Farming For Tomorrow September October 2023

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September October 2023

ENTREPRENEURS IN AGRICULTURE

Addicted to the Game of Farming Kristjan Hebert builds a legacy

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Addicted to the Game of Farming Angela Lovell

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Farm Programs Can Cause Economic Distortions

Covering Contact Herbicides

A Farmer’s Viewpoint

by Kevin Hursh

Those Wily Weeds

by Tammy Jones

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Don’t Let Greed Cost You

What’s Old is New Again

Grain Market Analysis

by Scott Shiels

Spraying 101

by Tom Wolf

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What Size of Farm is Right for You?

Canola Producers Continue to Move Forward

Farming Your Money

by Paul Kuntz

Seed

by Lisa Kopochinski

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Farmers Adapt to Global Fertilizer Markets

A Solid Balance Sheet

Fertilizer

by Becky Zimmer

KEVIN HURSH 8

TAMMY JONES

Bank on Better Business

by Vincent Cloutier

PAUL KUNTZ

SCOTT SHIELS

TOM WOLF

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A SECTION FARMER’S | TITLE VIEWPOINT | FARM PROGRAMS CAN CAUSE ECONOMIC DISTORTIONS

Farm Programs Can Cause Economic Distortions Kevin Hursh, P.Ag. Kevin Hursh is one of the country’s leading agricultural commentators. He is an agrologist, journalist and farmer. Kevin and his wife Marlene run Hursh Consulting & Communications based in Saskatoon. They also own and operate a farm near Cabri in southwest Saskatchewan growing a wide variety of crops. Kevin writes for a number of agricultural publications and serves as executive director for the Canary Seed Development Commission of Saskatchewan and the Inland Terminal Association of Canada (ITAC).

Twitter: @KevinHursh1

Government programs for agriculture, even when they are popular and well-administered, can still have unintended consequences. Two that come to mind are crop insurance and the maximum revenue entitlement (MRE).

The MRE puts a cap on the amount the two major railways can charge for hauling grain. It’s adjusted annually for increasing costs and for the volume of grain moved using a complicated formula. It isn’t a rate cap; it’s a revenue cap.

If a railway exceeds its MRE for the year, the excess as well as a small penalty has to be paid to the Western Grains Research Foundation (WGRF). That’s why the WGRF has millions of dollars earning interest with that money used to fund a multitude of research projects.

Since railway revenue for grain hauling is near or over the cap each year, one can conclude that without the MRE grain freight rates would be even higher. Many analysts believe the railways still make good profits on grain movement, but with a duopoly situation, they would no doubt extract more without the MRE in place.

Where the distortion comes is with southern grain movement. The MRE applies to grain moving to Vancouver, Prince Rupert and Thunder Bay. It doesn’t apply to southern shipments to the U.S. and Mexico.

With the merger of CP and Kansas City Southern, accessing southern destinations should become more feasible. However, economics are skewed by the MRE. In many cases, it’s less expensive to rail grain to Vancouver, put it on a ship, sail to Mexico, unload the ship and move the grain inland as compared to railing it straight to Mexico.

With all the congestion at the Port of Vancouver, being able to ship south by rail is attractive, but the MRE makes the economics difficult.

More obvious to farmers and ranchers are the distortions created by crop insurance. It’s clear to anyone who uses and analyzes crop insurance offerings that programs are far more effective for grain than cattle.

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A FARMER’S VIEWPOINT

Canola acreage is down a bit this year in both Alberta and Manitoba. It’s up in Saskatchewan and based on my observations, I think a lot of the increase is in areas worried about another drought.

Publishers

Pat Ottmann & Tim Ottmann

Editor

Lisa Johnston

Design

Cole Ottmann

Regular Contributors

Vincent Cloutier Kevin Hursh Tammy Jones

Scott Shiels Tom Wolf

When the insured prices for grain are high like they are this year, it takes a lot of risk out of trying to grow a crop. In fact, with crop insurance canola prices set around $19 a bushel (some variation from province to province), there’s more money to be made with a crop failure than with growing an average crop.

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So, if you have land that can be converted from tame hay or pasture into grain production, the economics says this should be your course of action. A lot of factors go into a decision like that, but crop insurance coverage is certainly a consideration.

Nancy Bielecki nancy@farmingfortomorrow.ca 587-774-7618

Crop insurance also influences cropping choices and this seems particularly evident in Saskatchewan. For many farmers, their highest coverage and some of the lowest premiums are on canola. If you fear a crop wreck and canola provides $600 an acre coverage – which is head and shoulders above other cropping choices – it may influence decisions.

Canola acreage is down a bit this year in both Alberta and Manitoba. It’s up in Saskatchewan and based on my observations, I think a lot of the increase is in areas worried about another drought.

How much has the security of crop insurance contributed to rising land prices? That would be an interesting economic study.

Unintended consequences have long occurred from programs and policies. It seems like ancient history now, but grain deliveries to the Canadian Wheat Board used to be based on seeded acres, which encouraged the cultivation of marginal land and the draining of wetlands.

The short-lived Gross Revenue Insurance Program (GRIP) was even worse than crop insurance for influencing crop choices.

There are no easy solutions to the distortions caused by the MRE and by crop insurance, but it’s important to understand unintended consequences so they can be mitigated whenever possible.

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Sales

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Chloe MacEachern chloe@farmingfortomorrow.ca 587-774-7622 /farming4tomorrow /FFTMagazine /farming-for-tomorrow /farmingfortomorrow WWW.FARMINGFORTOMORROW.CA Farming For Tomorrow is delivered to 90,720 farm and agribusiness addresses every second month.

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GRAIN MARKET ANALYSIS | DON’T LET GREED COST YOU

Don’t Let Greed Cost You Scott Shiels Scott grew up in Killarney, Man. and has been in the grain industry for 30 years.

He has worked with Grain Millers Canada for 10 years and manages procurement for both conventional and organic oats for their Canadian operation. Scott is an elected board member for Farm and Food Care Saskatchewan and sits on several other committees on both the organic and conventional sides of the oat industry. Scott and his wife Jenn live on an acreage near Yorkton, Sask. Find out more at www.grainmillers.com.

Writing grain marketing articles in the summer can be quite the monumental task. We have encountered a significant shift in seeded acres of some crops this year, and with the extremely variable growing conditions across the Prairies thus far, nailing down, or even wild-ass guessing, where grain markets are going is proving to be more difficult than ever.

StatCan came out in late June with their revised seeded acreage report, and to nobody’s real surprise, they found more wheat, canola and barley acres had been planted this spring. The biggest hit came to oat acreage, which is reportedly down over 35 per cent from last year, and my estimate is that number is low by likely 10-15 per cent. I am also firm in my belief that canola acreage is actually higher than estimated, as my travels this July painted a very yellow picture in every direction through eastern Saskatchewan and southern Manitoba.

Crop conditions through mid-July across the Prairies are one of the most inconsistent that I can remember in my 30 years in this business. This, plus the crazy acreage numbers, is going to make for a lot of marketing challenges. While the bulk of the news is definitely bullish, the great crop from 2022 and the carryout that brings, will make it difficult to really nail down the time to pull the trigger on your sales. We have ridden this market lower, and I am convinced the bottom is in for all commodities. We really only have upside potential from here. How much upside is the question now. I don’t think we will see prices as high as we did in the drought year of 2021, but I would never have thought we would pay those kinds of prices either, so maybe I will be wrong again this year.

Another factor that we always have to be aware of is crop conditions south of the border. The U.S. market is huge and the quality there affects our markets in Canada far more than the conditions of our own crop. They have been quite dry throughout much of their major grain production areas this spring and into summer, so we should expect prices on the wheat, corn and soybean markets to climb come harvest. Much like StatCan, the USDA reports can sway the markets, but these reports have been wildly inaccurate many times over the years.

The other big factor to watch is the European crop. While imports from Europe do not always pencil, and the logistics of bringing cargoes of grain across the ocean can be daunting to smaller companies, the fact remains that there are options out there for buyers that can limit the upside to our prices at some point.

Now, I am not saying there isn’t a great potential for price gains this year, but, like we have just experienced, there is a top to the market, just like there is a bottom. Long story short, don’t let greed cost you when marketing your upcoming crop.

Until next time…

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SECTION |YOUR FARMING TITLE MONEY | WHAT SIZE OF FARM IS RIGHT FOR YOU?

What Size of Farm is Right for You? Paul Kuntz Paul Kuntz is the owner of Wheatland Financial. He offers financial consulting and debt broker services.

Kuntz is also an advisor with Global Ag Risk Solutions.

He can be reached through wheatlandfinancial.ca.

Recently there have been discussions online and in farm publications regarding farms getting larger.

This has been a constant theme for several years. Many of my clients are being pressured by grain farms that are 15,000 acres, 20,000 acres, 30,000 acres and even larger. Which begs the question: what is the right size for a grain farm?

I am a blue-blooded capitalist like most entrepreneurs. I feel the markets will dictate what needs to be done. I am also of the belief that we should be able to run our businesses however we want with the freedom to be as big or as small as we want. When the pendulum swings too far to either side, though, we often have questions.

I offer consulting to my clients based on proven financial parameters. Although the size of the farm does affect certain ratios, there is no standard, minimum or maximum size. The sustainability of your farm is based on equity, working capital, ability to pay your debts, reasonable expenses and enough income to cover all costs and have some left over. I have farms that have 2,000 acres that meet these benchmarks as well as 15,000-acre farms meeting the same criteria. It all depends on how they are managed.

One aspect you need to ask yourself is whether you want to farm or manage employees. I have clients who do both but once you hit a certain size, most likely you will only manage employees. I have nothing against HR tasks if that is what you want, but I have yet to meet a farmer who only wants to manage employees. Farmers do what they do because they want to farm.

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FARMING YOUR MONEY | WHAT SIZE OF FARM IS RIGHT FOR YOU?

Know your numbers. The most important number on your farm is not the number of acres you have. The numbers you want to focus on are things like cash outflow per acre. How much money does it take to run your farm on a per acre basis?

StatCan’s 2021 agriculture survey does not support the theory that farms are getting bigger. According to the survey, the average farm size in Saskatchewan is 1,766 acres which is not that big. The number of farms did decrease in Saskatchewan from 2016 to 2021 but only by 1.1 per cent when the national average declined 1.9 per cent. That does not sound like all small farms are being bought up by large farms. I am sure anecdotally we can all think of examples of farms that have been bought up by large operations. That does not mean the end is inevitable for small farms. These events would have been choices made by farmers to end their agriculture career by selling out. This happens in every industry.

If you are feeling pressure in your area by larger operations and you believe your ability to expand is limited, there are some things you can focus on.

Know your numbers. The most important number on your farm is not the number of acres you have. The numbers you want to focus on are things like cash outflow per acre. How much money does it take to run your farm on a per acre basis? What are all of your costs, your loan payments and your drawings to live? Does your farm have a fighting chance of earning that? Will

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more acres make this better?

How does your gross income per acre stack up against others with the same type of land? When you take a drive and compare your crops to others, you assume your crop is just as good, but is it? What about the marketing of your crops? How would you grade yourself on that topic? Will more acres make that better?

How efficient is your operation when it comes to machinery?

Do you repair and rebuild your own equipment? Are you willing to run older equipment or do you need to have the biggest, newest and best equipment? There have been many advancements in technology that make equipment more efficient. It is important to understand these advancements and know what they can do for your farm.

We do not have to buy the newest equipment to get the newest technology. We see autosteer on 25-year-old tractors. We see sectional control on 20-year-old high-clearance sprayers. I visited a booth at Canada’s Farm Show in Regina in June that had yield/moisture monitors as well as yield mapping for combines as old as an MF 760.

Start by measuring how well you farm the acres you have now.

Perhaps increasing acres will help, but maybe not. We have to understand what the incremental acres will do to your farm. If you are farming a lot of land that is paid for, buying a quarter for $400,000 will change your numbers and be a tough pill to swallow. If you have a lot of $50/acre rent, paying $95/acre will negatively affect your numbers.

A wise client of mine once told me that if you want to expand quickly, you have to farm land that no one else wants to farm.

This is typically land that is less productive, inefficient or dirty. If expanding your farm means farming lesser quality land, then you need to account for this. I am confident that good farmers can improve the land, but there is a price to pay for that process. You will have some less than productive years and the cash costs to improve the land will affect your bottom line.

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FARMING YOUR MONEY | WHAT SIZE OF FARM IS RIGHT FOR YOU?

Being bigger has never meant being better. The only way to be better is to be better. The only way you will know if you are being better is by measuring your financial performance.

long-term and short-term sustainability ratios. If you harvest 2,500 acres, then seed 3,000, then next year seed 3,500 acres and so on, you will run yourself short of cash. It is much better to seed 3,000 acres, harvest 3,000 acres and do that for five years in a row. If Mother Nature cooperates, your operation will be financially stable.

Being bigger has never meant being better. The only way to be better is to be better. The only way you will know if you are being better is by measuring your financial performance.

I have nothing against someone wanting to farm 20,000 acres or 100,000 acres. That is the free market and we should all support everyone’s ambition to grow. Where I take issue is in the economic arguments that this size of farm is inevitable.

That, in my view, is incorrect. In my consulting world, the two largest farms I ever dealt with were 31,000 acres and 21,000 acres. Neither one of them exists in that form today. The two farms that I have worked with the longest from part of my banking career to my consulting career (25 years) are both under 3,000 acres. If you want to be big, go ahead, but don’t think that is the only way to farm.

There are advantages to being smaller. If you have a 2,500-acre farm and you have had that farm for 15 years without expanding or contracting, you will have a very strong financial position. It is much easier for this farm to build your working capital to a point of having enough cash to farm for an entire year without income.

That farm will have less debt and a greater ability to service it.

Constantly expanding a grain farm is very hard on your

Creating more value together

When it comes to farm size, I often revert back to living costs. If you need $100,000 to live for the year and you would like to have $100,000 to set aside each year to build equity, then you need an operation that can net $200,000. With today’s grain prices, your farm might be able to do that with under 3,000 acres.

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SECTION | TITLE FERTILIZER | FARMERS ADAPT TO GLOBAL FERTILIZER MARKETS

Farmers Adapt to Global Fertilizer Markets

By Becky Zimmer

Cost of fertilizers are on a fast decline in Canada but given the record highs of 2022, fertilizer companies, retailers and farmers are keeping an eye on input costs as they prepare for the 2024 growing season.

The first and second quarters of last year were frightful for farmers as they faced rising input costs in all areas of operation. According to Statistics Canada and their farm input price index, farmers saw an 80.8 per cent year-to-year increase in fertilizer pricing from the second quarters of 2021 to 2022. Prices hit an all-time high in the second quarter of 2022 but are now taking a plunge.

The Russia-Ukraine conflict changed the global landscape for fertilizer production and sales, says FCC senior economist Justin Shepherd. As Russia’s national focus moved away from being one of the world’s largest fertilizer exporters, farmers around the globe lost that supply access. Shepherd believes this growing energy crisis has hampered production by other countries as well.

“Europe is a fairly large fertilizer producer,” explains Shepherd.

“They were purchasing a lot of Russian natural gas, and last fall made the decision to move away from that and were purchasing natural gas from other parts of the world … and some of that 22

production capacity came offline for a while.”

According to the European Council on Foreign Relations (ECFR), Russian crude oil exports accounted for 45 per cent of Europe’s gas imports in 2021, but those taps were quickly turned off by the Russian government in 2022. Ammonia production requires natural gas, and EU consumption (estimated at 10-12 per cent in 2022) and industrial production both saw a sharp decline.

However, Szymon Kardaś, senior policy fellow with ECFR, wrote in February that he is expecting an increase in global demand for natural gas while no significant growth in LNG (liquified natural gas) supply is expected on the world market this year. All this is likely to make it harder for the EU to purchase LNG. Even with the sharp decline in crude oil imports from Russia, the nation is still the EU’s second biggest natural gas supplier after the United States.

“Fertilizer options that are 100 per cent locally supplied are rare if non-existent,” says Kevin Blair, CEO of Blair’s Crop Solutions. “Big fertilizer companies and even some retailers will always need import options and participation and access to the global markets.”

He adds that while there is plenty of nitrogen production in Canada, there will always be small but significant imports of

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FERTILIZER | FARMERS ADAPT TO GLOBAL FERTILIZER MARKETS

granular nitrogen within the marketplace from year to year.

Niche facilities are arising for other nutrient needs. Northern Nutrients Ltd. in Floral, Sask. offers a sulphur product with a nitrogen component and Guelph-based Waterloo Biofilter provides phosphorus removal from residential and commercial waste water. “While we’ll never import potash and rarely import sulphur, beyond waste water as a phosphorus source,” says Blair, “Canada’s supply for phosphate production ran out a long time ago.

“Most people don’t really think about it. They think about it a little bit like why would we want to bring product in from another country when we can produce it here? That’s just not how you keep a competitive landscape alive … primarily nitrogen and phosphorus.”

Even with the conflict in Ukraine, fertilizer manufacturers are still going to rely on supplies from Russia, the U.S. (especially Florida, North Carolina and Idaho), Morocco, and most recently, Norway.

Canada is the third-largest producer of primary fertilizers (N, P, K) and is the number one producer of potash fertilizer, with exports to over 75 countries every year, according to Fertilizer Canada. While 95 per cent of our potash production is exported, Canada is the seventh-largest market for fertilizer consumption.

According to the Canadian Agri-food Policy Institute’s (CAPI) March 2022 report, Food Security in the Wake of the Ukrainian Crisis: How Canada Can Play a Role, Canada needs to find its own strategy on how to “develop domestic sources of phosphate,” since it was a large importer of Russian nitrogen fertilizers at over half their tonnage, especially in Eastern Canada.

“Canada is already the largest exporter of potash; surely greater self-reliance in nitrogen fertilizers could be built, and a strategy to source imported phosphates developed,” concluded the report, which included contributions from Al Mussell, research director at CAPI. “The nitrogen fertilizer emission reduction target announced by the federal government is an opportunity to focus on improving fertilizer efficiency – with import dependency an aspect.”

While prices have been back on the upswing in the last few quarters, these decreases do not mean a total reversal on the challenges brought on by the energy crisis and global market. It will continue to be a global challenge that will have an impact on those prices in Canada.

It’s for these reasons that Mussell doesn’t expect prices will drop too far from these historical highs any time soon. “There are always ebbs and flows seasonally, but it’s going to be within a range that’s structurally higher than it’s been in the past,” he says.

Blair says the current prices are as good as they’ve been in a 24

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FERTILIZER | FARMERS ADAPT TO GLOBAL FERTILIZER MARKETS few years; however, it doesn’t mean it’s going to stay that way.

So, what can farmers do?

Even with the lofty input costs, high commodity prices have offered some benefit to help farmers balance their bottom lines. “For the upcoming growing season, even with fairly volatile commodity and input markets, farmers should be able to look at their production costs and do two things: manage risk effectively and sell grain profitably,” says Shepherd.

“One way that farmers could manage some of the risks is to stagger their fertilizer purchases,” he adds. “If you want to reduce the risk and if you think there’s maybe potential that fertilizer could go down further, purchase some in fall; split those purchases into multiple times. It could be beneficial to dollar cost average the entire year.”

Are there ways for farmers to lock in fertilizer while selling grain when it comes to dealing with supply and demand issues? All that takes is communication with local retailers, notes Shepherd.

Mussell advises farmers to find those dips in the market where they can buy relatively cheap. However, that will take some planning as it may mean investing money in storage

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options. There are pros and cons with this plan. Having storage available will mean some freedom on when to buy, but it can require capital investments for farmers lacking access to storage tanks. Prices on everything have increased so even building materials are historically higher than they once were.

“If I have to be shopping for urea or UAN (urea-ammonium nitrate), and be prepared to purchase it in November or December for the following spring, well, I better have an operating line, and relationship with my bank so that they know I need credit over a longer period of time to pay for this stuff,” says Mussell.

For Blair, purchasing of fertilizer early has historically been a better option, but that does take forethought in having those storage options available. However, the last few years have caused some exceptions with high pricing in traditionally low times of year. Farmers should be prepared with capital and storage, he advises.

“The state of the Canadian dollar is also going to swing those imports in either direction by $30-$50/tonne,” Blair adds. “So, that is another element that farmers can factor in when eyeing fertilizer prices.”

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AGRI-TRADE | TRADE EXPO TAKING OVER RED DEER IN NOVEMBER

Trade Expo Taking Over Red Deer in November There’s something for everyone in Red Deer this fall as one of the top crop production shows in North America gets ready for their 39th annual expo.

“(Westerner Park) is a fantastic facility,” says Fiddler. “We have seven halls that we utilize and we are completely sold out.”

With 325,000 square feet of indoor and outdoor space, 30,000 qualified agriculture buyers and over 475 equipment manufacturers, attendees will have no shortage of things to look at during the Agri-Trade Equipment Expo from November 8-10, 2023, at Westerner Park. Situated right after harvest time, attendees of all ages and presenters from across the world have a lot to celebrate.

Even with western Canadian roots, the show has global representation with notable contributions from Germany, Hungary and the United States. This is the second year the expo will have a German pavilion, which is an important highlight of the 2023 show. IFWexpo acts as an umbrella organization to bring German companies to Red Deer specifically for Agri-Trade.

“(Farmers) just got out of the field; they just got out of harvest,” says Krissy Fiddler, Agri-Trade operations manager.

“It’s still fresh in their mind what worked, what didn’t, and how can we always improve. And that’s what these attendees are striving for.”

“They had a really good show, so we’re looking forward to seeing the architectural designs and what the Europeans bring to (Red Deer) this year…. They (IFWexpo) build a fantastic display for those German companies.”

With very few formal sessions on the agenda, exhibitors do the talking. Many bring their own experts to interact with farmers about their product innovations and services.

Approximately 31,000 people come through the doors during the three-day event, an attendance number that Fiddler notes has been consistent over the last few years. With the expo taking up every square inch of Westerner Park in Red Deer, hundreds of other ag-based companies are on a wait list to get involved in the show.

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According to a news release from last year, Agri-Trade had registered buyers from all over the globe, including Mexico, Kenya, South Africa, as well as different European nations.

The ag industry is always evolving, says Fiddler, and even if North American companies and institutions are in the forefront, there is much to learn beyond our borders.

“Learning from those other countries that have the same type of landscape and the same type of farming practices is super important,” adds Fiddler.

TRADE EXPO TAKING OVER RED DEER IN NOVEMBER | AGRI-TRADE

Another important element of the show is the 15th-annual Ag Innovations competition. Five finalists will have the opportunity to share their inventions and knowledge for a chance to win a $20,000 grand prize. According to Fiddler, finalists have not always been from emergent technologies; many grassroot inventions have also made it to the stand.

“It’s so nice to see that these inventions sometimes aren’t coming from those big massive companies,” states Fiddler.

“Some that have done really well are ones that worked on their (the inventor’s) farm, so they’re making sure they are spreading the knowledge and the improvements to everyone else.”

The ag industry is in a constant state of change and the reason education is so important. It is also why expo organizers aim to attract more young people interested in agriculture-based careers.

Through a partnership with Ag For Life and the Agricultural Manufacturers of Canada, high school students from across the region will be in attendance to learn about their own futures in agriculture. Many students from both urban and

rural schools are already registered, and sessions and tours on the first day will get them talking and learning from companies right on the show floor before formal discussions of career opportunities. Bringing this awareness to the industry is a huge part of Agri-Trade’s role as a member of the agricultural community and many students are looking to trade schools as their post-secondary path. Fiddler notes it is important they know what opportunities exist.

“There are ebbs and flows within those industries, but you’re seeing a lot more people go back into ag, a lot more people go back into the trades, because that’s where they’re needed the most right now,” she says. “Where there are jobs, people will follow.”

With $22,500 worth of scholarships available through Olds College, Lakeland College and Red Deer Polytechnic, courtesy of the expo, this is just another way organizers are continuing their support of post-secondary ag students.

The expo will be the perfect place for holiday shopping with many ag-themed retail booths open for business, and will also feature live entertainment by local musicians.

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COVER STORY

Kristjan Hebert admits he is addicted to the game of farming, and it’s definitely one of the reasons that his farming operation, Hebert Grain Ventures, has grown from 5,500 to 30,000 acres over the past 15 years.

“Nobody paid me to play hockey when I was little. I got up at 6:30 on a Saturday to go to a hockey tournament for free.

That’s how we build the farm,” he says. “If you’re addicted to the game of what you do, it’s like playing sports when you’re young, but the outcome is you do a better job and you make more money.”

Hebert rented his first 500 acres from his parents, Louis and Karen, when he was 16. After attending university and working for Meyers Norris Penny as a CPA during the winter months, he and his wife, Theresa, moved back full time to the family farm in Moosomin, Saskatchewan. Their return precipitated some changes.

“Mom and dad had to work hard in the years it took to go from 320 acres to 3,000, but it got to the point where dad at times called it a monster because he couldn’t get away from it,” Hebert says. “He still loved the farm, but at times it became all-consuming. It wasn’t quite big enough for two or three full-time people and keeping one person around was tough because they didn’t have much of a job description other than ‘you do what I tell you to do, when I tell you to do it.’”

Making changes Hebert believed the best way to keep growing was to develop a team that would allow them to grow out of having to do everything themselves, but as the farm expanded, he and his dad didn’t always share the decision-making easily.

Addict the Ga Farmin Kristjan Hebert builds a legacy

By Angela Lovell Chantelle Rivers Photography

“Dad and I are both leaders and stubborn, so our most awkward time in succession was when we were at 8,000 acres.” Hebert was 28 at the time and his dad was only 50. “But we went really fast from 8,000 to 16,000 acres and at that point, we just had to trust each other. I’m good at the numbers, the financial statements and purchasing, and dad’s good at projects, improving land and being out in the field. There was so much work, we couldn’t be double-checking on each other or be worried about each other’s decisions; we just had to do our jobs.”

The Heberts also split off the cattle side of the operation to be overseen by Hebert’s brother, Kyle, as a separate entity, although they still collaborate and help each other out.

“I love business and grain and don’t like cows, and my brother doesn’t like grain and loves cows. As one business, it probably wasn’t going to work, so we split it into two parts,” Hebert says.

“We’re eight miles apart. I seed his land for feed and he’s a welder, so if I need him, he comes. We work well together, and I think it has made our relationship stronger.”

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Kristjan Hebert is no stranger to building a successful business from the ground up

ADDICTED TO THE GAME OF FARMING | COVER STORY

ted to ame of ng

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COVER STORY | ADDICTED TO THE GAME OF FARMING

The importance of people When Hebert left MNP, he had the goal of growing the farm to around 8,000 acres. Today, he doesn’t care how many acres he farms because he has realized that growth is less about the land base and more about the people involved.

“I don’t care if I farm 8,000 or 100,000 acres,” he says. “If I have good people, we can do a better job because people buy into the idea and there’s always ways to grow within your position because the farm’s growing. You might be an air seeder, sprayer and combine driver, but it’s way different doing it when there’s one machine in the field versus six or 10. If there’s growth in your job all the time, it gets exciting.”

When Hebert finds somebody he thinks could be useful to the farm, he brings them on and then worries about what they are going to do.

“The struggles we had early on with how much we were working is what led to our growth strategy,” he says. “A lot of people think the bigger you get, the more people you have, the more difficult it is, but I’ve always thought the other way. Every time we had the chance to hire a good person, we hired them.”

Hebert does add that he says all of this with a smile; early in the growth stages, he hired Jeff Warkentin as COO, who is also a junior partner in the farm. “Jeff is significantly better than me at the people part of the business. His skill set complements my vision extremely well,” he says.

That business model has also opened up opportunities and led to new enterprises that are complementary to the farm operation.

Although Hebert is a CPA and enjoys the financial side of the business, the operation had grown to where he needed to hire a chief financial officer (CFO), but didn’t need one full time. So, when he hired Evan Shout for the role, they partnered to start Maverick Ag (a risk and financial consulting company) and then Farmer Coach (a farm coaching consultancy), with Shout spending half his time helping other farmers.

“We found the industry was craving this knowledge and didn’t know where to get it,” Hebert says. “Maverick Ag and Farmer Coach grew out of that need. It is about trying to help the industry by sharing some of the education and processes we have built so they can build their own operation with a similar mindset and values. Over time, that creates collaboration when it comes to negotiation on policy or working together on projects and things like that.”

Living a legacy Kristjan’s legacy is built on four main values, all of which lead to success for the farm and community

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It’s something that ties into the farm’s legacy statement that hangs on the wall behind Hebert’s desk as a reminder to everyone of why they do what they do.

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COVER STORY | ADDICTED TO THE GAME OF FARMING

The success of Hebert Grain Ventures comes from the hard work and dedication of the entire team

“Our definition of success for our operation is that the land, the financial statements, the community and the industry are in a better position generation after generation. That led us to look at what we are good at.

We’re not just good at growing grain or financials; we enjoy solving agriculture’s puzzles, which means we’re never done; we are always finding new pieces.” - Kristjan Hebert 34

“Our definition of success for our operation is that the land, the financial statements, the community and the industry are in a better position generation after generation,” Hebert says.

“That led us to look at what we are good at. We’re not just good at growing grain or financials; we enjoy solving agriculture’s puzzles, which means we’re never done; we are always finding new pieces.”

It’s not always easy to live up to such a tall order because large farm operations often get thrown under the bus and accused of exactly the opposite.

“We often hear comments that we’re a big farm and we ruin small communities,” Hebert says. “I have 10 to 15 people who work for me who all live in the local communities. We had 40 kids under the age 15 at our Christmas party and virtually everyone on my team coaches their kid’s hockey or ball, so we are focused on trying to keep these services available in our small towns so people actually want to live here.”

The legacy is built on the farm’s four values, the first of which is win/win.

“Every deal you make, you should walk away being more excited about the next deal than the one you just made,” Hebert says.

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COVER STORY | ADDICTED TO THE GAME OF FARMING

“We had a good relationship where he recommended me to his retail customers and just asked that if any of my customers were looking to buy chemical that I would recommend him. After doing that for several years, I got to know his business and how it worked. When he was looking to retire, we came up with an agreement and Natasha and I took ownership in 2012.” - Dallas Vert

“I see people make deals and they’re not happy unless they feel they won and someone lost. I don’t believe that’s the way to move the industry forward.”

Hebert also believes that ‘can’t’ is not an option. “We are going to succeed. Whether it’s tenacity or grit, or we’re just too stupid to give up, we’re going to find a way,” he says.

The third value is to innovate and optimize, as the team uses data to learn and improve operations towards the success of value number four, a continuous growth mentality.

“We are going to grow, but that doesn’t mean in acres. It might be in people, execution, consulting, partnerships; it might be in whole bunch of different ways,” Hebert says.

Farmers make good business partners One of Hebert’s greatest strengths is in developing collaborations and partnerships with others, like serving on a research advisory board at Olds College, working with John Deere and Pattison Agriculture to continuously improve technology on the farm, and his advisory board work with Global Ag Risk Solutions.

Hebert says more farmers need to see themselves as potential business partners because they have a lot to offer.

“A business is a three-legged stool, with the legs being time, brains and money. In a lot of cases, a young person has lots of time and brains and farmers could fill the role of being the money; maybe put a quarter up as leverage, and they have a lot of knowledge about how to deal with change and inconsistency and not knowing the future,” Hebert says. “We don’t spend a lot of time trying to get those two groups together because farmers are always thought of as farmers, not entrepreneurs, although some of the best entrepreneurs I know are farmers.”

When asked what’s holding more farmers back from reaching out and making these kinds of connections, Hebert says it is simply acceptance and mindset.

Kristjan says that by treating themselves as potential business partners, farmers can open new opportunities

36

“If you are a salesman in the U.S., you had better pull up to somebody’s yard in the nicest Range Rover because they won’t buy from you if they don’t think you’re successful,” Hebert says.

“But the mentality in Canada is, you better pull up in an old F-150 because if you’re too successful, I won’t buy from you. I believe that pushes agriculture worse than anything. It’s not an industry where we’re super proud of the operations that are successful. I think that marketing and PR is important in the world of agriculture. We don’t need to do it to sell our grain but to educate consumers and communities, to find new team members and to find businesses that are looking for operations like ours to partner with.”

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COVER STORY | ADDICTED TO THE GAME OF FARMING

“It’s hiring people with a variety of different skill sets that I think we do differently. When you interview somebody, your favourite person is going to be the person with the skills and personality closest to yourself, and that’s the last person you should hire.” - Kristjan Hebert The small things matter Growth is not without its challenges and Hebert admits there were times when he and his wife were stretched too thin, especially as the business grew by 350 per cent at the same time they had started their family. Staying on course and selecting the right people to build an effective team to lighten the load is likely the biggest take-home message he can offer to other farmers who are diversifying and expanding.

“It’s hiring people with a variety of different skill sets that I think

Renting his first 500 acres at the age of 16, Kristjan says farming is not something like an addition to him

38

we do differently,” Hebert says. “When you interview somebody, your favourite person is going to be the person with the skills and personality closest to yourself, and that’s the last person you should hire.”

The other important piece is to never stop learning and listening to all and any ideas to help improve the business no matter how small they might seem. As an example, during seeding, Hebert’s wife and mother would spend hours driving around taking meals to the field for the workers, until they suggested switching to freezer meals and putting food warmers in every tractor. It made their lives easier and the crews more productive.

Another huge time saver for the farm has been a simple, free app called Voxer that everyone uses to communicate with each other via their phones. When they started coordinating carpooling last year during harvest, it ended up saving a lot of time and improving everyone’s mood.

“We’ve got six or seven combines running, and we might move five times in a day and the trucks might be 10 miles from where we started, so one person could spend three hours moving vehicles,” Hebert says. “Just having people carpool, getting 30 minutes together on the way to work, and 30 minutes on the way home to talk about the day, and having less vehicles to move, the number one feedback from our crew was that carpooling made harvest better. We often look for big things and it’s often the little things that make the difference.”

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Cleanfarms 2023 Unwanted Pesticides & Old Livestock/ Equine Medications Collection Vancouver Island – October 2 to 4 Fraser Valley – October 10 to 13 Southern Saskatchewan – October 23 to 27

Farmers! Got unwanted pesticides or livestock/equine medications?

Safely dispose of unwanted or obsolete agricultural pesticides and livestock/equine medications – no charge! Take them to the following locations on the dates noted between 9 a.m. and 4 p.m.

Vancouver Island CUMBERLAND Mon., Oct. 2nd Comox Valley Waste Management 3699 Bevan Rd. 250-336-8083 DUNCAN Tues., Oct. 3rd Bings Creek Recycling Centre 3900 Drinkwater Rd. 250-746-2540 VICTORIA Wed., Oct. 4th Hartland Landfill Victoria 1 Hartland Ave. 250-360-3410

Fraser Valley DELTA Tues., Oct. 10th Evergro, Division of Nutrien Solutions 7430 Hopcott Rd. 604-940-0290 LANGLEY Wed., Oct. 11th Professional Ag Distribution Inc. #1, 6285 – 205 St. 604-768-5602 ABBOTSFORD Thurs., Oct. 12th Terralink 464 Riverside Rd. 604-864-9044 Fri., Oct. 13th Evergro, Division of Nutrien Solutions 1454 Riverside Rd., Unit B 604-850-9500

Southern Saskatchewan AVONLEA Fri., Oct. 27th Genesis Co-op 300 McRorie Ave. 306-868-2133 BALCARRES Wed., Oct. 25th Synergy AG 200 Hwy. 10 306-331-5706 BALGONIE Tues., Oct. 24th Nutrien Ag Solutions 228 Old Hwy. 306-771-2032 CENTRAL BUTTE Tues., Oct. 24th Hawks Agro South Hwy. SK-19 306-796-4787 CORONACH Tues., Oct. 24th Richardson Pioneer 130 Railway Ave. 306-267-2100

• Next Cleanfarms collection in these areas in 2026.

• To view collection site maps or for collection dates elsewhere: cleanfarms.ca/materials/unwanted-pesticides-animal-meds/

DAVIDSON Mon., Oct. 23rd Richardson Pioneer Hwy. 11 S. 306-567-4778 ESTEVAN Wed., Oct. 25th Richardson Pioneer Intersection of Bienfait Municipal Rd. & Sister Roddy Rd., Hwy. 39 W. 306-634-2342 ESTON Mon., Oct. 23rd Emerge Ag Solutions 708 Hwy. 44 W. 306-962-4132 FILLMORE Fri., Oct. 27th Top Notch Farm Supply Inc. Hwy. 33 306-722-3200 GRENFELL Thurs., Oct. 26th Richardson Pioneer 1110 Hwy. 47 N. 306-697-3377

GULL LAKE Thurs., Oct. 26th South West Terminal Hwy.1, 7 Miles East of Gull Lake 306-672-4112 LEADER Tues., Oct. 24th Simplot (former G-Mac’s Ag Team) Hwy. 21 S. 306-628-3886 LIMERICK Mon., Oct. 23rd Limerick Co-op 1100 Railway Ave. 306-263-2033 MAPLE CREEK Wed., Oct. 25th Richardson Pioneer 305 1st Ave. N. 306-662-2420 MOOSE JAW Thurs., Oct. 26th Parrish & Heimbecker 1-501 High St. W. 306-693-2977

MOOSOMIN Fri., Oct. 27th Parrish & Heimbecker 1 mile west of Hwy. 1 639-877-9010 RAYMORE Mon., Oct. 23rd Cargill CNR Right of Way Elevator Rd. 306-746-2055 SHAUNAVON Fri., Oct. 27th Southwest Terminal Ltd. 815 Hwy. 37 306-297-4045 SWIFT CURRENT Wed., Oct. 25th Pioneer Co-op Agronomy Center 2284 South Service Rd. W. 306-778-8705 WEYBURN Thurs., Oct. 26th Parrish & Heimbecker 1 mile east of Hwy. 39 S. 306-842-7436

Partner

SCAN ME

Cleanfarms.ca info@cleanfarms.ca

@cleanfarms 39

THOSE WILY WEEDS | COVERING CONTACT HERBICIDES

Covering Contact Herbicides Tammy Jones B.Sc., P.Ag Tammy Jones completed her B.Sc. in crop protection at the University of Manitoba.

She has more than 15 years of experience in the crops industry in Manitoba and Alberta, with a focus on agronomy. Tammy lives near Carman, Man., and spends her time scouting for weeds and working with cattle at the family farm in Napinka.

Immediate results are always exciting for showcasing weed control. The return on investment is abundantly apparent when weeds seem to vanish from the crop. Rapid dry down of green material is essential at two key times: pre-harvest desiccation (not technically weed control) and pre-seed weed control.

Pre-harvest desiccation is more of a harvest aid, removing weeds and other green material to expedite harvest processes but it may also limit weed seed set of late maturing weeds. Pre-seed weed control often utilizes similar herbicide groups to rapidly kill early emerging weeds, providing better conditions for seeding and crop establishment. These herbicides groups that rely on fast action are typically considered contact herbicides.

The number of herbicides groups considered as “contact” herbicides is quite small compared to systemic herbicides. As the name implies, a contact herbicide will only affect the parts of the plant it lands on, with perhaps a tiny bit of movement to surrounding cells. A few examples of contact herbicides are foliar-applied Group 5 herbicides (atrazine, metribuzin), Group 6 (bromoxynil, bentazon), foliar-applied Group 14 (carfentrazone, saflufenacil, fomesafen), Group 22 (diquat) and Group 10 (glufosinate).

While each of these herbicide groups has a different way of causing plant death, the results of most of these herbicides are evident within hours or days. Contact herbicides cause cells to break down by destroying the cell membranes, which means that the cell sap leaks out. These herbicides may act directly on cell membranes acting like acids, soaps or oil, or react with plant processes to form destructive compounds which result in membrane damage. Since the cells lose integrity rapidly, there is little opportunity for translocation or movement of the herbicide within the plant.

The rapid disintegration of plant material from contact herbicides is first noticeable as a “watersoaked” appearance where the herbicide contacted the plant. Within a day or two, the leaves will begin

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COVERING CONTACT HERBICIDES | THOSE WILY WEEDS

As we continue to identify herbicide resistance in more weeds and in different combinations, there needs to be some contemplation of how best to use herbicide groups to manage weed issues. to wilt, and then “burn” which means the leaves will have speckling and browning. Within short order, the leaves yellow, and then dry out (desiccate). Unlike some systemic herbicides, where plants may stay green for days or weeks after the herbicide application but are not actively growing, the full extent of the damage from a contact herbicide is evident in days. In fact, if there is not adequate coverage of the weed, any growing points that are not killed may begin to regrow two or three weeks after application.

The keys to success for a contact herbicide are to apply it with high-water volume, using clean water, on a warm sunny day

when weeds are small. Systemic herbicides can be applied at a water volume of five or 10 U.S. gallons per acre to weeds that are four or five inches big for adequate weed control, but that is unlikely to be as successful with contact herbicides.

So, let’s dive into some key factors: • Water volume. Since contact herbicides are limited in their movement within a plant, coverage is a key component to good results. But high-water volume alone will not ensure good weed control. The droplet size needs to be smaller than a coarse or ultra coarse droplet so that there is good coverage of the plant. For example, 10 to 20 U.S. gallons per acre (GPA) is typically recommended for glufosinate or bentazon while diquat has a water volume range that goes up to 60 U.S. GPA to ensure coverage. I am sure that everyone has heard that more water is better, and with contact herbicides, MORE WATER is WAY BETTER. • Nozzle selection. In conjunction with the water volume, the droplet size from an appropriate nozzle will help to ensure even coverage. The recommendation for diquat is ASABE medium droplets, with the note that low-volume application equipment or nozzles may not be able to provide the desired coverage.

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THOSE WILY WEEDS | COVERING CONTACT HERBICIDES

Contact herbicides are not as forgiving when it comes to performance, but they are rapid and effective when applied correctly. Whether it is in-crop, pre-seed or pre-harvest, the keys to success for contact herbicides are different from systemic herbicides.

• Water quality matters. Certain contact herbicides, like diquat, are deactivated by soil particles. Clean, clear water is recommended for any herbicide application. If there is any murkiness/turbidity from dissolved solids, soil particles or organic matter, the effectiveness of the

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contact herbicide application will be compromised. If surface water is being utilized for spray applications, filtration may help to improve contact herbicide performance.

• Warm growing conditions are ideal for contact herbicides but it can be too hot and too dry. Sunshine helps products such as glufosinate or diquat to perform, so spraying at night is not the best. But relative humidity is also a key consideration for ensuring these herbicides with limited movement penetrate the leaf. Dr. Tom Wolf has explained the “Delta T” concept in many different articles and presentations with charts to thoroughly explain that at low relative humidity and hot temperatures, the performance of contact herbicides can be dramatically reduced.

Contact herbicides are not as forgiving when it comes to performance, but they are rapid and effective when applied correctly. Whether it is in-crop, pre-seed or pre-harvest, the keys to success for contact herbicides are different from systemic herbicides. Using the tips above can help to ensure better coverage, which is the ultimate key to success with a contact herbicide.

WHAT’S OLD IS NEW AGAIN | SPRAYING 101

What’s Old is New Again Tom Wolf, PhD, P.Ag. Tom Wolf grew up on a grain farm in southern Manitoba.

He obtained his BSA and M.Sc. (Plant Science) at the University of Manitoba and his PhD (Agronomy) at Ohio State University. Tom was a research scientist with Agriculture & Agri-Food Canada for 17 years before forming AgriMetrix, an agricultural research company that he now operates in Saskatoon. He specializes in spray drift, pesticide efficacy and sprayer tank cleanout, and conducts research and training on these topics throughout Canada. Tom sits on the Board of the Saskatchewan Soil Conservation Association, is an active member of the American Society of Agricultural and Biological Engineers and is a member and past president of the Canadian Weed Science Society.

My first full-time job on graduating from university was with Agriculture Canada at their Regina Research Station. They needed an agronomist to implement a grant they had received. The objective was to study various water volumes and what they called “novel” sprayers on herbicide performance and spray drift. We did field trials with air-assist sprayers (Sprafoil), spinning disks (Roto-Jet), ultra-low volume shrouds (Rogers Engineering) and plain flat fan nozzles to look at the viability of using low water volumes and finer sprays to reduce herbicide rates. We also studied spray drift from these and other shrouded sprayers.

It was the 1980s and the Prairies had just experienced some of the driest conditions on record.

Yields were low. Interest rates were high. Export markets disappeared. Newspapers were filled with farm auctions as producers left the business. It made sense that producers would try to save money on sprays any way they could. Our job was to identify which herbicides could be used with low-volume sprays and which shouldn’t.

On completion of the project three years later, I was convinced that low water volumes worked in some cases. But they required the use of finer sprays, and that created a number of other problems, like spray drift, nozzle plugging and poor uniformity. We also noted that the consistency of the work was lower. It worked very well sometimes, and less well under different conditions.

As canola and pulse crops became ever more prevalent, and herbicide resistance traits were on the horizon, managing drift had now become a higher priority. Fortunately, normal rain patterns returned by 1989. Air-induced low-drift nozzles appeared a few years later and our research emphasis shifted towards support of their implementation. Low-volume, fine sprays were still being used by some, but they had nervous neighbours and eventually agreed to use more water and low-drift sprays.

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SPRAYING 101 | WHAT’S OLD IS NEW AGAIN

It’s now almost 30 years later and the latest technology for spraying is the drone. And yes, it uses low water volumes and fine sprays. The funny thing about a 30-year time span is that we tend to dismiss lessons from that long ago.

It’s now almost 30 years later and the latest technology for spraying is the drone. And yes, it uses low water volumes and fine sprays. The funny thing about a 30-year time span is that we tend to dismiss lessons from that long ago. Experienced people have retired. New people are full of enthusiasm. And they venture forth and ask the same basic questions. Can we use low water volumes? How coarse can we spray with them?

How does drift compare?

Admittedly, some of the answers will have changed. We use new herbicides, with new formulations. We have new adjuvants. And of course, drones have this magic characteristic, called downwash, that acts as a sort of air assist.

But the lessons from the work done by many researchers in the 1970s and 1980s can still act as a guide. Here are the main things that were concluded: 1. Foliar applied pesticides require a certain minimum deposit density. For systemic herbicide products such as modes of action Group 2, 4 and 9, as little as 40 droplets per square centimetre may suffice. For contact products such as Group 6, 10, 14, 27 and 22, higher deposit densities, up to 80 droplets per square centimetre, are needed.

2. The amount of coverage that is possible with a tank of pesticide is constrained by three factors. The first is water volume; the second is droplet size; and the third is canopy leaf area index (the amount of leaf area per ground area). In short, the less water one uses, the finer the spray has to be.

And the more the canopy needs to be covered, or the farther down the coverage needs to reach, the more water is needed. There is no magic way to get around these constraints. No magic atomizer. No magic adjuvant. No magic spraying system. No magnets. No electrostatics. All are subject to these laws of math and physics.

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SPRAYING 101 | WHAT’S OLD IS NEW AGAIN 3. Finer sprays are easily displaced. This can be both good and bad. Drift and poor patterns are the major downsides. But the movement of the smaller droplets can also be valuable, allowing them to reach places in the canopy that are inaccessible to larger droplets. Stems, petioles and cotyledons can’t be reliably targeted with large droplets.

ground boom, the rotary atomizers we worked with generated poor patterns (imagine overlapping donuts). But on aircraft, including drones, the air turbulence redistributes the spray into acceptable uniformity. The best part about them is, of course, the ability to control droplet size without changing spray pressure or flow rate.

4. Finer sprays evaporate quickly. The life expectancy of a small droplet under hot and dry conditions is measured in seconds; even fractions of a second. A droplet with its water evaporated away still contains the active ingredient, but that ingredient is now in its dry form and that makes it harder to come in contact with the leaf and to be absorbed by it.

7. Rate reductions are a bad idea. In the 1980s, the worst that could happen when a rate was too low was that a respray was needed. In 2023, loss of control of a specific weed could result in an increase in resistance, making the future control harder (I’m oversimplifying, but I think you understand).

5. Air assist requires a proper adjustment of the air-blast strength relative to the canopy conditions and sprayer speed. Denser canopies need more air. Too much air on a seedling canopy generates rebound, or dust, which both hurt product performance and increase drift potential. When it comes to drone downwash, drone flying height may need to be adjusted with canopy type, flying speed and payload.

Drones shed nearly half their weight as the tank empties.

This means downwash changes and flying height will also need to change. Doing a good job with a drone requires a knowledgeable operator with access to deposit data for their specific drone under a number of conditions.

6. Rotary atomizers did not provide good results with ground sprayers, but they are very well suited to aircraft. On a

46

8. Expect variable deposits with finer sprays and downwash.

There will be regions where 50 per cent less spray reached the target, and regions where deposits are twice what’s needed. Working to minimize these fluctuations is essential.

We need to measure deposit uniformity and adjust to optimize it. This is no time to put heads in the sand.

When spraying with drones in the future, we will be well served to err on the side of caution and make every effort to mitigate the known pitfalls. When I was interviewed for a scientific job many years ago, one of the questions was to list the steps to conduct a proper scientific study. Step number one? Conduct a literature review to find out what others have learned in this area. When it comes to the exciting area of spray drones, lessons from the past are worth their weight in gold.

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SEED | CANOLA PRODUCERS CONTINUE TO MOVE FORWARD

Canola Producers Continue to Move Forward Timing, optimal seeding depth and density must be evaluated closely

By Lisa Kopochinski

Farmers are pleased that after the severe Prairie-wide drought in 2021, canola production has gained momentum. Although the drought caused issues and high input prices, the industry continues to move forward.

“It takes several years to recover from a drought as severe as that one,” says SaskCanola executive director Tracy Broughton.

“While there are still regions in Saskatchewan facing severe drought, there are also areas that have greatly improved.

Several new crushing plants and/or expansions have been announced which should create strong demand for the foreseeable future.”

Chuck Fossay, president of the Manitoba Canola Growers, reports canola-seeded acres in Western Canada have increased over the last year and demand for canola seed, oil and meal remain strong. “The greatest challenge that canola producers faced in the last year – other than weather – has been the higher cost of fertilizer.”

While many areas of the Prairies continue to face moisture concerns this year, he says most producers have recovered from the 2021 drought. “Canola yields seem to have plateaued around 42 bushels per acre, but acres have seen some growth that should maintain or increase total canola production.”

With respect to new canola varieties and technological advancements, Broughton adds that “it’s best for farmers to 48

check with their input suppliers to determine what would work best on their land and fit best with their crop rotation plan.”

Canola Council of Canada president Jim Everson believes great progress was made in 2022, as well as new opportunities to grow in the years ahead. “We had good news regarding our trade relationship with China,” he explains.

“After three long years, the restrictions imposed on two Canadian canola seed exporters were removed, signalling a return to more normal trade.”

He adds that some of the most exciting progress to differentiate the value of canola happened in the biofuels market. “We were pleased to see canola’s GHG-reducing advantages properly recognized in Canada’s new Clean Fuel Regulations and the U.S. Renewable Fuel Standard Program.

These achievements support strong demand for canola in the years ahead.”

Industry Challenges Neil Townsend is a chief market analyst at GrainFox, a data-driven farm wealth solutions platform designed to help producers build a clearer path from bin to bank. He says Australia grew a record crop in 2022-23 and this increased competition into China, which hurt Canadian export volumes as a result.

“Another challenge was the disruption in EU markets created by

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SEED | CANOLA PRODUCERS CONTINUE TO MOVE FORWARD an inflow of Ukrainian oilseeds,” he states. “EU canola prices came under pressure and, eventually, this bearishness leaked into the Canadian market. Prices were relatively firm until February and then moved significantly lower. Prices have stabilized due to lower U.S. soybean acreage.”

According to Townsend, the biggest challenge the industry is looking at this upcoming production season is weather.

Western Canada has been hot and dry for much of the growing season.

“There is a significant departure from average in total soil moisture across the Prairies. This could lead to a decrease in yield and a reduction in production. Looking forward, China’s economy must shake out of its doldrums to encourage more excitement in the oilseed (and commodity) space.”

Broughton agrees and says the ongoing drought compounds stress. “And, an ambiguous ruling from the Pest Management Regulatory Agency (PMRA) left farmers reeling as to which crop protection product they are allowed to use to control pest pressure.”

Townsend says the market was disappointed when the EPA finally released their volume mandates for biofuel in June.

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CANOLA PRODUCERS CONTINUE TO MOVE FORWARD | SEED

“Genetic improvements are an important part the canola industry’s strategy to increase yields and profitability for growers. We continue to see many canola seed innovations with improvements in disease resistance, shatter resistance, herbicide tolerance, seed treatments and more.” - Jim Everson However, there is still a strong impetus at both the U.S. federal and state level to increase renewable fuel inclusions.

“There are many plants underway in both Canada and the U.S. that are dependent on a continuation of subsidies and these mandates,” explains Townsend. “Airlines are pledging in increasing numbers to stipulate a minimum inclusion rate for renewable aviation fuel. A plant was announced in Portage la Prairie, Manitoba, to make renewable aviation fuel. There are many ways to skin a cat and we are confident that renewable fuel will become more tangible as a market driver within the next 12 months.”

Everson adds that the fundamentals of global demand for

Canadian canola are in our favour “and our industry continues to be focused on growing the supply of canola to meet this market demand in a sustainable, profitable way.”

The Canola Council has identified five agronomy priorities that, when applied, can lead to higher canola yield and profitability, and reduce the yield-loss risk.

Priorities include: • Improving nutrient use and efficiency through 4R nutrient management practices • Choosing the best seed traits for each field

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SEED | CANOLA PRODUCERS CONTINUE TO MOVE FORWARD • Achieving a uniform five to eight plants per square foot • Identifying and managing the top yield robbers in each field • Harvesting all seeds and delivering them at No. 1 grade “Genetic improvements are an important part the canola industry’s strategy to increase yields and profitability for growers,” says Everson. “We continue to see many canola seed innovations with improvements in disease resistance, shatter resistance, herbicide tolerance, seed treatments and more.”

What About Climate Change?

With respect to climate change and reducing emissions, many countries are switching from renewable fuel mandates to Clean Fuel Regulations that require lower carbon intensity from the fuels being used by today’s cars, trucks and machinery. Canada and the U.S. are among the countries introducing renewable fuel mandates to reduce greenhouse gas emissions.

“British Columbia and California will be increasing carbon intensity for fuel from 20 per cent to 30 per cent by 2030,” says Fossay. “Airlines are looking to reduce their carbon emissions by using up to 10 per cent sustainable aviation fuel (SAF) produced from canola and soybean oil by 2030. The demand for

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renewable diesel will keep the demand for canola oil and other vegetable oil high for the next decade.”

In November 2022, the U.S. Environmental Protection Agency delivered the final rule that renewable diesel, sustainable aviation fuel and other biofuels made from canola oil will qualify as “advanced biofuels” under the U.S. Renewal Fuel Standard Program. This means canola oil now has the pathway into the U.S. market.

“Here in Canada, we were pleased to see the Clean Fuel Regulations recognize the sustainable farm practices used by canola growers,” says Everson.

This bodes well for canola to become the feedstock of choice for biofuel production in this country. In addition to the environmental benefits, canola-based biofuels help grow and diversify market opportunities for canola growers and means more jobs and investment in value-added processing here in Canada.

“Overall, we’re seeing promising signs of global demand,” Everson adds. “We continue to see a growing appetite for healthier food products like canola oil and a growing awareness of canola meal’s advantages as an animal feed ingredient, as well as a growing market for low-carbon fuels.”

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BANK ON BETTER BUSINESS | A SOLID BALANCE SHEET

A Solid Balance Sheet

By Vincent Cloutier

Vincent Cloutier With nearly 20 years of experience in the Canadian agri-food industry, Cloutier is a member of National Bank’s Agriculture and Agri-Food team. Having served in recent years as Senior Economist at La Coop fédérée (now Sollio Groupe coopératif) and Director of Economic Affairs at Les Éleveurs de porcs du Québec, he specializes in international trade and agricultural policies.

A graduate in agronomy and agri-food management from Laval University and a four-time participant in the prestigious Harvard Agribusiness Seminar, Cloutier supports National Bank’s agricultural and agri-food financing teams with his expertise in business environment analysis.

Every spring, Statistics Canada publishes its Balance Sheet of the Agricultural Sector, dated the end of the previous year. The data is highly instructive on the state of Canadian agriculture and its constituents. The most recent publication testifies to the solid year 2022 experienced by Prairie agriculture.

Despite successive increases in the Bank of Canada’s prime rate during the year, their effect has yet to be felt on a large scale in Western Canada. Prairie farms have developed the wise habit of choosing longer loan terms, which effectively protects them from the inevitable rate fluctuations. In addition, only a fraction of farm financing was renewed during 2022, at rates lower than those currently prevailing. As a result, the interest coverage ratio calculated by Statistics Canada, which illustrates agriculture’s ability to bear its interest burden, is the highest in the Canadian Prairies since 2013. The excellent 2022 year in the country’s fields – not only in terms of crop margins but also yields – mainly explains this. The Statistics Canada balance sheet also shows that the equity ratio of Canadian farms has improved slightly, reflecting a relatively stable debt load in relation to asset value growth.

Several years of very high net farm income have contributed to this picture. The year 2023 will be different, and will be marked by diverging realities from the varying production sectors. Firstly, if the trend continues, crop margins will be tighter, and rising rates will gradually be felt as loans are renewed. On the other hand, the excellent year – finally! – in beef production will offset some of these effects.

Yes, the current year is one of exception in cattle production: they’re all too rare. Throughout the first months of 2023, the price of live cattle (all categories, including cull cattle) rose, to finally reflect their cost of production, propelled in 2021 and 2022 in particular by COVID-19 and the war in Ukraine. The very high animal prices in spring and summer 2023 are very welcome, but hardly sustainable. Proof of this is the colossal spread between the value of beef and pork proteins in the first half of 2023. These set the stage for an inevitable rebalancing, through a natural substitution effect. This period of exceptional prices is likely to mark the end of the long period of cattle herd liquidation in North America. Another undeniable indicator of the resilience of Western agriculture is the value of milk quotas. Their upward trend reflects the profitability of dairy production, and the determination of dairy companies to grow.

All things considered, Statistics Canada’s Balance Sheet of the Agricultural Sector once again demonstrates the resilience of the agricultural sector to economic fluctuations. With COVID-19, inflation and geopolitical tensions, the last few years have been among the most destabilizing in the last four decades, both socially and economically. Had it not been for the drought in 2021, they would have gone hand in hand with record net farm income, and a strengthening of balance sheets. Coincidence? Wouldn’t say so.

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