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EASTERN EDITION

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February 1, 2012 $3.50

THE NEW LEADERS Con Borsheim, tomorrow’s CEO

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FACE IT, WE CAN’T PRODUCE ENOUGH


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FEBRUARY 1, 2012 THE NEW LEADERS Who could have imagined Con Borsheim’s leadership story a generation ago? In this special issue, we investigate what leadership means on the farm in 2012.

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BUILD A STRONGER BANK RELATIONSHIP These strategies will impress your banker, and open new options for you too.

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GUIDE LIFE — EMOTIONS TO THE RESCUE Use these strategies when disagreements threaten to grow into family conflicts.

RELEASE YOUR INNER CEO Everybody can be a better leader, if you agree leadership isn’t just doing what comes naturally.

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THE APPLE FROM HEAVEN Luck had nothing to do with how these farmers turned Ambosia into an international success.

OWN THE TABLE Use these rules to take charge when meeting your accountant for your year-end review.

AN IMPOSSIBLE DREAM It won’t work, says the economist with the numbers. Farmers can’t produce as much as the world wants.

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GUIDE HR — EMOTIONAL INTELLIGENCE The proof is in. Farmers with high EQ are not only happier, they’re more successful too.

LEADING VS. MANAGING Con Borsheim has spent years building his unique management structure on this Saskatchewn farm.

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RISK, REWARD

PRODUCTION

For the Nightingales, leadership means turning mistakes into successes. Here’s how they do it.

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CORN CHOICE If you think you know the best way to choose your hybrids, you’re probably leaving money in the bag.

CAN WE SAVE THE MID-SIZED FARM? Maybe the co-operative isn’t dead. In fact, new co-ops may be the best hope for mid-sized farms.

HOW WET IS IT? Wet soils this winter mean challenges for your spring production system. Now is the time to prepare.

MACHINERY: THE ONE-YEAR LEASE Should you go short or long with your machinery leases? Our Scott Garvey helps you decide.

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Finally, we may be getting closer to finding a production system that works every year in every field.

STICKING TOGETHER Trends come and go, but leadership means the Wesselius children can farm for years to come.

WHAT SHOULD WE LEARN FROM 2011?

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CORN OUTLOOK 2012 It’s going to be a volatile year, which will be good or bad news depending on your marketing savvy.

Our commitment to your privacy At Farm Business Communications we have a firm commitment to protecting your privacy and security as our customer. Farm Business Communications will only collect personal information if it is required for the proper functioning of our business. As part of our commitment to enhance customer service, we may share this personal information with other strategic business partners. For more information regarding our Customer Information Privacy Policy, write to: Information Protection Officer, Farm Business Communications, 1666 Dublin Avenue, Winnipeg, MB R3H 0H1. Occasionally we make our list of subscribers available to other reputable firms whose products and services might be of interest to you. If you would prefer not to receive such offers, please contact us at the address in the preceding paragraph, or call 1-800-665-1362.

FEBRUARY 1, 2012

EDITOR’S NOTE:

Where’s my weather page? Look in every second issue for your month-long C OUNTRY GUIDE weather forecast during the winter months when we’re publishing every two weeks.

CONTENTS

BUSINESS

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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: Maggie Van Camp (905) 986-5342 Fax (905) 986-9991 Email: bmvancamp@fbcpublishing.com Gord Gilmour (204) 294-9195 Fax (204) 942-8463 Email: gord.gilmour@fbcpublishing.com Production Editor: Ralph Pearce (226) 448-4351 Email: ralph.pearce@fbcpublishing.com ADVERTISING SALES Lillie Ann Morris (905) 838-2826 Email: lamorris@xplornet.com Cory Bourdeaud’hui (204) 954-1414 Cell (204) 227-5274 Email: cory@fbcpublishing.com Head Office: 1666 Dublin Ave., Winnipeg, MB R3H 0H1 (204) 944-5765 Fax (204) 944-5562

Tom Button is editor of Country Guide magazine

Advertising Services Co-ordinator: Arlene Bomback (204) 944-5765 Fax (204) 944-5562 Email: ads@fbcpublishing.com

Reading about you on Bay Street

Publisher: Bob Willcox Email: bob.willcox@fbcpublishing.com

I sometimes play with the idea of C ountry G uide publishing a series of business books based on the strategic insights we glean from the farmers in our stories. By that I don’t mean business books FOR farmers (really, that’s what we’re trying to do with every issue of Country Guide.) I mean business books for non-farmers. The challenge with the book concept of course is that the public’s image of farmers is hardly one to suggest that farmers are people that business owners and managers should look to as sophisticated, strategically minded role models. In fact, in perverse moments, I have a feeling that if we did publish such books, the people who buy them would be disappointed to find them stuffed with sound business thinking instead of homespun proverbs about when to make hay. Clearly we would need to do a remarkable job on the marketing front. That said, the argument is favour of these books is that there is just so much solid stuff to put into them, as this issue of Country Guide once again demonstrates. “We continually look at every number,” Bill Nightingale Sr. told us in Risk, Reward. Nightingale’s farm has become one of the largest vegetable shippers in Ontario. Western grain growers may wonder at first what they can learn from Nightingale. Texas A&M economist Danny Klinefelter says the answer is crystal clear. Nightin4 country-guide.ca

gale takes risks. He tries new ideas. But he’s also fast at identifying which ideas aren’t going to pay, and at cutting them right ruthlessly. As Klinefelter says, the notion that a farm manager should never make mistakes is one of the most dangerous on the farm. Meanwhile, in Saskatchewn we talk to Sandy Purdy about farm business leadership. “The key for me is understanding how my mind thinks about what I believe, and the future that I create,” Purdy says. Business leadership takes self-analysis, Purdy says. If that sounds like just words, or worse, if it sounds like pop psychology, maybe it’s time to read about Purdy in Maggie Van Camp’s Unleash Your Inner CEO. Nor is business always easy. “Sometimes it’s difficult to cull, but you have to make the changes necessary in order to get the group together you want,” says Con Borsheim, CEO of Parkland Ventures, east of Saskatoon. It isn’t always the individual skill level of the team members that pays off, it’s the team. In New Brunswick, meanwhile, John Wesselius reminds us that not everything is new under the sun. Despite everything that has changed on the farm, it still takes a decision-maker. Be sure to read about their family in Sticking Together. We hope you enjoy and profit from this issue of Country Guide. Are we getting it right? Let me know at 519-674-1449, or at tom.button@fbcpublishing.com.

Associate Publisher/Editorial Director: John Morriss Email: john.morriss@fbcpublishing.com Production Director: Shawna Gibson Email: shawna@fbcpublishing.com Assistant Production Manager: Farrah Wilson Email: farrah@fbcpublishing.com Director of Sales and Circulation: Lynda Tityk Email: lynda.tityk@fbcpublishing.com Circulation Manager: Heather Anderson Email: heather@fbcpublishing.com Designer: Jenelle Jensen 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 12 times per year by Farm Business Communications.  Subscription rates in Canada — $33.60 for one year, $51.45 for 2 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.

Canadian Postmaster: Return undeliverable Canadian addresses (covers only) to: Circulation Dept., PO Box 9800, Winnipeg, Manitoba R3C 3K7. U.S. Postmaster: Send address changes and undeliverable addresses (covers only) to: Circulation Dept., PO Box 9800, Winnipeg, Manitoba R3C 3K7. Subscription inquiries:

Call toll-free 1-800-665-1362 or email: subscription@fbcpublishing.com U.S. subscribers call 1-204-944-5766 Country Guide is printed with linseed oil-based inks PRINTED IN CANADA Vol. 131 No. 2 Internet address: www.agcanada.com

ISSN 1915-8491 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 1, 2012


Machinery

By Philip Shaw

Tires are where the rubber literally hits the road.Yet making the right choice in tires isn’t always easy. Each manufacturer has a persuasive list of reasons to buy their brand. Then the picture gets even more confusing with myriad options and performance parameters. Cost per pound of rubber narrows the field, but you still need to know what you want.

 dynamic tire corporation galaxy ag radials The Galaxy line of agricultural tires are imported from China and compete on price. The company says they compete on performance too. The Galaxy line features many farm tires, with the Galaxy Ag Radial R-1 tractor tire offering a highly versatile multi-angle design. The Galaxy Ag Radial has a steep angle at the centre of the lug, which the company says provides long tread wear, exceptional mud clearing capability and smooth ride. The Galaxy Ag Radial also features “pads” between the lugs on the tire to act as mud breakers for improved self-cleaning. Galaxy says its ag radials are the equal of the major brands and they meet the standards demanded by North American farmers, yet are at least 20 per cent lower in cost than the big names. www.dynamictire.com

titan/goodyear optitrac r-1 radials  Titan manufactures a range of agricultural tires including the Goodyear line. According to Titan, the Optitrac-W radial tire is designed to dig deep, yet it is gentle enough for the softest soils. The company also says the tire’s increased tread depth allows for improved traction and longer tread wear. Titan characterizes the Optitrac R-1 W radial as “hard working.” This is backed up by the Optitrac’s reinforced bead area which gives the Optitrac the advantage of withstanding the forces generated by higher-torque applications and heavier vehicle loading. Titan also says that its agricultural tires are designed to fit farm needs. Their optimized mould shape enhances driver comfort while muffling vibrfations in the vehicle cabin. The shape is also engineered to provide equal ground pressure distribution across the fully optimized footprint, resulting in excellent traction and good flotation. www.titan-intl.com February 1, 2012

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Michelin agribib  Michelin has an extensive list of tire types in its agricultural lineup. Its Agribib tractor radial tire, for example, is a long-life tire with deep lugs and low slip, and the company says it is made of optimized rubber compounds to help reduce wear. The Agribib’s sharp vertical lug design allows it to retain traction even when it is 70 per cent worn. Michelin’s swept-back 45-degree lug design contributes to a smooth road ride. As well, the Agribib has a strong but flexible sidewall that maximizes footprint length, meaning this tire puts more lugs in contact with the soil surface. Michelin uses an exclusive

“self cleaning hinge” between the lugs, which ensures the tread stays free of mud for maximum pulling power in wet conditions. Michelin says the Agribib gives excellent flotation, which translates into low soil compaction. The long footprint reduces the tire’s penetration into soft soil. Operators can use also ultra-low working pressure, which helps further reduce soil compaction and damage. Michelin also produces the Spraybib tire design, which allows support for 14,330 lbs. at up to 40 mph while requiring 645 psi. This tire is increasingly popular for self-propelled sprayers. www.michelinag.com

firestone ad2 advanced deflection design radials Firestone calls AD2 the latest in tractor tire technology. Advanced design allows the AD2 radial design to carry the same load at lower pressures — or heavier loads at the same pressure — compared to standard radial tractor tires. The company says the new AD2 radials save time and fuel. The reduced inflation pressure or increased load results in increased sidewall deflection, which in turn results in a larger footprint compared to a standard equivalent-sized radial tires. This means the AD2 technology delivers improved traction, leading to less time in the field and reduced fuel consumption. The AD2 technology is available in the Firestone radial line with the 23-degree tread design. According to Firestone, the 23-degree tread design has proven in extensive testing that it provides more traction than 45-degree bars on most North American soils. www.firestonead2.com 6 country-guide.ca

trelleborg wheel systems  Trelleborg offers a wide range of agricultural radial tires for tractors and combines and many other agricultural applications. According to the company, its strategy is to develop solutions and products by rapidly interpreting market needs. An example is the Trelleborg TM 800, developed for high power tractors. The TM 800 is designed for excellent traction and superior load capability at high speeds, and it also offers a large flat plate or footprint with an excellent self-cleaning component after one revolution. Trelleborg also says its focuses on tire structure. Its radial tractor tires feature ply cords that extend to the beads and are laid at 90 degrees to the centre-line of the tread, the carcass being stabilized by an essentially inextensible circumferential belt. www.trelleborg.com February 1, 2012


BOOK REVIEW

INSIDE THE LEADER’S MIND FIVE WAYS TO THINK LIKE A LEADER Liz Mellon Financial Times $21

Reviewed By Tom Button, CG Editor We see them step out of their Lear jets or shake hands with presidents. We see them share champagne with movie stars, or open new office towers. But really, how different from you and me are the CEOs at the world’s top corporations? If we had their jobs, couldn't we basically do as well as they do? Liz Mellon’s new book is the quickest way to answer that question, and it’s probably the quickest way too to wrestle with the much more interesting question: If those CEOs were in charge of your farm, what would they do that you aren’t? Liz Mellon moves in different circles than you and I. That’s why she knows. Mellon is executive director at Duke Corporate Education, a spin-off from Duke University. Before that, she was on faculty at the London Business School. Now, she is ranked among the world’s top leadership trainers. Her clients include PricewaterhouseCoopers, Credit Suisse, Rolls Royce, GlaxoSmithKline, Unilever, and many, many others. Even better, when she is working with these clients, she is working with them at the most senior levels. In other words, Mellon’s job is to teach leadership to some of the most successful leaders in the world. They do breathe rarefied air, Mellon agrees. They make a lifetime of decisions in a single morning. Critically, too, they make decisions where there is no obvious right choice to make, such as when there are six options on the table, each of which has its advantages and its dangers. They’re the ones who need to choose just one of those six, and then live with their choice. Does it sound like farming yet? FEBRUARY 1, 2012

Importantly, Mellon’s client list also includes some of the world’s most successful head-hunting and talent-search firms. These are the companies that know a company with 100,000 employees will be lucky if it has 10 individuals who could do the big job, and that there’s only one who should get it, and these scouts think Mellon gives them a big hand to find that person. If Mellon helps them, could she help you decide whether your farm’s next generation has actually got what it's going to take to manage the farm for the next 30 to 40 years? Mellon finds five key traits in great leaders. 1. NO SAFETY NET: This is where it all starts, Mellon says. Leaders aren’t foolish risk takers, but they know that without risk there is no progress, and without progress there can only be the biggest failure of all. These leaders reduce risks not by going down paths that they know are safe, but by knowing more about their business than anyone else, and also by understanding the business positioning of everyone in their community better than those businesses understand it themselves. These business leaders believe that if you’re afraid to fail, you can’t succeed. The leader’s job is to push boundaries, Mellon says. Without a willingness to work beyond the safety net, their business can never be great. 2. COMFORTABLE IN DISCOMFORT: Everyone else might want clarity and certainty. Great leaders are exceptional at living in a world where everything is grey, not black and white. Business schools put enormous energy into teaching decisiveness, Mellon says. But great leaders focus on judgment, not decision making. Sometimes it simply makes more sense

not to make a decision at a particular point — which is basically deciding not to decide. Executives further down the chain start to lose focus when there doesn’t seem to be a clear direction. Great leaders, by contrast, are happy people in periods of transition. They sleep well, they have a great sense of humour, and they keep other people believing in them. 3. SOLID CORE: Call it an internal compass if you wish, or even a soul. Great leaders are in touch with their values. They understand instantly whether a strategy aligns with their vision. Great leaders are also authentic, and have almost always been raised by parents who have emphasized values. Employees — including family members — are expert at smelling insincerity. They can pick out an acting job when you may think you’ve got them in your grasp. The message, says Mellon, is to know yourself, know your role, and know that the fit is exactly right. 4. ON MY WATCH: These leaders do know what’s important. On average, they spend 80 per cent of their time making sure the ship stays afloat. The farm is not going to fail on their watch. They focus on cost control, employee efficiency, marketing programs and the like, because the number one job is to not fail. Then they devote 20 per cent of their time to thinking about the future, which means at least a day a week of hard work, not some vague day dreaming. 5. I AM THE ENTERPRISE: This may be hardest of all, says Mellon. If things go wrong, great leaders don’t start with the excuses, they start by taking responsibility. Because of that, great leaders also know they need to invest in themselves. They know they need to treat themselves well in order to keep their energy up, because when they are on the job, they are fully on the job. So, how much like a senior CEO are you? My bet is, you share something with such leaders. The difference, I can hear Mellon saying, is whether you’re satisfied with “something” versus “all.” CG country-guide.ca 7


opinion

An impossible dream What if agriculture can’t do both, feed our people and fuel our cars? By Gerald Pilger There’s an air of confidence down on the farm. Grain prices are historically high and returns across the livestock sector have been catching up. Not only that, but the good times seem basically guaranteed for years to come. Grain producers believe that rising global populations combined with soaring biofuel demand will mean that markets will be demand-led as far out as we can see. Livestock producers meanwhile see huge increases in demand for their own products now that higher incomes in China, India and the rest of the developing world are enabling consumers there to add more meat to their diets. Even the investment community is hopping on the agricultural bandwagon. Pension funds and corporate interests are buying up vast amounts of land and even starting their own farming subsidiaries trying to capitalize on what they see as a pot of gold at the end of an agricultural rainbow. Are these realistic expectations, or vain hopes? Before we yell out our answers, maybe we should first listen to Louisiana State economist Krishna Paudel. here really can be no question about it. The main driver of high grain prices over the past few years has been utilization of food crops for biofuels. Now, biofuel byproducts are also gaining acceptance in the livestock sector as a lower cost feed stuff in ration formulation. The upshot is, every farm has benefited from the demand for grains by the biofuel industry. As long as there is a demand for grain for biofuel, it seems, the future for farmers may indeed be rosy. Yet it raises the question, what happens if we simply cannot grow enough grains and grasses to meet both the food and fuel demand? Would there still be public support for heavily government-subsidized biofuel production if there is insufficient food to feed the world? Can we actually grow enough food to feed the world and still have surplus grain available for biofuel production? Those are question that economist Krishna Paudel at Louisiana State University Agricultural Centre addresses 8 country-guide.ca

in his new paper, “How Much Biofuel can be Produced from Grains without Affecting Food Supply? A Dietary Scenario Based Analysis.” According to Paudel, multiple studies have looked at the biofuel sector but none have considered just how much grain may actually be available for biofuel production after dietary needs have been met. “Biofuel demand for grains is only relevant after food needs have been met. Food comes before fuel,” Paudel told me when I caught up with him by phone. “By 2050 it is forecasted that we will need to feed a little over nine billion people. Will that leave any grain for biofuel production?” First, Paudel says, it’s essential that we take an honest look at the scale of the challenge. If all the wheat, barley, corn, sorghum and sugar grown in the world today were utilized for ethanol production, they would only meet 19.4 per cent of the demand for gasoline by the global transportation sector. If all the world’s soybean, rapeseed, palm oil, peanuts, cotton seed, and sunflower seed crops were confebruary 1, 2012


opinion verted to biodiesel, this would only meet 7.5 per cent of the oil demand for transportation. Some 50 countries have now mandated or set targets for biofuels in transportation fuels. On average, these countries are seeking to replace 10 per cent of the fossil fuels used in transportation with biofuels. Yet Paudel says few people realize that if you tried to achieve this 10 per cent goal using corn, it would require more than three times the current global corn crop. Biofuel advocates are predicting that new technology, new crops, and the utilization of crop residues will increase biofuel yields but Paudel is sceptical, at least in the short run. Such developments are a long way from achieving the scale needed to alter the flow of grain from food to fuel.

Supply-demand, 2050 How much food will the world actually need in 2050? Paudel launched a project to find out, basing his analysis on a projected population of 9.19 billion people. He is an economist, so his study is full of numbers and formulas, but the thinking behind it is quite straightforward. Paudel calculated food demand by multiplying the projected population against various diets, including 362.6 kg of grain per person per year (the current average world consumption level), a sustainable vegetarian diet of 474.5 kg per person per year (little or no meat or dairy products), a moderate diet of 878 kg per person per year (moderate amounts of meat and dairy products), and an affluent diet of 1,533 kg per person per year (a diet rich in meat, dairy and grains). Next, Paudel calculated the potential supply of grain in 2050. He took into consideration the amount of land which could be converted from pasture to grain production. Given the advances in intensive livestock production methods it is theoretically possible to convert over 90 per cent of the current pasture land to grain crops and still meet his estimated demand for meat and dairy products. Paudel also projected yield gains based on rates of the past 50 years. Most people do not realize just how much our productivity has jumped over the past 50 years. For example, average global wheat yields are up 141 per cent, corn is up 131 per cent and rice is up 110 per cent. It is questionable if yield growth can continue at this same rate for the next 40 years but that scenario cannot be discounted entirely. Overall, the findings are eye opening, and every farmer may want to consider Paudel's conclusions in their farm’s long-term strategic plans. The findings include: • If crop yields only grow by 40 per cent by 2050, the world’s farmers won’t produce enough grain to meet food demand in any dietary scenario. • The world won’t be able to spare a kernel of grain for fuel use in 2050 unless grain yields grow by 57 per cent, and unless per-capita grain consumption is capped at no more than 20 per cent above current levels — which means we accept that the february 1, 2012

Average global yields Projected yield gains based on rates of the past 50 years. For example, average global wheat yields are up 141 per cent, corn is up 131 per cent and rice is up 110 per cent.

Corn up

Wheat up

Rice up

world will still be a place with ongoing malnutrition and where the majority eat very little meat •E  xisting cropland won’t be able to produce enough grain to meet food demand in 2050 under the moderate and affluent diet scenarios even if crop yields more than double from today’s levels. • I f food demand in 2050 is capped at three times the current level (a moderate diet scenario) and 60 per cent of pasture land is converted to cropland, and we also see major increases in crop yields, there could be enough surplus grain to meet between six and 26 per cent of transportation fuel use, depending on assumptions. •H  owever, even if all existing available pasture land is converted to grain production, farmers would still not be able to meet food demand under an affluent diet scenario. It isn’t all doom and gloom. While it’s true that simply doing what we are doing today won’t feed the world in 2050, if technology enables farmers to produce 60 per cent more grain per acre, and if 60 per cent of pasture land is converted to grain production, we could not only provide the world with enough food for a moderate diet, but have enough grain left over to surpass the current 10 per cent mandate for biofuels in transportation. These may be achievable targets. However, they don’t consider farm behaviour. Will farmers switch to different crops in the future? Will the technology needed for yield increases flow to developing countries where yield increases must also happen. What impact will climate change have on grain production? Will farmers have affordable access to the resources needed to achieve those higher yields, especially water and fertilizer? Will the farmer’s cost of production for growing the huge crops exceed what the market is willing to pay for food and biofuel? Nor do the numbers consider politics. Do we really believe that the world will lurch through 40 years of tight supplies and high prices without politicians offering a magic fix? CG country-guide.ca 9


business

The apple from heaven Discovering Ambrosia apples was luck. Building them into one of the world’s favourite apples was anything but

By Madeleine Baerg

ongtime apple producers in the B.C. interior, Sally and Wilfrid Mennell are becoming world celebrities — at least in the apple world — for discovering a chance seedling in their orchard that they have built into one of the favourite apple varieties on Earth. How they did it proves once again that the most successful agricultural producers are part scientist, part entrepreneur, and all passion. Wilfrid isn’t shy about admitting there was luck involved. There had to be luck. Every seed in every apple on every tree is a lucky combination of DNA with the potential to grow into a tree unlike any other. But then, the likelihood that any random combination of genes will score high in each and every essential apple trait — in other words that it will not only produce a perfectly crunchy, heavenly sweet, blushingly tempting apple but that it will also be easy to grow, hold well in storage, and appeal to producers — is about the same as the odds of your child being the next Beethoven, Einstein and Churchill all in one. Wilfrid also willingly admits that it seems that fate also played a lead role. If this magical seedling had somehow emerged just a foot to the left or right, our story would have been chopped up by the blades of a mower before it really got a chance to get started. But, with luck and fate on their side, and hefty 10 country-guide.ca

doses of persistence, vision and hope, Wilfrid and Sally became the self-confessed “parents” to an apple that’s making enormous inroads with consumers and growers alike. That “Ambrosia” — the food of the gods in Greek mythology — is the name they chose for their fledgling variety illustrates both Wilfrid’s poetic bent, and just how much confidence they have in their apple.

The pickers knew first Despite having told and retold their story at grower meetings, industry events and consumer fairs, the Mennells are eager to recount Ambrosia’s history to me. “You start telling it, Wilfrid, and I’ll interrupt you when you’re wrong,” says Sally, serving up wide slices of a decadent cake she’s baked in honour of the occasion. “Well,” says Wilfrid, leaning forward with obvious enthusiasm, “the early story of Ambrosia apples wasn’t about creating or discovering them, it was a really a process of becoming aware…” In 1987, the Mennells replaced an orchard block of mixed apple and plum trees with the newly popular Jonagold variety of apples. About this same time, a single seed of unknown origin sprouted unnoticed among the recently planted trees. For those unfamiliar with orcharding, fruit trees are grown by grafting a bud of the desired variety february 1, 2012


“There was no road map,” says Sally, who with husband Wilfred Merrill made Ambrosia a best seller onto nursery-grown rootstock. This kind of asexual reproduction ensures that every tree produces identical fruit. Self-seeded saplings are wild-cards and are usually chopped out like any other weed. “This sapling was a product of negligence. It should have been removed,” admits Wilfrid. “But, it was in line with the new row we had planted, which is the only reason it was allowed to get to the point that it produced fruit.” In 1990, the young tree bore its first apples. The hired fruit pickers, who turned their noses up at all but the very best tasting fruit, stripped the sapling bare and gobbled every apple. The Mennells were intrigued. “They liked it, so we knew there had to be a reason,” explains Wilfrid. “But at first, it was just a curiosity.” When the pickers again ate all the fruit the following year, Wilfrid and Sally wondered if there might be more to this sapling than they’d first thought. Adventurous at heart, Wilfrid and brother Robert decided to propagate the sapling by budding snippets of the tree onto rootstock in Robert’s nursery. When the new trees bore their initial fruit two years later, the Mennells started getting excited. The budded trees had held true to variety and the resulting fruit was as memorably good as the pickers had promised. Ambrosia was born. february 15, 2012

Putting the team together While finding a new variety is one thing, successfully bringing it to market is quite another. Luckily, good timing proved again that it was one their side. A generation ago, Canadian orchardists grew Golden and Red Delicious apples almost exclusively. Back then, the trees were grown huge, typically with 14-foot spacings between 75-year old trees. On average, apple orchards ran about 200 trees per acre. In the mid 1980s, a new New Zealand variety called Royal Gala took the Canadian apple industry by storm. Consumers loved Galas and producers flocked to growing them. To ensure the fruit got its trademark rosy hue, the trees were grown small and very close together so every apple could face the sun. This shift in growing technique was revolutionary. Suddenly, first crops could be harvested after three years instead of a decade of growth, tree rotation decreased to 15 years from 75 or more, and per-acre density multiplied from 200 to upwards of 1,500 trees. Change was clearly underway. Energized by the success they’d enjoyed with Galas, growers in the late 1980s were — for the first time ever — sudContinued on page 12 country-guide.ca 11


business Continued from page 11 denly eager to grow new varieties. “We were very fortunate (Ambrosia’s genesis) occurred at a time in the industry that very valuable new varieties were coming on stream. There was a certain excitement about new varieties and growers were willing to give them a try,” says Wilfrid. “The risk-takers had gambled and just won with Royal Galas, and they had the taste of winning.” This was not the only piece of auspicious timing. As the Mennells’ confidence in their new variety grew, they decided to approach several nurseries for help in developing it. “At the time, the nurseries that were propagating new varieties were mainly American. We approached one American nursery and they said ‘Yes, that’s very nice. If you want to give us your variety, we’ll let you know how it goes.’ That was just the way it was done,” says Wilfrid. But, giving up their Ambrosia to a nursery was not what Wilfrid and Sally had in mind. They wanted assistance in developing their apple, they weren’t looking to be removed outright from Ambrosia’s future. And, says Wilfrid, “We wanted there to be a Canadian component to this.”

Support from farmers At just this time, a new variety development company was founded in Summerland B.C., just an hour away from the Mennell’s home. The Okanagan Plant Improvement Corporation (PICO) was created to manage the licensing of new varieties of tree fruits and berries, both domestically and internationally. It was a fit made in Greek heaven. Ambrosia gained a Canadian product development sponsor, and PICO gained a flagship product. In 1993, PICO facilitated the registration of Ambrosia for plant breeder’s rights (the Canadian version of plant patenting), which includes enormous volumes of paperwork and much measuring and testing to ensure that the variety is in fact unique. Ambrosia passed with flying colours. Meantime, PICO solicited interested growers to test the variety up and down the Okanagan valley. “We had no real expectations at that point. We registered it in order to protect it and to ensure that it had some consistent identity. If it had been released willy-nilly, it would never have gained traction in the market,” says Wilfrid. By the early 1990s, the Mennell brothers were selling Ambrosias picked from their own trees to the local organic market. “Because there’s a more direct intimacy between farm and organic consumer, selling organic meant we could gauge the response from consumers.” To the Mennells’ delight, that early consumer response was fantastic. Consumers bought initially because the product was unique, but came back for more because the apples — a heady combination of crunch, sweetness, juiciness and fragrance — sold themselves. 12 country-guide.ca

Equally important, support from growers was high from the start. When there was reluctance among B.C. packers and marketers to handle the first shipments of Ambrosia in the late 1990s, growers banded together and formed the New Varieties Development Council to advocate for the variety, support market development, and ensure that producers had a say in the crop’s future. The council also helped find a way around a catch-22 that faces any new variety. As Wilfrid explains, “If you don’t have the volume of fruit, you can’t test the market. To test the market, you have to do a lot of promotion, but you can’t afford to do that unless you have a lot of growers and a lot of grower buy-in.” Luckily, the growers voluntarily took a levy of a dollar per 40-lb. carton to market the fruit. “It was grower-based momentum that got the variety established.” “PICO initially envisaged this as a niche market apple,” says Sally. “There are so many characteristics necessary to move from a niche variety to a commercial variety: consistency, volume, appeal, grower friendliness. But this apple grows well in our climate, growers like growing it, and it really seems to have taken off.” Today, Ambrosia is BC Treefruits’ “flagship variety,” says Wilfrid. “It’s become the signature variety that they’re known all over for.” Ambrosia has a general release in Canada, which means any Canadian grower willing to pay the tree-based royalty can plant it. Internationally, PICO has sublicensed the variety to groups in various countries (where the growing sites are optimal for the growing of Ambrosia) including the US, New Zealand, Chile and the EU. “Standing in New Zealand and looking at Ambrosia trees and knowing they come from this one mother tree on our farm was an amazing feeling,” says Sally. And, she adds, the feedback from consumers has been rewarding. Wilfrid jumps in to relate his favourite international Ambrosia moment. A contestant on the Italian version of “Who Wants to be a Millionaire?” had to use all three lifelines when answering the question “What is an Ambrosia?”, which garnered, as Wilfrid crows, “10 full minutes of free publicity!” “The thing that has been interesting is that there has been no road map,” says Sally. The variety “was born and now we’ve brought it up. We’ve been involved in every stage along the way, but it comes back to the fact that the apple has to be good enough to speak for itself.” “There are times when it’s frustrating but it has been an extraordinary journey for us and a learning process for everyone involved.” “Part of what it has involved is looking at ourselves and who we are,” adds Wilfrid. “At the end of the day, we are still orchardists.” CG february 1, 2012


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business

Release your inner CEO With more employees on their farm, says Sandy Purdy, she has to recognize that leadership isn’t doing just what seems natural By Maggie Van Camp, CG Associate Editor

he sun hasn’t even peeked over the Saskatchewan horizon before Sandy Purdy begins doing what she sees as a vital job on her and her husband Ken’s farm near Moose Jaw. She’s thinking about leadership. “Every day I take time to think about how to engage people, like our employees, to get to our vision of our farm,” Purdy says. “It’s through people that you get to the end result.” Their former grain farm, now a 130-acre berry farm and processing facility, has seven employees — two on the farm itself and five in processing and distribution. In addition, they subcontract with seven growers to maximize the efficiency of the processing equipment and infrastructure. As agriculture moves toward larger-scale farms with employees, it means we all have to think differently, says Purdy. “Now that farmers aren’t just working with family who may forgive later, we need to engage people — in real ways and in real time.” That means Purdy’s job has evolved. Now, her success depends on her knowing how to lead by example. It also depends on her knowing how to give her employees responsibilities and how to give them ownership of specific challenges, together with the support they need to meet those responsibilities and challenges. Knowing when to lead and when to follow has become even more imperative, says Purdy. And, most important of all, Purdy says her leadership has to add up to something that’s got a lot more reality to it that just words on a flip chart. It’s got to roll out, as Purdy says, “in real ways and in real time.” It also puts concrete demands on herself. Leadership is different than it used to be, Purdy tells me. It takes self-analysis, emotional self-control and a new way of thinking. 14 country-guide.ca

It’s this combination of insight, expertise and commitment that the HR advisers tells us will get the people around us to embrace our goals. Still, it can also be a challenging metamorphosis for farmers who have focused over the generations on evolving systems to work and solve problems independently. However, Purdy says this way of thinking can be taught, and this inspires a change in attitude, habits and expectation. “The key for me is understanding how my mind thinks about what I believe, and the future that I create for myself, my family, my employees, and my community,” she says. “And leadership is about passion.” Almost 20 years ago, Ken and Purdy were smaller-scale grain farmers who took a leadership training course from The Pacific Institute, offered by Saskatchewan-based Farm Leadership Council. The Farm Leadership Council is a farmer-led organization that supports producer innovation and leadership in Western Canada (www.ourflc.com) through webinars and courses. Now Purdy teaches this program because of how it changed her and her husband’s lives, and she likes the rewards of helping other change their attitudes. “It helped me to overcome the fear of the unknown and to control my emotions,” she says. The program begins by examining the science around how the brain functions. Then it shows how we can use that science to control our emotions and also to question detrimental beliefs. To bring it all home, instructors help participants to isolate a limiting factor to their farming success. Then — and here’s the kicker — the program leaders help the farmers look at their deep set, conscious and unconscious beliefs around those barriers. For many this can be an “Ah ha!” moment. It turns out that we can be our own worst enemies. February 1, 2012


business Self-awareness tests have been part of leadership training since the 1940s when Myers and Briggs first began measuring personality type as a way to help people to choose their careers. By creating a test to evaluate and constructively use personality differences, these two psychologists forever changed HR management. The theory is, if you can objectively assess strengths and weaknesses in people, you should be able to do a better job of putting the right people in the right jobs. And that’s just a start. You should also be able to analyze your own aptitudes and find out which jobs you should keep, and which you should hire someone else to do. Plus, you should gain an understanding of what makes other personality types click, so you’ll be better at interfacing with other people. Purdy makes it work on her own farm. Every morning she asks herself what she needs to do that day and how she can get others to reach their goals. She breaks that big goal into chunks and then into step-by-step actions. For example, if an employee doesn’t like change, instead of just telling them to do their job differently, Purdy will raise some open ended what-if questions, and then leave the employee for a week to mull it over. More often than not, by the time she goes back in a week, the employee has already made the change — and instead of being upset, they’re happy about making a change that was their own idea. Rob Black, chief executive officer of both the Rural Ontario Institute and the long-running Advanced Ag Leadership Program (AALP), uses a similar tool to improve self understanding and how we affect those around us. “If I know how I deal with other personalities, it makes me a better leader,” says Black. For many, this self-awareness can be a starting point for broader change. Over the years of AALP, Black has had individuals in the group of 30 (from a cross section of agriculture business, extension and other farmers) completely transform attitudes over the 19-month program. That often translates into a positive changes for their farms, communities and organizations. “Often people who want to participate are at a crossroads and they want to learn more and end up meeting that crossroad head-on,” says Black.

At the crossroad The Purdys were at a crossroad when they took their first leadership course, and also in 1993 when they started their Saskatoon berry business by planting a small 10-acre orchard as a way to diversify their grain farm. Then in 2007, Prairie Berries Inc. joined with a strategic partner to plant 120 acres of Saskatoon berries in order to generate a consistent supply of Saskatoon berries for domestic and international markets. Today they also own and operate processing facilities and have partnerships with other larger processors. At the primary plant they grade, clean, freeze and package the berries, while in the secondary processing facility they produce Saskatoon berry retail products. February 1, 2012

Purdy says that it’s more important than ever for farmers to embrace change and provide leadership to help their businesses through change. “To create a different outcome, you have to be willing to engage in something different.” However, sometimes that takes a jolt. Or at least an open mind. During AALP, participants are exposed to new ways of thinking, including a farm tour in a different country, seeing social problems within Canada (like touring the Scott Mission in Toronto), testing with real-life projects, listening to speakers from outside agriculture and most significantly networking with a broad range of people. “We’re in a new era in agriculture. Change, succession, mergers, and amalgamations are normal today in agriculture,” says Black. “We need leaders who can handle times of chaos.”

“We’re in a new era in agriculture,” says Rob Black. “We need leaders who can handle times of chaos.” That takes confidence, a strong vision for change, good communication and collaborative skills, and above all, a positive attitude. Black is finding farm organizations today are more strategic, deliberate and collaborative. They require consensus on significant changes and challenges. These groups also require leadership-type advocacy which focusses on solutions, not complaints. With the connectivity and speed of information available today, it’s become more of an expectation that if it’s not working, make a change. “These leaders find an alternative and drive on,” says Black. More farming organizations are extending leadership training to their members. For instance,the Ontario Cattlemen’s Association launched a program last fall with 40 selected participants covering topics ranging from governance and meeting management to leadership styles and organization assessment and planning. “This leadership investment will not only equip our industry leaders across the province with the knowledge, resources and confidence to excel as future ambassadors in our industry, it will provide stronger leadership capabilities for our entire association,” says Curtis Royal, OCA president. The need for on-farm leadership is also intensifying. “Farmers have to be critical thinkers with the ability to examine the old beliefs that they held about farming,” says Purdy. “Seeking the truths will allow them to move forward without fear. To do this takes self confidence and openness to new possibilities. From that wellspring comes vision and passion, and the courage to see it through. Are leaders born or created? Purdy believes individuals can be taught leadership skills, she says, “if they are willing to change the way they think.” CG country-guide.ca 15


business

Leading vs managin

Photo credit: david stobbe

By Anne Lazurko, CG Contributing Editor

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February 1, 2012


business

vs. ging

Editor

Maybe it sounds simple, even obvious. Good leadership and good management go hand in hand. Yet Con Borsheim has spent years perfecting a business model to synchronize the two into a successful Saskatchewan farm-business operation. Now, he shares what he has learned Leadership Con Borsheim is clear about this. “Everybody has a bit of leadership lurking in their DNA,” he says. “It’s the opportunities and experiences that pull it out. It’s like riding a bike. You never forget how.” But Borsheim is also clear that genes aren’t enough. “To race that bike or do BMX biking you need to pursue the required skills,” he says. “You need to want to accept the responsibility that comes with leadership.” Switching metaphors, Borsheim sticks to the leadership theme. A successful business team is no different than a sports team, he says. “You don’t have to have the most talent to win, but you need trust and respect where everybody knows their role and respects their peers to do theirs. The leader has to be the catalyst to grow that.” “It’s easy to go amuck,” Borsheim continues. “Sometimes it’s difficult to cull. But you have to make the changes necessary in order to get the group together you want.” Borsheim can claim to know something about farm leadership. He’s the CEO of Parkland Ventures, a 15,000-acre farming joint venture near Humboldt, Sask. with five full-time and six or seven seasonal employees. Parkland has a management and leadership structure unique in grain farming today. And it also has a vision and structure developed through trial and error with an eye to the successes and failures experienced in Borsheim’s own early farming years, and witnessed in his 20 years working as a farm business adviser. But while Borsheim is more than comfortable talking about business models, he also believes in leadership. He says a good leader will maintain contact with what’s happening in the field (literally in this case), and a good leader will also build relationships and trust, and search out passionate people to create a team that will grow the business. To achieve that, a good leader will insist on clarity of roles and responsibilities, and will also insist that each function be performed at a high level, with all the players working together seamlessly. The leader may not be the one who does the actual work, but without strong leadership, the business will lack coherence. Says Borsheim: “That’s where leadership comes in… creating an atmosphere of creativity so that we don’t simply leave it for someone else to do.” A good leader is someone who is calm, assertive and consistent, Borsheim says. They must be

February 1, 2012

a good communicator, be passionate and act as catalyst for mutual trust and respect among those engaged in the operation. First and foremost, a good leader provides vision. “You have to understand what you’re trying to do and you have to identify and present values and make sure people live by them,” Borsheim says. “It’s easy for a farm business to ignore value statements… but if they don’t know where they’re going, they won’t even know when they get there.” That’s fair enough. But how does the vision of the leader become part of the value system of the employee? Borsheim says it starts with hiring the right people in the first place. “We pick people with a passion for modern farming and who want to be part of a farming team,” he says. “We look for skills, but character is key… attitude is more important in some cases than experience.” Most of all a leader has to remain calm and be patient, and a leader must understand that listening is a vital part of communication. Because these attributes aren’t necessarily all part of his own nature, Borsheim continually works to improve these skills. He also recognizes the importance of closing the communication loop so that, at the end of the day, everyone knows why a decision was made. And how are decisions made in an enterprise as diverse as large-scale farming? The answer is found in the good use of full information. “Management has to be balanced, which to me means we need to be able to share responsibility and accountability,” Borsheim says. “We need to carefully structure the business to ensure we have the people capacity, and clear roles and responsibilities so that we build trust and respect founded on accountability. And the leader has to create and communicate standard operating procedures while realizing any winning team is a combination of structure, strategy and innovation.”

Time to manage We don’t often hear the terms “executive” and “middle managers” when talking about primary production on the farm, yet Borsheim is convinced that many of the principles and business models used in large corporations are necessary for farm success. Given the rough ride corporate Canada has had Continued on page 18 country-guide.ca 17


business

Catch the vision As far as Con Borsheim at Parkland Ventures is concerned, U.S. five star general Dwight Eisenhower said it best: “Leadership is the art of getting someone to do something you want done because he wants to do it.” They are words that Borsheim lives by. Indeed, in an industry struggling to maintain a skilled and dedicated workforce, Borsheim believes Eisenhowers’ concept of good leadership is becoming increasingly necessary for farm success. A producer might have great agronomy and marketing know-how, or have the accounting skills of a banker, but Borsheim says if they don’t know how to get those who work on the farm to want the same things the leader does, the farm might fail anyway. Nor is Borsheim alone. “A leader must have a vision, and have the people he works with catch the vision,” agrees Peter Neufeldt, a consultant and Canadian Association of Farm Advisors (CAFA) member with Peak Performance Consulting out of Regina. Neufeldt has been coaching and providing workshops and presentations to farmers and agriculture related businesses for years. “Some farmers think small,” Neufeldt says. “They are afraid to invest in growth.” He uses the example of a farmer who was in this mindset for most of his farming life. But when his son wanted to join the farm, expansion was required, forcing him to think of ways to grow beyond the small family farm. “His vision changed and farm growth has tripled.” Farmers do a lot. That is, they work at the production level of farming, often within the time demands of weather and season. Doing is necessary. But so too is thinking about why things are being done. While reflection is sometimes dismissed as a waste of time, Neufeldt says it’s essential to spend time thinking. He asks farmers to consider the idea that you must not only work in your job, but also on your job in order to be a good leader.

Neufeldt’s key leadership traits: • Provide clarity on vision and on roles and expectations. • Build trust. Establish unique accountabilities and goals. Be clear about expected results. If you build trust by mentoring and teaching, Neufeldt says, it will be reciprocated. • Delegate. Find the person most interested and qualified for a job. When they do it 70 per cent as well as you, pass it on. • Give feedback. Replace the idea of “constructive criticism” with “constructive feedback” and calculate the risk of letting someone learn by failure. (It might be a good thing.) • Focus on how you select candidates. Get the right person for the right job.

How to motivate employees: • Challenging and interesting work • Open communication • Personal responsibility for results • Opportunities for personal growth • Money Every farmer will lead differently depending on their personality traits, but Neufeldt says everyone can learn how to lead. Much of leadership is mentorship, an awareness of the skills you don’t have, and a willingness to take the time to learn. Doing so might make the difference in the success of your farm. Besides, it’s hard to argue with Eisenhower.

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Continued from page 17 in the last three years, and the more recent backlash acted out through the Occupy movement, some farmers might cringe at the idea of a farm foray into the corporate boardroom. But Borsheim has put his ideas into action at Parkland Ventures with corporate concepts uniquely adjusted to the needs of the joint venture, and with a kind of moral vision of what “management” means. In a recent presentation to Canadian Association of Farm Advisers members at Agribition in Regina, he explained his concept. “Risk is high in relation to profit potential for the average farm,” Borsheim says. “We are focused on managing the things we can control… so we can better manage the impact from things we cannot control.” This requires above-average management in the key areas of production, marketing, people and finances. People do best at what they are passionate about, Borsheim says. “We need to build our management team to strengthen the areas we do not enjoy so much, so we can focus on our strengths and let others’ strengths balance it out.”

How Parkland succeeds At Parkland, the CEO carries out planning and reviews of marketing, finances and people. While responsible for final decisions, Borsheim insists those choices must be made with input from many sources, “including the people within the organization and specialized external sources.” Meanwhile, the operations manager plans and reviews production, making daily decisions to implement the production and agronomy plan. “Everything matters,” Borsheim says. “Marketing depends on production at costs that allow for profits in the current markets, which creates the financial strength to give all the people and investors great returns.” Reporting to both are the senior managers who carry out specific tasks as assigned to reach production goals and provide leadership for seasonal workers. It’s a system of Plan, Do and Review. Borsheim gives a simple example. A senior manager might have discovered a weed issue in their oats. He shares that with the operations manager who tells the CEO it will cost $12 per acre more to spray than originally anticipated. The discussion then revolves around the risk of lost yield and the potential revenue if the herbicide is not applied. The CEO assesses the choices and makes a decision. “It’s good information, and then a reliable decision,” Borsheim says. “And the guy on the sprayer is not just the guy on the sprayer. He’s helping to make the decision by observing and reporting.” The Parkland system seems to be working. “We have given our investors an annual return that is over 20 per cent better than the S&P Index performance and we haven’t been at our best or had ‘easy’ times to farm in,” Borsheim reports. Borsheim insists the devil is in the details. Business can be managed to be more profitable by looking for 20 opportunities for one per cent improvements, rather than the impossible single improvement of 20 per cent, he says. Despite successes so far, Borsheim believes he and his managers must be vigilant and constantly review and reassess, making changes as necessary. Borsheim’s advice? “Identify what you don’t know and how to find management services required to balance your farm management, and continue getting better, better, better.” CG February 1, 2012


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business

Risk, reward Strong leadership means success comes easy, right? By Maggie Van Camp, CG Associate Editor t first glance, you’re convinced that Nightingale Farms must have some kind of Midas touch. Everything here must always work out exactly according to plan. After all, how else could this family farm have grown to over 1,000 acres of fresh vegetables in the middle of the Norfolk sand plain, former home to Ontario’s decimated tobacco industry? If not for some kind of crystal ball, how else could the Nightingales be shipping 35 million pounds of fresh produce a year, making them one of

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the country’s largest local suppliers to food chains, independents, and Ontario Food Terminal brokers? How else could they be running everything from greenhouses to packing and distribution systems, and expanding into the U.S.? Bill Nightingale doesn’t buy a word of it. None of it has been easy, Bill Sr. says. It’s taken — and continues to take — equal and massive doses of fortitude and humility. It’s taken a strategy based on a strong core business, and it’s taken stringent analysis and great timing, the same as it would for any kind of farming.

February 1, 2012


business

The goal is to be the first to find the opportunities, says Bill Nightingale Jr. Then analyse and build on the successes More than anything, it’s taken the nerve to take risks and to keep on taking them, even though you know you won’t wind up on the upside every time. For the Nightingales, innovation is their lifeblood. It’s the heart of their business strategy, and if that sounds hackneyed and trite, like the sort of thing you’d say about any farm or business, take a closer look. This is a farm with its own R & D department. It’s a farm that actively and systematically sources new ideas, analyzes the results and then figures out how to transfer successful technologies to new environments. With an eye on their main goal of extending their growing season, this approach has catapulted their farm business, and it has also attracted a lot of attention. In 2007, the farm won the provincial Premier’s Award for Agri-Food Innovation Excellence. Passion drips from Bill Sr. when he talks about the farm’s history of innovation, and it intensifies as he moves on to describe their current projects, but he keeps coming back to their main rationale, which Bill sums up in a simple handful of words. “We’d rather be the first ones with the new technology,” Nightingale says. Nightingale, however, is just as quick to admit that not all their ventures are hits. “That’s just part of the business of farming today,” he says. This attitude is what sometimes separates exceptional farmers from good ones. “They not only believe in the necessity of making mistakes, they see mistakes as virtually synonymous with growth and progress,” says Danny Klinefelter, agricultural economist at Texas A&M and director of The Executive Program for Agricultural Producers (TEPAP) for 22 years. Through his TEPAP work, Klinefelter has come to know some of the most amazing farmers and ranchers in North America, and he says he has developed one key take-home. In order to thrive in farming, Klinefelter says, it’s going to take more than being good at controlling costs, keeping good records and having a sound marketing plan. “In this rapidly changing world, in order to stay ahead, the internal rate of change in the business needs to exceed the rate of change in the business’s external environment,” Klinefelter says. “If it doesn’t, the business is falling behind even though it may be moving forward.” If the farm has never seen failure, says Klinefelter, the farmer hasn't been pushing hard enough. But, he adds, there are two essential attributes that must accompany such risk taking. First, always do your research before diving in, says Klinefelter. Second, never pay twice for the same mistake. February 1, 2012

Analyze Top farmers consistently spend serious time monitoring and analyzing performance, Klinefelter says. They pick up on problems and opportunities earlier than other farmers, and they aren’t just good, they’re highly skilled at thinking in terms of multiple frames of reference. They also don’t ask “who” caused the problem, they ask “why.” It all means that such farmers are more likely to treat the cause and not just the symptoms of any problem, which means they’ve learned how to repeat successes, not failures. Besides, by not always trying to attach blame, they tend to engage everyone in the organization in continuous analysis, Klinefelter says. “They’re also more likely to hear what they need to hear, not just what employees think they want to hear.” This is especially important for farms like Nightingale Farms that rely on employees. The Nightingales’ payroll carries 250 to 300 people, mostly offshore workers on top of the 30 full-time staff in middle management. Bill Sr. and Bill Jr. continually analyze the financial contribution of each crop and try to react to it without emotion or ego, learning as they go. Other farms may say they do the same thing, but the Nightingales make it much more structural than most. “We continually look at every number, and if it’s not making money it has to go or we have to fix it,” says Bill Sr., the farms’ CFO. “Each crop is micromanaged,” he says. “In the fresh produce game, there’s no room for error.” That also means that the Nightingales are ready to walk away from decisions that aren’t working out. A few years ago, as an example, the Nightingales set up an organic warehouse and distribution centre with enough space to subcontract other organic producers in the area. After recently reviewing the financial performance of this entity, they decided to downsize. “We couldn’t afford the risk,” says Bill Sr. The volatility in organic demand and supply was simply too great. Retailers buy as needed, not based on Continued on page 22

Danny Klinefelter’s top reads • Good to Great, Jim Collins • Thriving on Chaos, Tom Peters • First, Break All The Rules, Marcus Buckingham and Curt Coffman • Leadership Is An Art, Max Dupree • The Breakthrough Company, Keith McFarland • Building Effective Farm Management Systems, R. L. (Dick) Wittman, • The Managerial Leadership Bible, Jeffrey Magee • Performance Execution, Jeffrey Magee

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business Continued from page 21 special organic production contracts. The Nightingales knew that going in, but they found the unpredictability was getting even worse than when they first got into the venture. Conditions had changed, and it was time to wrap it up… without regret and without blame. “For large-scale production there simply isn’t enough strength in the market,” Nightingale summarizes. But what’s right for Nightingale Farms isn’t necessarily right for other farmers, he quickly adds. In fact, he believes the organic market is still good as a niche, particularly for small-scale farmers selling limited amounts directly to consumers. “Maybe 10 or 20 years down the road it (the organic market) will grow but for now it’s too risky,” says Nightingale. “We’ve decided to trim it back.” Now they handle just their own certified organic production through their warehouse, paying extra attention to managing input costs and waste.

Learn from mistakes Successful farmers generally make more mistakes than the average, Klinefelter says. It’s because they’ve made more decisions and tried more things that others haven’t done before. However, these farmers are also quicker to recognize and fix their mistakes and cut their losses, and they are faster to capitalize on their successes. “One measure of success is not whether you have tough problems to deal with… everyone has problems... but whether your problems are the same as last year,” says Klinefelter. ” Since the mid-80s the Nightingales have been trying different ways to extend the duration of the local growing season. They also wanted to control moisture loss and to capitalize on the superior drainage and higher soil temperatures of Norfolk's sandy soils. Relative to other parts of Canada, crops mature earlier here with better disease control and increased yields and quality. Finding, developing and using ways to extend the season is a goal of the farm. In 1981, Bill Sr. was one of the first producers to use plastic mulches, which meant he was able to grow cantaloupes that ripened in July. Previously, they had only been able to sell into the peak period in late August. Cantaloupes are best when they’re ripened in the heat, not in the cool nights at the end of summer. Basically there was no larger-scale commercial production of cantaloupe in Canada so by using plastic mulch the Nightingales instantly became the largest commercial cantaloupe grower in Canada. Then they started trying plastic mulch with other crops. “We were doing it (plastic mulch) seven years before anyone else was thinking or doing anything about it,” says Nightingale. The Nightingales were also among the earliest adopters of drip irrigation to water the roots and temper the risk of frost. The Nightingales also adopted low tunnels, various crop covers, and a series of crop monitoring systems. Then in 2004 Bill Sr. spent six weeks in Europe looking 22 country-guide.ca

for new ideas, knowing that the farmers there were ahead of Canada. When he saw 20,000 acres of fresh vegetables flourishing there under high tunnels, he was convinced the idea would help grow a better product and produce higher yields back in Ontario, and he brought seven and a half acres of tunnels home to set up. It was such a success that the next year he learned how to manufacture the tunnels to better withstand our climate and continued to expand their tunnel acreage. Now, they’re able to produce various tender crops from April through to the end of October with lower fixed costs than greenhouses, which netted them the Premier’s Innovation Award. Nightingale was so impressed with the technology, he formed a company called Tunnel Tech, to manufacture and market high tunnels to other growers in North America and the Caribbean. Today he sells them throughout North America for about $25,000 an acre, about 10 per cent of the cost of a greenhouse.

Timing In Nightingale’s experience, the benefits of getting out ahead with the adoption of new technology can last about 20 to 25 years, but he’s concerned that in the Canadian fresh produce industry, the pipeline of new innovations may be stagnating. Of course, that may just mean that there are opportunities elsewhere. Klinefelter is enthusiastic about that kind of thinking. “Top managers are opportunistic,” he says. “They recognize that in business and in life, timing is everything.” Knowing when to get in also means knowing when to get out or to reapply somewhere else. “This is going to become even more important as the rate of change becomes exponential rather than linear,” says Klinefelter. “Management experts call those moments at which sharp growth or sharp declines occur tipping points.” These farmers have the ability to not only recognize existing contexts, but can visualize future contexts. “The most successful farm executives I’ve met don’t necessarily invent ideas, but they are able to put them in context and add perspective,” says Klinefelter. That’s exactly what the Nightingales have done with their research and development. Bill Jr., the farm’s next generation owner, is applying season-extending technology from southern Ontario to another geography. Under his guidance, over the last four years the farm has slowly expanded production into the southern U.S. They’ve been testing and adopting the frostavoidance techniques imported from the north to produce fresh produce in the winter, including January, February and what Bill Sr. calls “The March Wall” period. Every four or five years, Florida catches a killing frost during the winter months so farmers there simply don’t grow crops then. But the Canadians have a business advantage. With their high tunnels, mulch and drip irrigation, they already know how to survive and thrive during this high-risk period. “Growers get less aggressive the further south you go,” says Bill Sr. “In Florida they farm like we did 20 years ago.” That’s because the climate is so good and they’ve had little grower competition from other areas. February 1, 2012


Canadian Marketing 100 Yonge Street, 6th Floor Toronto, ON M5C 2W1

Size: 4.5’ x 10’ Colours: CMYK - 4 colour Publication: Country Guide - Western Edition Material Deadline: September 19, 2011 Insertion date: Oct 18

business Currently, the Nightingales are in the process of establishing about 100 acres of zucchini, peppers and eggplants as a base farm. Peak production is in March when produce in Canada is most expensive. Then they ship the produce north for grading and distribution via their on-farm warehouses. They use Canadian standards and have full control of the product quality and keep customer relationships year-round. The Nightingales hope this will add economies of scale and enable them to attract and keep more committed employees who want to work all year long. Their plan is to double their rented acres down south in the next few years. This is no small investment, with over a million dollars invested so far in establishing the new snowbird Nightingale farm. “There’s a margin of opportunity in Florida,” Bill Sr. says. However, there’s also a whole new set of rules. They must learn how to farm in the south, where the states handle water, taxes and labour issues differently. There’s also more disease pressure, and no killer Canadian winter to stop the insect, weed and disease cycles. Years ago, Bill Sr. learned firsthand how different geography and culture affects production when he spent three years trying to establish a Canadian International Development Agency project farm in Jamaica. He learned how difficult it can be to be a foreign owner and how important it is to have a network of friends that can help you find good resources at a competitive price. “I learned that it’s the unknowns that kill you,” he says. “I paid the price to learn that it’s not feasible to farm in Jamaica unless you live there.” But then, this goes right back to what Klinefelter preaches. It isn’t that top farmers never make mistakes, it’s that they don’t make them twice. Now, Bill Sr. is helping his son apply in Florida the lessons that Bill Sr. learned in Jamaica. Key learnings include the need to transfer technology in increments, and to rely on their pool of foreign labour. Like many top farmers, the Nightingales’ attempts to push the envelope by trying something different are calculated, managed risks. Again, Klinefelter likes what he sees. “The best managers do their homework,” Klinefelter says. “They consider their options — complete with the possible pitfalls and traps — and they develop a strategy before any major undertaking.” CG February 1, 2012

It takes a lot of time to milk over 400 cows. So the Schoutens started to ‘think outside the barn’.

Arnold and Elaine Schouten run one of Ontario’s top producing dairy herds, milking over 400 Holstein cows daily. That’s a lot of energy spent on a repetitive, time-consuming task. With the next generation now becoming involved, the Schoutens have invested in their future by purchasing 10 robotic milking systems, leaving their hands free to run the rest of their operation. That’s the kind of ‘doing things a bit differently’ that farming demands in order to stay competitive. And it’s where Scotiabank can help, with innovative products and lending that can give you access to the funds you need, when you need them. To learn more, contact your branch today or visit scotiabank.com/agriculturalservices

Agricultural Banking

® Registered trademark of The Bank of Nova Scotia.

country-guide.ca 23

Small Business Banking


business

Sticking together Sometimes the only way to actually make the most challenging of succession dreams come true may be to commit to the oldest of values By Kim Waalderbos

Maybe it doesn’t seem like a story of today, when farmers are told to start at their accountant’s and lawyer’s offices if they hope to help the next generation get started. But it worked. Against the odds, the Wesselius family executed their ambitious succession plan — to get all five sons established on farms of their own — by agreeing on two “old-fashioned” but strategic commitments. First, there was always one head guy. “Dad was always the boss. No question, that’s how it had to be,” says son John. “We would never have succeeded without him.” Second, the family also had one common goal — to farm. That solidarity kept squabbles to a minimum, says older brother George. “Dad said from the beginning, ‘if you fight, I will sell everything and you will have nothing.’” They may not be trendy sentiments, but the results are easy to see when you meet the family. The five Wesselius sons, each on their own farm, now have their own sets of children. In fact, there are 25 grandchildren today, including 17 boys and eight girls. “If they want to farm,” John says, “we’ll do what mom and dad did for us.” ost farmers hope to pass their farm to the next generation. Not many consider how to set up not one, not two, but five sons in dairy farming. That was the prospect facing Jake and Frederika Wesselius in the early 1980s. They were dairy farming in Friesland, a northern province in the Netherlands, and with the first two of their sons already starting into their teenage years and showing an interest in farming, Jake knew the 65-acre land base they had for their 80 cows wouldn’t be enough and he decided they would need to expand their horizons. Today, you can see the results when you drive southwest of Moncton, N.B. There are now five Wesselius dairy farms. As I chatted with Frederika about their journey from the Netherlands to Canada and their start as dairy farmers, it was hard to miss the strong family ties, pride and optimism of this family — those core values that the family built its succession plan on. I only wish that Jake could have been part of the conversation too. He passed away March 5, 2011. 24 country-guide.ca

Frederika speaks of how Jake grew up working beside his dad on a farm owned by an uncle. Jake was a true cow man and business man, but not much for machinery or as a handyman. While in his early 20s and with dreams of growing that small dairy farm, Jake was insistent that they should buy the farm from the uncle. With the title finally in their name, they began to grow and shape the farm, which then milked 20 to 30 cows. In the years that followed, Jake would meet and marry Frederika. Together they would have seven children — five sons and two daughters. In the early years, when a neighbouring property came up for sale Jake used his banker as a sounding board and was advised against buying the land. It was a decision he would later regret as it grew apparent that their small land base was a major growth limitation. After that Jake used his keen business sense to track the farm finances and used a “buy now, ask the banker’s permission later” philosophy, says Frederika. With that spirit they were able to buy land, travelling up the 20 kilometres to

Jacob Wesselius

February 22, 1939 ~ March 5, 2011

February 1, 2012


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Five Wesselius sons are farming today with their own families, and Frederika, at left, says the key to that success was to build ways for the family work together. reach some fields, and kept expanding until the herd reached 80 cows. Their innovative spirit showed through early — they were the first dairy farm in their Dutch village to build a freestall barn in 1974. In the early 1980s, a friend from Canada was in the Netherlands for a visit. He told the Wesselius’s about a dairy farm that he knew was for sale in Canada. With the future of their kids in mind, Jake and Frederika took an option on the farm, but they were not quite ready to take the leap and immigrate. Their seventh child was also on the way. “I was scared to death,” remembers Frederika of the thought of emigrating. “I had to get used to the idea of being without our family and friends. Jake told me: ‘If you don’t want to go, we’re not going.’” The Wesselius family, including all seven children then ages 16 years to six months, emigrated to Canada on May 2, 1983. They settled into their new farm in River Glade, N.B. with 49 cows, 12 heifers and a bull on about 230 acres cleared farm land (leased and bought). There was also about 120 acres of woodland. Frederika remembers there were 658 litres of fluid quota and 93,515 litres of market sharing quota with the farm. It was hard going on their Canadian farm. As with others, what the family lacked in money, they made up for with hard work, sacrifice and perseverance. For the first six weeks in the country they had no income until February 1, 2012

the milk cheque finally came. “Jake had what little money we had left marked on a piece of paper and any time we needed to buy something he kept subtracting and scratching it off,” remembers Frederika. Sons George and John remember when their dad changed their job description from farmers to lumberjacks and sent them into the woods. “We needed fence posts for our farm,” says George, “but we couldn’t afford to buy them, and we couldn’t afford a chain saw either. So dad sent us with the hand saw and axe to the woods and we worked until we had made 300 fence posts by hand.” John laughs at the irony of how after all the work was done the neighbour offered up his chainsaw for the job. Everyone in the family learned to pitch in, including the girls. One of the first two years Frederika unloaded 32,000 square bales off wagons as the kids stacked them in the hay mow. “We were so happy when we could finally afford the first upright silo the third year,” says George. In those early years everyone did their best to save what extra money they could to buy quota. The family also worked on their English. The family laughs at the irony of how Jake, with such poor English, was elected as secretary (and a founding member) of the Southeastern Farmer’s Co-op. George, who had Continued on page 26 country-guide.ca 25


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The Wesselius family Jacob & Frederika Wesselius

George & Heather John & Debbie Wesselius Wesselius

Ron & Coralee Wesselius

Albert & Arlene Wesselius

Continued from page 25 already been to trade school in the Netherlands, went back to high school for two years to practice his English and get his Canadian diploma. All the other kids would complete their schooling and move on to postsecondary studies; the youngest four sons all went to the Nova Scotia Agricultural College. The plans to start what would turn out to be all five sons dairy farming evolved as the years went by, said Frederika. Jake was a firm believer that two brothers should not farm the same property together. “He always said it might work for the first bit, but someone would always want to still be boss,” says John. So it made logical sense that another farm site was needed to start a second son. When a farm came available, the family had a hard time getting the money from lenders to buy the second location. The concept of starting a second farm was outside-the-box thinking then. Frederika remembers their lender saying to Jake that his determination to buy the second farm was likely to cost the family both farms in the end. In 1986 the family bought their second farm, just down the road from the first. It took some creative financing — including the savings that the kids had and the original farm owner leaving some equity in the place. “We bought it for the land,” says George of the 250 acres cleared, plus woodland. “All the buildings were run down, and we never even looked inside the house.” Figuring that George, as the oldest, had the most experience, Jake placed him on the second farm. The first number of years they housed 40 head of young cattle in that barn, cleaning it out by hand by tossing the manure out the windows. “It was a real treat,” says George with a smile, “but we made do with what we had.” Meanwhile, Jake and his second son, John, focused on building the herd size on the main farm. With money tight in 1988, the family headed back to the woods. They hauled pieces out tree length and cut all their lumber with a little sawmill 26 country-guide.ca

Lucille & Joel Brennan

Fred & Tammy Wesselius

Grace & Ryan Wiswell

they setup. Over the next two years they would work together to build their first freestall barn by themselves with space for 75 cows at the second farm site. By this time, the next two brothers — Ron and Albert — were heading to agriculture college and while they were away, the rest of the family stepped up to the building task with even the girls slinging hammers. Eventually, the family split the original milking herd in half so George could start milking at the second location in November 1990. Jake always told his sons that as long as they kept the milk flowing into the tank, the rest of the farm would look after itself. It took a few years after Ron and Albert were finished school before the family could set up more sites. Albert took a job at another farm for a couple of years; he would be the only son to work off-farm. Meanwhile, the Wesselius family started buying herds and quota — when the milk marketing board rules still allowed this — to build the cow numbers on their two farms. In fact, the family would be the first to ever purchase another farm’s complete cows and quota in New Brunswick. Finally, the opportunity came to start Ron farming when the family purchased a former dairy farm in Canaan from Ron’s in-laws. The older brothers’ herds were milking 90 to 100 cows, and they split off animals to start Ron milking in October 1994. Ron would relocate later at an easier-to-farm property a bit farther away in Head of Millstream. A few years later the family bought a fourth farm down the road in Intervale and Albert started milking there in November 1996 with cows and quota that the family had purchased through dispersals. When there were three farms, the family shared one set of farm equipment. It got to the point that they were running 24 hours a day from the start of June until September to get all the cropping done. “John and I had the privilege of cropping in the night hours,” says George. “It made for long days and the challenge was that we were never done.” It wasn’t a whole lot of fun at that point, so when fourth brother Albert started farming, the family February 1, 2012


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The Wesselius family’s succession milestones 1980

May 2, 1983 The Wesselius family immigrates to their first farm in New Brunswick, Canada.

1985

March 21, 1986 Buys their second farm down the road — oldest brother George as manager; second son John manages the home farm.

1990

November 5, 1990 George starts milking at second farm in familybuilt freestall.

established a second set of equipment. The two sets would each be rotated between only two farms. In October 2000, the family started Fred, their last son, at Elgin, N.B., 36 kilometres away. George and John had been building up their herd numbers to the point where they had overcrowded their 70-stall barns with about 130 cows. “We each took the latest ADLIC report (monthly milk recording) and numbered off every third cow to give to Fred to start his farm,” says George. “That was the fairest way we could think of to do it.” By this time, Frederika and Jake owned five farms — with each one managed by one of their sons. None of the farms they had purchased came with cows and quota, and because the buildings were run down, the family built freestalls on each site over time. “By the time we built Fred’s barn, we really had the hang of it and knew what worked best,” says George. Frederika looked after the momentous task of managing one set of books for all the farms. The sons brought receipts for their particular farm to weekly family bowling nights. Every couple of weeks the family would also meet to discuss farm management. “Everyone was allowed to voice their opinion,” says John. “But at the end of the day, it was mom and dad’s decision because they were still in charge.” Over time as the farms grew it became harder for Jake and Frederika to manage the farms as one large group. With 10 years age difference between the sons, the oldest sons were chomping at the bit to branch out with their own ideas, yet the youngest ones were still finding their footing in the industry. After 18 years together in Canada, the time came to cut the strings and let each son stand on his own. For two years leading up to the separation date, the family worked with their long-time accountant and lawyer, and also involved a tax specialist to advise them on how to split the farm as efficiently as possible. Jake and Frederika wanted to split the business fairly among their sons. Each one had about the same amount of quota, newer barns, a place to live, and hired hands. The machinery on each farm was evaluated and balanced until everyone had the same February 1, 2012

October 1, 1994 Third son, Ron, starts milking at farm in Canaan, later moving to Head of Millstream.

1995

November 12, 1996 Fourth son, Albert, starts milking at a farm site in Intervale, N.B.

2000

2005

October 1, 2000 Fifth son, Fred, starts milking in Elgin, N.B.

January 4, 2001 Jacob and Frederika retire from dairy farming; the sons have their own farm businesses.

cash value, and the sons each had to invest an equal amount to purchase some additional pieces so that each farm had a complete set of machinery to use. The debt load was split among the sons, with some accommodation made for those sons that had been farming up to 10 years longer in the family dynamic. “We all felt like we were put on even playing ground, and no one complained,” says George. Now, the sons share just a corn planter and sprayer between the five farms. Jake always said that as soon as he had started all their kids that were interested in farming he would retire. First, he and Frederika bought a “retirement farm” on the same road as his oldest two sons, then he officially retired on January 4, 2001, the date when all the sons were separated into their own business entities. They finally were able to travel and spend time with family, friends and hobbies. Jake was often heard saying, “farming is my hobby, and my hobby is farming.” So it was no surprise that he kept at this hobby even in retirement. Jake enjoyed helping his sons with milking and fieldwork, including running the 1978 tractor that they brought from Holland when they immigrated. Today, each son farms 500 to 600 acres with support from their wives and children, and each milks somewhere between 120 and 260 cows. The brothers that farm closest to each other have a gentlemen’s agreement in which they equally split any farm property that might come up for sale in the neighbourhood. In fact, George, John and Albert share 300 acres of leased land, co-ordinating each year so they all get together to work the land on the same dates. “There’s not much point fighting with your own brother for land,” says George. Frederika shares that folks who hear their story are always amazed at the sacrifices she and Jake made for their family. She’s quick to point out that their children also sacrificed a lot. “They had to put in a lot of long hours and hard work when their friends were out having fun,” she says. “We promised them that if they kept with it, in the end it would all come to them and they would get their own farm. That made it worth it for them.” CG country-guide.ca 27


WELCOME! Agricultural Management Institute Newsletter

A new partnership has formed between the Agricultural Management Institute (AMI) and Country Guide Magazine. It is with much excitement that we bring you the first AMI column. Over the next year, it is our intention to introduce stories, opinions and information that is heard or observed from Ontario’s agricultural community. AMI is the first farmer-led organization that focuses strictly on the improvement of business management practices on Ontario farms. As such, the perspective we share is uniquely insightful as it is a reflection of the ideas and concerns identified by your fellow farmers and farm organizations. In addition, due to the financial commitment provided by the federal and provincial governments, AMI provides funding for projects that develop business management tools, resources, and training for farm families, farm managers, and farm business advisers. These projects are led by agricultural organizations in Ontario as they self-identify ways to improve business management for farmers.

AMI newsletter spread.indd 1

Over the past 18 months AMI has funded over 30 projects, some of which will be shared over the next year with you.

It’s the power of groups! One area where AMI has focused its attention is furthering the formation of farm business management clubs. While farmers from the province of Québec have a long standing tradition of working together in groups or clubs, this concept is still relatively untapped by many Ontario farmers. However, there is, one example that comes from a club of over 60 francophone farmers located in eastern Ontario, who are really feeling the benefits from participating in a club.

The Eastern-Ontario group was formed over 15 years ago and meets on a continual basis to share their production and farm business management practices, all in an effort to move their individual businesses forward. Part of the longevity of this particular group comes from the group fees of nearly $1,500 per participant, which pays for a full-time group leader. The leader’s main duty is to monitor and mentor the group towards improved practices. To replicate this type of activity, AMI developed a program that provides funding for the advisory services of a consultant to assist in forming a group and develop a business plan that will guide the group’s direction in the future.


The consultants provide moderating services that help the group overcome the initial obstacle of building the trust that leads to information sharing and setting goals. One story that has come by way of a past AMI board member is of a young farmer who found he was at the bottom of the group’s performance ranking. He successfully adopted advice from his fellow group members to eventually find himself at the top of the group ranking. What he came to realize was that although he was an excellent grower, he needed to put the same pride and passion he put into growing crops, into his business management in order to make his farm more profitable.

Soft-skill development for advisers AMI not only focuses its attention on farmers, it also has a mandate to improve the use of services offered by farm business advisers. A farm business adviser is any professional who provides advice or services to a farmer in order to improve

the farm business whether that be in the form of law advice from a lawyer, accounting, agronomy...the list goes on. To properly assess the current perception and acceptance of advisory services, AMI conducted two surveys that included questions concerning the barriers for why farmers do not access business advisery services. Feedback has indicated a lack of trust, lack of agricultural understanding, lack of follow-up and overall cost. AMI is now charged with the task of tackling these issues, in partnership with organizations such as the Canadian Association of Farm Advisers. Together, we are working to identify ways to improve advisory services through the development of better communication materials and improve “soft skills” of the advisers. Soft skills are skills such as listening, moderating, providing advice appropriately and communicating the additional services that have previously not been utilized. Another way AMI envisions bringing people together in the spirit of collaboration is through its upcoming conference.

WATCH FOR OUR NEWSLETTER Over the next 11 editions of Country Guide, you will hear from a team of contributors from AMI, including Board members, industry collaborators as well as staff to provide content that will be timely and relevant to your farm business. We will also be accepting feedback on topics that may interest you, so please contact us if there is an issue or topic you wish to hear about. Until then, Ryan Koeslag, Executive Director Ashley Honsberger, Client Services Coordinator ami@takeanewapproach.ca www.takeanewapproach.ca

Calling all Leaders, Innovators and Independent Thinkers! Ontario is facing a time of great promise for its agricultural sector. With a rapidly expanding global population and middle income earners, Ontario is ideally situated to increase on-farm profitability by helping to feed this growing market. At the same time, there is real risk that we may deplete our food production resources; i.e. fertilizer, soil, etc. What we need is a road map to get there successfully. AMI will be bringing together leaders, innovators, and independent thinkers at an upcoming conference entitled: Take A New Approach: Global Perspectives for Growing Farm Profits. The conference will be held this February 15 & 16 in Guelph, Ontario at the Guelph Delta Hotel and Conference Centre. Registration information is available on AMI’s website www.TakeANewApproach.ca. This conference is aimed at encouraging innovative thinking and conducting a realistic examination of current farm business management practises within a global context. It also present the opportunity for business minded individuals to get together and learn more about the opportunities out there, and discuss how Ontario can continue to be a key player in the global agricultural marketplace. AMI has worked hard to ensure the conference covers topics that range from a high level view of the current global economic outlook for agriculture over the next several years, to then bringing it down to a level that will offer tangible ideas on how Ontario can responsibly and sustainably increase its presence in the marketplace. To put the conference attendees in a leadership state of mind, the first speaker of the conference will be Kellie Garrett, Senior VP of Strategy, Knowledge and Reputation at Farm Credit Canada who will speak to “Taking Your Leadership to a New Level”. Dr. Siwa Msangi from the International Food Policy Research Institute (IFPRI) will elaborate on how a more affluent population leads to an increase in food demand. Dr. Msangi’s work at IFPRI focuses on the economic and environmental impacts of bio-fuels however his talk at the conference will be drawn from his vast experiences working in international development, specifically in the realm of agriculture. Full conference details and a list of speakers are available on the AMI website. Without the input and collaboration of farmers, business people, international researchers and policy makers, increasing profitability on the farm during a time of great advances in global opportunities will simply not be possible. The AMI conference is aimed at facilitating those discussions that need to happen in order to get Ontario farmers on track for success.

A federal-provincial-territorial government initiative.

AMI is part of the Best Practices Suite of programs for Growing Forward, a federal-provincial-territorial government initiative.

04/01/2012 12:29:13 PM


management

The one-year lease:

Should you go short or long? Weigh all the costs as well as the advantages when choosing between short- and long-term equipment leases. Here’s how the experts decide which — or which combination — may be right for your operation By Scott Garvey, CG Machinery Editor ne-year machinery leases are quickly gaining ground, especially among large farmers who are determined to minimize downtime. In parts of the country, in fact, they’re the fastest-growing segment of the leasing business. But are they a smart move? The answer can be yes, in the right circumstances. Short-term leasing may be your lowest-cost option, but you can only know that if you add all the factors together, says Grant Griffith, director for primary producers at MNP, (formerly Meyers Norris Penny). That means recognizing that there’s a lot more to a lease than the interest rate, Griffith says. The lease with the lowest interest rate isn’t necessarily the best net deal, because of course, the other key factor is the amount that is being financed — or, in leasing terms, the amount of depreciation. While short-term leases of one or two years usually offer lower advertised interest rates than longer contracts lasting five or six years, their annual cost will be higher. The real expense on short-term agreements comes from depreciation. A new machine loses big chunks of its value during the first two years after it leaves the dealership. After those initial years, the dollar value of annual depreciation tapers off. That means a new machine will lose more of its value per year in a short-term lease than on a longerterm lease, and it is this dynamic, more than anything, that drives up the cost of short-term contracts. If you are always leasing on a short-term basis, in other words, you are always farming with equipment that is losing the maximum value at the fastest rate. “It’s a factor of the residual value (of a machine) rather than the interest rate,” agrees Stephan Paille, director of equipment financing at Farm Credit Canada. “The shorter term may not be the least expensive.” However, even if the short-term lease is more expensive on the face of it, it could still be money well spent. Having major machinery always under warranty may be the answer to labour difficulties or other operational problems. As well, producers who are expanding their opera30 country-guide.ca

tions and need to grow the size of their equipment over time may find a short-term lease suits their needs too. “In a lot of cases they want short-term leasing because they want to be able to flip into bigger equipment as their farm expands,” says Eugene Purcell, international program director at Versatile Finance (Agricredit). At the other end of their careers, Purcell adds that short-term leases also create an opportunity for farmers who plan to retire soon to use new equipment throughout their last seasons and have a chance to sell their own machines at the same time. “If a farmer was thinking of retiring and he takes on a short-term lease, he would be able to sell his (own) equipment off over those two or three years. He has two years to get the full value out of that combine or tractor that he may have some good equity in rather than go for a quick sale.” A short-term lease also fits nicely with equipment that has a low depreciation rate, although a lot depends on the producer’s plans for the machine at the end of the term. “What we see with short-term leases are small-dollar assets that would take a long time to depreciate,” says Paille. “We see customers leasing those for a short term with a minimal residual value. We don’t provide tax advice at FCC, but what we believe is customers are finding a faster way to write that machine off.” They can then buy it for a low price, with most of its value already used to reduce the farm’s tax bill. In fact, most contracts can be structured so the buyout value at the end of the lease is very low — even as low as one dollar with some plans. That gives farmers the opportunity to write off the machine’s value at an accelerated rate and still build up equity throughout the term of the contract. “It can be a quicker writeoff,” says Griffith. But he is quick to caution that leasing to buy isn’t always the best choice for all producers, and it could create as many new tax problems as it solves. As always, it's best to get professional advice. When evaluating the advantages of long-versus short-term contracts, Griffith recommends producers have a clear idea from the start if they’re looking at those agreements in order to maximize operating February 1, 2012


management

advantages or if it’s part of a strategy of acquiring capital assets. Then, once they’ve made their decision on which strategy they’re adopting, they need to stick with the plan. “When they’re looking at a lease program, they can’t be jumping back and forth (between leasing and ownership).” That could dramatically affect a producer’s tax position at the end of a year. “It comes down to what does the customer want,” says Paille. “What is their plan? Do they plan to buy the machine at the end? Do they plan to stay in a lease?” Purcell agrees. “Do you want ownership or do you want usage? Leasing isn’t for everybody. And I always advise every one after we give them options to go see their tax adviser, go see their accountant.” “There isn’t a cookie-cutter style that works for everybody,” adds Griffith. If producers intend to lease equipment as part of an operational plan, the length of the contract they need to consider will depend in part on the type of machine. Some kinds lend themselves to longer lease periods, while others are better suited to shorter terms. “Things that you’re going to keep for a long time, like an air seeder, may not fit on a short-term lease,” says Griffith. “But for some things that are higher maintenance, like a combine or high-clearance sprayer, this is where we’re seeing more opportunities (for shorter leases). You can get onto a program where you’re leasing a combine or sprayer every two years and stay on a warranty program with your local dealer.”

Talk to the right dealer The dealer plays a pretty big part in what kind of lease arrangement a producer is able to negotiate. Even though each retailer has access to similar financing options, the exact terms offered to a customer may vary between outlets, even of the same brand. “The dealer is key,” says Paille. Purcell acknowledges that as well. “Dealerships are the real key in any kind of lease,” he says. February 1, 2012

The reason long-term leases currently dominate the industry is because of the dealer participation in leasing arrangements. Many will be willing to write a long-term deal and still offer farmers a chance to renegotiate and get a new machine every year or two. “There is some flipping of longer-term leases that occurs,” explains Paille. “It’s very common in large-dollar equipment.”

Flipping a long term lease The nuts and bolts of how that’s done will depend in large part on what company is behind the financing but it allows a producer to effectively turn a longterm contract into an annual or bi-annual agreement, providing the farmer and dealer can come to terms. Often, it may be a lower-cost option than going with a short-term lease from the start, even after any refinancing costs are factored in, With an agreement like that, there is a benefit for dealers as well. They know when there will be inventory coming back onto the lot, and the sales team can even begin trying to market it ahead of its arrival. “A lot of dealerships today are writing those five-year leases and flipping the guy in two years, and then they can pre-sell that (machine),” says Purcell. To provide some security to producers, a few equipment finance companies will even allow a farmer to end a long-term lease early without a penalty. However, not all will, and many other lease conditions can vary as well, so Purcell advises farmers to read the terms of their contract carefully. “You have to be very careful when you read it,” he says. Leases written in Canada are required by law to provide full disclosure of the costs involved and the residual value of the machine at the end, which gives farmers a clear picture of all aspects of the deal. “Every producer just has to calculate the cost of having that piece of steel in the shed on their own operation,” adds Griffith. “Make sure you have a good understanding of what you’re paying.” CG country-guide.ca 31


opinion

Can we save the mid-sized farm? Don’t write off co-operatives just yet. Economist Greg McKee predicts the old may soon be new again By Gord Gilmour, CG Associate Editor Since the end of the Second World War, virtually all of our farms have shared the same history. They have either grown, or they have died. Long gone are the half-section grain farms in the West, or the 200-acre corn and bean farms in the East. Ditto the 20-head cow-calf operation, or the 30-sow hog farm. Even a modest-sized farm today would have been beyond imagining to our forefathers. That’s just the reality of the situation, but no one is pretending that it’s been an easy transition. Today’s farm size raises more than a few issues when it comes to how to structure these businesses, and more than a few challenges in how to manage

without assuming huge new risks that may or may not pay

them and keep them afloat.

off? That question has spun off a number of new strat-

Not least of these of these challenges is where the money is going to come from to continue expanding and diversifying these businesses. As their size creeps inexorably upwards, more and more zeros need to appear on balance sheets. More farmers are asking whether today’s most prevalent busi-

egies, from family corporations to long-term rental and leasing. While these strategies might be a good fit, at least one agricultural economist thinks we may want to look back to the future, to a model that many of us see as discredited.

ness model — a sole owner-operator who owns (usually along

Greg McKee is the director of the Quentin Burdick Center for

with the banker) all the assets of the business — is sustainable in

Co-operatives at North Dakota State University, and he sees co-

the face of this new reality?

operatives in one form or another as a business structure that

Is there a way for smaller operators to thrive and grow

32 country-guide.ca

deserves a second look.

february 1, 2012


opinion Country Guide: Any casual observer can tell that farms are growing, and their growth means higher capital requirements. Or are there nuances that we're missing? Greg McKee: What’s really happening is that we’re beginning to see a polar distribution in farm size. There are lots of very little farms, doing specialized things. There are lots of large farms who are engaged in commodity agriculture production. It’s the number of farms in the middle that is really getting squeezed. CG: And you see co-operatives as a potential business structure which will help these farmers? GM: It’s one of the best business structures out there to allow farmers to work together where they need to, yet remain independent where they want to. As agriculture operations get larger and more complex, there may be places where it’s in farmers’ best interests to work together. For example, a machinery ownership co-operative would allow farmers to get access to the best new technology that they might not be able to afford on their own. There’s certainly a fit in areas like value-added processing and marketing. It works really well where there are high capital requirements that might be right at or beyond the capacity of individuals. For instance, many creameries and cotton processors are co-ops, as well as almost all U.S. sugar processing. There are examples of successful co-operatives out there, particularly when they’ve gotten together and created their own brand and marketed it, like the Welch’s juices or Sunmaid raisins. There are groups of medium-sized livestock producers, for example, that have worked together successfully through co-operatives.

CG: Co-operatives were always said to give farmers more market power. What’s the status today? GM: We economists talk a lot about perfect competition, but the reality is that it really doesn’t ever happen. If there were perfect competition there would be a smooth and complete transfer of information between farmers and consumers. Farmers would be able to tell consumers what they have and when they have it, and consumers would be able to tell farmers what they want and when they want it. But the truth is that it’s not worth it for consumers to figure out what each farmer is raising and what they are willing to sell it for. That takes a lot of time and money, so they rely on other companies to do that for them. We also talk about many buyers and many sellers of a given commodity, which also doesn’t happen today. The reality is there are just a handful of companies that farmers deal with when buying inputs and selling produce, which leads to the next point, which is that when there’s a lot of competition, profits will essentially be driven to close to zero — companies will earn just enough to cover their costs and give them a small profit, which also doesn’t happen. So we still have a set of challenges in today’s agricultural economy that farmers need to overcome, and this frequently requires a joint effort.

CG: If you say “co-operative” in Canada’s farm country these days, there’s a lot of baggage associated with it. In Western Canada in particular we look at the implosion of the Prairie Pools, but all across the country there’s a tendency to see co-operatives as a failed business structure in agriculture. Do you find that as well? GM: There’s a similar reaction (in the U.S.), though it might be a bit more muted, since we didn’t have anything quite as spectacular as the failure of the Pools, though Farmland may be a near exception. But certainly there were many examples of similar failures of leadership in our co-operatives, and farmers are a bit disillusioned with them, and rightly so I think. But I would say that they should not throw the baby out with the bathwater. I don’t think the Pools, Farmland, and other co-ops failed fundamentally because of their business structure. The model still has a lot to offer.

CG: What about using the co-operative structure for a farm operation itself, say to allow farming and non-farming family members an ownership stake in an operation? GM: There have been some farm operations over the years that were organized on co-operative models. Some of the sorts of issues you’re hinting at — farm transfer and ownership — can fit this model if the family members are farming, but if there are non-farming family members involved, it may not fit ideally. Let me explain. There are three components to co-operatives, and all three have to be in place for a company to function as a co-op. The people who use the co-operative must be the ones who get the benefits, who have ownership and who control the co-operative. To me these three principles are still central for successful co-operatives. A good place on the internet to learn more about this is at www.extension.org/cooperatives. If you wanted to structure a farm business with farming and non-farming family members both owning shares, you can see how this wouldn’t fit the classification of a co-operative. There are other business models — such as a limited liability corporation — that appear to be better structures when these are the sort of problems you’re trying to overcome.

CG: Can you tell us a bit about what strengths they offer? GM: A farmer owned co-operative works really well to extend farmers along either end of the supply line. For example farmers can use co-operatives to acquire the raw materials for their production — fertilizer, irrigation, perhaps even land and equipment. On the other end they can also use co-operatives to convert their raw products into something else that’s closer to what the final consumer wants — for example converting a whole bison into a piece of steak. There it lets farmers extend forward the extra mile into the realm of operations that gets their product closer to consumers, or backwards to get more value from the raw materials they need for their production.

CG: Are there other keys to where co-ops will work? GM: Probably the most important one is that you have to participate. You can’t just set a co-operative up, hire a manager and then never think of it again. You’ve got to pay attention to what’s happening in that business. You have to read annual reports and financial statements, attend regular member meetings, and basically demonstrate that you control it. There are a lot of benefits to co-operatives — but they come with a cost. That cost is vigilance. The co-operative model is very flexible and has been used successfully in many agricultural settings, but it has its challenges too. To me it’s still a model worth looking at. CG

february 1, 2012

country-guide.ca 33


MANAGEMENT

Own the table Maximize the benefit you get out of your relationship with your farm accountant By Kim Waalderbos

f the expert across the table was recommending which herbicides you should spray this spring, few farmers would shake hands until they had asked enough questions to be sure the recommendation would fit into every aspect of their farm plan. If the expert is an accountant, too often, the temptation can be to take the attitude that the accountant knows their business, and they know your business, so whatever they recommend has got to be the right way to go. Indeed, talking to both sides, the uncomfortable truth emerges that of all the leadership challenges for farmers, being the leader when you’re doing your annual review can be the most rewarding… and the most challenging. To help, COUNTRY GUIDE caught up with two farm accounting advisers to find out how farmers can better maximize their relationships with them. Based in Walkerton, Ont., Jim Snyder is national director for agriculture at BDO Canada, and Stan MacEwen is agribusiness manager at Hergott Duval Stack in Saskatoon.

Snyder and MacEwen agree that the farmers who reap the most value from their relationships are business leaders who engage their farm accountants in a forward-looking, proactive approach to farm management. “It’s like sitting in a pickup truck,” says Snyder. “There are two places you can look. Either you look back using the rear-view mirror and see a smaller, more finite picture of your farm, or you look ahead through the windshield and see the bigger picture of possibilities and where you can go.” It’s up to each farmer to decide what they want from their farm accountant relationship. Some are content to spend all their time with their accountant looking back through the rear view mirror at the year that was, and just want to survive farming and get their tax returns done. More and more farmers, however, are looking through that windshield at the possibilities that could be, and they are engaging their farm accountants to assess those options and help map a route. Snyder and MacEwen have identified these key distinctions that set these top farm businesses apart.

#1 DRIVE THE PROCESS Farmers need to initiate and drive the process with their team, including their farm accountant advisers, says Snyder. “Each farm family that exists today is still in business because they’re successful and doing a lot of things right,” he says. “But there are always areas to elevate and improve their game.” As farms progress, expand and consolidate, there’s a noticeable shift in how these businesses are being managed. MacEwen says there’s starting to be more separation between business and personal life. “Farming is becoming big business, and needs to be treated as such,” MacEwen says. With

34 country-guide.ca

price volatility also becoming more extreme, there’s greater pressure on farmers to do more cash flow planning, lock in more sales and expenses, and work up scenarios to analyze profit options. Snyder is seeing that the farmers who try to stay sharp and keep a finger on the pulse of their business are more comfortable knowing and talking about their financial position. He says this financial awareness pays off because the farmers make decisions that are typically more profitable, and they are able to build better relationships with lenders — resulting in better access to capital, and lower cost of capital.

FEBRUARY 1, 2012


MANAGEMENT

#2 KEEP GOOD BOOKS Farm management decisions need to be based on sound information. That requires strong record-keeping. “You have to measure it to manage it,” says Snyder, who says a number of good accounting and management software programs can help. For farmers who aren’t as comfortable with computer software, Snyder encourages them to seek training opportunities put on in their area through groups such as agricultural organizations, community colleges and business development events. Additionally, he suggests farmers might be able to get together and access funding through Growing Forward programs by proposing learning initiatives that would help improve farm management and record keeping. Sometimes, too, it’s important to accept that record-keeping and financial analysis simply aren’t your strength. That’s okay, says Snyder. “Farmers get help with the production side of their

businesses by hiring others for things like artificial insemination and custom operators,” he says. “Why wouldn’t they seek help with their bookkeeping too by finding someone with that skill set?” Snyder is seeing the task being delegated to other family members, or even non-family members such as young stay-at-home parents that have relocated from the cities to the country and have business training. If farmers need some business referrals, then can ask their accountant. Snyder says he’s often recommending cost-effective local bookkeepers and business consultants to farmers. Both Snyder and MacEwen emphasize that no matter who is championing the bookkeeping process, the information still needs to be communicated to farm owners and key players so that they all understand the numbers. Bookkeeping can’t be done in a vacuum, separate from those who are making key spending and budgeting decisions.

#3 KNOW YOUR NUMBERS AND TRENDS Strong farm managers work with accurate information and don’t try to estimate things, says MacEwen. “They track income and expenses to the penny, know their production and inventory levels, and can project and track cash flow to match it to when they need cash most, such as when making big input purchases.” MacEwen says with these farmers there are rarely any surprises at their annual meetings. “They already know whether it was a good year or not. They have a good handle on where they are financially.” Snyder agrees. He says the annual meeting should be much like looking over a report card of what the farm has done the past year. “It’s a much different conversation at that point because there’s more of a comfort level with the numbers so decisions can be made that are more profitable.” In addition to knowing your numbers, MacEwen says watching trends in how those numbers and ratios change is equally important. “The numbers are a snapshot of the farm at that particular

FEBRUARY 1, 2012

day,” he says. “Knowing the trend and whether that’s a step better or worse than a previous time period starts to tell you how the farm is really doing.” MacEwen is seeing a shift in the method that farmers are using to keep their records as they start to get more focused on knowing their numbers. While most farmers (or their accountant on their behalf) still file on a cash basis for tax purposes, he says more farmers are switching their on-farm books to accrual accounting from cash because it’s easier for them to track how the farm is doing financially, and it’s also the bookkeeping format preferred by lenders and farm programs. “Looking at the cash in your account is just one small indicator of how you’re doing,” MacEwen says. “With accrual you get a better picture of other aspects such as amounts in inventories and prepaid expenses.” He estimates his clients are split, with half recording their onfarm books as accrual and the other half as cash basis.

Keep your accountant on their toes Building trust with your farm accountant is important. BDO’s Jim Snyder reminds farmers that they need to be dealing with someone they trust and someone who understands their business, including the unique tax and accounting issues facing agriculture. “There are lots of great accountants,” Snyder says. “Not all are great farm accountants.” MacEwen agrees and suggests it’s alright for farmers to take their business somewhere else if they feel like they’re not being heard. Each farm is unique so there is no cookie cutter process for managing the farm accounting. Farmers should be getting suggestions from their accountants on things they might consider doing different, MacEwen says: “As you’re sharing your personal and business goals, your accountant should be picking up on things that could be opportunities for your farm.” Such suggestions could be about how your business could be structured better, for example, or how it could be creditor-proofed to protect your investment. MacEwen stresses that it’s very important for farmers to also ask how their farm advisers keep up on information. Do they have network of support? Where do they go for additional expertise? “No one has all the answers,” says MacEwen.

country-guide.ca 35


MANAGEMENT

#4 SET GOALS Begin with the end in mind, says Snyder, pointing to Stephen Covey’s The Seven Habits of Highly Effective People. Smart farm businesses are more proactive in their thinking. “They have an end point in mind, and then work together with their farm accountant to map the route,” Snyder says. Snyder says having a farm accountant is a bit like a GPS system that can help the farmer identify how the business could progress. “There are different ways to get there, and lots of obstacles to do with people and weather changes that will influence the route, though without a map you’ll never know when you’ve arrived.” Snyder suggests farmers start with a blank sheet of paper and write down the goals they have for their business — as well as their personal goals — for at least the next three to five years. MacEwen

takes a similar approach with his clients. He says in your discussions together, farm accountants should pick up on what your goals will mean for managing the farm business, including topics such as capital purchases, and estate and succession plans. “If you’re idea of retirement entails staying in your existing farmhouse and helping out a bit at the neighbour’s farm, that requires a much different cash flow plan than an idea that you’ll spend retirement making trips abroad to explore the world,” says MacEwen. It’s important for farmers to invest time talking with their farm accountant advisers about their goals. It’s also equally important to keep those advisers in the loop when plans change. “Many things can happen that change things for any number of reasons,” says Snyder.

#5 ASK QUESTIONS There’s no such thing as a bad question. That’s why MacEwen encourages farmers to always ask. “If you have concerns or want clarification — ask to have it explained,” MacEwen says. “A little time spent is well worth it when everyone gains a better understanding of where the business is at.” Whether it’s having financial statements explained lineby-line, or understanding what particular numbers mean for your farm’s borrowing capacity or equity position. “It’s your business, and they’re your numbers so you should be comfortable with the information.” Often it can be hard for accountants to gauge a farmer’s knowledge level, MacEwen says. “Asking us questions gives an indication of where you’re at.”

MacEwen also encourages farmers to contact him at logical opportunities outside of their usual annual meeting together. It’s becoming more common for farmers to call him when they’re considering major financial decisions, such as buying the neighbour’s land or looking to lease or purchase a piece of machinery. “They’re wondering what their decision might mean for cash flow and profitability, or what the tax implications might be, or whether it makes sense to purchase in their name or the next generation’s,” says MacEwen. “If I’m kept in the loop it makes a big difference in how I can work ahead to plan and structure the farm accounting so that it brings the most benefit for the farmer.”

#6 BUILD A TEAM It’s human nature to concentrate on the things we like best and ignore what we’re not good at, says Snyder. That’s why he encourages farmers to seek out others with different strengths and talents to form unofficial advisory boards. “It could be a group of farmers pulling together to share ideas and identify best practices for improving their bookkeeping system or exploring intergenerational farm transfers,” says Snyder. Who you choose to ask for your advisory board often depends on the topic you wish to explore. It may make sense to choose neighbours that farm the same commodity, or per-

36 country-guide.ca

haps you would benefit more by learning from farmers in different commodities. It might even be something where you consider reaching beyond agricultural business to other small businesses. There’s a lot that can be learned by sharing ideas and experiences with others that have either tried something similar in their own businesses, such as with software programs or record-keeping, or from with those who are interested in exploring a new technology or practice such as alternative energy options. CG

FEBRUARY 1, 2012


banking

Build a stronger bank relationship By Karl McLaren, Bank of Montreal A strong relationship with your bank and your banker is an important part of a successful farm operation. I sometimes hear farmers mention they were disappointed with the level or with the speed of service they received from their banker. This sentiment can arise for many reasons, but there are measures you can undertake to cultivate a high-quality relationship, and together with your banker, ensure a rewarding relationship in the future.

Provide accurate and timely information

Communicate often

A strong banking relationship is built on a great understanding of your farm business. Providing accurate and timely information allows your banker to develop familiarity with your operation and plans. Often, this comes from reviewing financial statements, business plans, farm performance reports, and conversations with the farmer. High-quality information allows the banker to perform analysis and make decisions with more clarity and greater speed. It also conveys your strong farm management expertise. In addition, your banker will review the farm business to understand any risk that might arise throughout the relationship. Examples of high-quality information include: • Accountant-prepared review engagement financial statements (e.g. balance sheet, income statement, and detailed inventory valuations). • Farm business plan, cash flow projections, and cost-of-production budgets for the coming year (e.g. crop plans, livestock sales, input cost and yield forecasts). • Capital acquisition plans (highlight key capital assets your farm plans to acquire over the next three to five years). To facilitate a timely annual conversation, this information should be available 90 days after your fiscal year end. For transactions and funding needs occurring at other times, this information along with up to date interim financials should be available.

Advisers, including your banker, can only help you if they are aware of your short- and long-term plans. In most cases, bankers review your farm financial position on an annual basis. This conversation is an excellent opportunity to discuss your plans and priorities for the coming year and to discuss long-term goals. If your goal is to purchase a new farm or upgrade equipment, share this with your banker. It will allow them to offer solutions or adjust your banking and financing products to make these acquisitions. However, the relationship shouldn’t be based solely on one annual conversation. Regular contact throughout the year will help ensure that your banker is well informed about your farm and can help improve your banker’s ability to deliver high quality service in a timely manner.

Develop a strong and full banking relationship to help your farm succeed Review this information Often, farmers provide their bankers with quality information but they haven’t spent enough time reviewing the information themselves. Financial statements, business plans, and cost-of-production budgets are excellent management tools that you should review regularly to identify successes and areas for improvement. Your banker will have questions about specific entries and notes contained in these statements. Spending time reviewing the statements prior to meeting with your banker will allow for an in-depth discussion and provide an opportunity to ask for your banker’s opinion. February 1, 2012

Solicit feedback Your banker likely deals with many farmers and accordingly has expertise in areas such as business structure, forecasting, and succession planning. In addition, banks have other well-established resources including investment specialists, cash management specialists, and estate planners who can help you with your business plans and future success. Asking questions and soliciting feedback will yield valuable ideas about your business and finances. This will help your banker better understand your situation and provide solutions tailored to your farm. Your banker is a resource well beyond a provider of capital. To maximize your banking relationship, take advantage of your banker’s experience and expertise. In addition, make a point of meeting your banker’s manager. This is another excellent resource available to your farm and a point of contact should your banker be unavailable. As your farm grows and changes over time, your banker’s access to and understanding of a host of financial products and services will be a great asset. Seeing their customers flourish is the most fulfilling part of any banker’s job. By making progress on these four strategies, together with your banker you’ll develop a strong and full banking relationship to help your farm succeed now and in the future. Karl McLaren is an agricultural banker at BMO Bank of Montreal. He has an agricultural business degree from the University of Guelph and previously operated a dairy farm in Eastern Ontario. country-guide.ca 37


PRODUCTION

What should we learn from By Helen Lammers-Helps

?

We may be getting closer to finding a production system that works every year

Every farmer gets about 40 chances to get it right

Despite getting off to a bad start, corn yielded surpris-

when it comes to planting their crops. The problem is,

ingly well in 2011, says Greg Stewart, corn specialist with

every year it’s like a whole new game. If you want proof,

the Ontario agriculture ministry. A big chunk of the crop

just look at 2011. Then ask yourself how much you’d like

didn’t get planted until the first two weeks of June because

to bet on whether we’ll get that same weather this year, or

of wet conditions, and then someone turned off the tap.

something completely different.

Much of the province didn’t get any significant rain for the

It’s an old truism, but it’s still true, and it holds for more than just the weather. Between Mother Nature, new weeds and pests, new hybrids, volatile input prices and a whole host of new technologies, the rules are always changing.

next two months, with the last two weeks of July being particularly hot and dry. Fortunately for the vast majority of corn acres, the August rains came in time to preserve kernel number.

In that mix, farmers are somehow supposed to find a

Then, excellent growing conditions throughout August and

way to live up to their stereotype as masters of innovation

September led to kernel size that was larger than average

and eternal optimists, and somehow manage to take into

and often resulted in above-average yields.

consideration all of these game changers before making their plans for the next growing season. So with another year behind us, what lessons can be gleaned from 2011?

LESSON #1: ADJUST N BASED ON SPRING WEATHER Cool and wet conditions in April, May and June resulted in lower-than-normal mineralization of nitrogen from soil organic matter, which was made worse by the loss of fertilizer N through denitrification. This was confirmed, Stewart

38 country-guide.ca

And our luck kept coming. Killing frosts didn’t come to most of the corn belt until well into October, which gave even the June-planted corn a chance to dry down to the 22 to 26 per cent range for combining.

says, when the Pre-Sidedress Nitrate Test (PSNT) Survey done June 10 to 15 showed soil nitrate levels were below average. Many fields needed more N than we would have estimated, he continues. While the N calculator is a good general tool, it can definitely pay to assess spring weather and soil nitrate levels to see if there is a need to top up your sidedress rates.

FEBRUARY 1, 2012


PRODUCTION

LESSON #2: SEEDBED PREP PAYS OFF In 2011, farmers were rewarded for doing a better job of seedbed preparation and a better job of planting. “This is one of the reasons we were pleasantly surprised by yield,” says Stewart, who says farmers should aim for a uniform seedbed. “A good set of harrows will ensure their planter performs better,” he says. 2011 reinforced the lesson that conditions at planting set the stage for the entire year, agrees Scott Fife, area agronomist with

Pioneer Hi-Bred Limited for eastern Ontario and the Maritimes. Fields that were planted one or two days too soon had compaction a few inches below the soil surface, he says. With the dry conditions in June and July these fields suffered more moisture stress due to restricted root growth. “We saw more lodging and kernel abortion in these fields,” Fife says. Meanwhile, neighbouring fields that have been nurtured over time so they have superior soil structure paid their farmers back by growing through those stress periods and posting some remarkable yields.

LESSON #3: WATCH K LEVELS

LESSON #4: HYBRID SELECTION PAYS OFF

Adding some potassium to the starter fertilizer will pay off for corn fields where soil test K values are less than 80 ppm, says Stewart. With high yields the past few years and high potash prices, many fields are now testing at less than 80 ppm soil K. That’s especially true of fields that aren’t getting manure. “My data would suggest we need to be careful about how low we go with soil test potash,” Stewart says. He points to the first three years of a potassium starter trial which show a response to K in the starter even when 200 pounds of K was broadcast ahead of time. Stay tuned for future results, but although the numbers were mixed for 2011, Stewart thinks corn planted on soils testing less than 80 ppm K will show an economic response to K in the starter even if K is broadcast.

Those last minute hybrid switches paid off. With the late planting conditions, growers who worked with seed reps and agronomists did a great job of adjusting to the challenge by selecting the proper hybrids not only for yield potential but also for performance in a stressed growing year, says Dave Den Boer, manager of product development and agronomy for Pride Seeds. “This resulted in a crop that came through better than expected,” Den Boer says. Still, there was a surprise. Corn experts thought there would be little if any payback to high populations, given the late planting and high-stress conditions. Instead, 2011 was the fifth year of a Pride population trial, and the results showed another yield increase for hybrids that are adapted to higher pops. Says Den Boer: “We didn’t expect to see that in a dry year.”

LESSON #5 WATCH OUT FOR WESTERN BEAN CUTWORM

tan to purple within five to seven days. The best time to spray insecticide is when the eggs are purple and starting to hatch. After hatching the larvae will enter the tassel and within a week, will move down to the ears where they cause extensive feeding damage for the rest of the season. Smith adds that Western bean cutworm damage may also lead to increased ear mould. At the end of the season the larvae crawl down to the ground where they overwinter. Researchers can’t predict how extensive the problem will be in 2012 so growers are urged to be vigilant, particularly near the previous hot spots. Syngenta corn hybrids with the Viptera trait will give almost 100 per cent protection while SmartStax and Herculex corn, which contain the Cry1F protein are expected to provide 70 to 90 per cent protection. While selecting seed with resistance is the best option, says Smith, three insecticides — Matador, Corrigan and Decis — are registered for use. CG

Researchers are watching the western bean cutworm, a pest that is on the move and expanding its territory. There was significant damage from the pest in the Bothwell, Strathroy, Tillsonburg and Courtland areas, says Jocelyn Smith, expert in field crop pest management at the University of Guelph’s Ridgetown Campus. Moths were first spotted in Ontario in 2008. By 2011, they were confirmed all over Ontario — even as far north as Temiskaming and eastward into Quebec. However, damage from the feeding larvae thus far has been limited to the southwest. Growers should be watching for the eggs. They’re laid on the upper side of the leaves near the top of the plant just before tasselling. These eggs will change colour from white through

FEBRUARY 1, 2012

country-guide.ca 39


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How wet is it? 2012 could test all your skills if you hope to get your corn off to a fast, strong start By Ralph Pearce, CG Production Editor or corn growers, winter is the season for pencilling out your costs, mapping out your rotations and evaluating any changes to your management system, all in preparation for the flood of work that the spring season brings. For the 2012 planting season, however, many growers will be thinking of another kind of flood — the watery kind — and they will be remembering all those anxious days in 2011 as they prepare for corn planting. By late May, most of us thought last year’s crop would be average at best, and we worried that with an early frost, even average might be too much to hope for. Then came the amazing August and the long, open September for a glorious late-season surge. Can we plan on the surge again, or do we need to look for better ways to handle wet spring soils? “It wasn’t their best crop, but in some cases, it was their second-best crop,” says John Waters, a

Rainfall Accumulation: May 1 – December 31, 2011

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certified crop adviser with Lakeside Grain and Feed Supply in Forest, Ont. “Guys who said they hoped they’d get 150 bushels per acre and be happy if it came in at less than 30 per cent moisture wound up getting 200 bushels per acre and 19 per cent.” “When you think about it,” says Waters, “that’s really a testament to the new genetics.” That’s the same message we’re hearing from researchers and extension personnel this winter. The 2011 growing season will likely be remembered best as one of those farming anomalies — a year when it seemed that growers could basically do no wrong, at least with their corn and soybean crops. That’s not to say that growers found getting into the fields at harvest a simple matter. Above normal temperatures and a late frost effectively extended the growing season but heavy rains in the extreme southwest and in pockets elsewhere kept the crop in the field much longer than anyone wanted.

A wet spring ahead Despite that better-than-expected harvest, and despite the relief that has come with historically strong crop prices, 2011 has left us the makings of a difficult 2012. It can be summed up in two words — excess moisture. Yes, growers had to suffer through late planting and poor emergence last year, but think how much worse it might have been if we had gone into 2011 with record levels of precipitation from the year before. Weather INnovations (WIN) Incorporated, a weather monitoring and data gathering service based in Chatham, Ont., has issued its final tally for May 1 to Dec. 31, showing the Windsor-Essex region to be the hardest hit, with most of the county receiving at least 1,000 millimetres or essentially 40 inches of rain. Some parts were even wetter, getting soaked with closer to 50 inches. February 1, 2012


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And that was despite the June/July drought. Concerns are already surfacing about the kinds of difficulties growers will face heading into the spring planting season with those saturated soils. Unless March and April are uncommonly dry, excessively wet fields seems likely to prove the norm, and growers will be challenged — again — getting their corn planted in the spring.

Worse compaction For starters, compaction is likely to be a bigger issue this year than last, and at least for now, there aren’t any quick fixes. “At this point, frost is the only thing that’s going to break up compaction,” says Waters. If they had been planted earlier, penetrating cover crops such as tillage radish could have helped fracture tough plow pans, but that option will not be available until the fall of 2012, Waters says. “Tillage radish isn’t cheap but it’s cheaper than driving a shank down 18 inches and possibly making things worse.” The only real option for growers is to simply bide their time and wait until the ground is fit. “In some of these fields that were soaked, and in marginal fields, they’re going to have to be very careful this spring, and it may be very prudent for them to wait,” says Allan Spicer, a certified crop adviser and marketing representative for Can Grow Crop Solutions. “There’s no question that there’s going to be some compaction (in 2012). The clay soils that drain very well, they’ll be fine. But if you have dense clay — the wrong type of clay — then yes, there are going to be problems.” The tough question will be, how much can we get away with? In 2011, with all of the problems with the weather and a rushed planting season, there were incidents of sidewall smearing and “mudding-in” the crop. Yet the crop performed well. Ken Currah, market development agronomist with Pride Seeds, says that attitudes and solutions in the field have changed in the past 20 years. Equipment now is far more precise and powerful, and more forgiving when soil or weather conditions aren’t so co-operative. “We have a lot easier time making seed beds with the equipment options we have and with the horsepower we have today,” Currah says. “We can take a field that’s may be not quite ready to go, take tacky ground and make a seedbed out of it.” In any presentation on high yields in any crop, Currah notes that the two hallmarks in the discussion are early planting and plant stand consistency with rapid, even emergence. “That’s a difficult balancing act, but the bottom line is that you only get one chance to do it right, and if you look at last year, we had really limited root development,” says Currah, adding that many growers also learned what they can and cannot get away with in terms of fertilizer and herbicide applications. February 1, 2012

In 2012, Currah says growers will need to pay closer attention to the kind of job they are doing with their cultivators and planters as conditions change, not just from field to field, but across the same field.

The wet diseases For Albert Tenuta, the disease issues facing growers in 2012 are essentially the same that growers have been dealing with for the past five to 10 years, but with these weather conditions, we’re likely to see heavier pressure from all of the diseases that like wet soil environments, including the root rots and water moulds. “The pythiums and phytophthoras that can affect both corn and soybeans are the ones that will thrive under those conditions,” says Tenuta, the field crops pathologist with the Ontario agriculture ministry. “Growers making their selections for those hybrids and varieties should be looking at resistance and tolerance levels, particularly for phytophthora root rot.” As for the diseases that are increasing in Ontario, Tenuta says a lot of those are related to some of the recent changes in agricultural practices. “What we’re seeing are diseases that are residueborne, they survive longer, and have the ability to survive either in the soil or on residue,” Tenuta says. “These are the ear moulds, the residue-borne diseases in corn such as gray leaf spot, and Northern leaf blight that can survive either in the soil for a prolonged period of time or on residue.” Other diseases that Tenuta has on his list include Goss’s wilt, which is beginning to move north from Indiana and Michigan (although it has yet to be found in Ohio). Gibberella ear rot could also become an issue again, although that won’t be known until later in the season.

The value of drainage One of the fastest growing businesses related to agriculture in the past year is tile drainage. Contractors are overbooked — some as much as 18 months in advance — and interest in the subject is at an all-time high. At the 2012 Southwest Agricultural Conference in Ridgetown, organizers were hoping to attract between 15 and 25 people to each session on how tile drainage pays. The first session on day one was standing room only, attracting roughly 90 people. The second had nearly 120. With land fetching more than $10,000 per acre in some regions and commodity prices at relatively stable levels, there is a growing incentive to improve land quality. Currah also notes that some growers are moving into second generation tiling, either replacing old tiles or increasing their frequency, from 60 feet to 30, or from 30 feet to 15. Like corn farmers, however, the tilers will be looking for decent soil conditions. CG country-guide.ca 41


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Corn choice So you liked the hybrids you planted last year. Should you really plant them again? By Philip Shaw and Helen Lammers Helps

arming is a risky business. Each spring, corn growers go to the field and invest thousands in seed, fertilizer, herbicides and more, all in the hope that the crop will grow. We know the odds, and we ante up regardless. The truth, however, is that the odds aren’t the same for everyone. Growers who do a better than average job of picking their hybrids essentially have an ace up their sleeve. If anyone is going to walk away from the table with money in their pockets, it's probably going to be them. There's no news in this. Or maybe there is. In reality, the world has changed with regard to hybrid selection. With the advent of biotechnology, corn hybrids have turned into much more than just “corn.” Bt hybrids were the first to make the jump, but as we look into 2012 there are myriad new traits built into new hybrids that make our purchase decisions that much more difficult. Even with conventional traits, the game is different than it used to be. Improvements are coming faster than ever, which means it can take more effort just to keep up. Hybrids that used to last six or seven years, and sometimes more, now have an average lifespan of just four years. In addition, there’s more than ever for farmers to think about because of changing condition in their own fields, says Dave Den Boer, manager of product development and agronomy with Pride Seeds. “Increased plant residues, adverse weather extremes and the onset of new insects and diseases are new factors that growers need to deal with.” On the plus side, however, the overall field of hybrids is better than it has ever been. Basically, you can’t go too far wrong if you choose from any of the main genetics, says Pat Lynch, a Stratford-based certified crop adviser with an interest in hybrid selection since the 1970s. 42 country-guide.ca

“There’s not as much difference between hybrids as there used to be 10 years ago,” Lynch says. Still, differences of 20 bushels per acre aren’t uncommon, and when Greg Stewart, the Ontario ag ministry’s corn guru, talks about hybrid selection, you can hear the capitals in his voice: “Seed is THE most important input,” Stewart says. Then, you can multiply those yield impacts by today’s corn price, says Scott Fife, area agronomist for Eastern Ontario and the Maritimes with Pioneer Hi-Bred Limited. The result, says Fife, is one of the highest paybacks for any decision you will make all year. Another way to look at it is that all the crop-management decisions you make before or after hybrid selection are focused on protecting the genetic yield potential of the hybrid. You only get one chance to select that basic potential. Plus, selecting the right hybrid gives the best chance for good corn performance no matter what the growing season brings. For example, in 2011, hybrids with excellent emergence and vigour scores paid off as seed was planted in less-thanideal conditions. Hybrid choice nearly had to be vital in a different way too. The delayed planting meant hybrids that were faster to flower would have had a better chance to produce quality grain if there had been an early killing frost. Besides, switching to the newest highyielding hybrid a year earler than the next guy will give you a competitive advantage, says Stewart. “This is part of the art and science of farming,” says Stewart. By looking at the corn performance trial data and on-farm trial results, and diligently sorting out that data, a grower can be planting the new big hybrid before the rest of the township has picked up on it, Stewart continues. In other words, the old days have

disappeared when you could stay with a corn hybrid until you get conclusive onfarm proof that a new hybrid is better. The key in making that move sooner rather than later is getting access to yield data wherever you can, and for that, Stewart and Lynch point first to the Ontario Corn Committee trials found at www.gocorn.net. “It’ll get you in the mood,” says Lynch, who relishes the challenge of trying to pick the winning hybrids. The OCC reports make a good introduction and give some good background information, he adds. They’re also a good place to sort out the various traits without all the confusing company branding. For example, hybrids with resistance to corn borer are labelled B while D denotes hybrids with resistance to corn rootworm, W resistance to Western bean cutworm, etc. However, the most important information sources, in Lynch’s opinion, are the dealer and the company websites. Lynch likes the Pioneer database and hopes other companies will follow suit with a similar format. “Their site has a significant amount of hybrid by population data,” says Lynch. There are some things to keep in mind when reviewing the hybrid comparisons, cautions Lynch. Farmers need to look at the number of trials represented. “A February 1, 2012


production

“You need a good dealer you can trust… one you can count on for more than coats and hats.” — Pat Lynch

minimum of six trials is required,” he says. He also urges farmers to consider the percentage wins and the size of the win. A really big win could mean the data is questionable, he says. At one time, choosing a hybrid was a much simpler operation. A grower might have considered standability and yield and a few other factors, with seed price being one of them. Now there are multiple options and combinations of traits that growers need to assess, in contrast to yield potential alone. In fact, Stewart says that agronomic considerations might actually be first and foremost. Regardless of the traits that are available, there may be some hybrids with elite high-yielding germplasm that work best on your farm. Still, the western bean cutworm is an example of how the decision can rapidly get more complex. A relatively new pest in Ontario, we know the bean cutworm is not going away and it is overwintering in Ontario. Stewart says there were three times as many fields with western bean cutworm in 2011 compared to 2010, which resulted in a yield loss of five to seven bushels per acre in a fairly small geographic area. Growers over the last couple of years have been scrambling to choose the right trait to help fight the pest. February 1, 2012

For producers growing corn after corn and farming in an area where this cutworm has been confirmed as a problem, there are two trait decisions. The producer would need a corn hybrid with rootworm control and a trait which helps fight western bean cutworm, such as Herculex, SmartStax or Viptera. If you don't grow corn after corn or farm in an area where you do not anticipate western bean cutworm, these traits may be less valuable. In other words, the days are long gone when all that mattered was finding the corn hybrid to give you higher yields. Now you also have to be aware of some of the pests which you might have to defend against on your farm. Corn hybrids with specific traits may be very valuable. One of the benchmark criteria in the past has been standability for corn hybrids. In many ways it goes without saying that the hybrid with good standability will ultimately result in more grain in the tank. However, this isn’t always how it turns out. Stewart says that in the past the harvest index, which is the percentage of the corn plant which is grain, was approximately 48 to 50 per cent. Now, some of the new elite high-yielding corn hybrids have harvest index numbers of 54, 56, 58 or 60 per cent. As long as you've got sufficient stalk strength, isn't it better to put the extra resources into the ear? One option for finding better hybrids is to get more outside support. “As with everything from marketing your grain to managing your investments, farmers are relying more and more on the advice of professionals in their field,” says Doug Alderman, national sales manager with Pride Seeds. Yield, emergence, flowering, standability, disease resistance, dry-down and harvestability are all very important criteria when selecting a corn hybrid, Alderman says. With so many variables, it becomes a challenge to pick the winner. Having a good relationship with your seed rep is essential, agrees Fife. It’s hard for growers to gather all the info on their own, especially with the fast turnover of hybrids today, he says.

Lynch agrees. “The seed rep is trained and has the knowledge,” Lynch says. “You need a good dealer you can trust… one you can count on for more than coats and hats, a dealer who thinks long term and not just this year’s sale.” While Fife says data from trials on your farm is valuable, he also recommends looking at results further afield. These results will be a better predictor for next year, he says. Lynch also cautions farmers to be careful of results from their own farm trials when they don’t agree with other local comparisons. “Do not trust your own on-farm trials without looking elsewhere,” he says. Fife advises farmers to volunteer for a research plot with a seed company. This allows growers to get a look at a hybrid a year before it’s widely available commercially. “You can try it before you have to buy large volumes,” he says. “We’re always on the lookout for volunteers.” So when comparing hybrids, what factors should growers focus on? In Fife’s opinion, the big three are yield, maturity and standability. “After that, you need to look for traits that are specific to your own situation.” For example, a hog producer in southwestern Ontario will really want to look at giberella ear rot tolerance. And a no-till grower might look for stress emergence for cold ground. Still, some of the old rules still apply, including the 60:20:20 ratio for selecting corn hybrids, where 60 per cent of your corn acres should be planted to a hybrid within your heat unit maturity, 20 per cent to a hybrid that is about 100 heat units later than your maturity and 20 per cent to a hybrid that is about the same amount earlier than your maturity. Still, the best advice of all is to not put too much faith in your own ability to pick the winner. Choosing a diverse lineup of locally adapted hybrids with varying maturities and agronomic strengths is one way to help manage weather and pestrelated risks. Except in extraordinary circumstances, don’t plant more than about 25 per cent of the farm to any one hybrid, Fife says. “Unexpected things can happen.” CG country-guide.ca 43


production

Corn Outlook 2012 If 2012 is as unpredictable as 2011, can that be a good thing for corn growers? verybody likes to plant corn. At least it sure seems they do, and with $7 cash prices dancing in the collective memory of many eastern Canadian farmers, it’s hard to blame them. Corn prices have retreated from 2011’s highs, but as we look toward spring 2012, corn planters are poised to roll again. The question is, is it time to scale back our enthusiasm? The conventional wisdom in farm country is that, all things being equal, farmers will choose corn over soybeans or any other row crop. A large part of the reason is that modern corn hybrids have shown they can tough it out, year in and year out, and when the season is at all decent, they can hit it further out of the park than any other crop out there. Seed companies have inserted both biotech and improved conventional traits into new corn hybrids, so they not only fight pests like the European corn borer and western bean cutworm, they also thrive and pump out the bushels across a wider and wider range of weather and field conditions. But that’s what is happening in the real world. What happens in the market often 44 country-guide.ca

seems so very unreal. At least, it can be based on psychology, not just science and the fundamentals of supply and demand. Will the fundamentals of supply and demand change rapidly in 2012, and if they do, will those changes affect prices to the farmer? The difficulty of farming in 2012 is that once you start asking such questions, you have to keep asking more. Will politicians stick to their guns on ethanol support? Will non-agricultural investors keep pouring their billions into grain markets? Is weather likely to dominate the market? These are only some of the questions that corn producers may have to ask as they make plans for the coming spring. To answer them, lets start by taking a harder look at what happened to the market in late 2011. Since the end of August, corn futures have lost almost $2 a bushel — a significant drop caused mainly by noncommercial speculators leaving agricultural commodities. This in turn was caused partly because of the uncertainty that was generated by the sovereign debt woes within the European economy. So it’s no surprise that as we look ahead to 2012, many corn producers are wondering almost as much about non-agricultural

By Philip Shaw

markets as they are about basic grain supply-and-demand fundamentals. With the price of corn retreating by those two dollars in late 2011, you might think the fundamentals don’t matter any more. Adding muscle to that argument is the fact that the USDA supply and demand report in December 2011 pegged the U.S. corn stocks-to-use ratio at 6.7 per cent, which is still the lowest in history except for this past summer. Under such a tight scenario, how could prices fall? As we look into 2012, part of that answer may have been provided by that same December report. The USDA pegged global corn production for 2011-12 at 867.5 million tonnes (mmt). Corn production outside of the United States is estimated to be 43.4 mmt higher than last year with China’s production up 7.3 mmt at a forecast 191.8 mmt for this crop year. World ending stocks rose from 121.6 mmt to 127.2 mmt. The simple fact is that corn ending stocks, both in the United States and globally, increased in late 2011. Corn physical supplies may be tight in some areas of North America but it is clear that higher prices from early 2011 have encouraged production February 1, 2012


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worldwide — which, according to the textbooks, is exactly what high prices are supposed to do. Meanwhile, the 2011 U.S. corn crop was below average, with the December USDA report pegging it at 146.7 bushels per acre on 83.9 million acres. That puts production at 12.310 billion bushels, compared to total corn usage at 12.605 billion bushels. Ethanol was the largest component of that with corn usage, coming in at five billion bushels. Feed use followed at 4.6 billion bushels. That said, corn usage was actually down from the previous year, easing off to 13.066 billion bushels. Again, the text book theories are in force. High prices not only increase supply, they choke demand. It’s true that supply and demand may

We all need to be watching this speculative demand, and also watching for any other issues that might limit the participation of the spec funds in the corn market. Darin Newsom, a senior grain analyst with Telvent/DTN of Omaha, Nebraska, believes that world demand for corn will continue to grow, but he also believes that noncommercial demand is crucial to buoyant price movement. However, Newsom also says we should be keeping our eye on the U.S. dollar. That’s a market that the spec funds will be following very, very closely, he says, because if the U.S. dollar continues to gain value, the funds may not be able to reap the profits they are looking for in the grain market.

“Look for spring and summer weather rallies as the potential wildcards in this year’s corn market.” — Philip Shaw not have been affected as much as we might have predicted, but the signals are there. So what happens next? Will the market in 2012 depend on the weather? Or will there be other important factors that may lead to explosive price movement — upward or downward — before the 2012 crop is in the bin? Are the bears solidly in control of the grain-marketing playing field? In other words, should corn producers act defensively in 2012 against further price drops? Yes, as we noted in the introduction to this article, everybody likes planting corn but good things don’t necessarily last forever. The ups and downs of the price cycle are a natural part of agriculture, and a natural part of the corn market. Not all is bleak, however. Part of the foundation for improved corn price prospects in 2012 will be seen if noncommercial speculative demand comes back into agricultural commodity markets. Speculative demand consists of ETFs (Exchange Traded Funds), investment funds, index funds and many other types of financial instruments. The exit of noncommercial speculative demand was the main reason for the price drop in late 2011, and as we said, it was caused partly by uncertainty surrounding the sovereign debt problems in Europe. February 1, 2012

When the U.S. dollar was lower, it was much easier for the spec funds to make money. Basically, they were making money on the corn market, and also making money on the currency market in the same play. It will be much more unlikely that they will be able to forecast those returns if the greenback continues to gain in value. Agricultural commodity futures prices typically go down when the U.S. dollar goes up and vice versa. So, although a return of the noncommercial speculative demand in the corn market would be welcome, it’s not necessarily guaranteed, even if Europe starts to get it fiscal house in order. Newsom also draws parallels between the demise of MF Global, the large U.S.based brokerage firm, which filed for Chapter 11 bankruptcy in 2011, and the movement of noncommercial speculative capital into grains. When investors see that MF Global can run aground in the grain market, it’s a warning that corn may be too risky for non-industry players to mess with. Besides, we certainly aren’t out of the woods with regard to Europe. At the very least, the EU has to look forward to an economic path fraught with pain.

At worst… well, it could be much worse than what we've seen so far. Excessive sovereign debt financed by European banks has become a vicious circle and it has the potential to continue causing instability in world capital markets. This sort of pattern usually results in capital buying in U.S. securities, and this in turn raises the U.S. dollar — which as we have said is usually a negative for agricultural commodity prices. These European issues will not go away easily or in the short term, meaning a constant flux for currency markets, and this has an all too real potential to affect Canadian cash prices for corn. The success of the U.S. ethanol industry has been a major factor in corn prices rising over time. Who would have ever believed that in 2011 there would be more ethanol produced from corn to be burned in automobiles than would be used for feed? However, that is exactly what is taking place now. Ethanol profitability is based on a combination of the price of ethanol, corn, oil and gasoline prices — and available subsidies. Although some U.S. subsidies ran out at the end of 2011, ethanol demand has a solid base. The same is true in Ontario, where the Ontario Ethanol Growth Fund continues to subsidize each litre of ethanol produced from designated plants. The challenge for Canadian corn growers is to measure the profitability of corn on their farm. Rotational concerns are always paramount in the farm management process. Clearly though, the spectre of 200 bushels per acre at healthy prices in 2012 may trump everything. In Ontario in 2012, there may be more than two million acres of corn if the crop gets in the ground on a timely basis. But we all know that there’s a long way between hope and reality. Just because we want to get that much corn in the ground doesn’t mean that we automatically will. In fact, a big corn acreage may be a considerable challenge, given the wet conditions of the fall of 2011 and whatever the winter months bring. Certainly, 2011 wasn’t an easy planting season. Regardless, let’s hope 2012 is a real corn year. Big yields are good news, whichever way the market goes. CG country-guide.ca 45


ACRES

By Leeann Minogue

Carry the load If you give the kids a chance to lead, who’s going to do the real work? hen Elaine stepped inside the Hanson Acres cleaning plant she found three generations of Hanson men all focused on the same thing. Her father-in-law Dale was balancing at the top of a six-foot ladder, trying to hold on to one end of an eight-foot iron shaft as he pulled it out of the fanning mill. Elaine’s husband Jeff was on ground, staggering under the weight of the other end of the shaft as he tried to set it down safely. “Don’t drop it! Don’t drop it!” her grandfatherin-law Ed was shouting from his perch on a stool across the room. “Do you know what it would cost us if we had to take that thing to a machinist?” “Geez, Dad,” Dale shouted. “This thing must weigh 200 pounds.” Elaine watched as her husband and his dad lowered the large shaft down to the cement floor as gently as possible. “Thought you two were gonna crack the cement floor,” Ed grumbled. “If we had one more guy it would be easier to handle this thing,” Dale said. “You can’t do a repair job like this without a supervisor,” Ed said, rubbing his bad hip and wish46 country-guide.ca

ing he could help, or at least that he could stand up instead of sitting back like an old man while everyone else worked. “Looks like I came out at the wrong time,” Elaine said, pulling off her toque now that she was out of the cold winter wind. “Not if you want to watch an accident,” Ed grumbled. Dale climbed down from the ladder, and Jeff leaned against the wall, panting and rubbing his sore arms. Elaine got straight to the reason she’d come out to talk to the men. “I just had a call from my friend Sarah. Jeff, you remember her from university, don’t you?” Jeff nodded. “She’s got a government job now. In the agriculture ministry. And she has an offer for us.” “She’s from the government and she’s here to help us?” Ed said. “She has an extra invitation to the CIGI course. The ministry sponsored a few spots, and someone just dropped out. She can send one of us on the Grain Industry Overview Course in Winnipeg in March.” “Ciggie?” Ed asked. “The Canadian International Grains Institute,” Elaine said. FEBRUARY 1, 2012


acres

“Oh,” Ed nodded. “We’d better get in on that while we can. That outfit won’t last without the wheat board to prop it up.” “No,” Elaine said. “CIGI’s been working with grain companies and farmers. It’ll carry on giving courses and making sure end users know about Canadian grain, no matter what happens to the CWB.” “Huh,” said Ed. “I don’t see how they can last if they think we need a farm course. After 60 years at this, I could teach that course.” “There’s always something to learn, Dad,” Dale said. “When is it?” “March 19 to 23,” Elaine said. “That’s a long time to be away,” Dale said. “By the time a guy drives all the way to Winnipeg, it’s darn near a week off the farm. And the end of March? The phone’ll be ringing off the hook with farmers wanting seed.” “It’d be a shame to turn it down,” Elaine said. “The course normally costs more than $1,200. But since we have a sponsor, we only have to pay for meals and entertainment.” Ed chuckled. “Remember when Rick Wilson came home from that farm course in Winnipeg? He couldn’t stop talking about all the ‘entertainment’ he saw. When those corporate reps took him to see the ‘naked ballet.’” “What?” Elaine asked. “That was years ago,” Jeff said. “I’m sure they don’t do that anymore.” “Yeah, right,” Ed said, winking. Dale ignored his father. “I don’t know, Elaine. Spring is just too busy around here,” Dale said. “I knew you’d think that,” Elaine said. “I phoned Earl Geddes, the CIGI director, to see if he thought the course would be worth taking so much of our time.” “He’s not going to tell someone not to go to the course he runs,” Ed said. “Well no,” Elaine said, “But he has seen a lot of people who took the course and went home satisfied. Earl says learning more about the industry and our end customers can help farmers make better business decisions. And the course even has a section about transportation and logistics. You were just saying yesterday that you wished you understood railway pricing better.” Dale had to agree with that. “And Earl says the best thing is that it gives you some connections in the grain industry, so when you have a problem you know who to talk to. Remember when we had that mix up with our cash advance? It took us four days to figure out who to phone.” “Well,” Dale said. “I suppose I could get away for a few days. But I’ll have to leave the lists of who’s coming to pick up what. Geez. The middle of spring.” Jeff stood back, looking distressed, until Ed intervened. “I thought we were going to let the february 1, 2012

“I came at the wrong time,” said Elaine, pulling off her toque. “Not if you want to see an accident,” grumbled Ed kid make more decisions around here. Maybe we oughta send him.” “Oh, yeah,” Dale said. He was embarrassed to have been caught assuming automatically that the opportunity was meant for him. He knew he had to work harder at giving his son a chance to make decisions. “Guess you’re right Dad.” Then the door opened and Dale’s wife Donna asked, “Is it safe to come in?” As soon as Dale said “yup,” a red blur zipped into the cleaning plant, stirring up a huge cloud of dust. It was Elaine and Jeff’s toddler in his red snowsuit. Donna ran behind, gasping for breath. “Being a grandma is exhausting,” she said. “He’s been chasing the cat all over the yard.” Donna leaned against a bench until she caught her breath, then turned to Elaine. “Did you tell them I think you should take my car to the course in Winnipeg? It doesn’t make sense to drive your big SUV, especially when you’re leaving the boy here with us.” Elaine turned red as all three men turned to look at her. “Well…,” she said. Donna immediately figured out what had gone on, and shook her head. “Of course we’ll send Elaine. She’s taken on a lot of farm work this winter. She’s looking after the books. She filled out all our seed declarations. Sorted out our cash advance mix-up. She’ll need good contacts to keep doing this stuff. ” “I don’t know,” Ed said. “What’s the point of sending a woman all the way to Manitoba to see strippers?” “What?” Donna asked. “Just ignore him,” Dale said. “That’s what you meant earlier?” Elaine was incredulous. “I’m sure they don’t do that anymore,” Dale said. Jeff nodded. “It makes sense to send Elaine. And Elaine’s friend got us on the list in the first place. I can manage the baby on my own for a week. With Mom here to help.” “Right. Well, okay,” Dale said. “This is for the best. And then I’ll be here to make sure the customers get the right seed. And handle the late-season seed cleaning.” Donna smiled, then sighed as the door opened again and a blur of red snowsuit whizzed out into the yard, squealing. “I’d better go after him. Anything could happen if he actually gets hold of that cat.” CG country-guide.ca 47


life

Emotions to the rescue Disagreements don’t have to morph into conflicts. Instead, use these six leadership strategies to put the harmony back in your family farm By Maggie Van Camp, CG Associate Editor Inevitably, when farms expand to include multiple family members, family dynamics change.

becomes more difficult, and the business of farming creeps into more and more personal lives.

Before we talk about the stresses and strains that

“Learning to disagree without fighting is the

this can produce, we shouldn’t lose sight of the

secret to family farming success,” says Ron Hanson,

fundamental positives that this change brings to

professor of agri-business at the University of

the farm.

Nebraska-Lincoln. “That requires respect and trust

With more people involved and passionate about

between each and every family member.”

the farm’s success, there are more chances to

No matter who you’re dealing with — family

come up with more creative solutions. Plus, it’s a

or not — learning to disagree amicably and work

good thing when everyone has to justify their posi-

through problems is an invaluable skill.

tions outside of their own heads. On the negative side, however, communication

1. Meet regularly “If there is stress and conflict in your family, it will almost inevitably trace its roots back to a lack of effective communication at some point in the family system,” says Richard Cressman. Cressman, a six-foot tall former dairy farmer from New Hamburg, Ont. isn’t the sort of person you’d expect to be talking about feelings and emotions. Yet in his no-nonsense way, he does just that, helping farm families sort out things like blame, hurt, guilt, stress and fear when those emotions have festered into conflicts. Cressman is motivated to help farm families through conflicts because he lived it. In 1990 he and his brother terminated their 14-year farming partnership and it wasn’t due to financial problems. “I’ve experienced first hand the spats, the squabbles, the yelling, the anger, the resentment, and the hurt feelings that frequently break up successful farming businesses,” he says. Over the next decade, Cressman learned how to manage emotions in a family business and did his MBA thesis on farm succession. His relationship with his brother healed and now they run a seed dealership together, along with his nephews. Over the last 11 years, he’s coached countless farm families to deal with the emotional part of the business. Cressman often finds the traditional two-way communication structure of Mom and Dad talking between themselves is simply overwhelmed when 48 country-guide.ca

Here are six strategies to stop disagreements from turning into fights.

more people are added to the mix. If that communication infrastructure no longer works, it’s time to have group meetings, he says. It’s just like buying more equipment or trading up to increase capacity after acquiring more land. You have to increase your capacity to communicate. “The more people you have involved in the business, the more frequently meetings need to be held,” says Cressman. The reality is that you’re not going to agree all the time and it’s important that you don’t all think alike. By meeting regularly everybody knows what’s going on in other parts of the farm. Plus, the meetings give us experience in coming to agreement on smaller, easier everyday decisions before the big ones come up. “Cultivate an attitude that your meetings are an integral part of the future success of the business,” Cressman advises. In his consulting, Cressman has seen all sorts of meetings work, as long as everyone agrees on the ground rules. Basically, guidelines should include frequency of meetings, who attends and who has input into decision making. Sometimes agendas are used but for families who meet at least once a week, formal written ones are usually not needed. Clear guidelines for behaviour in meetings are key. If someone leaves a meeting angry, they’re still expected to come to the next meeting and be willing to participate. Also, don’t solicit support from February 1, 2012


life one family member behind the back of another. And always respect confidentiality. Although the communication structure should be somewhat adaptable and flexible, never stop meeting for the sake of being too busy. Attendance is mandatory. On some farms nothing major gets done or bought unless it has been brought up in a meeting so everyone knows what’s going on. “There’s no right or wrong way to do this,” says Cressman. “It doesn’t matter where, just do it, meet regularly.” In one family he worked with, the siblings could easily talk to each other but the younger brother struggled to talk with his Dad and so preferred to text.

2. Take a Time-Out When disagreements occur, try not to respond quickly. Cressman calls it his 24-second, 24-hour rule. “Take a few seconds to think about how this can help me, and how this can hurt me before you react,” he says. “Then, if it’s too complicated, take another 24 hours to think it through.” Many successful people are generally slower to respond to tough questions because they take time to think before responding. “Sometimes with family, we have too much spontaneity,” says Cressman. Some take silence to the extreme and use it as power over the people involved and the business. Also, bottling everything up can also be destructive

3. Step outside Willingness to look at the situation in a new perspective can really stop things from escalating. “Knowing the situation is bigger than just you, and asking how you fit into this, can really be helpful,” says Cressman. That’s sometimes difficult to do, especially with farms spreading out further and familial relationships sometimes crossing some very blurry lines. Expanding personal knowledge, networks and experiences can teach how to deal with more situations and personalities, or at least keep the situation in perspective. Letting comments or little disagreements roll off our backs can go a long way in keeping a positive attitude in a family and in a business. However, some people, particularly siblings, know which buttons to push and love to push them. In turns out, however, that we can still choose how we react. When a conflict arises, we immediately tell ourselves an ugly story, according to the theory of famous psychologist Albert Ellis. Every time we have something go wrong, this story is immediately created in our heads with us as the hero and someone else as the villain, all based on negative emotions. “If we know it’s happening, we can at least react differently, be less judgmental and change our attiFebruary 1, 2012

Eventually, they got used to each other and dropped the text messaging for face-to-face communications. Another pair of brothers discuss the day’s events in the parlour, while milking in the mornings and have a big family meeting once a year, including spouses. On Monday mornings at another farm, Dad buys take-out breakfast in town and then the three farming children meet and eat at his house. To make the best management decisions for the farm as a business, keep the family dynamics out of the discussion process, says Ron Hanson. After the meeting has concluded, then go back to being a family and interacting together as a family. “Keep the family out of the farm business and keep the business out of the family.”

to an individual. “Silence is control,” says Cressman. “By not interacting at all, you shut everything down in the business.” One of his farm clients has a policy around meeting attendance. If one of the partners is not there, they’ll go looking for him before they start. Everyone’s opinion is important. Usually with conflicts, the people involved suffer from a momentary inability to think about consequences and are willing to pay the price for their pride, no matter what the cost. “Family disagreements never destroy family relationships, but family fights always will,” says Hanson. “When family fights develop, people say and do things that cause non-repairable damage.”

tude to be more positive,” says Gregorio Billikopf, a professor at the University of California. Billikopf, who specializes in farm labour relations, has written a book called Third Party Mediation, (download it free at www.cnr.berkeley.edu/ucce50/aglabor/7conflict/). In it, he states if both parties clearly say what they need from the outcome rather than making it a competition, they’re more likely to get to a win-win situation. It’s not about giving up or solving disagreements with a lame compromise. By focusing on needs — instead of the issue — the solution will satisfy both parties. “When both are willing to move ego out of the way, that’s the beginning of success,” says Billikopf. “When someone steps on our pride, we react defensively and in anger.” In his experience as a mediator, he often has people interrupt just so they can get to their point. Instead he suggests listening first to understand, and only then repeat back your point of view as a question, such as “Do you mean...?” If the person feels understood, they’ll be open to hearing the other person’s opinion. Steven Covey, in Seven Habits of Highly Effective People, says if you encourage others to explain their side first, they will be more likely to listen to and try to understand your side. But don’t put on an act. “There’s no negotiation in the absence of sincerity,” says Billikopf. country-guide.ca 49


life 4. Look inward Maybe it’s time for a little honest self-assessment. After all, emotionally mature adults accept responsibility for themselves and the situation. Usually if we all change a little, we can make the situation better. How can my habits annoy other people? What can I do differently to make it better for other people? “We generally love to be victims,” says Cressman. “But it’s never one person that causes a conflict entirely.” Cressman says that invariably after meeting with the first couple, he’s expecting horns to be growing out of the head of the next couple. Instead he always find them to be very nice, normal people. Somehow when conflicts arise, we get very distorted views of each other. More often than not, the problem is just habitual behaviour, especially in families where there’s a natural hierarchy. “Dysfunctional patterns within families that I’ve observed are learned before the age of 12,” says Cressman. The old rule — don’t talk back to your elders — can mean that a business decision that goes against Dad’s wishes turns into a guiltfest. Unresolved relations between big and little brothers can turn a simple disagreement into a battle for control, and sometimes if baby sister is crying, maybe she’s simply trying to

5. Learn how to vent When you’re dealing with emotions, it’s tough to know where you’re going to end up. Simple disagreements turn into fights spilling over into family time. Arguments go beyond the boiling point, and tempers take over for thinking. Cressman has met some people he thinks are actually addicted to the adrenaline rush they get from outbursts. Almost like drug addicts, they need these blow-ups to get their fix. In Billikopf ‘s mediation experience, he has found that meeting with each conflicting party separately before mediation allows them to vent and he’s able to coach them on how to really listen to the other person. With deep-seated conflicts, some people actually stop calling the other party by name, dehumanizing them. Yet

6. Be thankful “You can either be thankful or you can be frustrated,” says Cressman. “Being thankful is invigorating, but being frustrated takes energy.” When he meets with the individual parties before bringing them together, Cressman assigns them the job of writing a list of things other family members done that they’re thankful for. For instance, he recently reviewed a gratitude statement he got by facsimile from one of his clients that listed nine positive points about the family member he was embroiled in a conflict with. Compiling that list makes him feel better and helps him remember why he’s farming and what’s important to him, Cressman says. 50 country-guide.ca

get her own way. After all, crying always worked when she was younger. Once all parties are aware of the possibility that the disagreement might have more to do with power or old family habits, they’re more likely to focus on finding a solution. At least they try to stop playing into it. “Always, always, always” says Cressman, “emotions trump logic.” One of the key mistakes Hanson sees is when the relationship of father and adult son or father and adult daughter can’t break out of the pattern of a parent-child relationship. As the children gain maturity and prove their responsibility, parents, especially dads, must be willing to gradually share decision-making so that the children have a chance to learn and some day take over management control. This is not a short term process and takes a great deal of trust when you have millions riding on their decisions. “Treat a son or daughter as an adult capable of making decisions and being responsible,” says Hanson. Cressman says such conflicts start with the very best of intentions. Mom and dad want a better life for their children but forget that they built their own successes by learning from their failures. “The children need to learn to do things on their own, to fall in the dirt and get up on their own,” Cressman says.

everyone can build the skills to be good listeners, Billikopf says, although it can take a long time and it can’t be conditional. “It’s a gift to know how to listen and allow people to vent and not take it on,” he says. “Don’t give a solution, just let them release it and get rid of it.” Other counsellors take other approaches. When Ron Hanson counsels a family, he never allows anyone to say anything negative about another person. “If there’s a problem, tell me how to fix it or how to find a solution,” he says. Allowing negative comments to surface during mediation only encourages more negative comments from others. Once that happens, the initial purpose of the meeting or discussion is lost and the fighting begins. “Always search for fairness when resolving conflict,” Hanson says. “No one ever gets upset when being treated fairly.”

Being thankful in a difficult moment can seem almost impossible. Yet when we look back at situations, we are often grateful that somehow, it worked out for the best. Being thankful in the middle of a conflict for how it’s potentially going to turn out takes a big dollop of faith but can really help you through it. Billikopf uses gratitude statements in formal mediations. “While a number of issues can affect the likely success of a joint mediation session, perhaps none is as telling as asking each stake holder what they value in the other contender,” he says. Above all else, Billikopf says, remember how precarious your happiness can be: “Our self-esteem is more fragile than most of us would like to admit.” CG February 1, 2012


HR

Emotional Intelligence

The key to personal and professional success level? It seems that in order to succeed, we do not need hat sets the best leaders apart, to master them all perfectly. However, acquiring or whether you’re looking at a muldeveloping these competencies facilitates success. tinational corporation or a family Why are emotions so important in the workplace? farm business? For a long time, For business managers, the lack of emotional comexperts thought that success was petencies in dealing with others weakens their perbased on a combination of technical skills and your sonal performance as well as the performance of their intelligence (also known as your intelligence quotient employees. For example, a manager who doesn’t know or IQ). Yet while these two factors do play their roles how to manage his anger and reacts in an impulin personal and professional success, they cannot fully By Pierrett Desrosiers sive manner will have a very negative impact on his explain or predict it. employees’ motivation and on the team spirit. In fact, according to psychologist Daniel GolePoor emotional management will also negatively man, emotional intelligence and the skills that relate affect decision-making. When we are under the influence of strong to it are twice as important as intellectual intelligence and techniemotions, our ability to make the right decisions is very limited cal skills in determining business success. because our judgment is biased and compromised. Furthermore, What is emotional intelligence (EI)? people who are more competent emotionally are better equipped to sense other people’s emotions, and therefore better able to Emotional intelligence is the capacity to monitor our own and respond to them. Finally, emotional intelligence allows us to be others’ feelings and emotions, and to discriminate among them more creative and to use our emotions and to use this information to guide to resolve day-to-day problems. our thinking and actions (Mayer and Personal competencies Social competencies What do leaders who are in the top Salovey, 1997). In fact, EI allows us to Self-awareness Empathy 10 per cent have in common? They use our feelings and intelligence to better (of feelings, preferences, (awareness of feelings, internal resources and intuitions) needs and worries of others) are emotionally intelligent. The higher manage our thoughts and behaviours in Self-regulation Social competencies up the ladder you are, and the more order to achieve our desired goals. These (of feelings, impulsions (in order to generate desired complex the job and the responsibiliare “emotional competencies” — how and internal resources) responses from others) ties are, the more that emotional comwe manage ourselves — and “social Self-motivation petencies will pay off. Likewise, the competencies” — how we manage our (tendencies that facilitate Goleman, Daniel the achievement of goals) poorer they are, the more it’s going to relationships with others. hold you back. For decades, emotions and feelings Research demonstrates that, on averwere considered a sign of weakness, age, the managers in the top 10 per cent especially for managers. On the conwill produce twice the revenues comtrary, far from being a weakness, using pared to the managers in the other 90 emotions along with proper manageper cent. So what about you when you ment skills represents one of the main are the one who makes all the decisions? success factors of the best managers. When we examine bankruptcies, The fact is, emotions are always we discover that expertise and techpresent. According to the neuroscientist nical skills are rarely the cause. EmoAntonio Damasio, a rational decision tional competency is the missing factor. is an impossible decision. Even when we are making what we believe If we wish to expand and to continue to perform in agriculture, is a decision based on logic, the actual point of choice is arguably we must focus on competencies that were underestimated in the always based on emotion. past, i.e. emotional competencies. In order to be more efficient, busiThis is why it is so important to better understand the role of ness leaders need to show emotional intelligence. Fortunately, these emotions. As reported by the expert, Amy Boren, “the capacity to competencies can be developed. In the end, it seems that we have to recognize and regulate emotions may serve as a tool that helps us pertake our emotions to the office… or to the barn after all. ceive contextual clues more easily, managing our relationships more To evaluate your Emotional Intelligence, go to my website effectively and motivating ourselves and others to achieve goals.” at: http://www.pierrettedesrosiers.com/outils_en.html and choose What are the specific emotional competencies that seem to be shared by entrepreneurs? They include high levels of self-confiEmotional Intelligence Self-Assessment. CG dence, trustworthiness, and achievement and service orientation, as well as the ability to nurture change, teamwork and collaboraPierrette Desrosiers is a work psychologist, professional speaker, tion. Trustworthiness, the ability to maintain standards of honcoach and author who specializes in the agricultural industry. esty, integrity and collaboration, was ranked highest among 18 She comes from a family of farmers and she and her husband emotional competencies measured. have farmed for more than 25 years. (www.pierrettedesrosiers. Is it possible to have all of these competencies at a very high com) Email: pierrette@pierrettedesrosiers.com.

“Emotional Intelligence sets successful business people apart” —Daniel Goleman

february 1, 2012

country-guide.ca 51


h e a lt h

Depression — a hidden condition By Marie Berry

epression is more common than you may think. An estimated one in 10 Canadians will have depression at some time in their lives. And there is another big number too. Two-thirds of Canadians who suffer depression will receive no therapy, either medication or non-drug. The reasons for this lack of treatment range from cultural habits to the assumption that depression is a common part of another condition such as older age. Of course, many Canadians also don’t want to be diagnosed because of the stigma associated with depression. Thankfully, more of us are now realizing that there is more to depression than just not being happy. Depression has clinical symptoms, including changes in your body, your mood and your thoughts. Even so, more of us need to become more aware of depression, both as it could affect ourselves and as it may affect those we love. Yes, depression involves having a depressed mood or feeling “down,” especially in the morning, but there is also often a feeling of fatigue. More specifically, you may experience a feeling of worthlessness or guilt and you may exhibit an inability to concentrate, together with a reduced ability to feel pleasure, a general restlessness, and sometimes thoughts of death. You may also experience changes in weight — either a gain or loss — and in sleep habits — either too much or too little. And yes, before you ask, everyone does have these symptoms, but in depression they are present every day for at least two weeks. And they occur for no definable reason, such as low thyroid levels or certain drug side effects. The impacts of depression can be serious. At home there is an increased risk for substance abuse and family problems. Depression is also the number one reason for work absenteeism, loss of work productivity, and work place accidents. If you have depression, you are twice as likely to develop heart disease, diabetes, high blood presYou use your hands for everything from house cleaning to outdoor chores. In the dry winter months, however, dry skin can be a problem on your hands and all over your body. Next issue we’ll look at some of the ways to moisturize your skin, including some of the products that promise to restore your youth.

52 country-guide.ca

sure, and dementia. Obviously, if you think you may have depression, get your symptoms checked! Both drug and non-drug therapy are used for depression, and the best results are when the two are combined. The theory behind drug treatment arises from an observed alteration in neurotransmitter levels in the nervous system. Antidepressant drugs work in the nervous system on these levels, but unfortunately there is no test to measure neurotransmitter levels. Thus, there are different types of antidepressant drugs and you may need to try several before you find the one that works best in your nervous system. Selective serotonin re-uptake inhibitors or SSRIs like fluoxetine, sertraline, paroxetine, and citalopram increase these serotonin levels. Serotonin norepinephrine re-uptake inhibitors or SNRIs like venlafaxine affect both serotonin and norepinephrine. Other antidepressant drugs include bupropion, mirtazapine, tricyclic antidepressants, and monoamine oxidase inhibitors. Unfortunately, all these drugs take one to two weeks to work, and maximum effectiveness takes four to six weeks, so it takes time for you to know if a drug is working. If it isn’t working, you may need to switch to another drug and wait to see if it works better. Non-drug treatment includes counseling, cognitive behavioural therapy, problem solving therapy, mindfulness, and exercise. Most of these treatments require seeing a specialist in the specific area and you may not feel comfortable, you may need to wait for an appointment, or you may not have the funds to pay for the service. However exercise does not have these drawbacks, and even a walking program may give you benefits. If you think you may have depression, you are among good company because it is reported that Johnny Carson, John Lennon, Winston Churchill, and Michelangelo all had depression. A good place to start is the Canadian Mental Health Association at www.cmha.ca or the University of Michigan’s Depression Center at www.depressiontoolkit.org. The latter website has various log books and diaries that you can print and use. Remember, everyone is depressed from time to time, but if you have ongoing symptoms, now is the time to get help. Marie Berry is a lawyer/pharmacist interested in health care and education. February 1, 2012


I am walking through a hospital corridor when a picture on the wall catches my attention. Riders on pinto and paint horses parallel a creek. Their leaders turn into the forest. Snow-covered mountains in the background remind me of southwestern Alberta. I often rode my horse Apache, who had markings resembling the horses in the painting, in terrain similar to the artwork on the wall. I am lost in memories of long afternoon rides and horseback adventures. A voice behind me says, “Go ahead, straighten it out.” I turn to find a woman sitting on the other side of the corridor. Apparently she has seen something I missed. The picture is not level. I lift one corner. She says, “Not quite so much. A little less,” so I make another adjustment. Eventually we agree that the picture is level. As I follow her directions, I wonder if she is the personality type who likes organization and tidiness. I visualize her as a person who likes a home where everything is in its place. I ask: “Do you like to straighten things out?” She admits her preference for tidiness and orderliness. As we speak, her husband arrives. His cap and T-shirt imply that he is a farmer. “Are you trying to straighten out the farmers?” She says, “Yes, but it is more difficult than straightening out the house.” After more good-natured banter, I learn they are Daryl and Margo and they farm near the Alberta and Saskatchewan border. They have 250 cows and farm three-quarters of a section of land. As we part, I ask if they read COUNTRY GUIDE? Daryl says, “I thought I had seen you somewhere. I was trying to remember where it was. I was thinking you were one of the insurance salesmen who show up at bull sales.” He explains that buyers need insurance on the bulls before they transport them home. We laughed about where the conversation could go next. As a minister I have jokingly been accused of selling “fire insurance.” I wonder if selling insurance on bulls is easier than persuading people to take the high road thereby avoiding eternal wrath. My conversation with Daryl and Margo resembles encounters that take place continuously, over the phone, at the grocery store or while standing at the parts counter. We try to “figure one another out.” Frederick Buechner in his book THE HUNGERING DARK says humanity is an enormous spider web. “If you touch it anywhere, you set the whole thing trembling. As we move around this world and as we act with kindness, perhaps, or with indifference, or with hostility, toward the people we meet, we too are setting the great spider web a-tremble. The life that I touch for good or ill will touch another life, and that in turn another, until who knows where the trembling stops or in what far place and time my touch will be felt. Our lives are linked. No man, no woman, is an island.” I am constantly amazed by how the enormity of creation is linked with the smallest detail. An ancient Celtic prayer describes God: “It is you who make the sun bright and the ice sparkle, you who make the rivers flow and the salmon leap. Your skilled hand makes the tree blossom and the corn turn golden. Your spirit composes the songs of the birds and the buzz of the bees. Your creation is a million wondrous miracles to behold.” Suggested Scripture: Matthew 3, Philippians 4:4-9

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Rod Andrews is a retired Anglican bishop. He lives in Saskatoon. FEBRUARY 1, 2012

country-guide.ca 53


Va l l e y

Surfing for perfect pork

have a tech-savvy neighbour, Sully, who jets across the continent every week advising corporate moguls about social media in the Age of Information. Quite frequently, Sully and his gorgeous young wife Sophie take a drive up the Petunia Valley Sideroad (which we affectionately refer to as the off-ramp of the information highway) and join us for dinner. Sully hails from New Jersey and he knows a lot more about how the wired urban world ticks than me or anyone else in Petunia Valley for that matter. Just the other night, we were tucking into a delicious crown roast of pork when Sully put down his knife and fork and sighed in wonderment. “This is fantastic!” he whispered. “Sophie, have you ever tasted anything like it?” He raised a glass in my direction. “Once again, my host, you are ahead of the curve. I salute you!” Cooking pork is serious business for me. I have raised my own pigs for the freezer since childhood but I’m not sure I could claim to be ahead of any curve plotted in the last half-century, at least not the ones Sully follows. “But that’s where you are mistaken,” said Sully. “You know what ranked as the most popular Google search in Canada last year?” “I don’t know. Pippa Middleton?” 54 country-guide.ca

“She certainly came close but no, what most people wanted to know was how to cook a roast of pork. How Canadian is that? You are riding the crest of the wave my boy, and if people knew pork could taste like this, they would beat a path to your door.” I feel a lot of pressure strapped to the front of the train like this. No one has ever come up the Petunia Valley Sideroad looking for groundbreaking, game-changing inspiration. Sully is telling me that I could be staring down the next big opportunity for wealth beyond the dreams of avarice. But of course, it would never work. I am steeped in the selfless tradition of rural Canada and instead of packaging the idea for YouTube and PayPal, I just hand away the secret to anyone who asks… for free. How Canadian is that? So if you’re interested, and Google says millions of you are, here is my neverfail recipe for the perfect roast of pork. I’m sorry it doesn’t quite fit into a Twitter feed, but nothing perfect ever does. Step One: You need two or three Hampshire-Landrace crossbred weaner pigs. Put them in the orchard in June at six weeks of age and feed them a ration of 60 per cent rolled barley, 20 per cent oats and 20 per cent field peas. Not too much. Just give them what they’ll clean up in 15 minutes and let them graze until dark and

feed them again. Let them romp and root in the orchard until late September and finish them on windfall Cortland apples… “Whoa,” cried Sully. “You’re way ahead of me now. How do I do this on my Blackberry from an airport lounge in Delaware in time for dinner?” All right, then. You can also start with Step Two. (If you choose to skip Step One you are now working on merely a “pretty good” pork roast.) Go to the supermarket and get a three-pound pork loin roast with the rib-bones still in. Don’t just tear the plastic off and bang it in the oven. Pat it dry with a paper towel and let the meat come up to room temperature. French the rib bones back to the body of the roast, that is, strip the fat from the bones. Cover the roast with a paste of ground figs, sweet onions, cider and balsamic vinegar and a tablespoon of brown sugar. Place it in a cast-iron Dutch oven uncovered and bake at 350 F for one hour and 45 minutes or just until the internal temperature of the roast hits 170 F. Then remove it from the oven, place the lid on the pan and let it stand for a good half hour. (This draws all the juices back into the meat and leaves you time to pour the ladies a glass of prosecco and mix Sully a martini.) Carve the roast in pork-chop sized pieces and serve. So there you go. I will be content with the thanks of a grateful nation. february 1, 2012

ILLUSTRATION: RICK KURKOWSKI

Dan Needles is the author of “Wingfield Farm” stage plays. His column is a regular feature in Country Guide


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