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Contents
february 2, 2016
BUSINESS 8
estate planning: part 2 Can your will be set aside because of something you said? It’s happening to more farms.
10 is a family trust right for you?
Where they fit and are well designed, trusts can be great choice.
12 going european
A generation ago, David Rolfe left England for Manitoba to escape overregulation. Now he’s not so sure.
16 what if the party’s over?
Anne Lazurko reports on the strategies that may keep more farmers from repeating the tragedy of the 1980s.
24 use financial ratios to diagnose operational issues
Balance sheet and calculator yield quick insight into your farm.
26 terminal story
With an incredible 5,000 registered buyers, Ontario’s Food Terminal rivals the Port of Vancouver in the East.
30 Guide HR — thrive: becoming the best you can be
Use this scientific research to improve your leadership skills.
32 your data, their sale
You farm better by analyzing field data. Now, ag supplies are studying you with the same intensity, looking to boost profits.
50 the national cost of alberta’s bill 6
Columnist Gerald Pilger fears the farm outrage at Alberta’s new farm safety law may already have backfired.
52 make room
China has a tractor it would like to sell you. How about a Zoomlion?
PG. 20 Selling the Farm Follow from the inside as this sale of a modern, sophisticated and diverse farm goes through its ups and downs, finally ending not only in the handing over of keys, but the building of a lasting relationship.
58 is your idea marketable?
This BioEnterprise model could help you go commercial.
60 last of the first-born tradition
There’s less and less room for a sense of entitlement on farms.
62
g uide life — preparing her to farm
CROPS GUIDE
Fifteen expert ideas for getting a woman’s farm career off to a productive and successful start.
35 an open MARKET is still a work in progress
Without pricing transparency, open market falls short.
EVERY ISSUE
38 faba-ulous
Hurdles still ahead for fabas, but momentum is strong.
42 achieving the ‘im-pulse-able’ 6 MACHINERY GUIDE
The first truly robotic tractor takes to the field in Holland.
65 GUIDE HEALTH
Medical drugs get recalled too. Here’s how to keep safe.
66 HANSON ACRES A big decision looms for Trina. Maybe the biggest ever?
Give more credit to breeders for tremendous crop evolution.
46 help the insects eat each other
By fostering beneficials, a canola farmer doesn’t need to spray.
48 canadian pulses for the world
Cigi targets pulse quality for UN International Year of Pulses.
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february 2, 2016
country-guide.ca 3
desk EDITORIAL STAFF Editor: Tom Button 12827 Klondyke Line, Ridgetown, ON N0P 2C0 (519) 674-1449 Fax (519) 674-5229 Email: tom.button@fbcpublishing.com Associate Editors: Gord Gilmour (204) 453-7624 Cell: (204) 294-9195 Fax (204) 942-8463 Email: gord.gilmour@fbcpublishing.com Maggie Van Camp Fax (905) 986-9991 (905) 986-5342 Email: mvancamp@fbcpublishing.com Production Editor: Ralph Pearce (226) 448-4351 Email: ralph.pearce@fbcpublishing.com ADVERTISING SALES Sales Director: Cory Bourdeaud’hui (204) 954-1414 Fax: (204) 944-5562 Email: cory@fbcpublishing.com Kevin Yaworsky (250) 869-5326 Email: kyaworsky@farmmedia.com Lillie Ann Morris (905) 838-2826 Email: lamorris@xplornet.com
Tom Button is editor of Country Guide magazine
Is this the last generation? The above title caught my eye as I was thumbing through some 2011 back issues of Country Guide. Hmm, I wondered, have the last five years changed what I think about whether young people can successfully take over enough of our family farms to actually comprise a “generation?” Or will they even want to? In 2011, after all, most of us still had stars in our eyes, even though we tried not to. World population was growing, ethanol use was growing, China’s middle class was growing, so although of course there will always be volatile markets because of weather, it seemed certain that commodity prices had ratcheted up and would never sink close to unprofitable levels for years to come. Of course, too, in 2011 we hadn’t comprehended exactly how high land prices would climb, and how difficult it would be for farms to continue expanding so the next generation would have an adequate operational base to start their career. Nor had we foreseen the fact that the extra zeroes on the balance sheet can introduce all sorts of caution into anyone’s thinking. When I speak to ag students today, I always tell them that the No. 1 thing that keeps their parents awake at night is whether their children have the skills and the aptitudes to take over the farm, not only so they can build their own careers, 4 country-guide.ca
but also so they won’t fritter away everyone else’s nest egg at the same time. Perhaps I exaggerate, but only a bit. Today’s youth know that no one looked at their parents and judged them so toughly. And you can’t blame them if it seems unfair. But neither can you entirely blame the parents for saying, “times have changed.” Even so, in all my thinking about agriculture, and after all the seminars I’ve attended and all the experts I’ve listened to, it still boils down to the same thing. External economic factors do play a role in determining whether a young person gets started on the farm. But internal factors play a much larger one. As you have read in past issues of Country Guide, and as you will read in future issues, where there is a passion for farming, and where this passion is coupled with a strong sense of values, our young people are finding a way. It turns out there isn’t the same kind of ladder that there used to be, where everybody starts off on the same rung, but there are also more opportunities, and more kinds of opportunities than ever before. I’m convinced that the family farm has a future because of the evidence of my eyes. Obviously we need to do more to remove some of their obstacles, but we also have to trust our young hopefuls with the chance to prove themselves. Am I getting it right? Let me know at tom.button@ fbcpublishing.com.
Head Office: 1666 Dublin Ave., Winnipeg, MB R3H 0H1 (204) 944-5765 Fax (204) 944-5562 Advertising Services Co-ordinator: Arlene Bomback (204) 944-5765 Fax (204) 944-5562 Email: ads@fbcpublishing.com Designer: Jenelle Jensen Publisher: Lynda Tityk Email: lynda.tityk@fbcpublishing.com Associate Publisher: John Morriss Email: john.morriss@fbcpublishing.com Editorial Director: Laura Rance Email: laura@fbcpublishing.com Production Director: Shawna Gibson Email: shawna@fbcpublishing.com Circulation Manager: Heather Anderson Email: heather@fbcpublishing.com President: Bob Willcox Glacier FarmMedia Email: bwillcox@farmmedia.com Contents of this publication are copyrighted and may be reproduced only with the permission of the editor. Country Guide, incorporating the Nor’West Farmer and Farm & Home, is published by Farm Business Communications. Head office: Winnipeg, Manitoba. Printed by Transcontinental LGMC. Country Guide is published 13 times per year by Farm Business Communications. Subscription rates in Canada — Farmer $43 for one year, $64 for 2 years, $91 for 3 years. (Prices include GST) U.S. subscription rate — $35 (U.S. funds). Subscription rate outside Canada and U.S. — $50 per year. Single copies: $3.50. Publications Mail Agreement Number 40069240. We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage.
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ISSN 0847-9178 The editors and journalists who write, contribute and provide opinions to Country Guide and Farm Business Communications attempt to provide accurate and useful opinions, information and analysis. However, the editors, journalists, Country Guide and Farm Business Communications, cannot and do not guarantee the accuracy of the information contained in this publication and the editors as well as Country Guide and Farm Business Communications assume no responsibility for any actions or decisions taken by any reader for this publication based on any and all information provided.
February 2, 2016
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Machinery The first true robot
By Scott Garvey, CG Machinery Editor
The Greenbot autonomous tractor hits the market farmer, scheduled for delivery right after the show ended, after which it would go straight to work on the farm. For power, the Greenbot relies on a 100-horsepower, 3.4-litre Perkins diesel engine, with the drive flowing through a hydrostatic transmission to a four-wheel drive system. Four-wheel steering makes the little tractor very manoeuvrable. A category I, three-point on the front and category II hitch on the rear along with a PTO allow it to handle a variety of equipment. Mouthaan adds there is also some flexibility in how the tractor can be configured, allowing it to be tailored to specific needs. The Greenbot doesn’t even have a standard operator’s station, although it can be driven by radio control, just like a kid’s RC toy. General field duties get programmed into its onboard computer, allowing it to follow a field map or figure out its own way to complete a job. “We have three ways to implement it,” says Mouthaan. “We have teach and play back, so you can do it with radio controls. You can put a (GPS) map inside that you make on your computer. You can also go to the field and let the machine go around one time and then say, OK, optimize itself.” If the tractor encounters an unexpected obstacle,
Photo: Scott Garvey
omplete automation may well be the dominant focus of ag machinery design in the coming decades. We’ve already seen various levels of robotics introduced into conventional equipment, and a few limited-use autonomous machines have appeared. But no company has yet been willing to offer fully autonomous, market-ready tractors for general field duties — until now. In November, the Dutch Power Company, based in the Netherlands, introduced its Greenbot fully autonomous tractor at the Agritechnica machinery expo in Hanover, Germany. Dutch Power has supplied components for a variety of automated agricultural systems offered by other companies in the past, but the Greenbot is a fully in-house design. “We’ve developed it in two years,” says Peter Mouthaan, company CEO. “One year of developing and building, and then testing one year. Now this is the production version.” The Greenbot hits the market with a 120,000 to 150,000 Euro price tag (i.e. about C$170,000 to C$213,000). The model on display at Agritechnica was a fully optioned version and was already sold to a Dutch
An onboard computer can receive instructions from a GPS map or the tractor can be driven around a field boundary and told to plan its own job route. 6 country-guide.ca
February 2, 2016
its built-in safety system immediately stops it. Then a text message is sent to its owner alerting them to the problem. The company’s description of the process claims safety was a “major consideration” during development. And the result, they say, is an automated tractor that operates even more safely than anything under the control of an experienced driver. Although the tractor’s small 100-horse power engine and 3,150 kilogram total weight makes it a relative lightweight, its autonomous function means it doesn’t need to stop for lunch breaks or shut down at night. Working 24 hours a day, even with a relatively small implement, the tractor could cover a lot of ground. It comes with a standard 85-litre fuel tank, but an additional tank can be installed to keep the little tractor busy for extended hours without stopping. “It’s doing 80 per cent of your standardized work when you go to a field,” says Mouthaan, noting farmers who
Hydraulic SCV valves, three-point hitches and a PTO are all available on the Greenbot. play at Agritechnica apparently saw the Greenbot’s potential too. “They’ve asked us to build a 200-horse power model,” Mouthaan says. “But we’ll start with this one.” For more information go online to www.precisionmakers.com. CG
have tried it eventually warm up to the idea of a driverless tractor. “At first they’re a little bit scared,” he admits. But then they see it working and they say, ‘Ah, it can do this for me. It can do that for me. It will make this easier.’” Many visitors to the company’s dis-
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country-guide.ca 7 12/11/15 12:11 PM
Legal
Estate planning: Part 2 Does your will protect your wishes? By Nadia Campion, Lenczner Slaght n an age when contracts are often the size of phone books and legal battles are fought over the fine print, people often question whether the old-fashioned handshake or verbal agreement still exist. The answer is yes. In fact, not only do oral contracts still exist, but they have the power to displace written contracts, including your last will and testament. In a recent decision, the Ontario Court of Appeal determined that an oral contract between a testator and beneficiaries can supersede the terms of a will where the oral contract can be proved. The case arose from a dispute between siblings over the assets of their late father, which consisted of farming land, equipment and other property. The farming operation had been in the family for five generations. The son worked full time alongside his father for 24 years. The daughter worked off the farm and was not involved in its operation. The parents each had wills that left the estate assets to the two children in equal proportions. The children were also named as co-executors. Following the father’s death, the son alleged he had an oral contract with his parents that if he stayed on the farm and worked with them, he would receive the farmland and its assets after his parents stopped farming. The oral agreement was made in 1977, when he was 19 years old. There were no living witnesses to the alleged oral agreement, other than the son. The agreement was never discussed with the daughter. However, various witnesses indicated that the parents intended to transfer the farm assets to the son and certain steps were taken in furtherance of the alleged agreement, including transferring the milk quota. In October 2001, the father was admitted to hospital with terminal cancer. He passed away at the end of November 2001. No changes were made to his will prior to his death. The son subsequently commenced a lawsuit seeking a declaration that he was entitled to the farmland and business notwithstanding that the wills directed the estate assets to be divided equally between him and his sister. The case went to trial. The trial judge dismissed the case because the son could not prove the existence of the oral contract. As a result, the estate assets were to be distributed equally to the son and daughter, in accordance with the wills. The son was also ordered to pay his sister $275,000 for her legal costs. 8 country-guide.ca
The son appealed the decision to the Court of Appeal and succeeded in overturning the decision. The Court of Appeal found that the trial judge failed to appreciate the nature of the relationship between the father and the son in their operation of the farm and that this led the trial judge to disregard evidence supporting the existence of an oral contract. The Court of Appeal ordered a new trial. The case settled before the new trial. This decision is significant. It emphasizes the importance of having an up-to-date estate plan that reflects the current wishes and desires of the testator to prevent disputes among beneficiaries. As evidenced by the $275,000 cost award, estate disputes can be very costly and, often, the estate’s assets are insufficient to support such costs. Estate litigation also has the effect of tearing families apart, something that many testators never envision or imagine will happen. However, unwritten promises and contracts are the kind of thing that one should expect will be dredged up following the death of a parent, particularly when one or more of the beneficiaries are unhappy with the terms of the parent’s will. In light of this, here are four tips to keep in mind: (1) if promises have been made to beneficiaries, or oral contracts have been entered into by the testator, it is best to capture these promises or agreements in the will; (2) make sure all beneficiaries know about oral agreements that might contradict the will; (3) wills should be reviewed on a regular basis to ensure that they are consistent with what the beneficiaries have been told and the testator desires; and (4) if there has been a change in personal circumstances — such as the birth of a child or grandchild, a divorce or marriage or the death of a beneficiary — the will should be updated. Clarity is the key to successful estate planning, and the avoidance of future disputes should play a central theme in the preparation of one’s will. Otherwise, as stated by a 19th century journalist, Ambrose Bierce, “Death is not the end. There remains the litigation over the estate.” CG Nadia Campion is a business litigator at Lenczner Slaght in Toronto. Campion’s clients include small- to medium-size businesses, individuals and associations across a range of sectors in civil litigation such as commercial disputes as well as wills, trusts and estates litigation. She can be reached at ncampion@ litigate.com or 416-865-2974. February 2, 2016
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business
Is a family trust right for you? A trust might be an efficient tool for protecting your farm business or for managing family issues at succession, but they aren’t for everyone By Angela Lovell amily trusts are commonly used as a convenient way to own shares in a company and as a succession tool for commercial businesses, but they can also be incorporated into a family farm structure… depending on the circumstances. “A farm corporation may have at its disposal favourable tax rules that may allow it to achieve the same objectives without the need for a family trust,” says Edith Frison, a tax specialist with MNP LLP. “Family trusts are not for everybody. They require specific actions and documentation to set up, and there is annual administration required to remain compliant with Canada Revenue Agency (CRA) if you have a family trust. “However,” says Frison, “if they work for you, they typically work very well.” There are many reasons for establishing a family trust. One is where parents want to fund their children’s university education or they wish to provide money for other reasons, such as a house purchase. A family trust allows them to allocate income to their children in a taxefficient manner to fund their expenditures.
How will the kids turn out? Another reason for a family trust is succession planning. “Succession planning is where we see family trusts used in farming most often,” says Frison. “The parents may not want to make the children shareholders in the farm business when they are 18 or 20 years old because they don’t know what their children will do in the future.
10 country-guide.ca
“Making them beneficiaries in a discretionary family trust means they don’t actually own any shares. When it comes time to distribute the assets or to pass the family farm on to the next generation, it can be passed to any of the beneficiaries who are beneficiaries of the family trust,” says Frison. “It buys parents time to see what path their children will follow; and whether they should receive the shares of the farm business. The trust also provides parents with the option to keep the shares of the business themselves if they decide their children are not the right fit for their succession plan.” Every parent hopes their adult children will never encounter unfortunate events or hardships that could negatively impact their lives. In today’s society, however, things such as divorce or substance abuse problems are all too common. If a child is an owner in a family business, these kinds of problems could put the value of any assets they own — including shares in the family business — at risk and subject to their creditors or even the creditors of their spouses. A family trust is typically an alternative to direct, family member share ownership. A beneficiary of a discretionary family trust cannot transfer trust property to someone else because he or she doesn’t own it. “We’ve seen incidents where, at the time of death, a shareholder’s assets are distributed in accordance with a will that creates unforeseen circumstances,” says Frison. Frison gives the following example: “A son is a shareholder in the farm and his will has his shares of the family farm left to his wife upon his death. His mother and father (the other shareholders of the corporation) unfortunately, don’t get along with his wife and they never anticipated that she would be a part of the family corporation. Now, after the son’s untimely death, his mother and father are in a business with his widow. She could potentially be part of the decision-making process for the family corporation and/or could be entitled to information regarding the business that the family is not interested in sharing. A discretionary family trust provides a way to have individuals involved in the corporation without jeopardizing family harmony.”
February 2, 2016
business
What is a family trust?
A tax-planning aid
A trust is not a legal entity like a corporation, but rather a relationship between the trustees who control the property and the beneficiaries who enjoy all benefits derived from the trust property. A family trust requires the following individuals: • Settlor, whose only role is to create and set up the terms of the trust. • Trustees, whose role is to administer the property in the trust. • Beneficiaries, whose role is to receive trust property at the trustees’ discretion. Family trusts can be cumbersome to set up and administer and have strict rules governing how they are established and operated. The settlor must provide an object of value that becomes the property of the trust and physically passes it to the trustees, expressing the intention that it be held for the benefit of the beneficiaries. The most common relationship MNP sees when creating a family trust is that the settlor of the trust is a grandparent, the trustees are their children, who control the family trust, and the beneficiaries are their grandchildren, who receive income and capital from the trust. A family trust acts as a conduit to flow income to its beneficiaries. For example, the family farm business pays dividends to the family trust and the trustees allocate those dividends to one or more of the beneficiaries at their discretion. Allocations to the beneficiaries are flexible and can change from year to year depending on their needs. The beneficiary must eventually receive the actual value of dividends or capital gains allocated to them. The life of a family trust is 21 years, and upon the 21st anniversary a decision should be made to distribute the remaining capital of the trust (shares of the company) to the beneficiaries, or adverse tax consequences could occur. Because of this time frame, family trusts are typically set up when children are in their late teens and approaching the age when they will require funds for university or other needs.
Because a family trust is a separate taxpayer under the Income Tax Act, it is required to file a tax return by March and it must maintain minutes, which usually involve an annual fee from the accountant and/or lawyer to prepare, file and maintain these legal documents. Any taxable income remaining in a family trust is subject to income tax at the highest marginal income tax rate. If the trust allocates its income to the beneficiaries, it pays no tax. The beneficiaries would be responsible to report the income received.
Protecting assets with a family trust Family trusts can also protect assets. Any business can be exposed to risks associated with its day-to-day activities, no matter how well it’s insured. As the farm business matures it may build up excess cash that’s not required at the time and consequently, this cash can be exposed to the risks of the business. “A family trust can assist in protecting the excess cash by transferring it to a new holding company (corporate beneficiary) on a tax-deferred basis. This cash is then held away from the business operations and is protected from business risks,” says Frison. “If the operating company requires some of this cash in the future, it can be lent by the corporate beneficiary (or holding company) back to the operating company and secured with a General Security Agreement, as would any other loan.”
Flexible but not for everyone Family trusts are flexible and can name multiple beneficiaries. But once legally documented in a trust indenture, a trust cannot add or remove beneficiaries. “Discretionary family trusts are very flexible tools, but they aren’t for everyone,” says Frison. “It’s essential to get the advice of your professional advisers to decide if a family trust is the best option for you.” CG
“ If they work for you, they typically work very well,” says Edith Frison, MNP tax specialist. The question, however, is whether a family trust is the best choice for your farm.
February 2, 2016
country-guide.ca 11
business
Going European Canada’s farmers are getting more and more regulated. Do we have to become just like Europe? By Gord Gilmour, CG Associate Editor Today, he doubts a British farmer making the same move today would find as big a difference, or be as happy with the move. “We’re not quite in the same situation yet, but we’re certainly quite a ways down that road,” Rolfe says.
n the mid-1970s, when David Rolfe made the decision to sell up in rural England and set up shop in rural Manitoba as one of Canada’s newest immigrant farmers, burdensome regulations were certainly part of the equation. It would have been one thing if they had been sensible regulations well-grounded in reasonable desires, which is how most of the regulations actually started. But over time they had morphed into something more intrusive, forcing farmers to seek outside approval for virtually every facet of the dayto-day operation of their farms. Whether it was erecting a small outbuilding or simply putting up a bit of fence, everything needed to be approved by the local government council, Rolfe said. The writing was on the wall, he felt. It was time to move. Upon arrival in rural western Manitoba, Rolfe seemed in an ideal operating environment, with plenty of elbow room, few busybody non-farming neighbours, and municipal governments largely run by and for farmers. Happy with his choice, Rolfe settled into a near40-year career that included a stint in farm leadership as the head of that province’s general farm organization, the Keystone Agricultural Producers (KAP).
12 country-guide.ca
Photo: Allan Dawson
David Rolfe
Piece by piece Rolfe isn’t the only observer who has noticed that times have changed. Barry Senft is the CEO of the Grain Farmers of Ontario, and is also a familiar face to western Canadian farmers where he was well known in the grain industry as a member of the Sask Wheat Pool management team, later chief commissioner of the Canadian Grain Commission, and then executive director of the Canadian International Grains Institute before taking his current post in Ontario. From this unique vantage point, he’s seen a rise in recent years in the challenges and scrutiny agriculture faces, driven in no small part by the increasingly urban nature of Canada. With just two per cent or so of the population involved in primary agriculture, urban voters are increasingly in the driver’s seat. In Ontario, that’s translated into legislation like its 2008 “cosmetic pesticide” ban that many fear will prove the thin edge of the wedge and result in on-farm bans and onerous regulations. More recently, growers in that province have been fighting a move to severely curtail use of neonicotinoid seed treatments due to fears the crop protectants are hurting bee populations. “During that debate we began to hear some concerning things — things like the provincial environment minister, when being criticized for not taking this ban further, saying ‘You don’t eat the elephant all in one bite,’” Senft says. With other agricultural issues on the horizon, the sector decided it was time to take action, forming Farm Action Now, a self-described task force aimed at giving agriculture a unified voice in the discussion to ensure better balance. The key, Senft says, is to make sure policy makers understand that the proportion of the population farming may be small, but they punch above their weight when it comes to generating important economic activity that benefits everyone. “It’s a dollars and cents issue,” Senft says. “Any provincial economy is sensitive enough right now February 2, 2016
that I don’t think anyone is eager to make changes that would harm themselves.” In many ways, Ontario is the leader in this move towards agriculture speaking more loudly in this debate, and if you pause to think about it, it’s obvious why. Approximately 13.6 million people call the province home, and it also has a robust agriculture industry, making it a place where farmers and non-farmers are likely to come into contact. It’s also a place where farmers don’t enjoy much political clout, making the need to participate in the discussion more acute. Now, others are starting to pay attention and transplant the approach elsewhere. Adele Buettner is CEO of Farm & Food Care Saskatchewan, an industry group including farmer organizations, government, input companies and food processors. It’s modeled after a similar organization of the same name in Ontario, with a similar mandate. “It’s a group that’s made up of farm organizations and those involved in food processing in Saskatchewan, from gate to plate,” Buettner says. “It’s the first organization of its type in Saskatchewan. Our interest is in having a conversation with consumers.” To the uninitiated, Saskatchewan might seem like a strange place for the agriculture industry to feel marginalized in policy discussions. After all, it’s still widely seen as the breadbasket of the country, and agriculture generates an enormous proportion of its economy. But even here in the heartland the demographics have been remorseless. Back in the mid-1970s when European farmers like Rolfe were starting to look across the pond for greener fields, Saskatchewan had a pretty even split — 55 per cent of its population was urban and 45 per cent rural, according to StatsCan. By the 2011 census, that balance had become unbalanced, with 70 per cent of the province’s populaiton living in the cities and only 30 per cent in the rural areas — and that raw data doesn’t account for the fact that most rural residents aren’t involved in agriculture anymore. It’s a challenging picture, but one Buettner insists isn’t impossible. She points out that last spring the organization was promoting farm and barn tours and got hundreds of respondents who came and saw the day-to-day activities of agricultural operations. “That’s what we really want to do — show people the face of modern agriculture,” Buettner says. Others, however, are a bit more skeptical of these sorts of efforts. Michael Gertler is a rural sociologist based at the University of Saskatchewan, and he says one problem with these efforts is they typically don’t show the true picture of what happens. He says instead they tend to paint a sanitized picture that’s really more about public relations than honest dialogue. “What they present is what I call the Disneyfied version of agriculture,” Gertler says. “It’s a type of agriculture where every animal is a happy February 2, 2016
Photo: grain farmers of Ontario
business
Barry Senft
“ Those who feared it was the thin edge of the wedge were right,” says Barry Senft. “It started in one province, now it’s in three.” animal and cruelty or environmental degradation never happen.” Another problem Gertler sees with current efforts to engage the public is that few appear to be genuinely driven by farmers. Many are instead efforts on the part of the overall agriculture industry and are co-opted by others rather than addressing the issues from a farmer standpoint. “This leads to a situation where you have farmContinued on page 14 country-guide.ca 13
business Continued from page 13 ers basically squandering an enormous amount of goodwill they’ve built up over generations, and they’re doing it in someone else’s interest,” Gertler says. Says Gertler: “I think farmers really need to stop and think about this and realize that when it comes to, say, some of these large agricultural companies, their interests and the interests of these companies are not necessarily the same.” There’s also going to be the issue of defining what’s a farm, and determining how farms are to be regulated in modern times. These days you have, for example, extremely large-scale livestock
operations that are run by hired managers and staffed by hired hands, while being owned either by corporate interests or shareholders. “Does it really make sense to regulate something like that in the same way you would regulate the old family farm of yore, where most of the labour came from within the family unit?” Gertler asks. “Over the years, agriculture has been exempted from a lot of things because of this, and now we have very large companies that want this sweetheart deal to continue under the guise that they’re farms.” Senft says he’s heard this argument before, but doesn’t think it fully under-
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stands how intertwined the interests of the various players in the agriculture sector are. It’s a reality, he says, that is part of the cosmetic pesticide ban. “I think we’ve seen that those who feared it was the thin edge of the wedge were right,” Senft says. “It started with one province, now it’s in three, and we’re beginning to see a lot more talk about regulating agricultural pesticides.”
Science or politics? Rolfe says he doesn’t know what the future holds, but his time at the helm of KAP does give him some idea what the correct path might be.
BIG.
February 2, 2016
business The industry can’t afford to just ignore non-farmer concerns or come to be seen as obstructionist, because urban voters do have more clout. But neither can it afford to become a convenient scapegoat. “Probably the most important word is going to be ‘science,’” Rolfe says. “The key there is to make sure the science is sound and that we’re making the right decisions, based on the right information.” Rolfe also says the examples of places where agriculture took on issues proactively — commodity quality assurance programs, for example — have shown another potential road forward. They’ve allowed producers to address consumer
concerns in a practical way, rather than having terms dictated to them. “While they do add to more paperwork at the farm level, they provide assurance to the consumer — and the producer — that food is produced to a certain standard of safety,” Rolfe says. Sociologist Gertler said he generally agrees these are both potential solutions, but cautions that for it to work, the industry must take a hard look in the mirror and ask if there really are places where farmers could improve. “We talk about self-referential bubbles, well I sometimes say agriculture is stuck in a self-reverential bubble,” Gertler says. “They need to honestly
look at the situation, and realize that, in some cases, there really might be a better way.” Gertler goes on to add this must also be a two-way street, where the rest of society better understands what we’re asking of farmers. For example, he says Europe is often held up as a regulatory nightmare, but at least farmers there are somewhat compensated for their trouble. “There they talk about multi-functionality and they pay farmers for those environmental services,” Gertler says. “If we’re going to be making similar demands, well, we’re probably going to need to pay farmers for those services.” CG
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country-guide.ca 15 2015-12-17 1:58 PM
business
What if the party’s over? Maybe these strategies will keep more of us from repeating the tragic ’80s
hat is a grain farmer to do? Encouraged by both record-high crop prices and production over the past few years, you bought more land and upgraded your combine. With record-low interest rates, these were shrewd business decisions that pencilled out. They made sense, right? Except now crop prices are flat, and those responsible for input costs and land pricing seem not to have noticed. Or not yet anyway. Your cash flow is suffering as a result. And you’re left wondering, what is a farmer to do? It’s a scenario all too familiar to those who lived the glory days of farming in the ’70s, only to try and survive bankruptcy in the ’80s. And there are murmurs in the industry — some alarm that we may see the devastation of that time on farms today. To get a handle on those fears, let’s start with some big-picture facts.
The national scene Record-setting crop prices and production have translated into record-high income on the farm. According to the 2015 Canadian Agricultural Outlook from AAFC, net cash income (farm receipts minus expenses) on Canadian farms reached $14 billion and $13 billion for 2014 and 2015 respectively. That’s 21 per cent higher than the average from 2009 to 2013. And it’s no secret that those records translated into land prices. In 2012 both Ontario and Saskatchewan saw land value increases of a whopping 30 per cent. Across the country those increases fell to 22 and 14 per cent in 2014 and 2015, respectively, according to the FCC numbers. Now, forecasts suggest land prices will tread water. “Land prices are softening because, in some provinces, land values are over their potential earning given lower commodity prices,” says Craig Klemmer, senior agricultural economist with FCC. 16 country-guide.ca
FCC’s 2015 report, Farmland Values Explained, examines the price to earnings (PE) ratio of land, price being the farmland value/acre and earnings being crop receipts/acre. In the ’70s these PE ratios exceeded the long-term average and were unsustainable when faced with high interest rates and a rapid decline in farm receipts. FCC found the 2014 PE on most farms was higher overall but still consistent with cash receipts, except in Ontario and Quebec where population growth and urban pressures on land values saw their PE ratios increase by 60 and 50 per cent respectively. However, what’s most interesting to note is that the same report suggests we shouldn’t be using cash receipts to value land at all. Land values and purchases should be based on net cash income. “The ability to pay for land is perhaps more connected to net cash income than cash receipts,” the report reads. “The former measure reveals true profitability associated with land. Yet crop receipts are a more important driver of farmland values from a statistical standpoint. It is important to emphasize the importance of the last point: the purchase of land should be based on profitability and debt repayment capacity. Yet, revenues appear to drive the value of farmland at the aggregate level.” With farmland now making up 64 per cent of the asset value of farms in Canada, it would seem important that farmers should be aware of the distinction, because at that level farmland becomes a much higher concentration of risk on the balance sheet. Can you, indeed, pay for it? Given the usual cycles in agriculture, Klemmer sees the current slowing in appreciation of asset values of land as “appropriate for the market before we get ourselves into a bad situation… land value increases of about five per cent are a normal value increase. They could go to zero or a small (negative) decline due to the impacts of ability to pay via crop prices.” “Some correction was needed,” he says. February 2, 2016
Photos: FCC
By Anne Lazurko, CG Contributing Editor
business
But is it the ’80s all over? Only two per cent of farmland turns over ownership in a given year, Klemmer says, so, after a couple of years of unsustainable prices relative to income, only two to four per cent of land has actually turned over, and entire farms are not likely leveraged at that high price. Instead high-cost land is supported by the rest of the farm. That, says Klemmer, is a substantial difference from the buying patterns of the ’70s. As well, commodity prices are down, but not as sharply as U.S. corn prices and nowhere near how they tanked back in the ’80s. This gradual decline gives producers time to adjust. The low Canadian dollar is also softening some of the commodity price impact, providing a 30 per cent buffer, although Klemmer admits this is only relative to U.S. products as other currencies around the world, such as Australia, are suffering as well. There are also other indicators supportive of Canadian agriculture that weren’t there 40 years ago. For one thing, debt-to-asset ratios have been declining the past few years, putting farmers in a better position than 10 years ago, Klemmer says. Farmers made strategic investments in their operations with land and equipment. As well, even with high land values, the amount of debt relative to asset appreciation is lower. It should be pointed out that a good deal of this improving ratio might simply be a reflection of inflation on land bought at a lower price, and not an indication of good management, but none the less it makes for a better ratio. And we are certainly not in the interest rate nightmare of the ’80s. Interest rates are expected to remain low at least until mid-2017. Klemmer believes that when they do go up, both short- and long-term rates will rise incrementally. And while input costs continue to escalate, especially those sourced out of the U.S., lower fuel and fertilizer costs will offset some of that. FCC and Ottawa both insist agriculture is in a good position moving forward, and that while the agriculture economy might soften, future population growth and a growing global middle class demanding higher-quality food will ensure markets for our products into the future.
The view from the grains and oilseeds sector Land values, according to FCC’s Farmland Values Explained, are affected by interest rates, crop receipts and momentum effect. We’ve already looked at the first two, but what about that momentum effect? If farmers are susceptible to it, could industry and analysts be as well? We’re all looking at the same numbers, but assessing these numbers relative to an entire industry might result in quite different conclusions than when applied to your farm. Or mine. Record-high net farm incomes, record-high farm net worth at $2.1 million per farm, total debt-toasset ratios declining over the past few years, and February 2, 2016
Klemmer sees the chill in today’s farmland prices as “appropriate for the market before we get ourselves into a bad situation.” It isn’t a time to panic, but a time for caution farm family income reaching another record — the AAFC outlook is pretty darn rosy. So why are we glancing over our shoulders at the ’80s? Perhaps it’s debt. Not once does the outlook mention total farm debt. But according to FCC numbers it rose 68 per cent since 2005 to a record $84 billion. So, let’s say you’re the farmer who just bought more land and upgraded your combine. Now you have to pay for it. Farm receipts in the grains and oilseeds sector declined by five per cent in 2014 and another four per cent in 2015, while expenses remained relatively the same. And net operating income per Canadian grain farm decreased an average of 10 per cent since 2013. On huge farms that represents some pretty huge numbers. Like you, many of those farms took out loans to buy more land and equipment, and now have those payments to make. That declining net operating income basically represents cash available to pay off creditors. Your farm is also paying a smaller percentage of your household needs. While total family income per Continued on page 18 country-guide.ca 17
business
“ More farmers are watching their financials,” says Stockbrugger, “and if the farmers don’t know them, the bankers do. The industry is more on top of it than it was in the ’80s”
Continued from page 17 grain farm has increased from $145,000 in 2013 to $151,000 in 2015, the income coming to the family as a portion of the net operating income is actually decreasing slightly, meaning the increase comes from off-farm wages, investment income and farm salaries. This isn’t to point to anything necessarily dire. It’s an observation that overall numbers only tell part of the story, and farmers need to crunch the numbers in their own sector and on their own farm so they understand why cash flow might be tightening up, making it harder to pay the bills or get ahead.
So what is a farmer to do? For 15 years Lance Stockbrugger worked as a chartered accountant and adviser in the agricultural sector and he continues to work as a sought-after speaker on ag financial issues, with his most popular talks on buying versus renting land and equipment leasing or buying. He also farms 4,000 acres near Englefeld, Sask. Stockbrugger agrees we’re unlikely to see the bankruptcy rush of the ’80s. “People are going broke but not in the same numbers as before,” he says. “More farmers are watching their financials more closely, and if the farmers don’t know them, the bankers do. The industry is more on top of it than it was in the ’80s.” But while producers aren’t necessarily going bankrupt, “there are a lot of auction sales where it sounds like they’re getting out or restructuring. And what we’ve heard is, they have no choice. They are selling equipment to refinance. In the ’80s they just kept pushing, thinking it would get better and then went bankrupt. Today they are reacting sooner.” 18 country-guide.ca
Perhaps farmers could have survived the heady crop and land prices of the ’70s if 20 per cent interest rates hadn’t killed them in the ’80s. But an extremely low interest rate can create financial trouble too, and Stockbrugger calls out “easy money” as a culprit on some farms. “One thing people have to stop using as a reason for buying is that ‘money is cheap’ right now,” Stockbrugger says. “Yes, it is, but we still have to acquire debt in moderation. If something is truly needed and will improve your operation, then yes, but if we’re only buying something because money is cheap, that doesn’t make sense… It’s easy money, but it has to be paid back. In the short term it might be easy, but is the farm gaining ground? Are we getting ahead or simply chasing the money?” Too many farmers are making decisions today based on 2012 numbers, Stockbrugger says. In 2012 margins were huge. But those margins are not happening and are not forecast to happen. In fact, 2019 things are predicted to be even tighter than today. “Any reasonable person in business would look at that and say, ‘we can’t make decisions based on 2012 numbers.’” Land prices will remain high as long as interest rates are low, Stockbrugger predicts, but he wonders if farmers are prepared if 10 years from now rates go to even seven per cent. It’s hard to know, given that money left over to service debt is decreasing. For some it might be too late. “People who have doubled their acreage in a year based on assumptions that may not be true? They will be in trouble,” he says. “If it’s been a slow and gradual increase, they will likely be OK. A well-planned, diversified and structured farm will ride it out.” It mostly comes down to managing ratios: debt February 2, 2016
business serviceability measures your working capital and ability to repay debts; debt to equity measures how you are financing your operation; and current ratio compares the current assets to current liabilities to determine the cash available to service the next 12 months’ debt that needs to be repaid. “In some instances the equity ratio is backwards,” Stockbrugger says. “The bank owns more of their farm than they do. Finance companies get to the point where they’ve got more riding on your farm than you do. It’s created by competition within the financing industry. But it spirals. A few bad years, depressed prices and you have to figure out how to get out of the spiral.” And, what if you’re caught in the spiral? What if you can’t pay for that land and upgraded combine? It’s all about the cash flow. Your ability to pay the bills is the first thing a banker will want to know. Some of the hard things Stockbrugger says to consider include: 1. A n Auction. Sell some long-term assets. It’s a tough one, but a piece of land or redundant assets like that spare semi or extra tractor might have to go on the block. Enough said. 2. New combine every two years? Maybe run the old one a little longer. 3. Give back some rented land: some of that marginal land you never make any money on, or that quarter you just never seem to have time for. 4. Cut costs. Farmers are price takers, so the only control is over costs. There’s not much room with inputs because you risk losing productivity and cash flow. So maybe pick on equipment. Move short-term debt to medium term. Hold off on purchases and leasing. 5. Don’t use short-term money for a longterm asset. Use your operating loan to finance your inputs, and finance longterm assets over the long term. 6. Act early: if you know you’ll need to expand your operating loan, ask in January, so there’s no crisis in June. 7. Change your management style. It got you into trouble and needs to change. And get help from the outside to learn to manage differently. 8. A nd if you’ve managed to hang on to farm another day: PLAN, so near death doesn’t happen again. Along with every other farm adviser and accountant, if there’s one word Lance Stockbrugger has to say about managing
your farm both for profitability and to avoid disaster, it’s just four letters long: plan. Reports from AAFC and FCC are likely true. The agriculture industry will take this bump as it always does, by digging in and waiting it out. But it is the individual farmer who will bear the brunt of his or her decisions relative to expensive land and equipment purchased at low interest rates but who now face softening commodity prices.
Craig Klemmer, Lance Stockbrugger and the people at Ag Canada will likely agree that, stats or no stats, farm level financial management skills and planning have never been more important. Add to that a certain level-headedness that is hard to regain after a period of record-breaking profits. Perhaps looking back at history isn’t such a bad thing. Not to make us afraid, but to remind us. CG
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business
Selling the farm nce you decide it’s time to retire from farming, there’s a pile of planning, strategy and communication to fork your way through. Here’s how one couple from Saskatchewan proactively approached the sale of their seed farm, and how they captured value beyond piecemeal selling of their hard assets. Warren and Carla Kaeding and Roger and Phyllis Kaeding had been growing seed at Churchbridge near the Manitoba border since 1983 after their Hereford herd was dispersed. At one point, they cropped 6,500 acres with about 70 per cent in pedigreed seed production and the rest in commercial grains, predominately canola. By most measures, they were very successful, with yearly gross sales of $2.5 to $3 million seed and $650,000 to $700,000 in commercial grain. In additon, they also retailed a fair amount of seed from other growers, and did some custom seed treating. As well, they packaged and exported specialty pea, triticale and other annual forage products into Eastern Canada and the U.S., and they have shipped seed to Kazakhstan, France and Argentina on a small scale. Warren started talking about quitting after seven years of slogging through some tough times, including the disastrous 2004 with three major hail storms followed by an early August frost, the low seed margins of 2007 to 2009, the incredibly wet fall of 2010 and having to seed by airplane in the spring of 2011. Moreover, land values started increasing exponentially and realtors began approaching their landlords with the idea that now was the time to sell. The Kaedings owned 2,500 acres and rented the remaining 4,000 acres from up to eight landlords. “They all gave me first option to purchase, which I really appreciated,” says Warren. “However, we had just climbed out of long-term debt, I had just turned 50 and was not anxious to borrow another $5 million and be in debt until I was 75, especially when neither son was interested in farming.” Although both their sons loved working on the farm, they didn’t want anything to do with farm management. Michael is a mechanical engineer, and Matthew an aerospace engineer graduating from Carlton University in Ottawa. “I had been mentioning to Dad that I wasn’t having that much fun any 20 country-guide.ca
Inside the sale of a modern, diversified and complex family farm more, and with the boys not interested I was questioning my future,” says Warren. “Then when the landlords came wondering if we were going to buy them out, I half-heartedly threw out the idea to him that maybe I should sell too. He didn’t even hesitate, saying very seriously, maybe I should. “I guess I just needed his endorsement that it wasn’t going to hurt his feelings if we sold his maternal home and farm.” So they did: the land sale was completed in the winter of 2011 and they had their equipment auction in the spring. The following March they officially sold their seed retail operation to Graham Sorgard and his family, who now operate the business as Sorgard Seeds. Although the Kaedings don’t grow seed now, they still manage new and unique varieties using select seed growers and local retailers such as Sorgard Seeds. The Sorgard family (Graham’s father Charles and mother Eileen) farmed in Iron Springs, Alta., producing bison, beef, alfalfa seed, and grain and also had irrigation and a gravel pit-and-delivery business. Various members of the family have also been in the poultry business in Saskatchewan. A year or two since buying the Kaeding farm, Graham and Emily Sogard also bought a very large, modern egg laying facility close by.
The rollercoaster ride In retrospect, it was a time when great change was sweeping through the Prairies: wheat prices soared, consolidation of farms revved up, funds were investing in farmland, and land prices rose. In the background, there was political upheaval when a few years later the CWB lost its 88-year monopoly, and the last great wheat co-operative would be sold. The tale of how the Kaedings farm sold reflects this tumultuous time. Many parties were interested and deals fell through. Along the way, concessions were made and new strategies developed. Originally the Kaedings sat down with each of their major landlords and discussed a strategy for moving the sale forward. They agreed that since they were going to February 2, 2016
Photography: Sandy Black
By Maggie Van Camp, CG Associate Editor
business
New owner Graham Sorgard’s respect for the work that the Kaedings had done helped create an impetus to make the complex sale come together. be selling everything as a package (rental and owned land), they would trust their judgment in picking a realtor and the buyer. The landlords would have final say on any offer made on their package with an eye on how it would affect the final sale. The Kaedings diligently looked through realtor options, and interviewed three different companies, asking each for their best offer. “We settled on Lane Realty as they had the best comprehensive package to offer, including a very attractive commission with the auction service,” says Warren. “I had also had a business relationship with the realtor before in the seed business and trusted that she would be a good fit for marketing our seed operation since she understood the business.” When they first listed their farm, two young Dutch guys made an offer on the land and equipment, but not February 2, 2016
the seed plant. The Kaedings figured out how to separate the seed plant and associated enterprise and were planning to list it on its own in the auction. They had also arranged to provide a sale agreement on some of the essential large pieces of equipment and were going to provide a one-year mentorship. The entire deal was contingent on an uncle selling a piece of farmland in Eastern Europe to finance the boys’ purchase here. A day or two before their deal was to close, their uncle’s land deal unraveled and he was unable to finance their new operation. “We were a little choked since we believed they had been vetted and were virtually a lock in making the purchase,” says Warren. “We had gone ahead and started construction of a new house in town.” Continued on page 22 country-guide.ca 21
business Continued from page 21
A one-year mentorship agreement with an optional second year kept Warren involved, and helped strengthen the relationship with new owner Graham.
Earlier an offer had been made by a South African couple but the conditions they were asking for were not acceptable. (They had requested that payment for the operation be spread over a number of years since they could not extract their savings from South Africa all at one time.) Impatiently, Warren spent the summer attempting to dry out the overly wet land, pooling water and trying to improve some small areas they had newly broken. Numerous offers came primarily for only the land with significant discounts for the yard and buildings and no value on the seed business. The chances of selling the operation as a seed business began to look slim. “As time moved on, we were getting impatient with not receiving any substantive offer,” says Warren. “Carla and I had made our minds up that we were going to sell, so we started entertaining some of the more serious offers even though we had to offer some concessions.” Big changes were happening with the Sorgard family too. In 2009, they had purchased a farm in
22 country-guide.ca
the Davidson area via a land auction. Within a couple of years, a Hutterite colony came into the area and wanted to buy that farm and surrounding farms to form a new colony. So the Sorgards began looking around the province for other value-added opportunities, including the Kaedings’ seed farm. However, there already was an offer pending on it so they looked at a dairy farm around Kamsack. Amazingly, as they were on their way to secure the dairy deal, they got a call from the Kaedings’ realtor indicating the initial offer had fallen through. If they were interested, she said, they were next on the list. As the last few days of the Kaedings’ listing wound down, they had a reasonable offer, it fell apart, and then the Sorgards’ offer came along at the eleventh hour. It was perfect, says Warren. “A young family wanted to be ambitious, aggressive, wanted to keep our staff, was going to fill our century-old farm house with kids, valued our seed business and they wanted to keep the farm dog permanently and me for awhile.”
The deal The Kaedings retained all of the shares of Wagon Wheel Seed Corp (WWSC) but sold all of the assets out of the Corporation. Initially they had a value established on the Good Will portion of Wagon Wheel, but in the end opted to not sell WWSC. This way there were fewer legal issues involved in wrapping up the corporation, and it simplified some tax implications. Second, the Kaedings decided there might still be some opportunities to utilize the WWSC name. For example, WWSC still has the marketing rights to three seed varieties and has numerous growers producing and retailing for them. WWSC provides some income and potentially has a reasonable future income expectation. “We had worked 30 years to build name recognition for WWSC, so we weren’t sure if we wanted to see it go to a new entity,” says Kaeding. “As well, we didn’t want Graham to be saddled with the expectations we had created for our customers.” A unique part of the deal was that the Sorgards had a one-year mentorship agreement with an option for another half year to follow if the buyer felt it necessary. Warren wanted it written into the contract that he would see the buyer through a complete year of seed planning, planting, managing, processing and marketing, including their first seed plant and operation audit. Kaeding also took Graham to various seed industry meetings, introducing him to some key players. Both felt it would be beneficial if Warren helped for the April-to-October period of the second year so they exercised the option on the second year. Also, Graham offered all of the staff the option to stay on if they wanted, and the three main employees kept their jobs. The unexpected added bonus is their friendship. “We still have an excellent relationship and he feels comfortable asking me about strategy, procedures, issues whenever they come up,” says Kaeding. February 2, 2016
business The valuation Setting values was probably the toughest part of the deal, says Warren. Since they weren’t going to be selling the name, how could they arrive at a value for the other non-tangible assets? As well, since the new owner might not want to carry on the business exactly the way the Kaedings had done, there was a lot of optional value in what they had to offer. In the end the Kaedings settled on a value for “Good Will” including customer lists, office and work force, and they also negotaited a rate for part of a mentorship agreement that included a value per hour and time expectations, and that also identified the rates for a second year if the Sorgards needed him.
After the sale Once they had the sale proceeds, the Kaedings interviewed six potential investment counsellors. One was an acquaintance, two currently invested their RRSPs and cash investments, and three had been recommended by contacts in the industry. In the end, the Kaedings went with someone from the industry who understood their risk levels and how to help plan their future and succession. This was also someone who would personalize their service, and someone they were confident they would be comfortable with for many years. Of course, they had deferred taxes to deal with on the sale, but they try to keep it in perspective. “As a farmer, you usually do not pay much tax when in the middle of your farming career; you can usually find those tax write-offs,” says Carla Kaeding. “When you sell, you will have a hefty tax bill… but average it over the 30-plus years of farming and the tax bill is still not that bad,” “You know you did something right when the tax man wants his share,” she says. They also try to keep it real as far as inheritance. “As long as you’ve given your kids the opportunity to get an education that will secure them a decent job, you have fulfilled your commitment,” says Carla. “I do not believe that you should not enjoy your retirement in hopes of leaving something for the kids when you die.” Besides, most times the money will come to them long after they really need it. Maybe a better option is providing an education fund for the grandchildren, February 2, 2016
For family-focused Warren and Carla, the hard part was actually deciding the time had come to move on a special family holiday or giving them sizeable incremental payments at age 25 and 35 so you get to see them enjoy it. “In your retirement you just need to save enough to pay for your life expenses so the kids do not need to be responsible for you,” says Carla.
The emotional side The most difficult aspect of selling the farm was likely making the initial decision, says Warren. For the first couple of years after the sale, he spent too much time worried they could have gotten more for the land if they had waited a year or two. “You can worry a lot about whether it is the right time, right value, right buyer,” he says. However, in the end it all turned out for the best. They got a great deal on the lot for their new house. The contractor happened to have a lull in his production cycle so it was completed in less than five months. 2012 was another challenging farm production year and Warren got to spend a lot of time with his ailing father. When his dad died, he was also able to spend a lot of time to help Mom adjust to her single life. Then they enjoyed a long summer vacation cruise through Europe, which they had always wanted to do but never could because of the summer workload. Their local MLA then announced he was retiring a year after they sold the farm, so
Warren is pursuing his teenage dream of being a politician. On the downside, Warren misses the contact he had with their very diverse customer base and the network of seed growers, and he misses knowing about the latest seed varieties and the latest agronomic developments. However, he doesn’t miss the late nights seeding, spraying and harvesting. “I used to like the rush of the season, but it was taking longer to recover.” He found he couldn’t sit at home for more than one nice, sunny, summer day. “I couldn’t sit on the deck enjoying a beer and reading the newspaper if it was Monday to Saturday,” he says. “Sunday I was good at relaxing but was going stircrazy sitting around on a weekday.” Warren admits to concern over what the industry would think. “I was (am) a strong proponent of agriculture, and was not sure how seriously I’d be taken now after ‘bailing out’ on my fellow farmers,” he says. “… I’m not convinced that it still doesn’t bother a few of what I considered close associates in farming.” The surprise was that, after the sale was complete, the Kaedings have had numerous farmers their age or younger get in touch for advice on how to wrap up their operations, and it feels good, they admit, to help by sharing what they’ve learned. CG country-guide.ca 23
ame-management
Use financial ratios to diagnose operational issues By Larry Martin, PhD, Agri-Food Management Excellence
- Cost of Goods Sold (CoGs)
operating efficiency — i.e. operating earnings/revenue, should be around 35 per cent. These ratios are attained by many of the cash crop and livestock farms in CTEAM. Expect higher gross margins, but also higher operating cost ratios for horticulture. Operating ratios will be lower for feedlots Cost Ratio because of their proportion of 35% purchased inputs. (TR-COGs)/TR
he profit and loss statement provides three financial ratios that can help identify operational issues and set priorities in your operations plan. The ratios and their benchmarks are: Revenue/ Earnings
Operating Ratio
Total revenue (Sales) (TR)
Cost Category
Gross Marg. (GM)
65% (GM/TR)
- Other Operating Costs (OC)
15-20% (GM–OC)/TR
Contribution Marg. (CM)
45-50% (CM/TR)
- Operating Overhds. (OH)
10-15% (CM-OH/TR)
EBITDA
35% (EBITDA/TR)
The first and third columns define revenue/earnings and cost categories deducted from them on a standardized operating statement. The second and fourth are the resulting operating and cost ratios and their benchmarks. Cost of goods sold should be 35 per cent of revenue for cash crop and some livestock farms. CoGs is essentially seed, chemicals and fertilizer for crops, and feed, vet and medicine for livestock. Deducting CoGs from Revenue gives Gross Margin, 65 per cent of sales (by definition). Next, subtract Other Operating Costs (OC) from Gross Margin. OC includes hired labour, custom work, and machinery operating costs (fuel, lube, repairs and maintenance). For crop and most livestock farms, these should be 15 to 20 per cent of total revenue. The resulting contribution margin, by definition, is 45 to 50 per cent of sales. Finally, subtracting off Operating Overheads gives Earnings before Interest, Taxes and Depreciation/Amortization. Overheads are normally in the 10 to 15 per cent range. They include hydro, management salaries, insurance, rents, legal and accounting expenses, property taxes. So, by definition, total
24 country-guide.ca
Using the ratios to diagnose and evaluate your operating statement
Your ratios and the standards provide a lot of information about your operational effectiveness. To illustrate, three example farms’ ratios are below: (it’s best to use three to five years of data to get an accurate picture of what’s happening). Farm 1
Farm 2
Farm 3
Gross margin %
71
57
69
Contribution %
40
39
52
Operating efficiency %
26
26
26
I start with operating efficiency: it signals the overall health of the business because it’s how much is left of each dollar of sales after paying all costs except depreciation, interest and taxes. OE is 26 per cent for all three, above average but below the benchmark. Yet each of the three show very different characteristics. Farm 1 exceeds the 65 per cent benchmark for gross margin and is under 15 per cent for operating overheads. Farm 1’s problem is that its other operating costs are 31 per cent of revenue while 15 to 20 per cent is expected. High OCs may indicate excess labour that needs to be used more effectively. Alternatively, machinery operating costs may be high because of age of equipment and/or too
much for the farm. Another possibility is small equipment is being purchased that is not employed well or should be included in capital costs and depreciated. Often the best approach is to examine the largest individual costs in this category and focus on reducing them or find ways to employ them more effectively. Farm 2 has good cost control since other operating and overhead costs are 18 per cent and 13 per cent of revenue, well within the target ranges, but CoGs is 43 per cent. This likely means Farm 2 has problems with some combination of product selling prices, low yields or ineffective control of direct production costs. Farm 3 has CoGs and OC of 31 per cent and 13 per cent, but overheads are 26 per cent of revenue. This problem often stems from high rental prices for land or from an operation that is overpaying for management labour.
Summary The examples illustrate the variety of situations that can exist: different farms have different factors affecting their performance. Financial results in this standardized format show whether poor performance is simply a result of bad markets or management factors that can be corrected. They also illustrate that identifying the problem is the first step in setting priorities to make improvements in operations. Farm 1 is going to focus on labour and machinery costs. Farm 2 will prioritize production and marketing. Farm 3 will likely try to do something about rental rates or management costs. Of course, effort has to be maintained on aspects that are doing well, but this approach can be helpful in prioritizing management efforts. Larry Martin is a principal of Agri-Food Management Excellence and is one of the instructors in AME’s Canadian Total Excellence in Agriculture Management program. www.agrifoodtraining.com.
February 2, 2016
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business With 82 first-come, first-served truck bays and 5,000 registered buyers, the terminal buzzes with farm activity.
Terminal story ucked between a Shoppers Drug Mart and an overgrown hedge, the entrance to the Ontario Food Terminal is nearly impossible to find after you turn off the bustling Queensway in southwest Toronto — unless you know where you’re going. Yet every day, about 2,500 people in cars, halftons, cube vans and tractor-trailers do know exactly where they’re going, and they steer here to sell and buy vast quantities of fresh produce. They also know how vital the sprawling 40-acre terminal is to their livelihoods. Like its hidden entrance, the food terminal, as it is always called, is almost unknown outside the fresh fruit and vegetable business, despite its 60-plus year history. As Canada’s largest wholesale produce distribution centre, it has a huge influence on those inside the business, helping set produce prices, providing a “one-stop-shop” for large and small buyers and sellers, and even sometimes something of a second home. 26 country-guide.ca
By Lois Harris
Should other farmers care? To answer that, read on. “My life is here,” says Bill Boots, who hauls flowers, beans, squash, Brussels sprouts and several other vegetables from his 530-acre farm southwest of Brantford to the terminal from Sunday to Friday for seven months of the year. His day starts at 10:30 p.m. (that’s right: 10:30 p.m.) when he leaves home with a full trailer load, arriving at midnight to catch his early customers from northern Ontario. “These guys want to get on the road by 2 a.m., so we have to be here,” Boots says. Boots stays at the terminal until 11:30 a.m. selling his produce to dozens of wholesale buyers, and then heads back home to load up and start the cycle again at 10:30 p.m. when most of us will be thinking about bed. It’s a hard life, but a rewarding one for the 400 farmers who pay to have stalls at the farmers’ market area of the terminal. “I’ve done better in sales every year I’ve been coming here,” Boots says. February 2, 2016
Photography: anne de haas
Handling over a million tons of produce a year, the Ontario Food Terminal is like agriculture’s Port of Vancouver in the east, and just as complex
business
Ontario growers sell their produce and horticultural products on a daily basis by paying $44 at the entrance gate or they can apply for a stall either on an annual or semi-annual basis. The annual rent per square foot of space is $3.31. There are also warehousing facilities that currently accommodate 21 tenants, and cold storage for $12 per pallet per week. “Any grower in Ontario who wants to bring product down to the terminal will never be denied,” says Victor Debono, the terminal’s interim board chair. The Ontario Food Terminal board was set up in 1954 by the provincial government, which mandated it to build, equip and operate a wholesale fruit and produce market. Today, the split between local and imported produce going through the terminal is about 40 per cent and 60 per cent, respectively, with high-end buyers leaning more and more to local. There is also evidence of new construction all around. With 40 employees and $1.7 million in net revenue, nearly $9 million has been spent over the last year and a half on upgrades that provide cover for buyers to keep out of the cold, rain and snow. Renovations also include an overhead walkway connecting the north and south buildings so that office staff can move around the premises without having to thread through the controlled chaos of the market and warehouse. After this phase of construction, there will be 82 bays that buyers can use to load and unload their trucks. Almost everyone talks about how the activity at the terminal only seems chaotic. It is, in reality, organized. The whole place — both the warehouse and the farmers market — vibrates with the energy of business getting done. February 2, 2016
On a Monday morning, forklifts driven by tenant employees whiz along the clean cement hallways, darting in and out of storages and warehouses like oversized mechanized grocery carts, bringing pallets of fresh squash, apples and eggplants to waiting trucks backed up to bays in the “buyers court.” Buyers are sent to the terminal from grocery store chains and independents, restaurants, and even smaller farmers markets. “The bays are all first come, first served,” says general manager Bruce Nicholas, who has been on the job since 1975. He says the farmers’ market was moved to the south side of the premises, where it can be organized in a more orderly fashion. Most of the growers who come to the terminal have been doing so for decades. For some, their children are carrying on the tradition. For others, it’s the end of the line. “You meet some inspirational people here from humble beginnings — there are some real success stories, both farmers and buyers,” says Doug Overholt, who has 150 acres of fruit trees in St. Catharines. Overholt’s family has been in the business since the early 1800s and he has been bringing a truckload of 20 skids six days a week since the 1970s. But he’ll be the last of a family tradition. “I’m the last kick at the can,” he says. “Part of a dying breed.” Other growers are in the process of handing the business to the next generation.
For Rosario Riga and his three sons, 300 acres of chard, kale and other greens go through the food terminal from their farm just north of Toronto.
Continued on page 28 country-guide.ca 27
business
The crops may be small-acreage, but the farms are big business.
Continued from page 27 Rosario Riga farms 300 acres of “greens” near Newmarket. He has three sons who now run the operation, which specializes in parsley, cilantro, dandelions, herbs, collards, Swiss chard, black and red kale, as well as the more traditional celery, onions and carrots. Riga sells to Sobey’s and Loblaws as well as many smaller outlets. One of those smaller outlets is Michael-Angelo’s, an independent family grocer that has two markets in Mississauga and Markham and will soon open another in Aurora. “The service is excellent here,” says Frank Berardi, Michael-Angelo’s head produce buyer. “The terminal gives the smaller guys like us the opportunity to buy from a lot of growers all at one time.” Berardi has been a buyer for 21 years, and his focus is on local. “Ninety-five per cent of our produce comes from the food terminal,” Berardi says. “And from June to the beginning of November, about 80 per cent of what I buy is locally grown.” Berardi likes working at the terminal because the farmers know what he’s looking for and he’s built solid relationships with them over the years. He says while he’s buying and talking to growers on a Monday, he can plan for what will be available on Thursday — the terminal’s biggest day for transactions. “People here are all friendly and easy to get along with,” Berardi says.
28 country-guide.ca
For Streef Produce, with 2,500 acres of potatoes plus a wholesale business, the $220,000 rent pays off There are 5,000 registered buyers who spend their days negotiating and purchasing tons of produce on behalf of their grocery stores, supermarkets, restaurants, farmers markets and more. More than a million tons of produce goes through the terminal every year. Growers appreciate the one-stop shopping aspect of the terminal just as much as the buyers. “The customers come to you, instead of having to truck all over Toronto,” says Sam Daraiche of Kingsville. “It cuts down on the traffic, and it’s safe and clean.” Daraiche has 10 acres of greenhouse vegetables under glass in Kingsville, three and a half hours east near Windsor-Detroit. He started out as a broker in the business that his father launched after emigrating from Lebanon in 1962, and Daraiche says he grew up in the market. He says the terminal is like an auction every day, and, like his father, he believes that “when the customer says ‘take it to the truck’ — you have the right price.” Daraiche’s nephew Eddie owns Zakaria Produce of London, and he caters to high-end markets with niche products. “Longo’s (an Ontario supermarket chain) loves my baby eggplants,” he says. Most farmers grow bigger February 2, 2016
business eggplants, because they get a larger yield per plant — he doesn’t because his customer likes the smaller ones. He also grows okra and cucumbers, among other vegetables. Zakaria’s approach to business is to carefully listen to his customers’ demands while talking to them at the terminal. He does his own marketing and sells his own produce because he likes to keep more of the price he charges. He’s planning to add chili peppers to his product offerings next year because of a customer request. Inside the warehouse, Peter Streef rents two units for about $220,000 per year. Streef Produce is a unique combination of grower, wholesaler and importer. Besides having its own 2,500 acres of potatoes, beans and many other vegetables, the company imports from all over the world, including asparagus from Peru and mangoes from Brazil. But the main focus is on Ontario produce. Depending on the season, Streef ships produce from 20 to 50 local growers to the terminal. With partners in Winnipeg and Calgary, the company can distribute right across the country. “Smaller independent businesses would not survive without the food terminal,” Streef says. He believes that the robust multicultural markets that are the pride of Toronto would not be possible without the OFT.
Tony Fallico sells produce out of the terminal for Ontario’s third-largest importer, F.G Lister and Company. He says the terminal gives him a vehicle to develop relationships with his customers. “Face-to-face discussions help a lot,” he says. “It’s better than negotiating by phone.” His company uses the limited space it has in the terminal warehouse to show customers what they have on offer. Negotiations take place at the terminal, and produce is shipped from the company’s larger warehouses. “At Montreal, where there is no central site — customers have to go to three different warehouses to get what they want,” Fallico says, and he notes Toronto is one of only six such terminals of its kind in North America — the others are in Chicago, Philadelphia, New York, Boston and Los Angeles. Yet the terminal’s operations are marked by an odd mix of technology, with 100 security cameras monitoring every corner of the premises, but a manual inventory system that relies completely on paper. “We’ve never lost a pallet,” says general manager Bruce Nicholas. “It works and we’re not changing it.” CG
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Thrive Becoming the best you can be By Pierrette Desrosiers, psychologist and coach
hat does the word “thrive” mean to you? On one level, it seems self-evident — to thrive is to prosper, to succeed, or to make steady progress. But what criteria do you use to measure whether or not you’re thriving? How do you judge your prosperity, success or progress? If you ask anyone what it means to thrive in business, or if you ask them what success and prosperity look like, you will usually find that their answers focus at least in part on money, power, and prestige. For many entrepreneurs, the measure of thriving is too often reduced to the acquisition of money and power. It can be measured in numbers: more land, trophies, profits, or employees. It can even be measured by shinier pickups and bigger machinery. But this limited view of thriving comes with a price. Of course, good numbers are an important part of a thriving business — but that definition seems clearly insufficient. Maybe it could even be the reason you don’t feel like you’re thriving. As Arianna Huffington, author of Thrive: The Third Metric to Redefining Success and Creating a Life of Well-Being, Wisdom, and Wonder, said in a Forbes interview, “Over time our society’s notion of success has been reduced to money and power… This idea of success can work — or appear to work — (only) in short term.” So what’s a better definition? Let’s start by recognizing that not being sick doesn’t mean you’re healthy. Making money or acquiring land doesn’t mean you’ve created a thriving business. Then, let’s look at other metrics: • D o your business practices contribute to your employees’ well-being? • Does your work environment encourage more collaboration than competition? • Are your business practices ethical? • Do your business decisions cause more good than harm to the environment? • Are your employees as happy to show up in the morning as they are to leave at the end of the day? • Do you talk with your employees, and are they happy to talk to you? • Are you more respected than feared? • Do your goals centre around a bigger purpose than making you or your associates rich? As I’ve met my clients and heard their stories, I’ve come to realize alongside them that a thriving business is about connection, mission and purpose. It is also 30 country-guide.ca
about compassion and forgiveness. These concepts, which don’t appear in management courses at university, are critical for developing a healthy business. Then, once we develop a thriving business, what about a thriving life? Can we have one without the other? Usually not. In almost 20 years, I have seen hundreds of family farms that, with the help of marketing experts, have developed successful businesses without ever consciously trying to cultivate the ideal of “thriving.” After years of trying to replicate in their personal lives the success they’ve found in their businesses, they’re now asking how they can thrive in life. Here again, we find that a thriving life is about more than not being sick. It is more than not having cancer or suffering from depression or addiction. So what does it mean to thrive in life? Thriving is knowing that you contribute positively to your family, your business, and your community. It is knowing that, at the end of the day, you will have added something to another’s life. It is being clear about your values and acting accordingly. It is accepting life when you can’t change it and acting with courage when you fear the situation. It is having someone with whom you can honestly speak about your fears, your joys and your hopes. It involves wisdom, bringing purpose and compassion into your life. It is about forgiveness. It is about personal growth, positive relations with others, purpose in life, and self-acceptance. In short, we could say it is to feel you are becoming the best you can become, a little more every day. So why should you care about a thriving business and a thriving life? Numerous studies show a high correlation between the psychological health of employees and the company’s bottom line. As a leader, you participate in others’ lives. A true leader will also help others develop or maintain a thriving life. Entrepreneurs are a little like parents. People look at you, and whether you like it or not, you wield monumental influence. CG Pierrette Desrosiers, MPS, CRHA is a work psychologist, professional speaker, coach and author who specializes in the agricultural industry. She comes from a family of farmers and she and her husband have farmed for more than 25 years. Find her at www.pierrettedesroiers.com, or contact her at pierrete@pierrettedesrosiers.com. february 2, 2016
CANADIAN FORAGE & GRASSLAND ASSOCIATION
www.canadianfga.ca • Ph: 506-260-0872
Dr. Bruce Coulman (third from left) received the CFGA Leadership Award from (l-r) CFGA chair Doug Wray, Claude Lesperance of CNH and Doug Warrener of CNH.
A successful conference in Saskatoon The Canadian Forage and Grasslands Association held its sixth annual conference, November 17-19 in Saskatoon, with 124 participants attending from across Canada and the United States. What better way to kick off a conference than with an optional tour? Pre-conference delegates had the opportunity to explore the University of Saskatchewan’s Rayner Dairy Research and Teaching Facility, the Canadian Light Source Inc’s Synchrotron and New Holland’s Manufacturing Facility. The conference proceedings, which are now available on the CFGA website, www.canadianfga.ca, touched on topics ranging from energy-dense forages and forage fertility to sustainable beef and conservation tillage systems to support soil health development.
The Canadian Forage and Grasslands Association is online with a newly refreshed website and online resource. Connect with CFGA on Twitter @CFGA_ACPF and on Facebook!
Each year the Canadian Forage and Grasslands Association recognizes an individual who exemplifies and enhances
the goals of the CFGA, and whose leadership has national or international significance for the promotion or advancement of forage and grasslands management. This year, the CFGA Leadership Award was awarded to Dr. Bruce Coulman, a leader in Western Canadian forage development. Dr. Coulman is a professor at the University of Saskatchewan, where he has served as head of the Plant Sciences Department for eight years. His research has focused on perennial forage grasses, cereal forages and grass seed production, and he has been involved in the development and registration of over 20 forage cultivars through his work at the U of S and Agriculture and Agri-Food Canada. Planning is already underway for the 2016 CFGA conference, which will be held in Winnipeg, Manitoba, November 15-17, 2016 — mark it in your calendar! We look forward to seeing you there!
business
Your data, their sale You farm better by studying the stacks of data you collect about your crops. Ag suppliers sell better by studying the stacks of data they collect about YOU By Amy Petherick, CG Contributing Editor
sing customer knowledge to outperform the competition has been a critical survival strategy for small-town businesses as they struggle to fend off competition from mega-retailers. Now, those mega-retailers are showing they can get to know their customers too. They can even get to know them better than the small shops. Don’t believe it? Then just think about your last time on the ’net. When you went to amazon.ca to buy a specific book, you got offered great deals on all sorts of other merchandise too. And somehow, even when you only go online to do a routine Google search, the ads that keep appearing are always about new trucks or airfares to the southern U.S.
Company marketers tap your purchase data to customize their sales pitches. But that’s just a start The ads are no accident. Corporate retailers have figured out how to mine the huge amount of data they’re getting from the Internet in order to produce scientifically proven marketing programs that put their pitches in front of the people who are most likely to open their wallets for their specific products. Now, agricultural retailers are also getting more sophisticated at individualizing their customer interactions too. The digital age has created a whole new world of opportunities for them to collect more information from farmers than ever before. Yet in agriculture, the “hands-on” approach is still vitally important, even among suppliers that are critically dependent on data analysis. By itself, Krystal Kolodziejak’s job title at Farm Credit Canada says a mouthful. Kolodziejak is manager of market insights, and she explains that FCC basically has two separate divisions dedicated to scrutinizing customer information. The job of the 32 country-guide.ca
first is to build and maintain a customer experience index that compiles feedback that comes directly from clients and computes it into one number that represents how well they were served. “It’s our way of monitoring throughout the relationship with a customer whether or not we are delivering value to them when we are working with them,” Kolodziejak says. “Based on how that score can fluctuate throughout the year, we will provide coaching to the team of that sales area.” The other division, the one that Kolodziejak manages and that includes FCC’s Vision Panel, is dedicated to monitoring the impacts of changes generated either within FCC or from the industry at large, and then directing the company’s response to those changes. Both divisions depend primarily on survey results, which are still physically mailed in many cases, as well as direct interviews of producers either as individuals or via small groups. The only thing that has really changed for Kolodziejak’s work in more recent years is the ability to collect most of the information she needs online. “Our FCC Vision Panel is made up of over 5,000 people across Canada, including primary producers, agribusiness, students, and people who serve ag clients,” Kolodziejak says. “We’ll go to the Vision Panel about a specific business decision or when we want to get the pulse of the industry, and we can use that information to get a better understanding of what our customers are facing.” Kolodziejak says sometimes a survey fails to tell the whole story, so when she needs to dig deeper into a particular issue, that’s when they form focus groups at five or six locations across the country where a selection of growers will meet together personally. Barry Nelson tells me this is pretty reflective of what they do at John Deere too. In fact, John Deere is responsible for generating even more numbers than a credit supplier such as FCC. Diagnostic software can pull a lot of information out of the modern tractor, and many producers are using features which transmit information automatically. “The customer is able to take all this data, crop yield, moisture, population, and now can wirelessly transfer this to a cloud — we call it the Operations February 2, 2016
business Centre — and can use that to analyze all this data so that they’re making wiser decisions,” Nelson says. It’s a real learning curve for farmers, who need to determine how to read and apply all of this new information. Yet it’s a learning curve for retailers too, not least because they have to bring in new kinds of employees, such as software technicians, and because they have to figure out how to develop and market new kinds of services, such as consulting services that help farmers make use of their data. It has also made Deere look at whether the value of participating in the new data-based farm equipment world makes it worth rethinking some of its most cherished paradigms, such as whether Deere should open its doors to research projects and components that originate from other workplaces. “In the old days, everything we put on the tractor was ‘John Deere,’” Nelson says. “In this new arena, in order to take care of our customers, we need to open up our platform, John Deere Operations Centre for example, so a software developer knows what it takes to work within the John Deere Operations System.”
The big difference Even so, there’s a big difference between showing other developers how the system works versus showing them the data the system collects. Nelson says at no time does the data uploaded from farmers become property of John Deere. Privacy protections won’t even allow John Deere to use the data by anonymizing the farm it came from. Unless customers opt to give them access, Nelson says, John Deere can’t touch their information. So, how does John Deere get customer information for its marketing department and for making strategic business decisions? As old-school as it seems, when it comes to customer insight, John Deere still relies on the feedback in its customer satisfaction surveys. Deere’s secondary avenue, like FCC’s, is to host focus meetings. “Before some products are even developed, we have customer focus meetings all the time,” Nelson says. “We even have our own research group that takes a look at all of that, because we have to try and figure out 10, 20, 30 years from now, where is agriculture headed and what are the needs in the future?” February 2, 2016
But that isn’t to say the data farmers share can’t be significant. “Right now farmers can opt in to allow us look at machinery issues,” Nelson offers as an example. “Say we’ve got 1,000 combines working out there and if we’re able to get the machinery information, maybe we find out 400 had this bearing fail in a certain time period.” That level of insight helps the company reassess specific shipments or parts suppliers and that’s the
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sort of customer knowledge that leads to build better machines moving forward. The question, though, is whether Deere can generate similar kinds of analytics, not just on its machines, but on its farm customers too. So far, that seems to be a step too far. Ag-chem companies, for instance, can crunch their sales numbers and figure out Continued on page 34
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country-guide.ca 33
business Continued from page 33 who their most valuable customers are, so they make sure they fight harder to retain their business by, for instance, sending agronomists to the farm, supplying extra technical support or perhaps offering great seats at an NHL playoff game. They can also analyze their data to look for opportunities to up-sell or cross-sell. But beyond that, the science hasn’t gone all that far.
Think ‘group’ It’s a point that Peter Gredig, a farmer and ag technology expert based near London, Ont., believes is very important for farmers to understand. One person’s information alone is not especially useful to anyone. But volume changes everything. “A lot of the data that’s collected, so-called big data, they don’t care who it is,” Gredig says. “Marketers, advertisers, and manufacturers want to be able to aggregate it. And with that, comes power.” Consider a phone app he helped to develop years ago called the Aphid Advisor. After scouting a soybean field for aphids, you input your observations and the app will tell you whether or not a spray application is warranted. “If you check off ‘I’m OK to share,’ it generates a data point so that researchers know where, when and what the environmental conditions were on a map of Ontario,” Gredig says. “In real time they would be able to see where that pest is manifesting and, I mean, how would we do that otherwise?” Where information sharing leads to greater good for everyone, Gredig says he has few concerns about giving access to his own information. Understanding the intentions of anyone who asks for your data is the critical thing in his mind and not something anyone’s being very diligent in explaining up front. “I’ve loaded apps or other pieces of software and the terms and conditions are in there, and I don’t think the lawyer who wrote them has read them,” Gredig admits. “If you’re going to hand off data to somebody else, at that moment, questions have to be asked; how are you using it, what access to copies will I get, and how will I be kept informed about it?” Gredig says if you don’t like the answers you get, you don’t have to give your consent. But if there are benefits to be gained in exchange, think carefully. And if your concern is someone else’s ability to profit by having it, well, chances are good they won’t because it doesn’t seem like anyone in the industry has figured out how to really profit from all this data yet. “The ability to collect is well beyond our ability to assess,” Gredig assures me. Basically, agribusiness right now is in the same spot crop producers were during the release of yield monitors in the late 1990s. “The idea was, we would just stare at these maps and all would be revealed,” Gredig recalls. “I have the feeling that agribusiness is going to end up staring at stuff and wondering how to get some value out of it.” 34 country-guide.ca
The limitations Kolodziejak says the limitations of data management create a real hurdle for analyzing customer information. So much decision-making depends on the emergence of patterns, but it’s extremely difficult not only to see from the data when a few isolated events actually become a pattern, but also whether the pattern will eventually be influential. Even if you could do that much, Kolodziejak says, you’d still be trying to sort out the complications that can arise from external factors, such as weather events, that have a big impact on the outlook of farming customers. For instance, if a particular region got too much rain during fall harvest last fall, could that mean that their survey responses are artificially low? It’s her job to decipher when data like this is being skewed, or the company could respond to a business issue that isn’t really an issue at all. Then there’s an additional complication. Farmers who have good experiences in customer service outside of agriculture expect such services to be provided within the industry too. Sometimes, negative feedback isn’t because of bad customer service from an FCC transaction, Kolodziejak explains. “It is because they have the experience of buying a condo on an iPad, and those experiences are shaping their expectations of working with us.” If customers continue to expect improved customer service, at accelerating rates, technology is going to have to take more of the manual labour out of her job going forward. “Excel is a great tool for so many things but if you have to go through and manually enter all of that information, the likelihood of you doing that is less,” she says. New technology needs to be developed to collect information easily, as well as analyze it. “You see other examples of technology that are good cases,” Kolodziejak says. Her personal favourite is the Nest Smart thermostat. “So many of us have programmable thermostats, we might have taken the effort to do that initial setup but it’s cumbersome, and all of a sudden you go away for a week and you don’t change that program. The Nest will learn, based on motion sensors, if you’re even at home, will adjust the temperature based on that, and then it gives you a report that allows you to see the trends and patterns yourself to make decisions. She wonders what an equivalent to this technology to help collect data in agriculture might look like and what more it could show her from the data she’s collecting. It’s a huge opportunity, Kolodziejak believes, and it is definitely attracting application developers, tech companies, and venture capital to agriculture. CG February 2, 2016
By Richard Kamchen
The WCWGA’s Blair Rutter says the handling system got too small under the CWB, and he sees more competition from new elevators such as those being built by CWB successor G3. Photo: allan dawson
An open market is still a work in progress A truly open market requires transparency of information, but the veil is still being lifted hen the Canadian Wheat Board lost its monopoly in 2012, Blair Rutter predicted that it would take 10 years to adjust to an open market system. “Moving from a centrally planned system to a market economy, it takes a while,” the executive director at the Western Canadian Wheat Growers Association said in an interview. “We saw that in Eastern Europe; you don’t move from a planned economy to a market economy overnight.” For a while, it looked as if Rutter was wrong. The railways had no problem moving that first high-quality crop, sold at record prices after the poor crop in the U.S. and elsewhere that year. But prices dropped sharply as the 2013 harvest approached, and then the rail log-jam of 2013-14 finished spoiling the party. Grain companies could take advantage of the high demand for grain handling and transportation services on the Prairies, said Murray Fulton, agricultural economics professor at the University of Saskatchewan. They rationed limited port capacity through lower on-farm prices. Continued on page 36
February 2, 2016
country-guide.ca 35
Prairie regional prices for wheat, canola and peas are now available at www.pdqinfo.ca. Continued from page 35 “This process was aided by the fact that there is limited price transparency in the system — the size of the basis cannot easily be determined. The result is a market that is not working effectively, and that from time to time generates large rents for one segment of the system, namely the elevator companies,” Fulton said.
Still murky Supporters of the open market concept often railed against the secrecy of the CWB and called for much greater transparency. Three years on, that’s still a work in progress. “I think we’ve got some ways to go, but it’ll be a combination of private and public sector information. It’s not there yet, but I think we’ll get to where we need to be,” Rutter said. Derek Brewin, an associate professor at the University of Manitoba’s department of agribusiness and agricultural economics, said farmers and the industry in general need accurate information. “We want the real export market reflected back to the farmer. When that basis is wide, the farmer’s not seeing the real demand for their product, so they could underinvest in next year’s crop and inputs. It’s economically inefficient to not have the fair price reflected back to the farmer.” With funding from Ottawa’s AgriRisk Initiatives, the Alberta Wheat Commission has taken steps to lift the veil. Together with Farmers Advanced Risk Management Co. (FarmCo), it undertook a price transparency project to develop a web-based concept for providing cash-based prices from most grain buyers. 36 country-guide.ca
FarmCo president John DePape said the site — www.pdqinfo.ca, which became available September 8, 2015 — was to initially provide regional Prairie prices for three wheat classes, as well as canola and peas, with others added thereafter. He said the data would be useful for farmers who want a real-time snapshot of the market in their area. In the U.S., meanwhile, exporters are required to report export sale. But DePape said that Canadian farmers who want a similar system here share a common misunderstanding. “They don’t (report prices) — it’s the commitment that they’re reporting, not the actual shipment,” DePape said. “People have also been asking for the port price, and I think that’s stepping on some commercial sensitivity.”
ICE futures struggle Better information could benefit the domestic wheat futures set up by the Intercontinental Exchange (ICE) following the end of the CWB monopoly. They’ve been almost completely inactive. “You need to know what the cash value is under a commodity before you’ll get people to trade that futures market,” DePape said. “I talked to people in the U.S. when [ICE] first launched that contract to see if they’d be interested, and their first question was ‘what’s the cash trading at?’ I think when we fill that gap, there’s a better chance of getting some life [in it],” says DePape. But it will still be a challenge to convince U.S. buyers to trade ICE futures over Chicago, Minneapolis or Kansas City. Customers are reluctant to consider an alternative when they already have a working market, as the Winnipeg Commodity Exchange discovered when it revived its oat market. February 2, 2016
marketing “The U.S. is our No. 1 market, and when you’re selling wheat into the U.S., typically you exchange futures as part of your cash transaction. They don’t want to exchange a different futures contract. They already have a position in Chicago or Minneapolis — those are the contracts they’d want to exchange,” DePape said.
More elevators and more competition? The WCWGA’s Rutter said more competition and capacity could improve prices for farmers. He said that under the CWB, there was underbuilding of commercial facilities at the expense of overbuilding of on-farm granaries. Over time, that imbalance will right itself. “We won’t get to the U.S., where it’s 50-50 (of farm and commercial storage), but still we’re going to see growth in commercial storage, and that will help get a more competitive market in play,” Rutter said. Adding a deep pocket like G3 Canada (formerly CWB) to the stable of Canada’s six big players (Viterra, Cargill, Richardson, Paterson Grain, Parrish & Heimbecker and Louis Dreyfus) is good news for farmers as well. “Any time you increase capacity, it’s going to be good for the farmer,” DePape said. “In times of low capacity availability, prices to farmers will drop. When you have more capacity, prices will improve because of competition… we know with our crop production growth, we will need to be able to handle more grain.” Rutter said that G3’s plans to build a new West Coast terminal and elevators with greater turnaround times will better serve farmers down the road. He also said the industry needs to reduce its reliance on east-west grain movement and boost integration with the U.S. “We have seen significant growth in wheat exports to the U.S. at the end of the monopoly — about a 70 per cent increase in wheat shipments going south,” Rutter said. “And I think you’re going to see expanded growth in shipments going south, not just to processing facilities in the U.S., but also to ship it along the BNSF line, whether it’s to the West Coast, down to the Gulf or domestically.” February 2, 2016
Rutter also anticipates more domestic use, which will also bolster competition for farmers’ grain. “We’re going to see some growth in livestock industry in Western Canada when some of these trade deals start to bear fruit,” he said. More competition, another West Coast terminal, more commercial storage, growing north-south movement
— by rail and truck — and an expanded domestic livestock sector will result in a fully integrated market with good arbitrage and basis levels that should be in line with those in the U.S., even in years of extraordinary bumper crops. “We’re not there yet at what I would a call a fully functioning marketplace; it’s going to take a few years before we see that,” Rutter said. CG
FEBRUARY 10 & 11, 2016
Victoria Inn Hotel & Convention Centre 1808 Wellington Ave, Winnipeg, MB
Keynote Speakers Michael Boehlje, Economist, Center for Food & Agricultural Business Managing in an Economic Downturn Charlie Arnot, CEO, The Center for Food Integrity Keeping Your Social License to Operate Donald Cooper, Former Owner, Cooper Canada Business Side of Ag...A Bottom Line Look at Strategy, Efficiency & Profitability
Banquet Speaker A Night of Comedy with Dave Hemstad, When Lightning Strikes
Registration Closes February 5, 2016 For more information on the event or to register, visit
cropconnectconference.ca Proudly brought to you by
country-guide.ca 37
By Gord Gilmour ⁄⁄ CG Associate editor
Faba-ulous Good results for the past few seasons have led to increased interest in fababeans, but like any new crop, there are still a few hurdles to clear fter a false start in the 1970s, it looks like fababeans are back on the Prairies for good this time. Alberta farmers planted only 15,000 acres in 2012, but most estimates put acreage at well over 100,000 acres last season. This interest has crossed the border into Saskatchewan too, with more than 15,000 acres going into the ground in 2015, according to industry watchers, although they concede that when acreage is this low, relatively speaking, getting a good handle on the numbers can be a challenge. But the bottom line is that the crop is growing in importance quite quickly, and the dean of Prairie pulse crop breeders says there’s plenty of potential for more. Bert Vandenberg has been breeding pulses since the early 1990s at the University of Saskatchewan’s Crop Development Centre. “I’m going to be a bit conservative and say we’ll probably see fababeans on a million acres across the Prairies,” Vandenberg told Country Guide. That’s because plenty of reasons have started to stack up for growers to give the crop a hard look.
Sherrilyn Phelps, an extension agronomist with the Saskatchewan Pulse Growers Association, says the crop first appeared back in the mid-1970s. But without ready markets it just didn’t catch on. New low- and no-tannin varieties have expanded the feed market, there is now a small food market, and the promise of fractionation for protein and starch has created more market opportunities over the past four or five years.
Northern Prairie potential Fababeans are a cooler-season crop, well adapted to areas that receive more rainfall. Phelps says they tolerate this additional moisture better than other pulses, but suffer more when conditions are dry. In many ways they might be a good fit for areas like northeast and east-central Saskatchewan and around Edmonton, where peas have fallen out of favour in recent years in the wake of a series of wet seasons that caused a spike in diseases such as aphanomyces. “It’s a crop that’s probably best suited for some of the darker soil zones, where they receive more moisture,” Phelps says. “It’s adapted to wetter areas, and does best in places that get eight to 10 inches of rainfall during the growing season.” Dale Risula, a pulse crops specialist with the Saskatchewan government, also sees more fababeans being grown in areas where peas have fallen from favour. So far production in Saskatchewan has centred around the northeastern city of Yorkton, where conditions seem conducive, he says. Growing them in the warmer and drier southern areas is less attractive, but that could change if prices improve. Risula says that part of what’s driving adoption is the promise of high yields, all packaged up in that promise of a soil-building crop that fixes more nitrogen than any other crop grown in the region. In a typical year yields have been around the 50- to 60-bushel mark, and test plots under ideal conditions have broken the 100-bushel mark. Continued on page 40
38 country-guide.ca
February 2, 2016
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Fababean basics • A large-podded (up to 10 cm long and two cm wide) legume crop that stands from 1.0 to 1.5 metres tall. • An annual legume with a strong hollow stem that promotes standability with little lodging. • Commercial production in Western Canada started in 1972. • Fababean has a strong taproot, compound leaves and large, white flowers with dark-purple markings. • A flower cluster may produce one to four pods, with three or four oblong seeds in each pod. • Immature pods are green, turning dark at maturity, from brown to black. • Flowering occurs in 45 to 60 days and fababean requires 110 to 130 days to mature. • The bushel weight of fababean is 60 pounds. Source: Saskatchewan Agriculture
Continued from page 38 However, growers don’t exactly get a free pass on the fertility side. “It’s a crop that utilizes a lot of phosphorus, so you need to either plant it on a field with adequate phosphorus, or be prepared to supplement it with phosphate fertilizer,” says SPGA’s Phelps.
New varieties On the varietal development front, Vandenberg says he’s already been quietly working on the crop for several years, and sees a few obvious places where improvement is needed. “I think we need to work on drought tolerance. Weed control and competitiveness are always an issue, and controlling the height of the plant as well,” he says. “There are also some things on the consumption side, such as lowering an anti-nutritional compound that occurs in them.” Vandenberg’s early efforts have centred around leveraging the existing research infrastructure to look at the crop on budgets that could only charitably be described as “shoestring.” Now that it’s garnering attention and more investment, he says the program is relatively well positioned to make advances, and that it will benefit from a recent linkage with researchers in other areas. “We’re now linked with a European research consortium at the research level,” Vandenberg says. “It’s a group of researchers working on fababeans north of the 49th parallel.” Sharing information like this will help crop breeders like himself make greater strides more quickly, he says. Improved funding will also help. “We now have funding for five years to work on fababeans — we just got the notice today, so I’m pretty happy about that,” Vandenberg said in an interview in December. Traditionally fababeans have been produced mainly in Europe and fed to livestock. The human market has been very small. Major markets include China and other Asian countries and North African destinations such as Egypt. To make them successful as a human food will be the key, and there are some hurdles to clear. Most important will be breeding varieties that contain 40 country-guide.ca
lower levels of certain compounds that can cause jaundice and other health problems in humans. The syndrome — dubbed favism — is common enough that it’s been named after the bean itself, even though it can also happen spontaneously. “Our breeders are looking to breed that out and to therefore improve its value as a food crop,” Risula said. “This should make it more attractive to grow, because the value as a food crop should be higher.” Other breeding objectives include making the crop more even overall, especially getting the beans to an appropriate and more uniform size, Risula said. That will pay a couple of dividends. End-use consumers prefer larger beans, and that should help build that market. Farmers also want something more uniform that won’t plug their seeders. “Getting a more uniform seed size will definitely make it easier for farmers to grow,” Risula said. As well as the human food market, there could be a market for products that come from fractionating the crop, in particular for the protein portion, which tends to range between 30 to 34 per cent, higher than any other pulse. “That could fit very well into the North American market,” Risula said. “There’s a market there for protein in the form of protein bars and other similar products.” The process would also produce starch and fibre which also have robust markets, and provide higher prices than just the raw beans. So far it’s attractive enough that a couple of domestic Prairie processors are already dabbling in it.
Production challenges Risula says that as with any new crop, there will be bumps along the way. He agrees there are plenty of reasons to be excited about the crop’s potential, but he adds he also counsels caution when talking to growers. Phelps agrees, noting that like any new crop, there’s been much talk of its advantages, and some of this is well founded — but few crops can live up to all the early hype and fababean comes with realworld challenges. For example, it’s a long-season crop, despite being better adapted otherwise to some of the shorter-season production areas. February 2, 2016
pulses “The open falls we’ve been having have helped us out,” Phelps said. She also noted that in the early part of the season, the crops have been noted to be very frost tolerant, making for a strong case for seeding as early as possible. Phelps says fababeans can suffer from heat, with trouble starting above 30 C. Prolonged heat, especially at pod setting and filling, can harm yields. “Between 30 C and 35 C is when we start to see a lot of flower and pod abortions,” she said. Pollinators are also crucial to reproduction, and the crop responds well to having a ready source of pollinators, such as nearby beehives. Phelps also noted that while there weren’t major disease problems, there were some problems with chocolate spot, which leaves brown spots on the beans. Because the crop hasn’t been widely grown until recently, there’s no research supporting any fungicide treatment recommendations yet. So far there aren’t any major insect pests either, though lygus bugs might be a problem. Other pests that have been known to be a concern aren’t present yet, though Phelps cautioned that this may not be a permanent state of affairs. “It really is an ‘if you grow it, they will come’ kind of a situation,” she said. “Again and again we find we grow new crops and think we don’t have certain pests, only to find out we actually do, or we do now.” CG
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cmbtc.com country-guide.ca 41 2016-01-12 1:45:19 PM
By Gord Gilmour ⁄⁄ CG associate editor
Achieving the ‘im-pulse-able’ A unique farmer-driven funding model has seen the Prairie pulse sector develop from a few hundred acres to a few million ometime in the next year or two, University of Saskatchewan Crop Development Centre pulse breeder Bert Vandenberg expects the sector will quietly cross a very important milestone. In the early days people like him set themselves a lofty goal of capturing a significant number of acres with soil-building, protein-rich legume crops like field peas and lentils. Two things drove that early interest. They recognized that growers needed more cropping options, and that if pulse crops were that option, there were a number of agronomic and environmental benefits ripe for the taking. The number they settled on was 20 per cent of the cropland in Saskatchewan. If everything lined up they thought that goal was lofty but attainable. “I think we could potentially get there next year,” Vandenberg said. “That would be about eight million acres of production in Saskatchewan, and I think it is possible we could see five million acres of lentils and three million acres of peas — that leaves three or four other crops like chickpeas, fababeans and dry beans to contribute a bit more and we could be there.” It’s a long way to come for a sector that didn’t really get rolling until well into the 1980s, and in no small part this advancement has been built on the work of breeders like Vandenberg and his former mentor and colleague Al Slinkard, who was the first plant breeder in Western Canada to tackle pulse crops. 42 country-guide.ca
Their work was built on an innovative but now long-standing funding model that saw significant producer checkoff dollars invested by the Saskatchewan Pulse Growers’ Association channelled to varietal development at the Crop Development Centre. Without that model, it’s an open question just how much work would have been done in this area over the years. Pulses are a small crop in any context — the FAO says about 11 million tonnes of peas were produced worldwide in 2013, with about 2.3 million in Canada. Lentils are an even smaller crop, with just under five million tonnes worldwide of which 1.9 were in Canada. Those figures compare to 715 million tonnes of world wheat production.
Research funding challenges Given such a low acreage spread across so many countries, few commercial interests are willing to invest in pulse research. At times, it’s also been tough to attract public research, says one of the earliest Saskatchewan pulse crop breeders. When professor emeritus, Al Slinkard, first started working on pulse breeding in the early 1970s at the University of Saskatchewan, funding was pretty much impossible to come by. The crops had barely even achieved oddity status, with a couple of small pockets of pea production in Manitoba and Saskatchewan and somewhere between 500 and 1,000 acres of lentils grown across the entire Prairies. February 2, 2016
pulses That meant getting money out of funding agencies was a hard sell, with many viewing investments in already established crops as a better bet, Slinkard recalls. “As someone said to me, ‘We could get a two per cent increase in wheat production and that would totally eclipse anything you could possibly accomplish,’” Slinkard says. Even so, there were still some compelling reasons to pursue the project. In the early days the crops offered growers an alternative to wheat, which simply wasn’t moving due to a global wheat glut. Pulse crops also filled a production hole, Slinkard says. “They’re protein crops, and they already had an oilseed in canola, and a starch crop in wheat, so pulse crops like peas and lentils were viewed as filling this gap,” Slinkard says. It was for this reason he eventually got his first funding for pulse research from the Canadian Grains Council in the mid-1970s. It wasn’t a lot, but it gave him a foundation to work from. “It let me hire a technician and get a used pickup truck to do plot work, and to get access to a plot seeder and plot combine,” Slinkard says. Initially he began working from the pea genetic materials available through the USDA’s Pullman, Washington, research facility. At the same time he also requested the available genetic material for lentils, since the two crops were typically grown in similar locations. He wanted to work on lentils because peas already had some public and commercial support but no one else was working on lentils yet. He grew out 10 lentil plots his first year. Two died in short order, leaving eight potentials. Of those only two were high yielding, making his selections for the next season reasonably straightforward. Over the next several years he continued to refine his selections and ultimately produced two green lentil varieties he considered ready for release — one large seeded and one small seeded. “I was asked what should be released first and I decided, based on my little bit of experience with the business, that buyers seemed to like large seeds, so that’s what we picked,” Slinkard says. “It was released the following year, 1978, as Laird. Then in 1980 we released the small-seeded variety, and that was Eston. And that was the start of the pulse industry here.”
Funding model The unique model that has been in place for quite some time has seen the SPGA provide the U of S’s crop development centre with “quite significant funding” for pulse breeding, in exchange for the commercialization rights for varieties out of that program, says SPGA executive director Carl Potts. “Our objective has been to work directly with plant breeders on the most important factors limiting pulse production in Saskatchewan,” Potts says. That has included obvious targets like diseaseresistant varieties and agronomic traits, including plant structure that results in a taller canopy. February 2, 2016
Lentil and field pea growers, for example, have found that a series of wetter years has meant a spike in root diseases such as aphanomyces, which has become a breeding target. Other pulse crops like fababeans and chickpeas tolerate wetter conditions a bit better and haven’t fallen prey to this disease in the same way, but have their own unique challenges, Potts said.
“ We always joked that what we were trying to do with this system was UPOV-lite.” — Bert Vandenberg
Crop Development Centre pulse breeder Bert Vandenberg along with Kirstin Bett, professor and bean breeder in the department of plant sciences at the University of Saskatchewan. Bett is leading the international lentil genome sequencing effort and the new Genome Canada project on lentil diversity. Photo: University of Saskatchewan “For those two crops, a big challenge is to expand the adapted area where they can be produced,” he says. “Chickpeas, for example, do very well in the southwest corner of Saskatchewan, but don’t perform particularly well outside of that area.” Weed control is also a major issue for most pulse crops, Potts says. None of these crops tends to be strongly competitive with weeds and can struggle to overcome weed flushes in the field. “They’re just not great competitors, lentils in particular,” Potts says. “There are herbicide-tolerant options — Clearfield lentils have been very successful, but we would like to see alternative and additional options, because we’re concerned about herbicide-tolerant weeds.” Potts agrees that in many ways the pulse industry has always punched above its weight in varietal development. Continued on page 44 country-guide.ca 43
Al Slinkard, now a professor emeritus at the University of Saskatchewan, faced some skepticism when he first started working with lentils in the 1970s. Photo: University of Saskatchewan
Continued from page 43 “The industry is actually quite small, in global terms,” Potts says. “When you compare it to wheat, corn or soybeans, for example, they’re much smaller acreage.”
Changes due to UPOV? Small acreage makes a crop unattractive for commercial plant breeders. Potts says visionary growers and researchers realized that would be an issue and set up the industry’s unique model, directly funding research — very necessary research when you consider where the crops were coming from and how different those climates were.
“ It let me hire a technician and get a used pickup truck to do plot work, and to get access to a plot seeder and plot combine.” — Al Slinkard
“These crops were coming out of the Middle East and South Asia,” Potts says. “The varieties that were generated there didn’t travel well and didn’t produce well here.” Meanwhile, what’s less clear, Vandenberg says, is exactly what the future model of pulse crop development might be. In many ways the existing system was a response to Canada’s failure to sign on to the original plant breeders’ rights treaty, UPOV, which had been in development since the 1960s and had been the law in other jurisdictions since the 1991 treaty. 44 country-guide.ca
“We always joked that what we were trying to do with this system was UPOV-lite,” Vandenberg says. “It really accomplished the same thing, it just gave the money to the breeders at the front end, not the back end as royalties.” Since Canada signed on to the treaty last year, the need for the current system might not be as strong, and it may even have some disadvantages over the new model. For example, the current system depends on the continued support of grower organizations, rather than reflecting the breeder’s ability to deliver results that capture acres, Vandenberg says. “You might also see a situation where a grower group, for whatever reason, doesn’t put out requests for research proposals for three years,” Vandenberg says. “These breeding programs require a constant flow of dollars to deliver results.” He also points out that it prevented breeders from taking calculated gambles based on their understanding of the sector, to breed for emerging issues or opportunities. For example, he’s been breeding fababeans quietly for years, piggybacking on existing infrastructure, something that might not have garnered a lot of financial support if he’d had to seek it. “If I’d have told someone 10 years ago I wanted to breed fababeans, they’d have thought I was crazy,” Vandenberg says. Whether the model moves to reflect the changing times isn’t a foregone conclusion, and Vandenberg stresses that he is only giving his personal opinion and isn’t speaking for the university or any of his colleagues, but he adds that UPOV is a significant change, and one that gives breeders like him a lot more control over their fates. Says Vandenberg: “It feels great to have rights — it’s like I’m finally a citizen.” CG February 2, 2016
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By Jay Whetter ⁄⁄ canola council of canada
Help the insects eat each other Insecticides don’t just kill the bad bugs — they also kill their enemies erry Young has never sprayed for insects. “I’ve had the odd bertha and lygus in my canola and wheat midge in my wheat, but they haven’t been an issue for as long as I’ve been farming, which is 30-plus years now,” he says. Young farms at Lacombe, which is one of the most productive agricultural regions in Western Canada. Canola has been produced in the area for years and in big numbers. The pests are there. His neighbours spray for them. So what gives on his farm? Young doesn’t know for sure, but he has a few ideas. “I stick to a four-year rotation while many others use a two-year rotation of canola and wheat. That diversity does seem to keep everything in check,” he says. “And central Alberta does have a lot of bluffs and wetlands, providing habitat for pests and beneficials to overwinter. Maybe that helps?” And by never spraying, Young has possibly allowed the insect ecosystem to find a balance. “Spraying kills everything, including the beneficials (insects), and from what I’ve heard, the pests always come back first,” he says. This idea of balance might be the key. Jim Broatch made an observation in 2015 that got him thinking more about give and take within the insect ecosystem. The pest management specialist with Alberta Agriculture and Forestry was tracking the high number of cabbage root maggots found on some canola fields in central Alberta. In doing background checks on these fields, he found hints of a trend. Fields sprayed earlier in the season for flea beetles tended to have much higher levels of maggots than fields that were not sprayed. Does that mean the flea beetle sprays also kill beneficial insects such as ground beetle predators that could reduce root maggot populations? With dozens and perhaps hundreds of insects that provide some benefit against crop pests, this would seem highly possible. However, Broatch does not have proof beyond a few field observations. “Unfortunately, other than the theory behind the situation, I’m not aware of actual studies that demonstrate it through counts and analysis,” he says. “This is a very limited area of study.” 46 country-guide.ca
Bring in the ladybugs Scientists at the University of California, Berkeley, have been studying biocontrol of insects for more than 100 years. The work started in the late 1800s when California citrus trees were under attack from an invasive insect called cottony cushion scale. Interestingly, when Berkeley researchers went to the source of this insect — Australia — they found it was not a serious citrus pest at all. That’s because it lived within an ecosystem that included other insects, including vedalia beetles (a.k.a. ladybugs), that fed on and naturally controlled its population, says Miguel Altieri, professor and entomologist at the university. Vedalia beetles were brought to California and released, and Altieri says that to this day cottony cushion scale has been controlled by its natural enemies without the need for pesticides. By recognizing and supporting this natural regulation of insect populations, growers can work toward getting off what Altieri calls the “pesticide treadmill.” Biocontrol initiatives inspired by Berkeley research have saved California producers over $1 billion in pesticide costs, he says. Altieri says the situation Broatch observed with flea beetle sprays leading to an increase in root maggot infestations is actually quite common. “Secondary pest outbreaks have been reported in citrus, strawberries and cotton,” Altieri says. Spraying for one pest inadvertently kills the natural enemies for that pest as well as for other secondary pests. These secondary pests that would not normally cause any economic level of damage start to rise in numbers because the natural enemies that keep them regulated are gone. He gives one example of lygus in U.S. cotton crops. “Cotton growers found that spraying lygus killed the natural enemies of boll worm, and suddenly boll worms take off.”
Leave shelter for the bugs Altieri has been working on insect ecology for 35 years. He says a big reason for the rise in insect pests is crop monoculture. He says growers in monoculture or short rotation situations can do a lot to improve the insect ecology by leaving patches February 2, 2016
natural insect control
High levels of root maggots have been observed in some canola fields. Could the reason be that flea beetle sprays early in the season wipe out natural predators of these maggots? Photo: Jay Whetter
of flowering crops that provide habitat and food for beneficial insects. This is especially important early in the season so beneficials can build up and start feeding before the pest insect populations start building. “Beneficial insects function best when the pest population is at low densities and just starting to reproduce,” he says. California vineyards grow flowers between rows and strawberry producers grow alfalfa strips as one way to break their monoculture crops and provide biodiversity, he says. Gregory Sekulic, agronomy specialist with the Canola Council of Canada, adds that leaving later-emerging weeds — which cause little if any economic loss to a competitive well-established crop — can go a long way to boosting the diversity that a healthy balanced insect ecosystem needs. Leaving shelterbelts, fencelines and ravines as natural habitat also helps. “The studies on this subject agree there’s a positive relationship between yield and uncultivated natural areas in close proximity to crops. So there’s a February 2, 2016
good financial incentive to leave those bluffs, fencelines and wetlands intact, or even enhanced,” Sekulic says. “Help nature help you. Leave the beneficial insects a place to live and grow, and they’ll pay dividends in pest management and reduced risk of pesticide resistance.” Terry Young thinks growers would be more inclined to take these measures if they could see the economics more clearly. He says growers need to know the return these insects provide in reducing input costs and improving yields, and how practices such as fouryear rotations and habitat protection can help. “We haven’t put a value on these beneficial insects,” he says. “We don’t know what they’re doing to help us.” CG
Gregory Sekulic, agronomy specialist with the Canola Council of Canada, says insect management can be improved by maintaining diversity. “Leave the beneficial insects a place to live and grow, and they’ll pay dividends in pest management and reduced risk of pesticide resistance.” Photo: Jay Whetter
Jay Whetter is communications manager with the Canola Council of Canada. Contact him at whetterj@canolacouncil. org. For more on beneficial insects at work in canola, go to www.canolawatch. org, click “Insects” in the banner at the top and look for the “Beneficials” heading. country-guide.ca 47
By ellen goodman ⁄⁄ cigi
Canadian pulses for the world Cigi will engage with industry on pulse quality during International Year of Pulses n recognition of the United Nations declaration of 2016 as International Year of Pulses (IYP), several pulse-related events are planned in Canada and other countries in an effort to draw global attention to the use of pulses. Themes being promoted include food security, nutrition and innovation; creating awareness; market access and stability; and productivity and environmental sustainability. Pulse Canada together with a committee of industry representatives has been coordinating activity in Canada. “The Canadian pulse industry has come together in a big way to ensure that IYP initiatives lead to increased awareness and consumption of pulses,” says Madeleine Goodwin, Pulse Canada’s IYP co-ordinator. As part of this effort, the Canadian International Grains Institute (Cigi) will connect with industry representatives to showcase its work with pulses and focus on the quality needs of the food and processing industries. From April 26 to 28, Cigi will offer industry invitees and other interested participants a two-day workshop titled “Practical Use of Pulses in Healthy Foods.” It will explore the health and nutritional benefits of pulses as food ingredients and how they are being used in food applications such as baked goods, pasta, and Asian products. “We often have a lot of questions about pulses with regard to pulse ingredient quality and really defining it,” says Heather Maskus, project manager, Pulse Flour Milling and Food Applications at Cigi. “This will give us an opportunity to talk to food companies about what quality means and to create a dialogue on what they expect.” Maskus says Cigi is focusing on the food security, nutrition, and innovation components of IYP. The workshop, funded by Saskatchewan Pulse Growers and Agriculture and Agri-Food Canada’s AgriMarketing Program, is the first of a two-part series that is also a learning opportunity for Cigi. “Once we have the ability to demonstrate the use of a pea or lentil flour in a bread, for example, and hear directly from food companies on what they think about the quality, we hope to use that information to determine what we need to be delivering as an industry.” Cigi may also relay feedback from this interaction with industry back to the growers, Maskus says. “It can ultimately help provide direction in terms of pulse varieties that farmers may consider growing, how the growing conditions may affect their crop quality, and how they can specifically market some of their yield into certain food applications.” 48 country-guide.ca
Heather Maskus of Cigi works with customers to show how pulse flours can be blended in foods such as baked goods and pasta. Photo: Cigi For more than 10 years Cigi has been developing expertise with pulses as ingredients, working on projects in its technical facilities on behalf of industry with the aim of increasing pulse consumption and technical knowledge. Work has evolved from primary processing such as dehulling and splitting pulses to milling pulse flours, fractionation of components such as starches and proteins as food ingredients, and investigating how processing techniques affect composition and functionality. Part two of the workshop series, “Processing Pulse Ingredients for Food Applications,” will be hosted by POS Bio-Sciences and the Saskatchewan Food Industry Development Centre Sept. 21 to 23 in Saskatoon. The workshop will focus on pulseprocessing technologies that include pilot-scale demonstrations of pulse fractionation and extrusion. “These workshops are for representatives in the food industry involved in product development, engineering, health and nutrition, and food ingredient processing,” says Rick Green, vice-president of Technology at POS Bio-Sciences. For more information contact Madeleine Goodwin, IYP Canada co-ordinator, Pulse Canada, at mgoodwin@pulsecanada.com or 204-925-3787. CG February 2, 2016
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The national cost of
Alberta’s Bill 6 Farm outrage at the Enhanced Protection for Farm and Ranch Workers Act may have already backfired By Gerald Pilger
s 2015 came to a close, Canadians watched Alberta farmers hold massive rallies against legislation intended to improve farm safety. They listened to farmers raging against the costs Bill 6 would impose on their operations, with farmers saying the legislation will destroy family farms. They heard farmers complain they hadn’t been consulted in the drafting of the legislation, and that Bill 6 was neither wanted nor needed in the province. However, the biggest cost of Bill 6 may be the loss of farmers’ credibility and reputation. Most of the arguments by farmers against Bill 6 simply cannot be substantiated, such as the claim that it will destroy family farms. Alberta is the only province where farmers are exempted from Occupation Health and Safety legislation, the cornerstone of Bill 6. Yet family farms continue to exist in every other province where farms fall under OHS regulations. Farmers feign surprise at the law. Farm safety has been an issue in Alberta for decades. Premiers Ed Stelmach, Alison Redford and Jim Prentice had all vowed to bring in farm safety legislation. The Canadian Press reported that PC leader Ric McIver was close to bringing forward that party’s own health and safety rules for farmers before the PCs lost the election on May 5, 2015. On June 24, 2015, Samantha Trudel, Alberta Barley’s government relations and policy intern, wrote a blog post on the Alberta Barley website recognizing Alberta was the only province exempting farmers from OHS. She went on to say: “The issue of OHS is still being fully investigated by the provincial commissions, and representatives will be attending a stakeholder meeting in Edmonton in June (2015) to further discuss the options with the government in the hopes of coming to an industry-endorsed solution.” Trudel concluded: “Whether agriculture is eventually included in The Occupational Health and Safety Act or not, the industry must come together to discuss the issues collectively and proactively.” Plus, on July 7, 2015, the Alberta minister of agriculture, Oneil Carlier told a Canadian Occupational Health and Safety News meeting: “We feel that it’s time that farm workers no longer have an exemption from health and safety regulations.” 50 country-guide.ca
Contrary to the claims that farmers were not consulted, farm organizations were in fact meeting with government on this very topic.
25 deaths in 2015 Agriculture continues to rank among the most dangerous industries, and the educational approach reportedly favoured by most farmers has not worked. Alberta in particular has had farm safety programs in place for decades. Alberta incorporated The Farm Safety Centre on Aug. 19, 1991, almost 25 years ago. The Farm Safety Centre mission was to significantly influence the safety and overall well-being of rural individuals through effective farm safety education and training initiatives. The Canadian Agricultural Safety Association and Canadian Federation of Agriculture along with Ag for Life and the Alberta Agriculture Ministry host an annual ag safety week in Alberta. As well, the ministry and Alberta Jobs, Skills, Training, and Labour developed the FarmSafe Plan. This program utilizes a written manual with a twoday workshop to assist farmers in creating a written health and safety plan for their farms. Even with such efforts, however, 25 people lost their lives on Alberta farms in 2015. Of course, many injuries probably occurred too, but that number is unknown because there is no requirement to track injuries on farms in Alberta.
Higher costs All this isn’t to say that farmers should just accept whatever legislation the government wants to dream up. Farmers do have a verifiable complaint about Bill 6. It will increase labour costs for most farmers with paid employees. It was estimated only about seven per cent of Alberta farms were enrolled with the Worker’s Compensation Board prior to the introduction of Bill 6. But even the cost issue is clouded by the oft repeated claim that farmers already carry better and cheaper insurance than what is offered through WCB. Unfortunately, farmers are not backing up this claim with details and costs of these insurance products. February 2, 2016
business Dick Reaney, a chartered financial consultant and Edmonton-based insurance broker, feels most Alberta farmers do not carry disability and illness insurance even for themselves because of the cost of such policies. Even with the adoption of Bill 6, Reaney questions whether farmers will be willing to pick up the WCB tab for employees or if they will only hire labour on a contract basis. In other words, having a WCB card could become a prerequisite for working on farms, and workers would be hired only if they are already self-enrolled in WCB as contractors. I had hoped AARD could provide some factual insight on the number of farmers providing health and safety insurance coverage for their employees and what the costs are for such coverage. After all, AARD had commissioned a study in 2014 of farm worker insurance products, the uptake of these products, and how they compared to WCB products along with the financial risk to farms from accidents, disabilities, and death of farm workers. Although this study was to have been completed by January 30, 2015, I was unable to obtain the results from AARD, or even get confirmation whether the study had been done. Perhaps one reason why farmers may think their current insurance is better and cheaper than WCB could be because farmers are confusing the liability insurance they carry to protect their farm business from lawsuits arising from an injury someone suffers while on the farm with the protection that life/disability/ illness/WCB insurance provides an employee. These are two very different insurance products which provide protection to different parties. It is critical to understand the focus of Bill 6 is not on the farm business owner, or even the farm family; it is protection for paid employees. (To understand how Alberta has become the only province to exempt farm workers from OHS, read Bob Barnetson’s Paper “No Right To Be Safe: Justifying the Exclusion of Alberta Farm Workers From Health and Safety Legislations” ( https://ejournals.library. ualberta.ca/index.php/sss/article/viewFile/23549/17433. Barnetson is an associate professor of labour relations at Athabasca University.) February 2, 2016
Is farming a business? Governments, industry, and farmers themselves have worked hard to change the perception of farming from an uneducated, menial job to a sophisticated, professionally run business. Unfortunately, the message the public is getting from farm opposition to Bill 6 is that farming is not a business, it is a lifestyle, and that farming isn’t viable without unpaid family labour and low-cost hired help. The message to our future workforce is just as negative. It’s that farm employees shouldn’t expect the same safety and employment protections that all other businesses provide.
We spend years trying to convince the public that farming is a professional business. Then we throw that effort away
We have to ask whether these messages help us change the attitudes at Service Canada, where its website says “job prospects are limited” for general farm workers, and “recruitment difficulties experienced by this industry were primarily a result of the low pay and demanding working conditions (seasonal work, long hours, work on weekends, high employer expectations, etc.)… plus competition from other occupations.”
Reputation is everything! Leon Bracey, a business development leader for Brown Public Relations of Atlanta, Georgia wrote an article entitled “The Importance of Business Reputation” for Business in Focus magazine and says a business’s reputation is its most important asset. “If you do anything to damage either your own reputation or your company’s, you could destroy your business,” Bracey says. “While a good reputation precedes you, a bad reputation will follow you for a long time.” The business world is littered with the debris from battered reputations. Consider the costs to BP’s reputation after the blowout in the Gulf of Mexico, the costs to Toyota to rebuild its reputation after having to recall eight million vehicles in 2009, or the battering of Volkswagen from the emissions foul-up. Reputation is critical in agriculture and the food industries too. Consider the impact COOL, GMOs, MRLs, hormones and antibiotics, organics, and environmental sustainability have had on consumer preferences and the prices farmers receive. Consider the impact mad cow disease had on the beef industry, or the recalls of food products after salmonella or listeria contaminations. Reputation also impacts labour. Research by C orporate R esponsibil ity Magazine found that 75 per cent of Americans would not take a job with a company that had a bad reputation, even if they were unemployed. There is no question Bill 6 has flaws. However, it is one thing to address these shortcomings, and quite another to attack the premise of the bill. If farmers truly feel that farm employees should not have the protections offered by every other business, we will experience a growing labour shortage, and a growing disconnect with the public. That is something agriculture cannot afford. CG country-guide.ca 51
business
China’s Zoomlion brand had a large display at Agritechnica in Germany in November. The company is hoping to expand into new world markets. Photo: Scott Garvey
make room
Is there really enough market for two more full-line farm equipment manufacturers?
By Scott Garvey, CG Machinery Editor n a second floor conference room at the Hanover fairgrounds in Germany during the Agritechnica machinery expo in November, a panel of experts got together to present their individual views on the present and future of the agricultural machinery market around the globe. Despite the fact world demand for new machinery has slowed significantly, optimism was relatively high. In fact, it was high enough for one expert to suggest there is — or at least will be — room for as many as two more global, full-line farm machinery brands in the world market. Really? As the world’s ag journalists listened, the windows of our conference room opened with an impressive view of the 30 or so giant exhibit halls in which more than a couple of up-and-coming manufacturers were exhibiting their equipment, some of them making no secret of the fact they intend to occupy one of those new, full-line, global-brand opportunities of the future. But competition for those spots will be intense. In today’s market, it isn’t only the major brands that are delving into unfamiliar markets. Small- and medium-size manufacturers are also trying to grow their businesses in foreign markets, according to the managing director of the VDMA (the German Engineering Federation), Bernd Scherer, who participated in that expert panel discussion. 52 country-guide.ca
“If I look at the situation from the German manufacturers’ point of view, the small- and mediumsize manufacturers are very active in many of these markets,” Scherer said. “There, I think the world has changed considerably; 15 or 20 years ago I don’t think any small- or medium-size company would have dared to approach any of the emerging markets and invest in them because the risks are considerable. Now look at how many small- and mediumsize companies have invested in markets like Africa and China, because they expect returns.” But if those ambitious small- and medium-size companies now dare to battle it out in foreign lands, another trend was also becoming obvious at Agritechnica; some of the manufacturers that are hoping to take on the world are brands few westerners have ever heard of. Among them are Chinese companies looking to move west into markets in Europe as they, too, chase “global manufacturer” status. Being a major player in all the world’s markets, however, means catering to a host of very different demands in markets where needs vary considerably. “You can imagine that a farmer in a newly industrialized country, in Africa, in Asia, in China, has completely different requirements for a tractor than, for instance, a customer in Western Europe,” said Roger Stirnimann, a professor at the School of Agricultural, Forest and Food Sciences in Zollikofen, February 2, 2016
business Switzerland, during the conference. “The customers in these emerging countries ask for simple, robust and reliable technology. Of course they also demand an appropriate price.” “Maintenance is supposed to be simple so that everything can be done in the field,” Stirnimann continued. “This is also true for repairs. Everything should be quite simple. It shouldn’t require expensive tools. And last, but not least, (machines) shouldn’t be sensitive to different fuel qualities that might not be on the same level we are used to.” To move into markets in the emerging countries, western tractor brands have built simple, lowerhorsepower models that more closely resemble those that were in use on Canadian farms in the middle of the last century. For Asian manufacturers that want to be global brands, however, the challenge has been the opposite. It’s been to create sophisticated, higher-horsepower models that appeal to European and North American farmers. That means adding cutting-edge technology and advanced operator comfort features, not yet something their home markets demand. All of this presents a much greater challenge than — for lack of a better term — dumbing down a machine. At least two brands from China were making noises at the show about global expansion. One of
them, Zoomlion, had clearly spent a bundle buying floor space to introduce new tractor models that are moving up into the mid-horsepower category. Zoomlion now offers models that surpass the 200-horsepower mark, well above the typical sizes that dominate Asian home markets, so clearly this brand is putting its R&D money where its mouth is. To conquer the world, the logical first step for companies based in emerging nations whose machines offer limited horsepower is to move into Western Europe, where 200-horsepower machines still appeal to a relatively broad range of farmers. Eastern Europe and North America must then wait until the horsepower limits of their tractors grow along with their presence on the world stage. But being taken seriously in the West means these Chinese firms are facing an additional challenge. Walk through exhibits from some manufacturers based there, and gaps in their plan for world domination start to become obvious. The inscrutable East seems to find the West equally difficult to understand. Mastering the subtle nuances of appealing to western consumers appears to be an art many haven’t yet come to terms with. The displays of some Chinese exhibitors at Agritechnica seemed to have a lot in common with Continued on page 56
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business Continued from page 53 something you might expect to see at a street market vendor. Bright-yellow walls (a colour associated with social status, good luck and the earth in the Five Elements Theory within Chinese culture) often looked out of place, especially since they were plastered with poorly translated, English language slogans. They weren’t exactly stopping passersby in their tracks. Even in some of the better turned-out Chinese exhibits, language translations were often poorly done. The language skills of many people inside the displays were even worse. The overall marketing strategies of some Chinese manufacturers seem to miss the mark, too. Consider the Zoomlion brand name, for example. I suspect that name — or a literal translation of it — is culturally significant in China. The question is, will most western farmers just consider it silly? Farmers are likely going to be reluctant to write a six-figure cheque for a machine that doesn’t command their respect.
I can remember interviewing a Saskatchewan farmer several years ago, because he operated a farm fleet made up exclusively of ’70s-era, Sovietbuilt tractors. The brand did develop a small and loyal following here, but for the most part it failed to make major market inroads. Many potential buyers just wouldn’t take these tractors seriously. That particular farmer did, and he was willing to sacrifice the sophistication common to traditional North American brands in order to reap the low operating cost these tractors offered. But his comments during our conversation seemed to sum things up. “They have to have good lights,” he said with a smile. “Why?” I asked, a little confused. “Because you only want to drive them at night when no one can see you,” he replied. Learning to understand the subtleties of western markets is one major hurdle that up-and-coming brands from Asia and all emerging countries will have to clear before they can truly set themselves on a path to global status. Either that or they’ll need to build tractors with good lights. CG
What’s in a name? In Europe, most tractor manufacturers have used model names for decades, just as North Americans have used model names for their cars. Now, we can expect to see more names for tractors and other farm equipment on this side of the Atlantic too. It’s because global companies are moving toward increased standardization of their equipment across all western markets. For example, Case IH has just added to its practice of naming tractors with the introduction of the new Optum line. The name Optum is one of those made-up words companies are increasingly turning to instead of monikers that actually mean something, like Ford’s “Mustang” or Chrysler’s “Ram.” These days marketing bosses at Case IH aren’t alone in opting for mean-nothing names. It’s a trend European brands are embracing as more and more of their machines head off to foreign markets. Artificial names like Claas’ Arion are seeing increased “The machines that were built during the use by exporting manufacturers rather than more beginning of our company history had relatively common names, which may carry unexpected, normal names,” said Gunter Leigers, a retired negative connotations in some countries. engineer at Claas, as he guided a group of journalists through the company’s factory in Harsewinkel, Germany in November. “Names had a realistic meaning,” he continued. “Now, over three-quarters of our machinery is sold outside Germany. So, that gives you a problem with naming your equipment. If the translation of a name is not well done, people would either be laughing at you or not taking your equipment seriously. So that is why, more and more, we’re using artificial names, like Arion, Xerion and Lexion. “One of the reasons is the problem of translating names. Chevrolet, for instance, built a small car named Nova. It might be a good name of a star in the sky, but in Spanish it can mean ‘it doesn’t work.’ Now, would you drive a car (with a name) that clearly says this car doesn’t work at all? That’s the reason we’ve decided in favour of artificial names and acronyms. But it’s always a problem finding a proper name for new machinery.”
56 country-guide.ca
February 2, 2016
The Canadian Association of Farm Advisors (CAFA) Inc. is a national, non-profit professional umbrella organization dedicated to assisting farm families and businesses by increasing the skills of farm advisors and consultants.
www.cafanet.com
Challenges and solutions for keeping your family farm By BoB Beach
T
he objective of farm estate planning is to keep the farm in the family, be fair to all family members and pay as little tax as possible. There is an effective method to do this that is becoming popular with farmers across Canada. It allows parents to roll the farm over to the children in a relatively and comparatively inexpensive manner. It is called the Pre-Funding Estate Planning Method. The average family farm lasts three generations regardless of mom and dad’s intentions. If financial and legal provisions are not made for the transfer of the farm, it will be lost. This may be dramatic but the message is clear: farm transfer is an issue that cannot be put off. If you intend to keep the farm in the family the main challenges are: 1. Maintaining retirement security; 2. Passing the farm to a child who wishes to farm; and 3. Being fair to the non-farming children. The key word is “FAIRNESS.” Keep in mind this is the inevitable and
not referring to an untimely death or something unforeseen happening. You must realize that at some point you will be replaced and distribution of assets must be discussed. An interesting statistic: the average farmer will invest 100,000 hours into his business and yet spend less than 10 hours planning what will happen after his death. The fact is, CASH is the solution to estate problems. Estate planning problems arise as a result of a lack of cash. The question is then, how can an insurance company help? The answer is simple: insurance companies are the only companies that can provide taxfree cash for: 1. Replacement of lost equity; 2. Payment of legal and accountant fees; and 3. Most important, cash for non-farming heirs. In days gone by many insurance programs were inadequate and inappropriate. Today, we are able to offer programs that you cannot outlive. You can prepay them (when you have a good year) or even miss a year (when you have a bad year), but you know they will last no matter how long you live.
Insurance is creating opportunities for young farmers to remain on the farm without being buried by the debt incurred when they try to buy out the family farm assets. Insurance today can: • Help provide a secure, comfortable retirement for the parents; • Lessen the burden of interest payments and tax; • Replace equity lost to interest rates; and • Offer peace of mind from implementing an attractive plan. From an estate planning perspective, the tax-free mortality gain of life insurance is the most attractive feature for a farmer. A large pool of tax-free dollars will be available when death occurs. There is virtually no other guaranteed way to provide taxfree cash precisely when it is needed most. Bob Beach, B.Ed., LUAC, CAFA, is a Farm Estate and Retirement Planner at Bob Beach Insurance Inc. in Calgary. He can be reached at (403) 242-9990 or at bobbeach@shaw.ca.
Save the dateS! CAFA is improving the quality of farm advice. • February 25, 2016: Focus on Farm Women, Guelph, Ont. • May 18, 2016: Farm Succession Update – 3-Circle Model In-Depth, Ajax, Ont. & via webinar • June 2, 2016: Farm Management Update, Woodstock, Ont. & via webinar • Fall 2016: Farm Tax Update
More information available at www.cafanet.com/Conferences
Toll free: 1-877-474-2871 Email: info@cafanet.com PO Box 270 • Seven Sisters Falls, MB • R0E 1Y0
Follow us on Twitter @CAFANET
business
Is your idea marketable? The BioEnterprise model could help you get your project off the ground By Helen Lammers-Helps armers are known for being natural innovators, and for finding ways of doing things faster, better or easier. What farmer hasn’t thought at least once: “This is a great idea — I bet I could sell it.” But the reality is that there is a long and difficult road between “the great idea” and a “successful commercial venture.” Doug Knox, vice-president at BioEnterprise, a not-for-profit company in Guelph, Ont. helps entrepreneurs navigate that difficult path from concept to the revenue-generating phase BioEnterprise, funded under the Growing Forward 2 program, focuses on products or processes that have a direct connection to food, agriculture or the non-timber forestry industry. Each year Knox consults with 150 to 200 entrepreneurs who are at various stages of the process. Of these, Knox says they do a significant amount of work for 50 to 75 companies. Knox categorizes the entrepreneurs who approach him into one of three categories. About 15 per cent are at the idea stage. “They want to know how to get started.” About 10 per cent are already in business, but are adding a new product to their lineup. These companies are looking for a mentor or technical assistance. The other 60 per cent, however, are entrepreneurs at the prototype stage. “They want to know how to get into a commercial path,” says Knox. “Most are at a critical stage and have exhausted all of their own resources.” For a nominal fee of $500 per month for a sixmonth period, Knox and his team of associates will provide advisory services. If the business isn’t incorporated, the first step is to get that done (all businesses must be incorporated before BioEnterprise will work with them.) Once that is in place, Knox and his associates can begin assessing the viability of the idea. This includes checking for scientific or intellectual property patents, trademarks or similar designations. Knox’s team will also do a market and competitive analysis to determine the size of the potential market and to explore the strengths and weaknesses of the competition so they can evaluate threats and opportunities. Armed with this information, the team helps entrepreneurs create their value propositions, i.e. one-sentence statements that sum up why someone should buy their product. 58 country-guide.ca
The assessment process will also evaluate whether the innovator would be better off to find a strategic partner to whom they can license the concept to rather than commercializing it themselves. Knox and his associates will figure out how much capital will be needed to get the product to market and they will look for funding from government grants or loans at the provincial or federal levels. There are additional charges for writing funding proposals or setting up businesses to be “investment ready.” Regulatory issues are usually the biggest obstacles, says Knox. “The level of regulation is increasing, for example, implements must now meet ISO standards,” he says. Food products may need various certifications, such as kosher or gluten free. “It’s like a jigsaw puzzle,” says Knox. “We have to find the pieces to put together.” Knox cautions it can take substantially longer than people realize for a product to become a commercial success. “Farmers are conservative by nature. They won’t buy until they see an on-the-ground farmer who is championing the product. That’s how the word gets out and it can be a slow process.” Innovators need to be patient investors, he cautions, as it can take five or more years to see a product take off, he adds. That observation rings true for Jake Kraayenbrink. He has developed an Automatic Air InflationDeflation system that reduces compaction caused by heavy manure tankers. It was in 2009 that the Drayton, Ont. farmer began working on his idea for a system that could quickly deflate manure tanker tires to increase the tire footprint by up to 60 per cent and reduce compaction. The system also quickly reinflates the tires for road travel. With sales through his company AgriBrink (www. agribrink.com), Kraayenbrink admits it has taken longer than he thought it would for sales to take off. He sees a parallel in the dairy industry where it took a long time for robotic milkers to gain acceptance. “Farmers have been burned before with things that didn’t work well, so they are cautious,” he explains. BioEnterprise has helped Kraayenbrink by connecting him with a patent lawyer and helping him prepare pricing and marketing materials. Kraayenbrink says he’s still learning and that he’s been grateful for the support of BioEnterprise. “It’s helpful to have someone to bounce ideas off of.” February 2, 2016
business Kraayenbrink has been working on ISO compatibility for the controller, but it’s an expensive process, he adds, and he admits he has also been disappointed by the lack of funding available. “There’s not as much funding available as I’d hoped,” he says. “Our business is too small, and there’s not enough job creation to qualify for a lot of funding.” Kraayenbrink says that in addition to reducing compaction, the equipment also reduces tire wear and tear and fuel consumption. Despite the many positive benefits of the equipment which is eligible for funding under Ontario’s GLASI program, business has been slower than he hoped. Kraayenbrink has participated in many farm shows and had a video made for his website. He has also advertised through farm newspapers and radio. This past year, he hit the road, personally visiting several dairy farms to showcase about the equipment. Kraayenbrink anticipates that things will take off soon, based on sales of 11 units this past year. “That’s the best advertising,” he says. CG
Looking for help to commercialize an idea? Here is a selection of resources across the country. Bioenterprise, Guelph, Ont. • www.bioenterprise.ca Focuses on food- or ag-related products. Sumas Regional Consortium for High Tech (SRCTec), Mission, B.C. http://srctec.org/ Focuses on technology in ag Ag-West Bio Inc., Saskatoon, Sask. • www.agwest.sk.ca – This bioscience industry association works with innovators and investors to help bring research to market. Food Development Centre, Portage la Prairie, Man. • www.gov.mb.ca – A non-profit, fee-for-service special operating agency under the authority of Manitoba Agriculture, Food and Rural Initiative, one-stop shop to transform food product ideas into marketable winners. Canadian Beef Centre of Excellence, Calgary, Alta. Specializing in beef product research and development. • canadianbeefcentreofexcellence.ca – For food products, look for Centres of Excellence for food and food processing. Also check with your commodity organizations to see what’s available.
Want to know what’s next in agriculture? Watch This Country Called Agriculture and be informed. This Country Called Agriculture is a new on-demand video series that delivers relevant news & information on the agriculture industry. Host Rob Eirich interviews ag pioneers, professionals and academics that offer insight into today’s trends and what the future holds for agriculture – on and off the farm. Video topics include: Sustainability Starting a new farm
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country-guide.ca 59
business
Last of the first-born tradition By Angela Lovell
f you’re the first-born male, it used to mean you had won the lottery. You got to inherit the biggest share, you got to take over as boss, and you got to sit at the head of the family table. But today that kind of European hierarchy is quickly fading on the family farm. Except… how do you decide who should be in charge, or how to split the estate when you can’t simply apply the old first-born formula the way all our previous generations did? “Just because you have a son or daughter who has grown up on the farm, doesn’t mean that he or she is the best suited to run it,” says family farm coach and succession planner, Elaine Froese. “You need to separate the fact that they are your children and say, from a business perspective, are they the ones who have the skill set that your farm team needs?” It’s also understandable that you feel you should try to accommodate as many family members as possible. We aren’t good at saying “no” to our children. And who wants to risk the bad relations? But that doesn’t mean you’re being kind. Instead, you may simply be sailing toward an even bigger wreck in future. “I have seen situations where people say, ‘My kids want to farm, so I’ve got to make room for them.’ But if they don’t want to farm together and one is dragging the other along, you are just pushing that problem out 10 years, and there’s eventually going to be a blow-up,” says Len Davies, founder of Davies Legacy Planning Group, who has guided many farm families through succession. “When you look at succession planning, you’ve got three circles — the family, the business, and the ownership. If your kids aren’t capable of running the farm and you’re saying, they’re going to be successors because they want to be, then all you’re going to do is mess up the management circle, which then will mess up the family circle, and mess up the ownership part.” Almost as bad is the situation where an unwilling child inherits by default, for example due to the sudden death of the parent who was running the farm operation, or from legacy pressure. “I’ve seen 60 country-guide.ca
There’s less and less room for entitlement on today’s family farm
instances where someone is forced to come back to the farm when that’s not what they really wanted,” says Froese. “The reverse of that is legacy pressure; the pressure that some young people feel to continue the family farm when that’s not really their passion.”
� F rom entitlement to gratitude
Froese says she’d like to see entitlement to the family farm replaced by gratitude. “The top three stumbling blocks to a successful farm business transition are lack of appreciation, unwillingness to give up power and control, and lack of forgiveness,” she says. “From a conflict resolution standpoint, a collaborative model of resolving conflict and making collaborative decisions is a win-win for everybody, and is much more effective than a hierarchy.” Froese emphasizes the importance of clear communication and what she calls the Three Cs — clarity of expectations, certainties of timelines, and commitment to act. “Clarity of expectations means the family has to sit down and be clear about what their vision is for the farm business and for the family, and how each person wants to show up in both of those systems,” says Froese. “Then speak to each other about what your ideal life looks like and why.” Certainty of agreements and timelines is also a must. “I know young men who are passionate about having a successful farm business but they’re not getting good leadership from the founder,” she says. “They want them to complete things. They want to know what their vision is and the timeline. They want to be compensated partially now, because they’re 35 with two young kids. They can’t wait another 10 years and they don’t want everything to be resolved when there’s a death. Wills are great for the dying but they’re not great for the living. They’re not appropriate as a farm business plan because the succession plan is for now; it’s for the living.” Commitment to act means actually having to start giving things up to meet the current needs of the February 2, 2016
business successor, not just future needs. “The successor needs certainty now and equity now so he or she can leverage for their future earnings. If the parents keep all their equity they can’t get any advantage from growth,” says Froese. “There’s typically a huge fear of failure in the next generation and so that’s why the reins are tight for as long as possible, which I think is crazy. When you have a younger farmer who’s been there for 10 years and has done amazing things, why would it be any different if you changed or transitioned some ownership to them?” Froese believes many farm men aren’t paying attention to their own self-care and emotional well-being, and if they are trying to live their lives vicariously through the successor, that’s a mistake. “Live the life you were intended to live at the chapter of life that you’re at,” she says. “Respect your age and respect that your roles are going to shift. Be happy at the stage that you’re at, and be a leader to your team because I would like to see founders become wise elders. There’s always going to be a role for them.”
Davies uses a method known as the Koble Index to help families better understand what makes each other tick. The Koble Index is a computer-based system that assesses each person based on responses to a number of questions across four Action Modes — instincts that humans use to creatively problem solve. Then it rates the person according to his or her unique operating style. “It tells you how each person will look at a task or an idea, so one person might be the Fact Finder, who likes to do research, while another is the Follow Through, i.e. the person who runs the office perhaps and gets things done. You might have the Quick Start, who is the idea guy, and the Implementer who figures out how to make things work, and suddenly you have a nice team. I tried this with my kids and our family business and it’s a powerful tool. “Now I look at my kids as assets,” Davies says. “The problem with a lot of parents is if their kids aren’t just like them, and most of the time they’re not, they look at them as a liability rather than an asset which can work for you.”
� Equal versus fair
� B irth order
Davies says he finds it odd that farmers have wrapped their heads around the difference between fair versus equal when it comes to the value of the farm, but they’re having a much harder time applying that same concept to skills. “If the farm’s worth $2 million and they’ve got four kids, they can’t divide that and give each kid $500,000; they’ve bought into that concept,” he says. “They’re prepared to tell somebody, I’m sorry you’re not getting a quarter of this farm and this is the reason why. But they’re not prepared to say no, you can’t come in because you just don’t have a role here. They want to bring the brother in and that’s OK if the place can support two families, and it’s OK if they realize each other’s strengths and are willing to work with it. If they don’t realize that, it’s a recipe for disaster.” Parents also have to be prepared for another child to turn up out of the blue looking for their share of the business, says Froese. “Parents need to think about reallocating some of their resources to a personal business wealth bubble outside of the farm so they can allocate wealth to non-farming or non-business heirs from a different place and leave the farm alone.”
Birth order does have real-world impact, but it shouldn’t be confused with birthright, Froese says. Birthright has no place on the family farm, she says, because engaged family members — and sometimes even outsiders — who are doing purposeful, meaningful work that’s aligned to their values and the way they are wired, always have a place. Although it shouldn’t be the deciding factor in who is the best farm leader, birth order does have an influence, says Froese. “There are psychological differences or different needs or ways of showing up in the world based on birth order,” she says. “For example, people might say, ‘I can tell you’re the oldest child because you’re so responsible and a take-charge kind of person.’ That is typical, and does come with birth order. I do a map on every family I work with, called a genogram. It’s important for me to know how old people are and line them up in descending order because that gives me some clues as to why they might be feeling they’re not getting their independence or ownership and control, based on their ages.” CG
does play a role
� U nderstanding what makes everyone tick
Davies and Froese use many different tools to help farm families identify the strengths, weaknesses and differences in character of everyone involved in the farm succession, and where they best fit into the farm team. “First of all you look at what the vision is for the farm and — if all parties are in growth mode — are they willing to make collaborative decisions?” says Froese, who uses a tool she calls the ultimate decision maker, which identifies who is making what kinds of decisions on the farm. “It’s very telling because the best managers are compassionate mentors, and they train and lead to be replaced in the future,” Froese says. “Most farm men don’t ever want to retire but their role is going to shift, and then it becomes the dance of letting go and figuring out which pieces they still want to have a role in, and when the ultimate decision-making goes from the founder to the successor. It’s more valuable when both have a collaborative decision-making role and they make decisions together based on their unique skill sets and perspectives.” February 2, 2016
Resources to help you choose the right successor: Susan Forward — Emotional Blackmail: When the people in your life use fear, obligation, and guilt to manipulate you,
Harper Collins, 1997. Dr. Kevin Leman — The Birth Order Book: Why you are the way you are (Revell, 2009). Elaine Froese — Farming’s In-Law Factor… how to have more harmony and less conflict on family farms. Stephen Poulter — The Father Factor: How your father’s legacy impacts your career (Prometheus Books, 2006). Jeanne Safer — Cain’s Legacy: Liberating siblings from a lifetime of rage, shame, secrecy, and regret (Basic Books, 2012). The Koble Index — http://www.kolbe.com/why-kolbe/kolbewisdom/kolbe-indexes/.
country-guide.ca 61
life
Preparing her to farm Fifteen expert ideas for a better start to a woman’s career on the farm By Helen Lammers-Helps
s more women join the ranks of primary producers, they still find out there are some challenges working in an industry where they are in the minority. How can young women best prepare for a career as a farmer? How can their families help them. Country Guide asked a variety of experts from backgrounds as varied as the barn and boardroom for their advice on how to get a great start. These days, with agriculture getting so much more complex, “producer” and “manager” perspectives are both essential for anyone planning a future in the industry. Amanda Hammell, a senior financing specialist with RBC Royal Bank who also operates a dairy farm with her husband near Dobbinton, Ont., says that when it comes to approving an application for financing, the applicant’s education is an important consideration. Formal education pays, but Hammell also puts value on farm experience and knowledge of the industry, so she encourages young people to make use of the many opportunities available to gain industry knowledge, all the way from Twitter to attending producer meetings. Brenda Schoepp, a farmer and mentor from Red Deer, Alta., advises young people to get some training in human resources for today’s increasingly complex farms. Schoepp also encourages young women to spend time away working off the farm, travelling. When they return to the farm, these young women are more confident and their value will be recognized, she explains. Marg Rempel who has been farming near Steinbach, Man. for more than 40 years, first with her husband, then on her own for 12 years after his death, and now for the past three years with her son, agrees that cultivating self-confidence is critical for young female farmers who will find themselves outnumbered on boards and at industry meetings. On a more philosophical note, she advises young women to get clear about their objectives. “Knowing the difference between wants and needs will help you understand where true satisfaction and serenity lie,” she explains. Developing a core team of advisers is also essential. This team could include a banker, lawyer, accountant, and crop specialist. “These should be 62 country-guide.ca
people you like and trust and feel comfortable asking questions,” says Hammell. Rempel agrees. “Find a core ‘support group’ where opinions can be shared openly and honestly… the folks who will listen when you’ve had a terrible day or horrible harvest weather and the folks who will challenge you to be ever conscious of your role as an environmental steward.” Also look for the learning opportunities in everything you do. Ask questions, our experts advise. It’s one of the best ways to keep on the path to success. “Learn all you can. Ask farmers, professors, crop consultants and family members you respect for their wisdom,” says Rempel. “The old adage about ‘two ears, one mouth’ bears heeding,” she says. “Listen lots, speak carefully.” Sandi Brock who has a flock of 450 breeding ewes near Staffa, Ont., agrees. “Don’t be too proud to ask questions,” she recommends. Also keep your eye open for mentors, Brock says. When she first started farming after university, Brock worked in a broiler breeder operation and says she learned a lot from two men who were highly respected in the industry. She says she asked a lot of questions and they liked helping her. “I was keen and enthusiastic and it didn’t matter to them that I was a woman,” she says. She also gave the men feedback on how their ideas worked out. Mentors can come in different forms and in different ways, continues Brock. “Latch on to the ones who are in the right place at the right time.” When Brock later decided to get into sheep farming, another producer became her mentor. She helped him with his chores and in return she learned how to care for the sheep. When he got out of the business, she bought his sheep and set up her barn like his, she says. But also be alert for role models. Having women as role models is proven to help young women succeed in male-dominated professions. According to Dr. Christine Logel, a professor at the University of Waterloo, studies in social psychology consistently show that when girls have examples of women who have succeeded in a male-dominated field, it helps them handle the stress that comes with constantly having to prove themselves. Also, remember all the kinds of help that parents can provide. Hammell thinks helping their children develop financial literacy is one of the most important things parents can do. If a son or daughter is taking over the farm, February 2, 2016
life
Devote some time to travelling and to working off farm, Brenda Schoepp advises. It will boost your self-confidence and resiliency
they should understand the financial statements, she says. They need to understand the farm’s potential revenue and expenses, and where these numbers come from. If you’re a young woman looking to start a farm, a related idea is to do the books yourself rather than hiring a bookkeeper because it helps you develop a better, and more detailed understanding of how money flows into and out of the operation. “Otherwise you may have dug a hole before you realize it,” Hammell says. “You have to be able to evaluate every decision. It’s easy to want the new tractor, but will it make you money?” Focus on succession planning as well as financial planning. Attend meetings with accountants, lawyers and others when farm succession is being discussed. Hammell says she sees far too many instances where a son or daughter is planning to take over the farm but isn’t at the succession planning and purchasing decision meetings. They need to make attendance a priority, she says. Schoepp agrees that financial literacy is crucial. Both men and women need to have a full understanding of the finances and a strong business plan. While Hammell says all applicants at her bank are evaluated with the same standards regardless of gender, age, or race, Schoepp thinks there may be situations where women face some lingering discrimination when it comes to accessing capital. Also consider building a separate enterprise of her own.
This can be a great way to develop financial literacy, Schoepp says, and she suggests young people purchase a house while at university or start an agribusiness of their own, separate from the farm, to gain money management skills. Schoepp also suggests parents have a contingency fund for each child so that they can travel before taking over the family farm. By travelling, people learn new ways of doing things, gain independence, responsibility and resiliency. And also… don’t forget that your attitudes toward work are crucial. Brock credits her parents with instilling in her a work ethic that she considers to be her most valuable asset. Growing up on a dairy farm with only girls in the family and no hired help, Brock says she and her sisters did everything. She learned skills such as how to fix things that are still useful today on her own farm. “The best training was to get in there and do it,” Brock says. While Brock doesn’t think she works her own teenaged children as hard as she worked herself growing up, she says her children have gained excellent critical thinking skills on the farm. She and her husband, Mark, who runs the cash crop side of the farm, regularly discuss all aspects of their farm and their industries with the children “We talk about the good, the bad and the ugly,” Brock says. “If my children do decide they want to farm, there won’t be any surprises.” CG
- 2015 Delegate, Jamie Y., Regina, SK
y! . da ed to it er lim st s gi g i Re atin Se
This is a great opportunity to learn from great, powerful women in Ag and other industries. Sometimes it can be easy to forget all the possible connections we can make, so getting into a room with 570+ women really helps!
LISTEN, LEARN, NETWORK & GROW Open your mind to the endless possibilites. Prepare to be inspired. Aquire the life skills you need to reach your goals. This conference could be life-changing. Register today! Visit advancingwomenconference.ca or phone 403-686-8407.
HYATT REGENCY CALGARY, MARCH 28 & 29, 2016 February 2, 2016
country-guide.ca 63
Advancing Women Conference WEST 2016 / Country Guide National / 7” x 3.357”
w e at h e r COOLER THAN NORMAL
NEAR NORMAL
MILDER THAN NORMAL
**
MILDER-THAN-NORMAL TEMPERATURES NEAR- TO BELOW -AVERAGE PRECIPITATION
M Sca ild sno ttered w/r ain
al n o w si ca / sno c O in ra
Mild Scattered snow / rain
ild ed M tter now a s Sc in / ra
BRITISH COLUMBIA
colder, windy days expect heavier snow, mixed with rain in the south.
Sto at ti rmy mes
EOVRES B A IT ATU AIN A BPER / R TO M W R- L TE SNO A NERMAAGE NO VER A
Mar. 13-19: Pleasant on several days with some highs in the double digits in the south and thawing in the north. Periodic snow, some rain in the south changing to heavier snow in northern regions.
February 21 to March 19, 2016
Feb. 21-27: Mostly fair with seasonable temperatures but a couple of cooler, blustery days bring rain to the coast and snow or rain elsewhere. Chance of heavy precipitation in places. Feb. 27-Mar. 5: Milder winds raise temperatures to double digits in southern locations with thawing in the north. Fair with periodic rain changing to snow at higher levels and north. Mar. 6-12: Fair overall apart from occasional rain on the coast on two or three days changing to showers or snow inland. Chance of heavy precipitation in a few areas. Windy from time to time. Mar. 13-19: Temperatures climb to double digits in southern regions and well above zero in the north. Often sunny aside from scattered rain or showers and occasional snow in the north.
ALBERTA
Feb. 21-27: Windy days cause fluctuating temperatures, at times well above zero in the south. Fair, bright days interchange with snow and drifting in the south and heavier snow in the north. Feb. 28-Mar. 5: Milder air moves in on several occasions with thawing in many areas. Often sunny but on a couple of days expect snow or rain. Chance of heavier precipitation in places. Mar. 6-12: Fair skies dominate the week but snow or rain on a couple of days in the south with heavier snow in northern regions. Windy periods with changeable temperatures. Mar. 13-19: Fair, mild on several days with highs in the double digits in the south and well above zero in the north. On 64 country-guide.ca
SASKATCHEWAN
Feb. 21-27: Several bright days apart from a couple of days in the south with drifting snow. Blustery at times. Changeable from seasonable to mild. Flurries, seasonable in the north. Feb. 2-Mar. 5: Brisk winds bring in milder air with some melting on a few days. Fair overall apart from scattered snow, drifting with a chance of heavier snow. Risk of rain in the south. Mar. 6-12: Temperatures moderate to above normal with thawing on a few days this week. Pleasant, windy overall with snow near mid-week, heavier in the north. Chance of rain in the south. Mar. 13-19: Several pleasant but windy days send temperatures into double digits in the south and above zero in the north. Occasional snow or rain on a couple of days in the south, heavier snow in the north.
MANITOBA
Feb. 21-27: Aside from a few bright, fair days expect snow and drifting in the south on a couple of occasions. Windy with seasonable to mild temperatures. Seasonable with some snow in the north. Feb. 28-Mar. 5: Sunshine and some thawing alternate with unsettled, windy, snowy and cool days. Chance of rain in the south with heavy precipitation in places. Some snow, blustery in the north. Mar. 6-12: Seasonable temperatures in the south but some cooling, brisk winds bring patchy rain with snow and drifting on a couple of days. Cool in the north with intermittent heavier snow.
February 21 to March 19, 2016 NATIONAL HIGHLIGHTS With the help of El Niño plus longer days and more frequent southerly winds, milder-than-usual temperatures are expected to dominate most of Canada in this late-winter period. As a result, temperatures from British Columbia to the Atlantic Provinces are likely to run above seasonable values well into mid-March. Lighter-than-usual snow and rain amounts should accompany the mild conditions. The only exception to the mild weather may be in Quebec and Atlantic Canada where occasional cold outbreaks could keep readings at more seasonable values from time to time. A couple of heavier precipitation events are likely to be associated with these colder sessions.
Editor’s note:
Where’s my weather page? Look in every second issue for your month-long Country Guide weather forecast during the winter months when we’re publishing every two weeks. Prepared by meteorologist Larry Romaniuk of Weatherite Services. Forecasts should be 80 per cent accurate for your area; expect variations by a day or two due to changeable speed of weather systems. February 2, 2016
h e a lt h
The world of recalls for drugs By Marie Berry
hile you often hear about automobile and food recalls, you may be less aware of drug recalls. However, they do happen. Health Canada is responsible not only for authorizing which drugs can be sold in Canada, but also to do the reverse, that is, to recall drugs from the Canadian market. To understand drug recalls, you need to be aware of how sales of a drug are allowed in the first place, which begins when a drug manufacturer applies to Health Canada for authorization to sell its drug here. Canadians are often surprised that it isn’t researchers or health professionals who start the process, but rather drug manufacturers. Included in the submission is information about the drug such as its intended use, safety, effectiveness, adverse reactions, and contraindications. Research studies that support the drug’s use are also provided, as well as samples of its label and the suggested product monograph. Scientists at Health Canada review the material, although there are no timelines set out for this process. Rather, the quality and quantity of the submitted material play a role, as does the workload of staff at Health Canada. However, if the drug is for what is considered a critical illness like cancer, Alzheimer’s disease or AIDS, times may be faster just because there are few treatments for these types of diseases. Finally, a notice of compliance is issued and the drug can be sold in Canada. But a certificate doesn’t necessarily mean that the drug will in fact be sold. If you check out Health Canada’s database you will see a listing for notices of compliance (i.e. those drugs approved for sale) and a listing called the drug product database, that is, the drugs that are actually being sold in Canada. Thus, a drug may be approved but still not be available on our market. The drug manufacturer may sell it in other countries, but decide, perhaps for financial reasons, against selling it in Canada. Licensed natural health products like vitamins, minerals, herbs, and traditional medicines, also undergo a process to be sold in Canada, but their approval focuses on safety and labelling. Drug recalls occur when a drug is defective or potentially harmful. For example, the drug may be mislabelled, poorly packaged, subtherapeutic, more potent than labelled, or contaminated. Every drug manufacturer is required to have quality control and safety procedures, and to also have recall mechanisms
in place. Ideally problems are prevented, but when a problem does occur the manufacturer is obligated to contact everyone to whom it has sold the drug. Health Canada must be notified within 24 hours of a manufacturer making a recall decision. If a licensed natural health product is involved, the manufacturer has three days to contact Health Canada. So if you take a prescription drug, how do you as a patient find out about the recall? For a recall that involves a batch or lot of a drug, memos are faxed to all Canadian wholesalers and pharmacies which then check their stock on hand. A response to the fax is required, and the drug manufacturer will ensure they receive one. It is the pharmacy’s obligation to contact you, although if your prescription was for 20 capsules three months ago, your pharmacist will know you have completed your prescription and not contact you. For recalls that involve a newly discovered adverse effect or contraindication, the recall information is disseminated more widely and you may even hear about it in the news. Sometimes a drug is removed completely from the market, for example the pain reliever rofecoxib or Viox, which was associated with serious cardiovascular problems. Not only did the drug manufacturer contact all their customers, but pharmacists also contacted all their clients with the aim that ALL tablets be returned. Sometimes, however, there may be new information that is important enough to be communicated to prescribers and pharmacists, but not serious enough to warrant a recall, for example, the use of atypical antipsychotics like risperidone for behaviour problems in elderly dementia patients. Risperidone is indicated for psychosis, but it can be prescribed “off label” for other reasons with the prescriber deciding its appropriate use. However, new research has linked the use of these drugs in elderly patients to an increased incidence of cardiovascular deaths. A warning, not a recall, was issued by both Health Canada and drug manufacturers, with prescribers and pharmacists checking their patient profiles for any patients who might be at increased risk. Health Canada’s recalls and warnings are available on its website, and you can even subscribe to the service. If you take a recalled medication, you certainly want to know about it! Marie Berry is a lawyer/pharmacist interested in health and education.
You see ads for drugs for sexual performance almost everywhere and you may wonder if this is a new problem that men and now women have, or if it’s merely marketing. It’s probably a combination of both, and next month we’ll look at these drugs as well as at some disease and medication factors that can complicate your sex life. February 2, 2016
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acres
By Leeann Minogue
Time to check that forecast Will Trina make the eight-hour drive to the farm? rina Hanson was taking a break in her Calgary office, checking the weather on her phone. “Great,” she thought. “Minus 30 and drifting snow for Friday.” It was only Tuesday, but Trina was already dreading the eight-hour drive home to the farm for the weekend. She’d been making the trip from Alberta to southeast Saskatchewan fairly regularly for the last year and a half, since she’d started dating Ryan, an organic farmer who lived near her family’s farm. It was harder for Ryan to get away, he worked most weekends at a local ag dealership, and when he did have time off he wasn’t wild about staying in her city condo. So Trina did most of the driving and usually headed east on the No. 1 when she had a three-day weekend. In the summer she liked the drive. Even in the winter she usually didn’t mind. But nobody wanted to be stuck on the highway in a Prairie blizzard. Trina looked up when her co-worker and friend, Sarah, came in from down the hall. “Checking the weather for another weekend trek to the homestead?” Sarah asked. Trina blushed, caught. “I was planning to, Trina sighed. “But the forecast looks nasty.” “Stay here,” Sarah said. “My boyfriend’s having a party on Friday. And we can finally go skiing on Saturday.” “I don’t know,” Trina said. “Isn’t it going to be kind of cold for skiing?” Trina was getting used to finding new ways to say “no” to her Calgary friends so she could spend time with Ryan. She didn’t really have time to enjoy herself in either place. Something was going to have to change. “I know,” Sarah said. “You want to spend time with Ryan. Maybe you should marry him already. You’re not making the most of single life, anyway.” 66 country-guide.ca
Ryan hadn’t asked her to marry him, or even move in, but Trina had been giving it a lot of thought. She loved being in Saskatchewan. She went to her nephew’s hockey games (if what the under-five team was doing could be called “hockey”) and it was fun watching her little niece learn how to talk. She liked her sister-in-law, and spending time with her parents and brother. This arrangement was great for weekends and holidays, but could it work full time? First, she’d need a job. Ryan’s family farm wasn’t big enough to support Ryan full time. And even if she wasn’t on the payroll, she wasn’t sure Ryan’s father would need or want her around the farm every day. Trina was still a part of her own family farm, if “part” could be defined as having a small share in the corporation and collecting some annual dividends. But she was pretty sure her brother Jeff wasn’t interested in sharing the day-to-day decision-making. So even if there was some way the Hansons could give her a job, wouldn’t she be just another farm hand, reporting to her brother? Trina wasn’t sure that would be a long-term plan for a happy family. There were other possibilities. Jobs in Weyburn, or one of the local ag businesses. She knew some people who worked from home. But… Trina looked past Sarah and out her office window. She didn’t work in downtown Calgary, but she could see the skyline from her office. Skiing wasn’t her thing, but she did like all the restaurants and concerts, even though she couldn’t enjoy them much with her schedule. “I get it,” Sarah said, watching Trina’s eyes. “You don’t want to give up city life. But you’ve got the worst of both worlds now! You’re missing everything here, but you don’t spend enough time with Ryan to live there either.” Ryan lived in an old house in his parents’ farmyard. Trina didn’t want to move back in with her parents, but she wasn’t sure she was ready to move in with Ryan. february 2, 2016
“Now you’re upset,” Sarah said. “I didn’t mean to start anything. This is about your organic father-in-law again. I’ll get back to work before you’re mad at me.” Sarah had heard Trina’s side of this problem a thousand times, but Trina still didn’t think her friend understood this insurmountable problem. Ryan’s parents hoped he would find someone else. Ryan’s father especially. He couldn’t stop himself from making comments about the amount of insecticide Trina’s brother used on his farm (“just enough to kill harmful insects,” Trina thought to herself), or worse, he asked about how Trina could sleep at night when she had a job with a chemical company. “Don’t take it personally,” Sarah had advised. Trina knew this was good advice, but it was hard to follow. She wondered what would happen if she and Ryan had kids. Now she understood why people said it was hard for parents from different religions to raise children. Organic or not, if she stayed with Ryan, they could raise their children on a farm, and give them the sort of childhood that she’d had. She didn’t know the first thing about bringing up children in the city. “How do you know what school they’d go to?” she wondered. “Would there even be a bus? What if you didn’t know all of their friends’ parents? Would the kids trick-or-treat at strangers’ houses on Halloween?” She had a good salary. Her kids would have lots of opportunities if she stayed with her career. But it would be hard for them to ever get back to a farm. She would be the first generation in her family to leave the farm for good since… she didn’t even know when. Maybe forever. Sure, she had a job with an agricultural company. But that wouldn’t mean much to her future children. They wouldn’t have any tie to the Hanson farm, or to any land anywhere at all. Then her computer beeped with incoming emails, so Trina took a slurp of coffee and turned back to her desk. The third email on the monitor was from her boss. “Trina,” it read, “there’s a job opportunity coming up in our research office down in Raleigh-Durham. I think you would be a good fit, and they said they’d be happy to talk to you about it if you could get there for Friday afternoon.” This was a curve she wasn’t expecting. Since she had the weather app still open on her phone she checked. Average temperatures of 13° in February? She kept reading. “While you’re down there stay an extra day,” Trina’s boss wrote. “Check out the sights. See if you like the place.” Trina already knew some of her co-workers in North Carolina, and two of her university friends worked for other companies in the Research Triangle. She would probably get a raise. No more eight-hour drives. No more blizzards. She would miss her niece and nephew. And the rest of her family. Then she looked down at the small photo of Ryan she kept on the side of her desk. Trina turned back to her computer screen and picked up her mouse. She clicked her way to a travel website to book a flight that would get her to Raleigh-Durham in time for the Friday meeting. CG Leeann Minogue is the editor of Grainews, a playwright and part of a family grain farm in southeastern Saskatchewan. february 2, 2016
Little Katie, in the CBC television series “Heartland,” rides the school bus to her first day at kindergarten. She comes home to announce she has a boyfriend whose name is Abraham. She asks her mother Lou if she can wear a pretty dress to school the next day because “Abraham and I are getting married.” When she arrives home the second day, she tells Lou, “Abraham and I got married at recess but we got divorced at lunch.” The institution of marriage is battered about but, judging from racks of valentines in stores, romance flourishes. Cards, flowers and chocolate dominate, but how did Valentine’s Day begin? Was there a person named Valentine? There is no reliable history of the original Valentine. One legend says he was a Roman Catholic priest who lived in the third century. The Roman Emperor, Claudius the Second, forbade his soldiers to marry. He reasoned that soldiers free of wives and girlfriends would be fearless. Single men would be better soldiers. Claudius decreed that no marriages were to be celebrated and all engagements broken off immediately. Father Valentine understood human relations. He knew that people wanted to marry. Valentine disobeyed the emperor’s edict and secretly performed marriages. When the authorities discovered what he was doing they imprisoned him. Father Valentine, a kind and wise person, had many friends. They begged the emperor to free him and sent letters and flowers to him in jail. The legend says he was buried in the Church of St. Praxedes, Rome, on the 14th of February, 270 AD. Another legend is that Valentine was an early Christian. At that time freedom and liberties were severely restricted. Being a Christian was against the law. The story is that Valentine was arrested and thrown into jail. He and the jail keeper’s daughter Julia fell in love. Valentine was said to have miraculous power which disturbed the Roman authorities. They ordered him beheaded. The morning of his execution he is reported to have sent Julia a farewell message signed, “From your Valentine.” Which legend is true? Does it really matter? Valentine’s is a time to focus on love, commitment and faithfulness. I have had the privilege of presiding at many weddings. I sometimes wonder how couples I married over the years are doing. A few years ago I was rushing to catch a plane when an attractive woman bounded across the terminal, threw her arms around me and knocked my hat off as she hugged me. In a loud, shrill voice she exclaimed for all to hear, “YOU MARRIED ME.” The moment when the bride and groom exchange vows and are blessed is deeply intimate. When the ceremony is over and the newly married couple walk through their family and friends they are filled with hope and great expectation We need hope and expectation to be successful in marriage. We need hope and expectation to have a meaningful life whether we are married or not. Pastor Bill arranged to preside at a wedding at the close of the Sunday morning service. After the final blessing, he planned to call the couple forward to be married in a brief ceremony before the congregation. As he was completing the blessing, his mind went blank. He could not think of the names of those who were to be married. Embarrassed, he said, “Will those wanting to get married please come to the front?” Nine single ladies, three widows, four widowers and six single men stepped forward. Suggested Scripture: Ephesians 5:25-33, 1 John 4:7-21 Rod Andrews is a retired Anglican bishop. He lives in Saskatoon. country-guide.ca 67
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