola Growers A ssoc i atio n i s h os t i n g it s 1 8t h A n n u a l C a n o l a E x p o on Wednesday, Dec. 10 in Langdon, N.D. The keynote speaker this year is Jerry Gulke of the Gulke Group. The 2015 PNW Oilseed and Direct Seed Conference will be Jan. 20-22, 2015 at Three R i ve r s Co nve nt i o n Ce nte r in Kennew ick, Wash. More information is forthcoming. Submit your entries by Dec. 31 for U.S. Canola Digest’s “ Lights , Ca me ra , Ca nol a! ” p h oto co nte s t . D et a i l s at uscanolaassociation.com.
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canola cooks
CANOLA SPICES it up in the Kitchen SHERI COLEMAN, B.S.N., R.N.
IN MANY PARTS OF THE COUNTRY, crisp leaves are falling on the ground, the scent of autumn fills the air and even a dust of snow appears on occasion. As thoughts turn to nesting in for the winter, we also look forward to warming our kitchens with spices and familiar smells of the season. Making quick breads, such as the warmly spiced version here, is among the most versatile techniques in a cook’s repertoire. Varying the basic ingredients or adding others produces many different flavors and textures. They are called “quick” because they can be prepared quickly and because they usually need to be cooked immediately after mixing. From sweet treats like cakes and cookies to sturdy muffins, waffles and pancakes to delicate cream puffs and popovers, quick breads start with just four basic ingredients: flour, fat, liquid and leavening. Leavening is any ingredient that produces air bubbles that expand during baking, thereby lightening the texture. Instead of yeast, quick breads generally use baking soda, baking powder or both. Baking soda is a food-grade chemical base, sodium bicarbonate. Baking powder is baking soda combined with a food-grade chemical acid, such as cream of tartar. These work with an acid-base reaction that produces carbon dioxide, or by thermal decomposition producing both steam and carbon dioxide. In addition to its flavor and texture contribution, fat can also be a leavening agent. Creamed with sugar or cut into flour, it holds microscopic pockets of air that expand during baking. Substituting the fat with canola oil or canola margarine is an easy way to reduce saturated fat. Because it has a very mild flavor, canola oil works especially well in recipes meant to showcase another ingredient. And here is the real key to the versatility of quick breads: almost any ingredient or flavor can be highlighted. Spices are the simplest addition, but far from the only possibility. Replace some liquid with a fruit or vegetable puree. Add ingredients such as sugar and eggs. If the dough is thick enough, stir in solids such as chocolate, nuts, cheese or meat. These Pumpkin Gingerbread Muffins are a delicious example of how quick breads highlight seasonal flavors, assisted by healthful, versatile canola oil. SHERI COLEMAN, B.S.N., R.N., IS ASSOCIATE DIRECTOR OF THE NORTHERN CANOLA GROWERS ASSOCIATION IN BISMARCK, N.D.
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U.S. CANOL A DIGEST
NOVEMBER • D ECEMBER 2014
PUMPKIN GINGERBREAD MUFFINS Reminiscent of gingersnaps, these fragrant treats are the perfect school or office snack for a crowd. 1 cup canola oil 1 cup dark brown sugar 4 large eggs 1/3 cup molasses 1 (15 oz.) can pumpkin 2 cups white whole wheat flour 1 1/2 cups all-purpose flour 2 tsp baking powder
2 tsp ground cinnamon* 2 tsp ground ginger* 1 1/2 tsp salt 1 tsp nutmeg* 1 tsp baking soda 1/2 tsp ground cloves* 1/3 cup water
Optional toppings: finely chopped crystallized ginger, ground flax or granulated sugar Heat oven to 350 °F. Line 24 muffin cups with paper liners or spray muffin tin bottoms only with no-stick canola oil cooking spray. Beat canola oil, sugar, eggs and molasses until creamy. Add pumpkin and mix until well incorporated. In separate small bowl, combine dry ingredients, flours through ground cloves. Slowly add combined dry ingredients and water to pumpkin mixture, stirring just until dry ingredients are moistened. Fill muffin cups almost full. Sprinkle with your choice of toppings, if desired. Bake 18 to 22 minutes or until tops spring back when lightly touched. Let cool in pan 5 minutes; remove from pan and cool completely on racks. Store loosely covered or freeze in freezer bags. Just reheat frozen muffin in microwave for about 30 seconds. Yield: 24 muffins. *TIP: Use 5 tsp. pumpkin pie spice in place of cinnamon, ground ginger, nutmeg and cloves, if desired.
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U.S. CANOL A DIGEST
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