February 15, 2013 $3.50
SUNHAVEN SHARES THE LEAD For Bryan Perkins and 150 pork farmers, shared leadership pays off despite rough market
+PLUS FCC ACCUSED OF STOKING LAND PRICES TOWARD COLLAPSE IS NEXT GENERATION OF FARMERS UP TO THE LEADERSHIP CHALLENGE?
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MASSIMO CAPRA TELLS HOW TO SELL TO CANADA’S TOP CHEF
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FEBRUARY 15, 2013 THE PRICE OF LAND The numbers are astronomic. Even two years ago none of us would have believed the price that land is getting today. So what will it be in the next two years? This month, our writers bring you multiple perspectives, but no easy answers.
ARE THEY UP TO IT? No one disputes that the leadership challenge is getting tougher for farmers. But is it too tough?
HOW DO YOU PREPARE FOR A DEFLATIONARY MARKET?
EVERY ISSUE 6
HOW TO EFFECTIVELY MANAGE FOREIGN EXCHANGE RISK These strategies can protect your grain and livestock sales from volatile currency fluctuations.
‘INSURE’ YOU GET PAID Accounts receivable insurance suddenly becomes a hot topic for risk management on the farm.
TAKING ON THE GIANTS Winnipeg’s Versatile says it’s ready to go head to head with the Big Three tractor manufacturers.
FEBRUARY 15, 2013
MACHINERY GUIDE Combines may be the most important machinery on the farm, but they aren’t all created equal.
HANSON ACRES Those countless trips to town are turning into an education for our Prairie family.
GUIDE HEALTH In sex ed class it sounded so simple. In real life, though, getting pregnant can be complicated.
Leadership is helping Sunhaven Farms survive the pork market. Their example may help you too.
GUIDE LIFE — CLEAR OUT THE CLUTTER Take a few minutes for this checklist before your next trip to buy office furniture and equipment.
Down pressure on commodities may call for a whole new marketing philosophy, our Errol Anderson writes.
GUIDE HR — WHEN FEAR GETS IN THE WAY Forty per cent of our worries are for events that never happen. Thirty per cent already did. So why worry?
BANKING ON FARMERS Critics say FCC is driving farmland prices to the point where they will crash. The lender begs to differ.
TWENTY MINUTES OF PRAISE You may not like performance reviews, but the proof is growing that they help retain good employees.
WHO’S IN THE BACK ROOM? Saskatchewan has launched a hush-hush investigation into illegal farmland sales.
HOW HIGH CAN LAND GO? Farmers, not investors, are driving the price of land, and it looks like the market is far from topping out.
FARM FRESH FUN At Synders Family Farm, success begins when you toss out those old ideas of what makes a farm.
THE CHEF KNOWS One of Canada’s best-known chefs, Massimo Capra shares how farmers should market to him.
PETUNIA VALLEY What are women doing in the coffee shop? Worse, why is Dan sitting with them instead of the men?
desk EDITORIAL STAFF Editor: Tom Button 12827 Klondyke Line, Ridgetown, ON N0P 2C0 (519) 674-1449 Fax (519) 674-5229 Email: firstname.lastname@example.org Associate Editors: Gord Gilmour Cell (204) 294-9195 (204) 453-7624 Fax (204) 942-8463 Email: email@example.com Maggie Van Camp (905) 986-5342 Fax (905) 986-9991 Email: firstname.lastname@example.org Production Editor: Ralph Pearce (226) 448-4351 Email: email@example.com ADVERTISING SALES Cory Bourdeaud’hui Cell (204) 227-5274 (204) 954-1414 Email: firstname.lastname@example.org Lillie Ann Morris (905) 838-2826 Email: email@example.com
Tom Button is editor of Country Guide magazine
The right price for land The truth is that the Canadian land market is operating pretty much as it should. But that doesn’t mean surging land prices won’t fundamentally transform our agriculture. Of course they will. The fact that many investors have dropped out of the market this winter because they believe prices are too high and too risky — as Richard Kamchen reports this month — confirms that the market is doing its job. Even if the last couple years have been an extraordinary ride in agriculture, the fundamental truth underlying the farm in Canada is still that it’s a live-poor, die-rich business model. Revenue is still converted into the price of land. When I was a kid in my part of Ontario, the wisdom was that good land should go for three times the value of the corn crop that you could grow on it. Well, it’s been a long, long time since that had any meaning in the real world, and similar rules of thumb suffered similar fates all across the country. Nor should we mourn them. The world hasn’t gone haywire. Farming is, and pretty much always has been, a business of high capitalization and low margins. This is the fundamental gamble that farmers make, believing in their ability to farm well enough to walk away a winner. We aren’t naive enough to think there aren’t any offshore investors quietly buying Canadian land, or that all of the nonfarming investors have dropped out of 4 country-guide.ca
the market. Still, all the evidence is that it is farmers who are driving the price of farmland, and that this is a form of wealth generation that recognizes the fundamental value of farming. Some will say the surge is forcing farmers to bear unrealistic risks. Perhaps they will be proved right, but I have a hard time believing it. I see no indication that interest rates are going to shoot up overnight. Nor do I see evidence that commodity prices will go into a longterm slump. Yes, they may slide, but the fundamentals are too bullish for me to turn pessimist. Instead, farmers have reasonable income prospects and reasonable expectations of low interest rates, and because they generally have high net worth based on land they already own, few farmers are likely to be forces to sell the land they’re buying now, which is what it would take to make the market do a U-turn. Of more concern is that farm families will be reluctant to sell their land for at least the next generation, especially when they look at neighbours who sold out a couple years ago and have missed the ride. In other words, the rising tide of tomorrow’s non-farming landlords are today’s farmers and their children. As so often happens in agriculture, evolution is coming from within. Are you becoming the enemy you worried about yesterday? Let me know if we’re getting it right. I’m at 519-674-1449, or tom.button@ fbcpublishing.com.
Head Office: 1666 Dublin Ave., Winnipeg, MB R3H 0H1 (204) 944-5765 Fax (204) 944-5562 Advertising Services Co-ordinator: Sharon Komoski (204) 944-5758 Fax (204) 944-5562 Email: firstname.lastname@example.org Publisher: Bob Willcox Email: email@example.com Associate Publisher/Editorial Director: John Morriss Email: firstname.lastname@example.org Production Director: Shawna Gibson Email: email@example.com Director of Sales and Circulation: Lynda Tityk Email: firstname.lastname@example.org Circulation Manager: Heather Anderson Email: email@example.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 — Farmer $36.75 for one year, $55 for 2 years, $79 for 3 years. Non-farmer $79 for one year. (Prices include GST.) U.S. subscription rate — $35 (U.S. funds). Subscription rate outside Canada and U.S. — $50 per year. Single copies: $3.50. Publications Mail Agreement Number 40069240. We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage.
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february 15, 2013
Manager Strategist Marketer Accountant Problem-Solver Role Model
Farmer Carmela Miller â€“ FCC Customer
We understand your business
By Ralph Pearce, CG Production Editor
What’s the most important piece of farm machinery on your farm? They’re all important, of course. If you can’t get the crop in the ground, after all, there’s no point owning a combine. Increasingly, though, it’s in the combine that the farm’s production, marketing and business management intersect. Industry stats show North American equipment sales fell a modest eight per cent with the drought of 2012, following three years of what are described as “very high sales figures” for combines. It’s a chance for manufacturers to start catching up on back orders. For some Canadian farmers, it may be a great time to visit your dealer.
claas 700 series Claas is seeking to differentiate itself not only with its muscles, but also with its brains. The company’s Lexion 700 Series combine is a mix of new technology and existing features that have been finetuned. In the cab, you’ll find the CEBIS display, Claas’s Electronic On-Board Information System, providing total machine monitoring and control with harvest displays and control systems including throughput monitoring, yield and moisture monitoring, message window for alarms and information, and head positions. More information means you’ll be better informed, the company says, which will lead to better decisions. www.claasofamerica.com
versatile rt490 The company wants its name to say it all, and with its RT490 combine you can see how they’re trying to carry that Versatile concept into the field, from its solid design to its rugged durability. At the heart of the RT490 is the innovative Rotating Concave Rotary System, a 360-degree concave that wraps around a large 6 country-guide.ca
rotor and counter-rotates. That contrast of rotation of the concave in relation to the rotor translates into an unparalleled threshing and separating area. The moving concave eliminates any dead zone, and the grain is threshed three times in each rotation for increased throughput and a cleaner grain sample. www.versatile-ag.ca FEBRUARY 15, 2013
massey ferguson 9600, 9700 and 9800 series
new holland cr twin rotor combines
Two words define Massey Ferguson’s goal with its 9600, 9700 and 9800 Series combines: speed and reliability. Choose from any of these three models and get direct high-volume unloading capability, with what the company says is the world’s fastest unloading rate at 4.5 bushels per second. The redesigned cab on all three models comes with improved header visibility, plus brighter lighting and a C2000 virtual terminal that keeps you in touch with what’s happening with your crop. There are fewer belts and fewer augers, but more efficiency and better quality control on your harvested grain. www.masseyferguson.us
Take one impressive lineup of New Holland combines and introduce some added features, and you have five different models that can lead from the front. Choose from the CR6090 all the way up to the CR9090, then add the Terrain Tracer lateral float system, a feature that automatically raises the head to follow the contours of any field harvesting any crop. In addition to the new Tier 4A engines, New Holland is introducing the Advanced Stone Protection (ASP) system, an industry first, that senses stones, then stops the head and the feeder automatically. Best of all, it requires a minimal amount of operator input. www.newholland.com
challenger 500c series
case ih 30 series
The Challenger slogan is “Strength from Simplicity.” Like the company, the slogan is direct, no-nonsense, and ready to go to work. The Challenger 500C Series combines are designed to answer farm demands for more power, improved performance and better control over grain quality. Whether it’s the 540C or the 560C, Challenger boasts a new processor that is a complete threshing and separating system designed to increase capacity while reducing power consumption. The new header design delivers as much as 55 per cent more horsepower, and there’s also a multi-stage cleaning system that enhances grain quality. www.challenger-ag.us
Heading into 2013, Case IH is continuing to hone its offerings with its 30 Series Axial Flow combines. Case has become the leader in axial-flow design, and with six different models, they want to solidify that reputation. The company’s engineering goal is to build 30 Series combines that offer an incredible mix of maximum control and intuitive operation blended with simplicity, adaptability and capacity, all at impressive power levels, to a maximum of 560 horsepower — and all at your fingertips no matter the crop and no matter the field conditions. www.caseih.com
FEBRUARY 15, 2013
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Express® brand herbicide. This is going to be hot. Questions? Ask your retailer, call 1-800-667-3925 or visit express.dupont.ca As with all crop protection products, read and follow label instructions carefully. The DuPont Oval Logo, DuPont™, The miracles of science™, Express® and Solumax® are registered trademarks or trademarks of E. I. du Pont de Nemours and Company. E. I. du Pont Canada Company is a licensee. All other products are trademarks of their respective companies. Member of CropLife Canada. © Copyright 2013 E. I. du Pont Canada Company. All rights reserved.
28312 Express 2013_DPS_CountryGuideWest.indd 1
Advertisement MULTIPLE MODES OF ACTION TAKE GLYPHOSATE TO THE NEXT LEVEL
Managing resistance before resistance manages you.
estern Canadian farmers continue to benefit from tools such as glyphosate for non-crop weed control practices including pre-seed, chemfallow and post-harvest herbicide applications. Those applications are an important tool in reducing weed competition for moisture and nutrients, and – particularly for pre-seed applications – can help guarantee the best start for a new crop.
EFFECTIVE NON-CROP USE OF GROUP 2 HERBICIDES Pre-seed weed control is a practice that began in cereal crops, and is increasingly popular as an increasing number of Western Canadian farmers adopt minimum tillage practices.
But in recent years, growers have seen an increase in the number of documented cases of weed resistance in Western Canada, proving glyphosate alone can no longer do the job. Now, researchers suggest that mixing herbicides with multiple modes of action and using them in the same spray will go a long way in helping to control glyphosate-resistant weeds, and preventing new herbicide-resistant weeds from developing.
UNDERSTANDING RESISTANCE Weeds become resistant when they’ve had too much of a good thing. Practices and crops that work well one year are less effective in consecutive years, if there’s no break in routine. That’s why healthy rotation – of crop types, practices and herbicides – is essential. It’s becoming increasingly clear that using glyphosate alone will not control glyphosate-resistant kochia and may increase the risk of glyphosate-resistance occurring in other weed species in the future. With the emergence of Roundup Ready® volunteers, as well as hard-to-kill weeds that are not controlled by glyphosate alone, growers have found that including an add-in like DuPont™ Express® brand herbicide helps to control these weeds and manage resistance.
MANAGING RESISTANCE Crop rotation
Ideally, any healthy field will have a rotation of at least three crop types. Research suggests it is equally important to incorporate a host of other natural methods of weed control such as higher seeding rates, the use of clean seed, mowing out suspected resistant weed patches before they go to seed and using herbicides according to label directions.
Utilizing multiple modes of action
Herbicides are categorized into 17 different groups according to how they target a weed. For example, Sulfonylurea (member of Group 2) herbicides control weeds by inhibiting the enzyme acetolactate synthase, which is essential to their growth. “If at all possible, producers should use mixtures of herbicides that use multiple modes of action in the seeding year,” says Ken Sapsford, University of Saskatchewan. “It’s one further step to help stop resistance from developing.” Group 2 herbicides are a highly effective way to control weeds – but like other herbicide groups they need to be used appropriately, and utilized with herbicides from other groups in the same spray to help manage resistance.
In spring, particularly if the crop rotation included a crop such as RR canola, DuPont scientists recommend a pre-plant/burndown herbicide treatment such as Express® brands (Group 2) or PrecisionPac® NC-00439 or NC-0050 (Group 2) as an add-in with glyphosate to take advantage of multiple modes of action. Because both Group 2 and Group 9 herbicides have activity on many of the same weeds, growers automatically get multiple modes of action where they need it most. In certain areas, adding a third mode of action such as dicamba, 2,4-D or MCPA (Group 4) is advisable, and can be recommended by an agronomist. “We know that if we control those weeds early with a burn-off and then come in and seed, controlling those weeds and conserving moisture is the best option,” says Ken Sapsford, University of Saskatchewan. The Express® brands significantly improve control of tough weeds such as dandelion and narrow-leaved hawk’s beard in a pre-seed burn-off or post-harvest burndown. Not only will growers improve their weed control but they will also be hitting weeds with actives from two different groups to help manage weed resistance.
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Photo credit: Anne de Haas
The chef By Steven Biggs, CG Contributing Editor
Our Steve Biggs asks elite Toronto chef Massimo Capra how farmers should make a sales pitch to him. Says Capra: “I talk to everybody who calls.”
elebrity chef, Massimo Capra, grins as he tells the waiter to bring him his “regular.” Then he turns to me to explain that his “regular” is a double-double — forget the fancy espresso or cappuccino. We’re not at Tim Horton’s… quite
the contrary; we’re sitting in Mistura, Capra’s elegant midtown Toronto restaurant with linen tablecloths, sleek, charcoal-coloured walls, and trendy lighting. It’s an espresso atmosphere if ever there was one, but Capra shrugs off the Timmy’s contradiction. His double-double isn’t really a surprise, I soon find out, because Capra also tells me he prefers good, plain white bread to fancy loaves full of whole and exotic grains. Growing up in Italy, he explains, white bread was the norm — and he loves it to this day. It’s that down-to-earth appreciation of good things that makes Capra not only a trend leader in the world of food, but a chef whose insights are gobbled up by an increasing number of farmers. But don’t make the mistake of thinking Capra is old school. For him, the allure of his Italian roots and food traditions is matched just as powerfully by the emerging food scene in Canada. “I go home and after two weeks I’m dying to come home (to Canada) to go for Indian food and sushi,” he declares. Then, as he talks about the amazing variety of food in Canada, he wonders aloud why anyone would want to live anywhere else. Or grow food anywhere else. As we talk, it’s also clear that like any farmer, Capra seamlessly mixes business with his thinking. Like any product, he says, food sells if it’s what people want. When I ask him how he has survived as a trend leader for 10 years, once again you could switch the restaurant and replace it with farm. The restaurant and its menu are not fixed in time, he tells me. They evolve. “When you’re running a restaurant, ultimately, the client dictates what they want.” It’s beginning to sound familiar.
Talking food on many fronts With a quick tour of YouTube, you will find videos of Capra in his restaurant Mistura, in his hometown in Italy, talking about buying his first steak, or doing a cooking demonstration. In another video, while drinking a glass of red wine and talking about the pleasures of food, he says, “I absolutely have no problem with fast food. As a matter of fact, one of my favourite things is chicken nuggets. Beautifully fried fresh chicken nuggets from McDonald’s… I have no problem with that.” Throw together a resonant voice, lots of laughter, an expressive manner, a big, big moustache and a gourmet chef who dispenses with pomposity to drink double-doubles and eat chicken nuggets, and you’ve got a food personality who can connect. Capra’s television resumé includes “Restaurant Makeover” on the Food Network, “CityLine TV,” and “Gourmet Escapes.” Right now, he’s stoked about his upcoming show about ethnic food in Canada. I ask how he likes the TV spotlight compared to the kitchen, and he says he loves it because it gets him out of the kitchen to meet other chefs. He talks about food in print too. Capra has a regular column in the Globe and Mail, and, along with his book One-Pot Italian Cooking, he co-authored the book 3 Chefs: The Kitchen Men.
Shopping for food I ask Capra what goes through his mind when he sources food. Capra is a farm boy, an upbringing he partially credits for his love of food. “You know how much respect I have for farmers,” he says, as he talks about his late father’s passion for the land. “When I was a kid we used to have schoolkids from Milan,” he says, recalling the busloads of Continued on page 12
FEBRUARY 15, 2013
Look to the past for ideas, Capra says. Then remember we are living in the present Continued from page 11 city schoolkids coming to see the farm. He still goes back to Italy to visit family — and says he always picks up a handful of soil to smell when he’s there. He inhales deeply as he describes the smell of the soil. He’s a big fan of seasonal and locally produced foods, saying, “I think that local and in-season is the key.” Giving an example, he says, “You’ll not catch me eating strawberries right now.” He frowns at the thought of California strawberries in Canada in January. Ditto for the imported tomatoes. “You can play pinball with them,” he chuckles. At the same time, he says, we live in a climate where we simply can’t buy seasonal and local fare all of the time. “I’m not militant about market-fresh cuisine,” he says, noting that he thinks the local-seasonal card is sometimes overplayed. “The reality is you have to buy from here and there.” In short, he likes seasonal and local, but won’t hesitate to round out a meal with other food. “Organic is the cherry on top,” he adds. I ask whether, in the restaurant business, he gets suppliers and farmers knocking at his door. “We normally have people who call,” he explains, adding, “I always talk to everybody who calls.” He talks about the farm that produces arugula and squash for the restaurant — and then enthuses about tunnel-grown strawberries he recently tried at a nearby agricultural fair. Capra uses the example of carrots to explain how a chef thinks. Keeping kitchen preparation time to a minimum is important, so he prefers prewashed carrots that don’t need to be scrubbed for dirt. Uniformity matters, so carrots sorted for size are important — because he can’t give one patron two large carrots, and another four small carrots. The other thing that’s important is package size. “The kind of volume I do, I need 100 pounds of carrots,” he says, as he explains how small bundles from farmers’ markets simply wouldn’t be practical for him. 12 country-guide.ca
The business of food I catch Capra by phone one day as he’s driving across town from a new restaurant he’s opening. “I’m a very reluctant businessman — I like to be behind the stove,” he says, explaining that at first, business was outside his comfort zone, which was near the food. Yet here he is, in a car, driving from business to business, while being interviewed. Capra’s favourite way to learn about business is by watching. For him, observing people who are successful works better than reading about the theory of business. “It’s the biggest ace up my sleeve,” he says. As for innovation, he’s not convinced good business means reinventing the wheel every time. “I did not invent anything — I just took what was there and built on it,” he says. Look to the past for ideas, and then remember we are living in the present, he advises.
Ethnic food in Canada Capra is invigorated by the amazing variety of food in Canada. Even when he arrived here in the 1980s, Toronto’s Chinatown had vegetables he had never seen before. Capra is working on a new television show about ethnic food in Canada. As he reflects on Canadian cuisine, he says, “I think Canadian cuisine is a mix of ethnic cuisines from around the world.” He likes that mix because the Italy in which he grew up was not multicultural. Tell me about ethnic food on the Canadian Prairies, I say. “You want some good perogies man — I had some great perogies in Saskatoon,” he exclaims, as he talks about some of the eastern European dishes found there. Then we jump to what he thinks might go mainstream. He’s excited about the prospects for Indian cuisine. “I think it will be taking over, just like Chinese restaurants have done,” he says.
The consumer’s ear I ask Capra how he has earned the ear of consumers on food matters — and how, as a chef, he has also forged a niche as a pop celebrity. After thinking for a moment, he says, “I don’t pull any punches,” and then adds with a laugh, “Sometimes, it comes back to bite me in the butt.” When it comes to the ethics of eating meat, he doesn’t shy away. We are supposed to eat everything in moderation. “We are omnivorous — that means we eat everything,” he says. It’s an opinion that some vegetarians don’t like — but it’s his opinion. He gives an example from farming, saying, “I’m not gonna slam mega-farms, because mega-farms make farmers money,” continuing on to say that this is not always the case with small farms. “You cannot be militant about everything,” Capra says.
Business means risk Capra talks about Italian food shopping habits, where people go out and shop daily and then do a bulk buy once a week. There are lots of small, specialized shops. What’s heartening for him is that he sees a new generation of Canadians who seem to be more interested in food. “Things are getting better all around,” he says as he talks about the interest in food and the growth of specialty food shops in Toronto. “There was a generation that was my age and that was a bit detached,” he says. But to him, food is anything but a banal experience. The way he sees it, awareness and excitement about food are an opportunity for food producers. The new restaurant that he’s opening is at the Pearson International Airport on the outskirts of Toronto — a completely different milieu than his midtown location. “It’s a big risk,” he says. If he’s worried, he doesn’t say so. “I can do it, and I will work it until it’s successful,” he says. I don’t ask if the new restaurant will serve double-double coffee — or white bread. Of course it will. I’m guessing it will have lots of local and seasonal fare, but some imported food too. There will be some traditional dishes, with a modern-day twist. And patrons will leave with just a bit of Chef Capra’s bullishness about food in Canada. “I jump in with both feet,” says Capra, adding, “I tell my cooks all the time, failure is not bad — the biggest failure is when you think you know it all.” “You’re only as good as your last plate of spaghetti,” laughs Capra. CG FEBRUARY 15, 2013
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How high can land go? Don’t blame investors for soaring land prices. They’ve been scared off, but your neighbours have their bankers primed and ready By Richard Kamchen hile Canadian farmland prices surge higher and higher, the experts insist the market is being driven by farmers, and not, as some fear, by foreign capital swallowing up Canada’s farmland. “What you’re seeing is people buying the land around them. That’s mostly what’s happening,” says David Sparling, ag professor at the Richard Ivey School of Business at the University of Western Ontario. “For the last couple of years, farmers have been doing much better,” Sparling says. “Grain prices have been higher and they’re just making a lot more money.” Jared Carlberg agrees, and the University of Manitoba agribusiness and agricultural economics prof adds an extra explanation. Farmers will spend more to expand their land holdings than investment companies are willing to risk, Carlberg says. “I think it really is driven by farmer purchases. The farmland investment companies are out there, they have a lot of money, but they don’t spend it foolishly,” says Carlberg. “I think they’re less likely to overpay for farmland than producers themselves might be.” Carlberg says the market’s energy can be broken down into two sources: commodity prices mean farmers have cash, and the constant need to achieve higher economies of scale means they’ve got incentive to buy. With high commodity prices — and with farmers thinking prices are going to stay well above historic averages — farmers can pay more for land and still expect to continue making money on it. Plus, there’s an additional factor. New technologies, especially on the machinery side, mean farmers can cover more acres in the same limited number of days, so they can safely increase the size of their operations. It’s hard to keep on top of just how fast land values are increasing, but Farm Credit Canada’s 2012 Farmland Values Report pegged the average increase 14 country-guide.ca
in the value of Canada’s at 8.6 per cent for just the first half of 2012. That in turn was built on average increases of 6.9 and 7.4 per cent in the previous two reporting periods. Based in Ottawa, Bonnefield Financial calls itself the country’s only Canada-wide farmland investment manager and property management firm, providing lease financing to growth-oriented farmers and also providing opportunities for institutions and individuals to invest in farmland. “You can pretty much predict where farmland prices are going to go once you know where farm incomes are going,” says Bonnefield president Tom Eisenhauer. Like Carlberg and Sparling, Eisenhauer believes that the main explanation for soaring land prices lies in farm revenue and improving farm productivity. It’s been true for at least the past 30 years, Eisenhauer says. “It’s become a bit of a new story lately because we’ve seen some bigger increases in the last few years,” Eisenhauer says, “but those increases are certainly not out of line with general farm revenue.” Eisenhauer says it has become popular to believe outside investors are scooping up farmland, but the evidence doesn’t bear it out. “There’s roughly, by our estimation, about $300 billion worth of farmland in Canada, and from what we can tell, if you were to go back even over the last 10 years and add up all the third-party investor capital that’s been invested in farmland, maybe, maybe, you get to a few hundred million dollars,” Eisenhauer says. Adds Eisenhauer: “To suggest a few hundred million dollars of transactions over a 10-year period is driving the price of $300 billion worth of farmland is just lunacy.” Eisenhauer says that roughly $15 billion of farmland changes hands each year in Canada, and that Continued on page 16 FEBRUARY 15, 2013
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business Continued from page 14 very little of that — perhaps a fraction of one per cent — would represent third-party investors. That makes it cut and dried, Eisenhauer continues. “There’s no question. Farmers set the prices of farmland.” In fact, it’s not uncommon for farmland to get sold to a neighbour without ever even getting listed on the open market. That’s certainly true in Manitoba, where neighbours typically get first dibs and take advantage of the opportunity, Carlberg says. Farm Credit Canada last fall reported Manitoba farmland values rose an average of 10.3 per cent in the first half of 2012, the province’s highest increase since FCC began reporting farmland values in 1984. Ontario is experiencing a similar situation and demand has far exceeded supply, sending values soaring in the process. FCC reported Ontario farmland increased a staggering 16.3 per cent in the first half of 2012, the highest increase in Canada, and Ontario’s largest gain since 1996. It’s part of an ongoing trend. Ontario’s Municipal Property Assessment Corporation reports the province’s farm property values rose by an average of 34 per cent between January 1, 2008 and January 1, 2012. MPAC, which handles property assessments and appeals for the provincial government, adds that when eliminating farm homes and the one acre of land on which they sit — both of which are assessed as residential property — the average farmland value increase during the same four-year period is actually 46 per cent. Sparling says farmers are in a position where it pays to jump on any nearby land. The farther away land is from their other production, the more expense they add trying to service it. So if a piece of land comes up next door, and that same land may not come back on the market for 10 or 20 years, it adds to farmers’ willingness to pay a premium for that property. “If you’ve got a farm of 500 acres and it’s all paid off, then you buy the (500 acres) next door, and you’ve got 1,000 acres to pay for 500. People are leveraging their existing properties and grain capacity to buy more,” Sparling says. Eisenhauer agrees, saying that even by paying a “crazy” price, the overall average cost of land versus revenue for the operation could still be ridiculously low.
No bubble in sight As high as prices are now, don’t be surprised if they keep going higher. In fact, these experts say you should count on it. “Long term, the value of farmland in Canada is likely going to increase,” says Sparling, who adds that relative to many parts of the world, Canadian farmland prices are not out of line or even particularly expensive. Besides, the global ag outlook remains bullish. With a rising world population and changing consumption patterns in developing markets, demand for food is going to increase. “You’ve got a scenario that farming’s going to 16 country-guide.ca
look good over the next 20 years at least,” Sparling says, pointing out that what seems expensive now may not in 10 years. Land prices in most areas probably seem high now, but then again, they seemed high two years ago. The same is true in the West, and it’s impossible to pinpoint the limit of prices. “When farmland was $300 an acre, people couldn’t believe it would ever get to $600. And when it was $600, people couldn’t believe it would ever get to $1,000. And when it was $1,000, $2,000 was unimaginable. And if it’s $2,000, $4,000 seems unimaginable,” says Carlberg. “The upper limit on it really is what people are willing to pay. It’s as simple as that.” No one is pointing a gun at farmers and forcing them to pay something they aren’t willing to spend. Farmers have an intuitive sense of what’s too much, says Carlberg: “The farmer understands his or her operation, cost structure, has an idea of what’s going to happen with commodity prices, and makes the land purchase decision accordingly.” As well, although prices might seem exorbitant, history tells a different story. According to Eisenhauer, the percentage of the revenue that comes from each acre that a farmer would have to spend on a mortgage is actually much less today than it was back in 1982, even though farmland is much, much higher in value. “It’s more affordable because you’re getting much higher yields, you’re getting much better prices, and interest rates are lower,” Eisenhauer explains. “It’s just a much better time to be a farmer today than it was, and that’s being reflected in the land.”
Risks None of the above means it’s a simple no-brainer, however. Clearly, say our experts, there are risks. When farmers are highly leveraged, they are susceptible to changes in interest rates and commodity prices. And, of course, the weather can also wipe out a crop. There is also the risk that no one can definitively predict the future, whether that’s yield or price or financial conditions. “If interest rates go up and commodity prices go down, that farmer is done,” warns Carlberg. Some farmers in the early 1980s experienced 17 per cent interest rates compounded monthly, combined with ground temperatures over 100°. “It will happen again,” Carlberg says. “It’s inevitable. Those are things farmers are guessing on with respect to the future. I think lenders need to be judicious in lending money out for very highly priced land.” But both Carlberg and Sparling believe the global economy is too fragile for interest rates to rise anytime soon, or at least substantially enough to put people who hold a lot of debt — like farmers with newly purchased, high-priced land — in short-term trouble. “And if interest rates don’t go up, then you can carry an awful lot of debt at three, four, five per cent interest rates,” Sparling says. CG FEBRUARY 15, 2013
Who’s in the back room? It’s a favourite sport in Saskatchewan for farmers to accuse “foreigners” of sneaking around the province’s land ownership rules, often with the collusion of locals. It turns out, however, the farmers are sometimes right askatchewan is hiring an investigator to dig into rumours that foreign investors are adding fuel to the province’s skyrocketing land values, despite rules that ban non-residents from buying any more than 10 acres. The only thing more secret than the rumoured under-the-table deals that the investigator is supposed to pry into, however, is apparently the investigation itself. If the province’s rules are working, farmers would be the only ones who are bidding up prices. By blocking non-farmers, that’s supposed to mean the province’s farmland is as cheap as it can be. Saskatchewan’s Agriculture Minister Lyle Stewart has announced his government has appointed a special investigator to examine who is buying what and where the money is coming from. “There is speculation out there in farming country that some of the land is being bought by foreign interests, and under Saskatchewan law, that’s illegal.” Stewart told Country Guide The minister is tight lipped about specifics, however, not even going so far as to name the investigator or explain exactly how he or she will tackle their assignment. “We’re really not making that public in order to preserve the integrity of the investigations that may follow, or the methods that the investigator may use to conduct the investigations,” Stewart said. Saskatchewan’s Farm Land Security Board (FLSB) currently reviews suspicious activity, and the new investigator is to enhance those efforts with his or her “special skills,” Stewart said. But what those skills are exactly, he won’t say. “In the past, a number of sales have been discovered that were not legal by the existing staff of the Farm Land Security Board, and divestitures of those properties have been ordered and carried out,” Stewart said. “So this could lead to more of that, fines and so on, or jail terms.” Although Saskatchewan doesn’t maintain specific statistics about individuals or entities purchasing farmland, Stewart FEBRUARY 15, 2013
By Richard Kamchen emphatically rejected any notion that the province doesn’t keep track of the number of non-residents who buy land. “Nothing could be much further from the truth than that. Every sale has been looked at in the past and there are records (at) the Farm Land Security Board, and certainly we keep track,” Stewart said. FLSB is notified any time there is a change in land title and the board’s staff reviews those reports, says its general manager, Mark Folk. Stewart, however, allowed that the FLSB may have limitations in tracking where the money is coming from: “It’s a difficult thing to do and maybe that’s part of the reason we brought this particular investigator on board.” But the investigator isn’t considering broad consultations with farmers, although Stewart noted the FLSB has “always been open to tips and complaints about the sales of farmland.” In fact, it’s those tips that seem to have sparked this investigation in the first place. Stewart acknowledged farmers have voiced their objections about money coming from places like China, India and South Korea and driving up farmland values. “There’s a lot of chatter and occasional complaints that are associated with specific sales, but there’s a lot more coffee row chatter than there are specifics,” Stewart said. “It’s a difficult situation at best to follow up on the basis of the investments. “Farm Land Security Board staff have been following up on any sales that seem suspicious to them or sales to which complaints or tips from the public have been associated,” Stewart said. “This investigator will just add a little more punch.” The provincial government is clearly taking the issue seriously. Shortly before the minister announced the hiring of a new investigator in December, Folk wrote the Law Society of Saskatchewan to remind lawyers of provincial rules about foreign
ownership. It was an action that followed an FLSB meeting with the minister. “It was also sent to real estate agents and auction markets to verify that these are the rules and if anybody has questions on who can own what, here they are,” says Folk.
Other side of the fence Tom Eisenhauer chuckles at the idea that it’s money from China or other foreign countries that’s sending the prices of Saskatchewan farmland to new heights. The president of the farmland investment company Bonnefield says the facts and figures simply don’t bear this out. Eisenhauer says that for just about every province, there’s a strong link between farm revenue and farmland prices — except for Saskatchewan. And he says that has a lot to do with the province’s rules blocking foreign investment. Under the Saskatchewan Farm Security Act, only Canadian citizens and permanent residents, as well as 100 per cent Canadian entities that are not publicly traded can own more than 10 acres. The rules used to be even tighter. Between 1974 and 2002, non-Saskatchewan residents couldn’t buy land at all. Saskatchewan has been playing catchup since then, and according to Farm Credit Canada’s most recent findings, its farmland values rose an average of 9.1 per cent in the first half of 2012. That followed gains of 10.1 and 11.6 per cent in the two previous reporting periods. Eisenhauer’s findings, however, reveal that the legacy of restrictive ownership still affects values there. Despite experiencing the greatest rate of revenue growth of any province, Saskatchewan farmland appreciated the least of any Prairie province between 2006 and 2010. Still, Eisenhauer applauds Saskatchewan’s appointment of a special investigator to level the playing field. “If you’re going to have these, what I think, are stupid rules, then at least enforce them equitably... If there is some stuff that’s not legitimate, let’s root it out.” CG country-guide.ca 17
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Banking on farmers Critics say government-backed FCC is blowing up a land bubble. But farmers love this lender like no other
ankers have always been viewed by farmers with a healthy dose of skepticism. After all, what could someone sitting behind a desk all day know about the day-to-day operations of a farm? Besides, why is it the banks always seems to want to give you money when you don’t really need it, but also can’t seem to wait to rip the rug out from under your feet at the first sign of trouble? In fact, the banker-farmer tension is one of the most familiar tales in agriculture. From the dust bowl of the 1930s to the penny auctions of the 1980s, stories, songs and barrels of printer’s ink have been used to tell this tale over and over again. That’s what makes the tale of Farm Credit Canada even more extraordinary. Just try to say something even vaguely critical of FCC in front of a Canadian farmer, and there’s a fairly high likelihood that the previously unthinkable will happen — a farmer will begin to defend the reputation of a banker. Sean Gorrill, 45, runs a dairy in the heart of Saskatchewan’s breadbasket, near the community of Bulyea, north of Regina. His story reflects the diverse environment that FCC faces, even within agriculture. Every farmer may need money, but their needs are unique as the farm itself, and it seems to be FCC’s ability to handle both the diversity and the commonalities of farming that lies underneath farmers’ positive assessments. Gorrill milks 190 head and has worked with FCC three times in recent years, once for a significant expansion, once to adopt robotic milking technology and most recently to finance a divorce settlement. His grandparents milked cows back in the 1950s, and his parents revived the dairy portion of the operation in the early 1970s when they returned to the farm. From a farmer perspective, Gorrill cites FCC’s relative expertise in the industry. “They’ve got a lot of staff with agriculture backgrounds,” Gorrill says. “You don’t have to explain stuff to them. I would say that’s the No. 1 thing.” 20 country-guide.ca
While he has enjoyed working with FCC and says the local representative has been excellent, Gorrill disputes any suggestion FCC is a soft touch that’s too quick to make a loan. “They’ve been great to deal with and have stood by us the whole way, but I wouldn’t say they’re too loose with making loans,” Gorrill says. “You have to have your numbers and your projections -- and they have to be realistic. I’d say the more homework you show you’ve done, the easier they are to deal with.” Gorrill also says other lenders tend to come and go as their interest in agriculture waxes and wanes. When times are good they’re interested in agriculture lending but when times are tough they can disappear and make tough demands, as many operations in the area remember from the farm crisis years of the 1980s. “FCC seems to be in it for the long term,” Gorrill says. “Even though money is available now from banks, I think people learned a lesson in the 1980s.” At least one U.S.-based think-tank, however, says it should probably be taken as a warning sign when a lender’s clients sing its praises. Alex Pollock, a research fellow at the American Enterprise Institute, recently penned a dire warning over land prices and the role of the U.S. Farm Credit Administration. In that report, entitled “A Bubble to Remember — and Anticipate?” Pollock revisited the 1970s land boom and subsequent bust of the 1980s. He drew striking parallels between then and now and noted that during the last time through this cycle, the government-backed lending system may have contributed to increasing asset values beyond what the underlying fundamentals would have supported in the absence of government intervention. “To me it’s what happens when you push credit into a sector using a government-sponsored entity,” Pollock told Country Guide during a recent telephone discussion. “The value of that credit gets fairly quickly converted into the price of capital investments like land.” FEBRUARY 15, 2013
Photo credit: Carey Shaw
By Gord Gilmour, CG Associate Editor
Farmie Mae? To see the danger, Pollock urges farmers to take a close look at housing markets in both the U.S. and Canada. There, he says, one can see the clear outline of government intervention into a lending market. While the goal of affordable housing might have been an admirable one at the outset, organizations like Fannie Mae and Freddy Mac in the U.S. and the Canadian Mortgage and Housing Corporation (CMHC) in Canada ultimately wound up fuelling a speculative bubble in residential real estate. With homebuyers able to access cheap and readily available credit because of these publicly backed institutions, the institutions took on more and more risk. In the case of the CMHC, its portfolio now sits at nearly $600 billion, and that could spell trouble, Pollock says. “So far at least you’ve avoided a housing disaster like we had in the U.S.,” Pollock says. “But there are growing signs, I think, that you could be in for a rough ride too.” The problem with these types of governmentbacked entities is simply one of incentives, Pollock says, and they share a number of key traits that can translate into trouble. Their funding is either implicitly or explicitly government backed, which means the people supplying the money pay less attention to the bottom line because of the government guarantee. This can make money too readily available. FEBRUARY 15, 2013
They also tend to have relatively weak oversight that’s riddled with conflicts of interest — in the case of residential lending for example, such institutions tend to have boards of directors that are packed with real estate insiders. “If they have a vested interest in keeping credit flowing to the sector, it’s difficult to see how they can provide appropriate oversight,” Pollock says. As a final point Pollock notes that excessive pride in the executive suites can also play a crucially important, but frequently overlooked role in brewing up this cocktail. “Eventually these organizations always seem to get taken over by someone with ambition, someone who really wants to make his or her mark,” Pollock says. “They’re not content with a niche role, with being a lender of last resort, so they begin to expand the role of the organization.”
Mandate creep That can mean anything from getting into completely new roles to radically altering the rules under which it fulfilled its old mandate. Pollock again cites the CMHC as an example of an organization that’s undergone such a transformation. When the CMHC was first founded just after the Second World War, it was intended to make credit available to returning veterans to buy homes. It operContinued on page 22 country-guide.ca 21
BUSINESS Continued from page 21 ated under relatively stringent lending requirements that demanded hefty down payments and strict amortization periods. Today, however, it underwrites virtually every residential mortgage in the country. In recent years it also significantly lowered its lending standards. After decades of using a tried-and-true formula of 10 per cent minimum down payments and maximum amortization periods of 25 years, it began to reduce the first and increase the second. At the peak of this trend in 2006, you could sign a zero down mortgage that amortized over a 40-year period.
It’s a strategy that encourages buyers to go out and buy more house than they could otherwise afford, and crucially, it depends on constantly rising house prices to remain financially viable — for borrower and lender alike. “We saw how that worked out in the U.S. — housing can and will go down for a period of time, and we’re only just now, five years later, at the very early stages of recovering from that,” Pollock says. Pollock says he spends a lot of time talking about housing while trying to illustrate his point on farm lending because it’s a recent example that’s still fresh in mind, unlike the 1970s and ’80s bust-and-boom
cycle. However, he also says many of the underlying issues apply and the numbers are beginning to strongly suggest the same thing is happening. During the last land-values cycle, U.S. farmland prices first boomed and then fell 27 per cent from peak to trough, something which he notes in his report caused “disastrous effects for farmers, lenders and the Farm Credit System.” He notes that in the U.S. at least, they’re now on their 17th straight year of growth in real farmland prices and that average prices are now higher than the peak of the previous cycle. He also takes little comfort in the prevailing wisdom that other underlying fundamentals like
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BUSINESS population growth and income growth in emerging economies underpin this trend. He points out similar arguments were heard last time around, and they essentially amount to the infamous claim that “this time is different” which in investment terms is always a great time to head for the exits. “It’s not impossible to imagine that farmland prices could fall again,” Pollock says. While Pollock freely admits he is less familiar with the Canadian farm lending situation, he also notes that the two economies are so interlinked it would be difficult to see a major shakeout in farm prices in the U.S. that didn’t eventually
bleed across the border. He also stresses that the particulars of individual organizations may vary, but that all such institutions share the same key potential weaknesses, and even if FCC is functioning well today, it’s always a good idea to maintain vigilance.
DIFFERENT HERE? One Canadian economist who has spent some time looking at Farm Credit Canada says he simply doesn’t share Pollock’s alarm. Derek Brewin, an agriculture economics professor at the University of Manitoba, worked at FCC prior to returning to school for an advanced
degree in the 1990s, and his master’s thesis was on FCC lending risk. During a conversation with C OUN TRY G UIDE , Brewin quickly began to deconstruct Pollock’s points regarding government-backed lenders and highlight where they didn’t apply to FCC. One key difference is FCC’s relative importance to agriculture lending in Canada. According to their most recent annual report, FCC makes up just 29 per cent of Canadian farm lending. That’s significant for one single organization, but it has remained relatively stable for the past number of years. In Continued on page 24
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country-guide.ca 23 1/14/13 8:23 AM
BUSINESS Continued from page 23 1980 for example, FCC held 30 per cent of farm debt in Saskatchewan, Brewin says. By comparison chartered banks currently have about a 36 per cent combined market share, making them the largest agriculture lenders in the country, albeit as a group. Their market share has also been more volatile, Brewin points out. In 2003 the chartered banks had a 25 per cent market share, which climbed by 2007 to 40 per cent, only to drop back down. Brewin also takes issue with the characterization of FCC as pushing unneeded credit into the sector, noting that they
don’t subsidize their interest rates, and as a federal Crown corporation they actually return revenue to the federal government — a 20 per cent return on equity according to the last annual report. “This suggests that they are actually levying a small tax on farmers who use their services, though another way of looking at it might be that they’re simply generating a fair return on lending with government-backed rates,” Brewin says. “The only things that would make money ‘far more available’ than it otherwise would be are subsidized interest rates, which I think is minor, or riskier lending practices as we saw down south in the housing sector.”
In fact if you want a clear snapshot of where FCC is in terms of its risk management practices, the single most important number to key in on is a ratio known as loan-to-security, Brewin says. Taking the U.S. housing example, those values actually crept above 100 per cent — meaning lenders were not just no longer requiring down payments, they were actually giving people cash money back the day they signed their loans, according to media reports at the time. “If FCC were loaning at or close to 100 per cent of their security, I would probably share this concern,” Brewin
FEBRUARY 15, 2013
BUSINESS says. “I’m not sure what their current rules are regarding their loan-to-security, but loans at 100 per cent loanto-security were very rare when I was working there.”
MINDING THE STORE So, where is FFC’s loan-to-security number actually sitting? A heck of a lot lower than 100 per cent, says Michael Hoffort, FCC’s senior vice-president of portfolio and credit risk. Hoffort says over the past year the average loan that FCC has put on the books has had a loan-to-security margin of just over 63 per cent. In other words, it’s like a down payment of 37 per cent.
Hoffort also notes this number has remained relatively stable over the past several years, and that the loan-to-security ratio for FCC’s overall loan portfolio is actually significantly lower than that, since farmers retire part of the value of the loans over time. As a baseline FCC will lend for land, for example, at a loan-to-security that doesn’t exceed 75 per cent, and Hoffort notes that a significant number of the farmers who it lends to actually prefer to put more than that down, further lowering FCC’s credit risk. Remi Lemoine, FCC’s chief operating officer, also says he’s comfortable that Hoffort and the risk management
shop are performing adequate oversight. During a conversation with C OUNTRY G UIDE he pointed out that there are significant checks and balances built into the system which the average loan applicant might not see when they’re dealing with front-line staff at the institution’s lending offices across the country. “I hate to disappoint anyone,” Lemoine says, “but it’s pretty bank-y here behind the scenes. We do say no. We actually say no quite a lot.” They also spend a lot of time with customers making sure they’ve considContinued on page 26
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business Continued from page 25 ered all of the potential ramifications and have ‘stress tested’ their borrowing decisions. “One key difference between now and the 1980s is the quality of financial advice farmers have access to,” Lemoine says. “It’s easier now than it’s ever been to run scenarios that look at issues like whether a loan is still viable if interest rates rise, prices fall or some combination of both. We strongly encourage our clients to work with their accountants or farm management advisers to do these exercises.” Both Hoffort and Lemoine also point out that there was a significant amount
of oversight from outside the organization every year, with officials from both the Agriculture and Treasury departments expecting thorough annual reviews and ongoing medium-term business plans. “These are not just rubber stamp reviews,” Hoffort says. “They are significant and detailed and the federal officials ask a lot of questions about our operations.” Both also noted that the board of directors, which is appointed by the federal agriculture minister, isn’t just stacked with agriculture industry insiders either. It has some farmers and agriculture insiders, balanced with an equal slate of financial professionals.
“I think both groups bring very valuable skills and perspectives,” Lemoine says. “The agriculture people bring their understanding of the business, the financial professionals their considerable knowledge and skills.” Lemoine also notes in recent years there’s been a clear trend in the business world towards ensuring the independence of boards of directors and the active provision of oversight, rather than simply responding to the information they’re spoon fed by management, and FCC is no exception, with a group charged with independent monitoring for the board members. “At FCC those folks go where they
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business want, talk to who they want to and attend whatever meetings they choose to, and report back directly to the board,” Lemoine says. “I think this is something that was ongoing at the time of the 2008 financial crisis, but got a real kick in the seat of the pants as a result of it.” So what of the question of land values, which caused AEI’s Pollock to pen his report? Here Lemoine actually sounds a note of caution that begins to sound similar. Does it really amount to a bout of irrational exuberance based on short-term trends? “This is actually an area — land values — where we have a lot of interest in
what’s happening as a lender,” Lemoine says. “I also think this is an area where I might share some of those concerns and it’s why we spend time talking with our customers about stress testing a farm operation.” It’s a focus both he and Hoffort say goes back to the dark days of the 1980s when FCC was itself dealing with the after-effects of the 1970s boom and subsequent bust. “We were basically broke, and absolutely nobody wants to go back to those days,” Lemoine said. “There is a good corporate memory of that experience and a real desire not to repeat it.” In many ways the sort of criticism from
the outside like Pollock’s report can actually be helpful for an organization like FCC Lemoine says, serving to shake up their thinking and interject fresh points of view. “I think one of the basic challenges for our organization — or any large organization really — is to not become too ‘positional’ and thinking that only we have all the answers,” Lemoine says. “In fact sometimes this criticism from without contains messages that we need to hear.” In an era of cheap and relatively available money, FCC has been holding its own in market share. In no small part that’s because of a loyal base of farm clients who have made the organization their lender of choice. CG
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Are they up to it? Even the experts agree that your farm is a great place to learn leadership. The question is, will it produce young farmers prepared for the leadership challenges to keep your farm in business tomorrow? By Amy Petherick
“There is never a time when leadership training is not valid for a business, even if you’ve got yourself and just one employee or a spouse,” says Sparling, “but as farms become larger and more complex, you really need it because you actually have to get a somewhat diverse group to work toward the same goals.” Beyond the farm gate, there are other reasons for farmers to be thinking about leadership, adds Sparling. The co-operatives, buying groups, marketing boards and industry associations which represent farmers must operate in a collaborative style, which is unlike the average farmer’s daily decision-making processes. As in other areas of agriculture, these groups are often getting larger and more complex, and the dollar sums that they’re handling include a lot more zeroes than they used to. This requires everyone involved to at least understand a little bit about leadership, to ensure they’re electing individuals with the skills to wield their power effectively. “Even if they aren’t going to take on leadership roles, they need to be thinking about who are the best people to send to tackle future issues,” says Sparling. Besides, Sparling adds, it’s important for farmers to be conscious of how leadership works because often they are unknowing leaders themselves. “Farmers often take on different roles outside their farm that have an influence on their local community and beyond.”
What leadership means Maybe one of the reasons why farmers don’t think of themselves as leaders is because the definition of a leader isn’t always clear. Academics offer myriad definitions of what leadership is, and even more theories about how it works. William DeMarco has been both a scholar and professor of leadership theory throughout his career. His definition of leadership is simple; “Leaders give purpose to a group or a collective effort and inspire willing effort.” It’s a useful expression because it breaks the act of leadership into two distinct parts. First comes giving the group a reason to act. Second is convincing each individual to participate of their own free will. Neither task is especially easy, but each offers significant advantages to the leader who masters them. FEBRUARY 15, 2013
PHOTO CREDIT: PAUL MAYNE, WESTERN NEWS
aybe there are two things that farmers can be forgiven for sometimes getting wrong about leadership. First is that no one is really a born leader. You might have won the genetic sweepstakes and arrived on the scene with the right instincts and talents, but somewhere along the way your ability to lead needs to be nurtured and mentored… even if you don’t realize at the time that this is what is going on. Second, and even more important, is that many farmers may think the farm is the last place to learn how to be a good leader because you spend so much time on your own. Who needs to be a leader when sometimes it feels like the only person you can be boss of is the person you see in the mirror? But that means you’re selling the whole concept of business leadership short, and it can also mean you’re ignoring a new generation of business insights, which say that those times when you’re working alone on the farm can be practically the best times ever for honing your business leadership abilities. That’s a good thing, because virtually everyone agrees that the leadership demands on farmers are getting more and more intense. Farms are getting larger and more complex, many are multi-generational, often with multiple siblings, and many are incorporated and have multiple employees. And the complexities are only going to grow. But is the next generation of Canadian farmers learning the leadership skills it will need? The place to start is by learning more about leadership, the experts say, and to break leadership into its essential parts. Along the way, maybe the older generation can reflect on whether they should be polishing their leadership skills too. David Sparling is a professor at the Richard Ivey School of Business in London, Ont., who spends his time investigating the nuts and bolts of economic pressures and opportunities for farmers (See How High, page 14). But Sparling also thinks everyone, no matter what business sector they’re in, needs to always be honing their leadership skills. But the need may be extra imperative in agriculture.
“Understand your own style, how you approach decisions, how you communicate those decisions, and how you get people to buy into them.” — David Sparling “Giving a purpose, a nobility, to the group brings value to the group if it’s done right because people will collaborate, they will put in the extra effort, and they won’t waste energy on infighting or tearing each other down,” DeMarco says. Farmers actually start with a foot on the first rung here, DeMarco says, because you don’t need to be too creative to think about the farm in the context of doing something absolutely worthwhile. “There are very few jobs I can think of that are absolutely necessary for the human condition,” says DeMarco. “Farmers and people in agribusiness do something truly noble.” That in itself makes it easier to convince others to join you, says DeMarco, because in almost all cases, human beings relate very well to something virtuous, rather than something they deem mundane. Sometimes we think that in business, the purpose of the group is to make money and our inspiration is the paycheque that we get to take home at the end of the day. This is a common misconception, says DeMarco. A growing bank account is a result of inspired leadership, but an employee who is just putting in their hours doesn’t go out after dark to harvest one more load even if it’s not going to rain in the morning. FEBRUARY 15, 2013
In business, leadership is getting everyone to surrender to the idea that we’re all in this together, and that even when the boss isn’t around, everyone “gets” how important the work they are doing is, so they’ll go that extra distance for the job. Yes, some people are just hard workers, no matter who they’re working for. But one person’s hard worker is another’s workaholic. Individual values are very much a part of group dynamics and, therefore, leadership. “Every time you add additional human beings into the mix, their value system comes in conflict with the value system of the core,” says DeMarco. “We need to have a clear sense of our value system, but within that, we need to understand our needs.” DeMarco’s definition of values includes a person’s needs, their attitudes, and their beliefs. He tells me you can think of the value system as a teeter-totter, with needs on one end, beliefs on the other, and attitudes are the fulcrum in between. If there’s a disproportionate non-compliance with the needs, he says, that will force the teeter-totter down to the point where nothing else is possible, no matter what a person believes. In other words, as the old ChiContinued on page 30 country-guide.ca 29
business Continued from page 29 nese proverb goes, he who has much bread has many problems, but he who has no bread has only one. In short, leaders who work equally hard at meeting the needs and upholding the beliefs of the group have a greater capacity to influence their teams.
The behaviours of a leader Among the blessings of farm life are moments of solitude which often lead to reflection, which both DeMarco and Sparling say is critical for leaders. Not only do leaders need to dedicate time to envisioning the future of a group, but they need to remain intimately aware of their own values and convictions, which can flux with changes. “Our real values live in our behaviour,” says DeMarco, “so if you want to see what you truly value, look at your behaviour. Everything else is just ideas and words. ” Everyone likely knows someone, assigned to a leadership position, who said the right words or had the right ideas but their behaviour didn’t motivate the group to follow them towards a vision. “If you don’t have followers you’re actually not a leader,” says Sparling. “People don’t really think very much about that, but it’s true.” That seems to be one of the tricky things about leadership. You can think you’re a leader when you’re not, or be a leader and
A lesson on leadership and management from Kim McConnell There’s a common belief that management and leadership are just two words for the same thing. Kim McConnell begs to disagree. Managers organize tasks, McConnell says. Leaders organize emotions, ambition and drive. In other words, an effective manager can be the furthest thing from an instrument of inspiration. A leader, on the other hand, may have powers of persuasion and all the strength of vision in the world and still not be able to get the job delivered on time. McConnell, a Canadian Agriculture Hall of Fame Inductee in 2012 tells the story about the time Mary Kay was asked to speak at Harvard. Mary Kay herself arrived in attire befitting a cosmetic saleswoman and she brought one of her chief executives with her, who slumped off in his dated suit to a dark corner of the stage. Kay delivered a glowing address, detailing her vision of the company with great fervour, and delighting the sombre crowd of Harvard scholars as she whisked brightly around. When she’d finished, one student asked her a very detailed question about a specific company transaction that had occurred. Kay simply said, “That’s a good question,” and stepped aside so the dowdy executive could take centre stage and impress the whole crowd by methodically outlining every action taken in the case, as well as the reasoning behind each decision. McConnell says the story perfectly demonstrates that not only are the roles of leaders and managers not the same, but also that a company can be extremely well served by isolating the two roles. Management produces order and consistency. Leadership creates change and movement. Your business, McConnell says, needs a combination of both to excel.
not know it. “There are various styles of leadership,” says Sparling, “and it’s important to understand your own style; how you approach decisions, how you communicate those decisions, and how you get people to buy into them.” Sparling says a common tool used to help people rank their leadership ability is through a 360-degree analysis, which involves getting feedback from the people all around the leader is order to identify their strengths and their areas for improvement. Self-assessment can be effective too. Asking simple questions like, “Do people listen to me?” “Do people tend to react well when I suggest directions?” and “Why do I think they follow me?” can help many leaders down useful paths of self-discovery. “The problem with a lot of this self-assessment is that our perceptions of why people do things relative to us are just that; they’re our perceptions and they’re not necessarily accurate,” Sparling points out. This is when you see executive coaches come in to help. Heather Petherick is an executive coach based in Lethbridge, Alta. who started her career in agriculture. She says that coaching as a profession is relatively new but it’s gaining traction among professionals including accountants and lawyers. Whether or not farmers think of themselves as professionals, Petherick says it’s still an isolating journey, which can really benefit from coaching. “It’s inaccurate to think that you’re either a born leader or you’re not,” says Petherick. “The best leaders are intrinsically driven by their values and their passion to create or change something.” Petherick (aunt of the author’s farming husband) says most people who come to see her have already identified something about the way they’re running their business they need to change, and are looking for help on how to make that change. “Business is so complex today and we’re identifying how unrealistic it is to know it all or do it all ourselves,” says Petherick. Yet business leaders feel under pressure to never admit any vulnerabilities, either to a competitor, a supplier or to staff. Coaches give the leader that chance to let their guard down and to talk frankly, says Petherick. They’re from outside of the business and can offer a safe place to air frustrations, toss ideas around, and be heard without being judged. “Coaching comes from the perspective that the client is talented, resourceful and creative… ultimately, that they have the smarts to get through this challenge,” says Petherick, “and the coach’s role is to support them by brainstorming, evaluating options, and untangling them.” Petherick says that the most effective leaders have someone beyond a spouse investing in and supporting them already. For some leaders, it’s an individual they can usually count on to disagree with their ideas. While that doesn’t necessarily suit everyone, all three experts agree that becoming a leader must include a willingness to adapt and grow as an individual through such means. CG FEBRUARY 15, 2013
How do you prepare for a deflationary market? By Errol Anderson
he word “deflation” doesn’t enter our vocabulary very often during a lifetime. But that doesn’t mean it is unheard of. Japan has been battling a deflationary economy for years, starting back in the 1990s. In fact, Japanese interest rates for a time actually turned negative. But deflation in North America? Come on, get real… Deflation occurs when all general price levels begin to decline for a prolonged period. Assets are simply worth less. In a farm context, even land prices and cash rent values might be impacted. This type of economic event has long tentacles, but it often begins in the energy world, with the market for crude oil. Crude oil is a lead indicator of commodity price health. A buoyant crude market is a sign of robust global economies (or disruptions in oil supply.) And crude oil is also a key price indicator for ethanol, which can impact U.S. corn prices as well. West Texas Intermediate (WTI) crude prices approaching $100 per barrel EW are a good sign. WTI prices slumping toward $80 per barrel or lower are not. Through this winter there has been a brewing battle between those who believe hyperinflation will inflate product values because of our global economic woes, and those who believe that commodity prices including input costs are in store for a prolonged setback. Let’s imagine for a moment that there may be a truly deflationary economy on our market doorstep. How can a grower set price targets in this potential new economic environment? If this economic scenario unfolds, it would change some market planning ideas of old. Deflation suggests storing product may not be an effective strategy. The longer you store, the lower the price. It also means market rallies may have shorter lifespans. From a farm market perspective, this makes it exceedingly important to have realistic price targets in place with your cash buyers and commodity brokers. But deflation is not just a one-way street. Deflation would affect not only raw commodity values, but input prices may be affected and pulled back as well. This thought will no doubt spark debate. Many say there is no way growers will get a break in input costs. But that is the shocking aspect of a rare deflationary market event. Even inputs might be impacted. Another good news aspect of this economic reversal is that interest rates should stay depressed for a long time. Although interest rates are destined Febuary 15, 2013
to remain low, debt must be monitored closely. If inflation won’t allow expansion, then controlling debt starts to take on a whole new meaning. Again, this is up to much debate. But a deflationary market means inflationary pressures are in check. And rising interest rates are a government tonic for inflationary pressures, not deflationary ones. Here’s some more good news should deflation rear its head. Fuel prices may stay down for the long haul. That’s unheard of, you say? What about the $130-per-barrel oil talked about just months ago? No doubt the Edmonton crude spot market has been hard hit so far in 2013. Canada is experiencing a more difficult time accessing premium U.S. markets, creating a supply bulge here at home. This slowdown in demand for key staple commodities is characteristic of a deflating economy. But the world population is growing and everyone has to eat. How can prices possibly go down? This is a common comment, but price discovery is a balance between supply and demand, and when prices compete for market share, demand is ultimately the steering wheel of markets. The law of product substitution kicks in. That’s why bull markets in commodities tend to have a shortened shelf life. In times of global price shortages, world markets become innovative and resourceful. Rising prices eventually price themselves out of the global marketplace. A key in a deflationary marketplace is to keep close tabs on your cost of production. A deflating price environment may also threaten to break below production costs from time to time. This will mean a sharp pencil on the input cost of the equation is necessary. As any coach would state, a solid defense may be your best offense. This pertains to marketing as well. Global economies and governments have a daunting struggle ahead of them. Global debt loads are forcing a showdown that will impact global markets and ultimately impact our own. No one really has a clear vision of what lies ahead. You may not agree that there is a possibility of deflation, but this article is meant to generate some discussion and thought. Ask yourself just what will happen if commodity markets take a twist toward deflation. Are you prepared? CG Errol Anderson is a Calgary-based commodity broker and author of the daily ProMarket Wire report. He can be reached at (403) 275-5555, email: email@example.com. country-guide.ca 31
Turbulent times Strong leadership and an innovative business structure have helped the members of Alberta’s Sunhaven Farms survive in the pork sector. Could the same approach help you too?
hanks to their ingeniously complex business model, the farmer members of Sunhaven Farms in Alberta are maintaining their independence while also taking advantage of the scales of economy and the access to knowledge and services normally only available to a large corporation. If it sounds like a pipe dream, it isn’t. But then, if it sounds easy, it isn’t that either. Undeniably, it takes special leadership skills and an iron will to keep a steady beam on a ship with so many oarsmen, especially considering the volatility of the swine industry and its ongoing story of bail-outs and bankruptcies.
Photo credit: Dirk Brouwer Photography
By Maggie Van Camp, CG Associate Editor
FEBRUARY 15, 2013
Says Sunhaven’s Bryan Perkins, “By working together, we can accomplish more.”
The core belief, however, is as pure and simple as it can be, and so is the group’s commitment to it. “By working together we can accomplish more,” says Bryan Perkins, president of Sunhaven Farms and Sunhaven Farms Milling. Sunhaven is also aware of the evolutionary pressure on agriculture, perhaps best summed up by Bob Milligan, senior consultant with Dairy Strategies in Wisconsin and professor emeritus at Cornell University. Today’s farmers need to motivate and share decision-making with more people, Milligan argues, and in order to do so they must transition from their past roles as operations managers into a new future as chief executives. Such leadership skills can be learned, Milligan says. In fact, he says they must be learned: “In addition to hard work and excellent management, farm business success today is increasingly requiring great leadership.” Not only is there volatility in farm commodities, but economic variability threatens to rock the boat as well, Milligan adds, so our farms increasingly need leaders who are dedicated to a strong vision. Like Sunhaven, such leaders must not only think operationally but strategically as well, and they must make planning for the future a priority each day. “Business leaders portray this better future by articulating the mission or vision for the business,” says Milligan. “Every farm manager and agribusiness professional must recognize the earth-shattering changes occurring in our industry and world.” Sunhaven Farms was started in the
FEBRUARY 15, 2013
mid-’90s with 30 investors, mostly local grain farmers including Perkins who wanted to add value to their production. At the time, massive changes were sweeping through the hog business. Processor- and investor-owned hog barns were emerging, processors were moving to the Prairies, and segregated production units were gaining popularity. In this mix, Sunhaven was born as a community of shareholders investing in sow barns and a feed mill that would then contract to and supply feeder barns that were independently owned and operated by farm families.
One hundred and fifty shareholders Today, Sunhaven Farms has about 150 shareholders and four partnerships. Including the Perkins Farms unit, the company has about 11,000 sows and contracts out nearly a quarter-million market hogs per year to affiliated farms. Bryan’s son, Ian, leads Perkins Farms, a farrow-to-finish hog operation with 1,900 sows and feed mill, plus 10,000 acres of grain. To the contract feeder barns, Sunhaven provides the pigs from their own sow units and Perkins Farms. Sunhaven also provides veterinary services and cost-only feed made through their own mill at Irma, Alta. As well, the company co-ordinates marketing. Feeder barn owners are then paid a fee per pig for the job of finishing and, if there are any, they get the first share of the profits.
Although the structure itself is a complicated flow chart, the benefits are simple and powerful. Each farm can take advantage of production scales of economy and have at-cost feed. Then the group, by sharing similar management, feed and marketing goals, is able to market larger volumes of fairly uniform market hogs. As well, members also help each other keep on top of production information and hire topquality veterinary services and consultants. Around wooden tables in local halls, Perkins chairs meetings with feeder barn owners and sow barn operators three times a year. They share information, listen to speakers and talk about the general business of the farms. They aren’t trying to extract more margins out of each other and instead are trying to work together and learn from each other in order to heighten their efficiency. Through it all, the message is that their success is linked.
Multiple owners Historically, farming has been a bastion of sole proprietorship and individualism, Perkins says, yet farmers have also been leaders in a range of co-operative efforts, including everything from local elevators to community telephone and power projects. This approach to working together demands a willingness to delegate some decision-making to the group. But Perkins makes what he believes is a critical point. Says Perkins: “Most larger enterprises, outside of farming, have multiple owners.” Continued on page 36
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business Continued from page 33 Unlike many large corporations, Sunhaven Farms has a competitive advantage. It is made up of family farms, with vested down-to-earth people. There are no fancy offices or boardrooms here. Everyone wants to help each other and yet the members are still driven individuals in their own right, trying to make a better future for their children. Bryan’s daughter Shannon leads the Sunhaven accounting and administration team and with her husband Arthur owns and operates a nearby grain farm. “It helps that each of the finishing barn owners has skin in the game,” says Perkins. “And we try to run a strong balance sheet and replenish on good years.” It also helps to have shareholders who understand the agricultural industry and recognize what’s gone on — the diminished number of herds after prolonged poor prices and substantially high grain costs. Originally, this business structure was conceived by Perkins as a way to capture the success he had working with family and friends on their grain farms. He still shares equipment and works with his children, his brother Mark, his brotherin-law Matt, and neighbour, Ken Wasmuth. Also, many years ago Ken and Bryan owned and operated a local crop input company together. Each individual owns their own land, decides what to grow and how to market, and separately buys inputs. However, they share one of the largest fixed costs, equipment. At harvest they operate by the principle that the grade-sensitive crops come first, followed by the highervalue ones, and they leave the feed grain until last. Since they work together with larger equipment, they can harvest faster and more efficiently, a big advantage especially for the smaller, newer farms. “It’s not one big farm but we share equipment, help each other with labour and consult with each other on inputs and marketing,” says Perkins.
Rally the troops Larger operations need a leader who can rally people, says Milligan. Traditionally farmers have led more by example, but in larger businesses the leader cannot work alongside every employee. However, leaders can show they’re willing to do the work and that they have great respect and trust in those they lead. 36 country-guide.ca
“It’s the farm leader’s responsibility to evoke the passion of all owners, family members, and employees to work as a dedicated team to fulfil the mission and vision,” says Milligan. Having the ability to draw good people to the operation and and to engage everyone in a shared vision has been essential to the success of all the organizations Perkins has helped lead. He was vice-president for UGG (later became part of Viterra) and chairman of Fletchers Fine Foods (now Olymel). He has also coached teams and volunteered for many non-profit organizations. Fundamentally, he believes in the power of enjoying what you’re doing, since that energy will spread to others within the organization. “If you’re not having fun, it’s not going to work out very well,” he says.
Connect Motivating others requires communication and that can be a challenge in larger operations separated by long stretches of the Prairies. Sunhaven Farms has 80 employees and, as with many livestock operations, strict biosecurity regimes mean it’s difficult to have person-to-person contact. Even so, Perkins prefers a more personal communication method than email. “To me, phones are better because you can get a tone of voice, and face to face if possible is even better.” In early June, Sunhaven Farms’ owners have an annual meeting and every spring, the general partners, management and employees meet, eat and have some fun together at a big seminar. “Leaders need to be connected,” says Perkins. Over the years, having strong public speaking skills has helped Perkins conduct meetings, and communicate effectively as director and executive at large business boards and local functions. He first got a taste of this skill as a teenager as a junior toastmaster in high school. Milligan says leaders like Perkins tend to network with other leaders to learn and observe, and Perkins points to his own role representing agriculture in the Rotary Club of Wainright. “Where do the leaders in your local community — the mayor, the superintendent of schools, the presidents of local businesses — meet, network and learn? Perhaps you should join,” says Milligan. “In addition to learning and growth, you would be a positive representative of agriculture.”
Self-SWOT Over the years, Perkins has observed that people have different qualities which can almost always contribute to leadership, but these inclinations vary a lot. “Strong leaders make use of others’ strengths,” he says. “If allowed and encouraged to show, one or more leadership traits will emerge.” The strong leaders Milligan has met fundamentally understand each person is a unique, wonderful human being, and they make the most of it. Moreover, Milligan says leaders like Perkins are self-aware and recognize and understand their own uniqueness, tendencies, strengths and weaknesses. They get help on those things at which they’re weak. “I’m probably not the best detail person so I need to surround myself with people who are good at it,” says Perkins. His integrated-yet-independent business model plays into this ability. “Over the years I’ve learned that everyone has their own strengths and weaknesses, and working together helps balance that out,” he says. “Then all you need is a leader who helps build on the strengths of people and makes sure the weaknesses are covered by others.” Before making a final decision in meetings, Perkins goes around the table asking each individual if they’ve got anything to add. Some of the individuals who were reluctant or too shy to speak up may have the best insight. Also, you get a higher degree of buy-in. It’s a way to acknowledge that there are different views but in the end someone’s got to make the decision, says Perkins. At least then the group can move together as a team.
Youth By engaging everyone, a deeper pool of knowledge and a wider set of skills are leveraged. Plus, in common with many strong leaders in business, Perkins believes in engaging younger people. They provide energy and bring in new knowledge and skills to the organization, and they also stretch leadership skills. “We have quite a range of ages on our operations and I think that’s healthy,” Perkins says. “You can balance out the energy, excitement and new knowledge with the accumulated wisdom and experience.” Leaders recognize that the workforce is changing, adds Milligan. “The genXer and millennial generations are much less willing to work at a job that does not have meaning.” FEBRUARY 15, 2013
business Milligan also points to another characteristic of the millennials. They have little respect for authority. For that age group, it matters how feedback is framed and the relationship with the supervisor leader is also crucial. Since 1969, when Perkins started grain and hog farming, changes in technology have impacted the industry the most, he feels. “Then all you needed was energy, ambition and physical work but today you’re likely to need management skills, computer know-how.”
Learn from mistakes In Perkins’ view, the biggest mistake he almost made was trying to
buy a block of land in the 1980s. Luckily he ended up backing off, since interest rates soared shortly after and the people who ended up buying it struggled. Over the years there have been many challenges and Perkins says that they taught him the importance of risk management and alternative marketing strategies. In 2002, there was no crop in his area but they had crop insurance. When pork demand took a dive with the swine flu scare and one lender backed out, they were prepared B:8.635” to quickly move to another creditor. When they lost a T:8.125” barn to fire, it was covered by an insurance S:7” policy.
In 2009, when Perkins had a heart attack and his father passed away later that year, the business model of working together became a sort of personal hedge. He had the support of family, community and long-term friends built into the business, and that proved to be an amazingly strong risk-management tool. Making mistakes is essential to developing skills, says Perkins. It also teaches how important it is to manage risk, while at the same time revealing that sometimes you just have to be aggressive and go after what you want. It’s that balance, he says, that can be the hardest part of farming. CG
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How to effectively manage foreign exchange risk The second in a two-part series on managing foreign exchange risk By Mark Kelly and James Percival, Western Union Business Solutions
n our first article, Protecting Crop Profits from Foreign Exchange Risk, we stressed the need for today’s Canadian farm operations to understand the impact that foreign exchange (FX) risk has on their bottom line, regardless of whether they export directly or not. We also discussed the first elements of a successful FX hedging policy: starting with calculating the value-at-risk to FX fluctuations and from there determining a budgeted rate that not only makes sense from an operational standpoint but is also realistic relative to the current market environment. As well, we touched on the important concept of separating your FX hedging program from your commodity hedging program to maximize the benefit derived from each. Now the next step in the process is choosing the right hedging tools and having a strategic implementation plan to effectively manage this risk. In other words, now that you have worked out the value-atrisk in your operation and determined a budgeted exchange rate that makes sense, how do you go about protecting that rate and ultimately your farm’s bottom line?
Choosing the right hedging tools FX hedges are designed to efficiently and precisely target currency risk without increasing other exposures. Therefore they are often the most costeffective and useful tools available. These typically take the form of a financial contract with a financial institution or dedicated foreign exchange services provider, and contain provisions for the settlement of funds in the future according to an agreed-upon formula. The two main types of tools available to hedge foreign exchange are as follows:
1. Forward (or swap) based: A forward contract lets you buy or sell one currency for another for settlement at a desired point in the future. Unlike a spot rate contract, which is the purchase or sale of one currency against another transacted immediately, a forward contract reduces the risk of fluctuating exchange rates by locking in an exchange rate today for a transaction that will take place in the future. By protecting your future cash flows against negative currency fluctuations, it can reduce some of the risk associated with doing business in a market where the primary price discovery is in U.S. dollars. With a forward contract, the locked-in forward rate you receive will either be at a discount or a 38 country-guide.ca
premium relative to the spot market rate. The reason for this has nothing to do with market expectations of future rates but rather the difference in market interest rates between countries. The currency of a country with lower interest rates than Canada will therefore trade at a discount, whereas currencies of countries with higher rates will trade at a premium. There are two main types of forward contracts available to meet the FX risk management needs of agribusiness: • Open Forward Contracts: With an open forward contract you lock in an exchange rate now for delivery of any portion at any time until the contract is depleted (referred to as a drawdown), or its expiry date arrives. An open forward contract is therefore suited to a producer who wishes to lock in a particular exchange rate for their production that will be sold at indeterminable intervals (i.e. when they decide commodity prices are favourable) throughout a period of time. • C losed Forward Contracts: With a closed forward contract you lock in an exchange rate now for delivery of the currency on a specific date in the future. This contract is best suited for when a producer knows that they will be receiving or delivering product on a particular date (i.e. there is a contractual agreement to deliver). FEBRUARY 15, 2013
As well, forward contracts can be classified as either deliverable or non-deliverable. A deliverable forward contract requires that settlement of the contract be done with physical dollars, meaning that there is an actual exchange of funds (i.e. if you sell a US$100,000 deliverable forward, settlement occurs when you deliver the U.S. dollars to the financial institution you entered into the contract with). A deliverable forward contract is therefore best suited to the producer who directly exports their production to another country and receives foreign currency as payment for those goods. A non-deliverable forward contract on the other hand allows the producer to settle the forward contract by either paying the out-of-the-money or receiving the in-themoney position at the contract’s expiry: Example: If you sell a US$100,000 non-deliverable forward at a rate of 1.0000 USD/CAD, settlement occurs by either paying the outof-the-money portion of the contract if the rate on expiry is above 1.0000 USD/CAD or receiving the in-the-money portion of the contract if the rate on expiry is below 1.0000 USD/CAD. A non-deliverable forward contract is best suited to the producer who sells and/or hedges their production in domestic currency, whether through a Canadian merchant or exchange, where the commodity being hedged has primary price discovery in U.S. dollars (i.e. soybeans, corn, wheat, hogs). Forward contracts are cost-efficient and flexible tools, allowing producers to easily and effectively reduce their exposure to FX market movements. However, the downside to fixing an exchange rate is that it also limits your ability to gain when the markets shift in your favour. For those producers wanting to hedge their exposure while still allowing for potential upside participation, option-based products are a great alternative.
A strong FX risk management strategy can help to provide pricing and profit stability to an agribusinesses environment that is fraught with uncertainty — helping you to survive and thrive on a global scale
Let’s Get GrowInG! Growing Forward 2 is an investment of $3 billion in strategic initiatives to assist farmers like you find innovative ways to expand markets and stay competitive. Learn more about these and other federal, provincial and territorial programs that can help you manage your business risks.
Growing Forward 2 programs focus on: • • • •
Innovation Competitiveness Market Development Business Risk Management
To find out more about federal programs and application deadlines, visit
www.agr.gc.ca/growingforward2 2. OPTION BASED: One of the most flexible ways to mitigate the foreign exchange risk in your operation is to make use of currency options. Currency options allow you to effectively manage risk and, at the same time, take advantage of positive changes in market exchange rates. The benefit of options is that they provide protection against adverse market developments, give you the opportunity to partici-
or call 1-877-246-4682 today!
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Continued on page 40 FEBRUARY 15, 2013
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Continued from page 39 pate in favourable moves, and can be structured at a zero cost. They may be used alone or in combination with other hedging tools, such as forward contracts, to offer a powerful risk management strategy. Option-based currency hedging products can be categorized into two main classes: Vanilla and Structured: • Vanilla Options: Vanilla options allow you to maintain a position that is fully hedged while also giving you the ability to take advantage of any favourable market movement. As ‘the Buyer’ of a vanilla option, you have the right, but not the obligation, to exchange currency at a predetermined rate on a predetermined date. However, vanilla options do require you to pay a premium, similar to an insurance premium, in order to protect you at that predetermined rate. The size of the premium payable varies depending on a number of factors such as: how far your protection rate is from the market rate, how much time is left before the option expires, interest rates, and market volatility among other factors. The protection rate is that rate which you use to measure the strength of a hedging strategy, and it is the rate you will receive if the spot market is
Managing foreign exchange risk effectively often requires highly specific knowledge of the market and the tools available trading at a less advantageous rate than you have received as your protection rate. The advantage of using a vanilla option is that if the spot rate is more favourable than your protection rate at expiry, then you are free to deal at the more favourable spot rate. Alternatively, should the spot price at expiry be less favourable than your protection price, you are fully protected and can deal at your protection rate. With a vanilla option, the cost is always limited to the cost of the insurance premium that is paid to buy the option. Depending on your FX service provider, it may also be possible to defer the upfront premium and pay it upon expiry of the option. As far as the drawbacks to consider, the premiums associated with vanilla options can be quite expen40 country-guide.ca
sive under certain market conditions and are also non-refundable. • Structured Options: Like vanilla options, structured options allow you to maintain a position that is fully hedged while also giving you the ability to participate in favourable market movements. However, unlike a vanilla option, a structured option is usually built at zero premium cost to the holder, avoiding the hefty upfront premiums associated with vanilla options. In exchange for not having to pay a premium, the holder of a structured option typically agrees to cap their upside to a favourable market move. Structured options are created through the concurrent sale and purchase of two or more call options and/or put options. In any structure you may be both ‘the Buyer’ of an option and ‘the Seller’ of an option. As ‘the Seller’ of an option you create an obligation as opposed to a right to buy or sell currency at a predetermined rate and date. Combining both the sale and purchase of two or more options therefore gives the holder of a structured option both the right to exchange currency at a predetermined rate and date (full protection) as well as the obligation to exchange currency if certain conditions attached to one or more of the options within the structure are met (limited upside). Many producers prefer structured options over traditional forwards and vanilla options as this gives them the protection of a forward contract combined with the elements of the upside potential associated with vanilla options, without having to pay a premium.
Strategic implementation plan A strategic implementation plan involves bringing all the pieces we’ve discussed so far together into an executable action plan. After an assessment of your operation’s FX risk has been done, the valueat-risk identified, a budgeted rate determined, and the appropriate hedging tool(s) selected, successfully executing on your FX risk management strategy is crucial to its overall effectiveness. Day-to-day market movement can present many opportunities for producers to enter positions at favourable levels, but large negative moves can wipe away profit just as easily. As a result, many of the most experienced corporate risk managers trade tactically by employing pairs of standing market orders to capture opportunities while protecting themselves in the event that markets shift against them. Market orders can be placed to automatically trigger a trade when the exchange rate hits a prespecified level. When the trigger is placed on the favourable side of the market, the order is called a “take profit”; when it is placed on the less favourable side, it is called a “stop loss.” Pairing both FEBRUARY 15, 2013
types of orders in a disciplined manner can help to optimize trade execution levels within the context of your budgeted rate, while ensuring that the bottom line is protected against large negative moves. A variant of this tactic is called a “trailing stop loss.” A trailing stop loss order sets a protection level at a specified percentage away from the prevailing spot price, and moves with favourable movement in the currency. This creates a “worst-case rate” for hedging and accounting purposes while allowing for upside participation — particularly in those circumstances when the market moves sharply in one direction. Looking at charts to visually quantify recent trading patterns can be instrumental in understanding the risks and opportunities available, and can be particularly helpful when determining where to place market orders. Speaking to trading specialists may be highly worthwhile, both in determining where market consensus is heading and in understanding where this consensus is vulnerable to adjustment. When adjustments occur, currency volatility follows, and volatility creates opportunity.
is corporate foreign exchange specialist, agriculture for Western Union Business Solutions, a world leader in helping farms of all sizes manage foreign exchange and cross-border payments in 140 currencies and 200 countries. Mark specializes in currency
risk management solutions for agricultural clients, and James designs holistic agricultural foreign exchange risk management strategies. Contact them at 877-475-2226 or: mark.kelly@ business.westernunion.com , james. firstname.lastname@example.org.
Make The Connection
SUMMARY Ultimately, a strong FX risk management strategy can help to provide pricing and profit stability to an agribusinesses environment that is fraught with uncertainty — helping you to survive and thrive on a global scale. Of course, the ideas presented for consideration in this article are merely a starting point. Many agribusinesses simply do not have the internal resources available to build, implement and monitor an FX risk management program. These resources are not always easily developed or maintained, particularly over the long term. Managing foreign exchange risk effectively often requires highly specific knowledge of the market and the tools available. A dedicated foreign exchange specialist can add significant value to this process by providing the information, the tools, and the expertise required to help you make the right decisions. CG Based in Winnipeg, Mark G.J. Kelly is sr. business development executive, agriculture, and James Percival FEBRUARY 15, 2013
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‘Insure’ you get paid Whoever thought it could be interesting to talk about accounts receivable insurance? Well, the day has come. Today, there may be multiple benefits to buying your own insurance to make sure you get paid for your grains or livestock, no matter where on the globe you sell them. By Gerald Pilger armers are quick to insure the tractors, barns and other assets they need to produce the commodities they sell. Most farmers insure those commodities too, buying crop insurance, for instance, and also insuring their breeding herd. Yet most willingly deliver their production before payment is made, typically with little due diligence into the ability of the buyer to pay. Should farm managers insure against the risk of the buyer not paying for commodities they receive? The answer to this question depends on three factors: the risk of non-payment, the capacity of the farm operation to endure non-payment, and the availability and cost of insurance to protect against non-payment. Most farmers believe the risk of not receiving payment for the grain or cattle they sell is very small. After all, there are relatively few cases of farmers not being paid for sales. Yes, we hear of small grain companies occasionally going broke, and the hog industry in particular has had a number of large operations declare bankruptcy and not pay for hogs and feed. But given the size of agriculture in Canada, such
Market Power Assurance Last summer, Pangaea Global Risk Management of Vancouver partnered with Atradius Credit Insurance and Export Development Canada to develop a new group accounts receivable insurance program specifically designed to protect sales of farm commodities and livestock. They are offering this insurance to farmers through Farmers of North America (FNA). Kevin Sullivan, president at Pangaea Global spent two years working to structure an accounts receivable insurance policy specifically for western Canadian farmers. Sullivan says utilization rates for this type of insurance by farmers were previously non-existent because few individual farmers have the $5 million to $10 million in annual sales to fit the profile for the policies sold by private insurers. Nor did the farmers have the margin, so the two to three per cent of gross sales charged as a premium was too costly.
shortfalls are far from the norm and affect a relatively small number of producers. Couple this with the belief by the majority of farmers that the Canadian Grain Commission (CGC) already offers no-cost payment protection to grain growers through the licensing and bonding of grain buyers, then insurance against non-payment seems like a redundant, needless expense. The rules in Eastern Canada are somewhat different. For instance, grain farmers in Ontario are protected by that province’s Grain Financial Protection Program. However, the net effect in terms of farm risk is similar.
Buying insurance Exporters, manufacturers, and even retail business have relied on accounts receivable insurance for years to protect their operations against buyers failing to pay. David Newstead, assistant regional vice-president, Canada, of Euler Hermes, a global issuer of credit insurance products, describes accounts receivable insurance as affordable security for any business,
Sullivan’s solution was to create an aggregated program which insured sales on a transactional basis. According to Sullivan, this approach to account receivable insurance had never been done before in the world. With a big group policy the risk of each single transaction can then be spread across all buyers and sellers, thereby reducing the premiums on each sale. Sullivan says the MPA premium for sales to large Canadian or American buyers is less than half a per cent. “This one simple program is open to all Canadian farmers, including livestock producers, hatcheries, and grain growers,” Sullivan says. “Every farmer has access to the program.” Sullivan also says that MPA offers three benefits to growers. First is risk mitigation. The plan empowers the producer by guaranteeing payment and by increasing the creditworthy buyer pool the farmer is comfortable dealing with.
FEBRUARY 15, 2013
MANAGEMENT including farms, against unpaid invoices. “You get paid even if your customer defaults,” Newstead says. Most of Euler Hermes business is geared to companies which are export oriented because of the increased risks of dealing with a buyer in another country. “Most sellers don’t have any inkling of the solvency of a foreign buyer,” Newstead says. Instead, underwriters of accounts receivable insurance do the business intelligence needed to evaluate the risk of a buyer defaulting on payment in the next 12 to 18 months. “We get that information and then continue to monitor the buyer on behalf of the seller,” Newstead says. “If a buyer defaults, a standard accounts receivable insurance policy will pay the seller an indemnity of 80 per cent of the sale value.” Newstead describes the application process for accounts receivable insurance as fairly simple. Typically, a company will insure all of a business’s annual sales on one policy. The insurer reviews the past sales history of the company, losses the company has experienced in the past, and the buyers and countries where the company is selling. In as little as a week or two the underwriter will respond to an application for insurance with a personalized policy for the selling company. Euler Hermes will also tailor-make a policy that covers only sales to one particular buyer that a business sells to, as well as offering policies which cover a single sales transaction. Each policy is written on a case-by-case basis. In a few cases, insurance cannot be offered simply because the risks cannot be evaluated, or because of
Second, Sullivan says MPA provides cost savings to buyers. Previously, letters of credit were commonly used to guarantee payment, and this was a real cost in terms of working capital for the buyer. MPA insurance costs are not only lower, but they free up working capital so buyers may be willing to bid more or change the terms of the sale. Third, the insurance policy can be viewed as a capital asset, unlike a credit sale, and farmers are able to borrow against the policy, thereby increasing their working capital. Farmers who want to insure a sale through MPA must first join the program by visiting mpa.fna.ca or by calling FNA
FEBRUARY 15, 2013
the political climate as with some trade to buyers in Iran, Cuba, or Venezuela. Newstead adds that Euler Hermes offers accounts receivable insurance for domestic transactions as well and he invites business owners to contact him if they are interested in partnering with a company that specializes in credit management. He points out the value of this insurance really depends on the client’s appetite for risk, but he believes any company with over $1 million in sales annually would find this insurance affordable and it will take the worry of not being paid for sales off your plate.
Export Development Canada Farmers who are looking at exporting crops and livestock also have the option of purchasing accounts receivable insurance from Export Development Canada. This federal government agency is mandated to increase Canadian exports through a number of actions including assisting in finding export opportunities, developing exporting and business plans, creating credit profiles on buyers, and providing financing and bonding. It also offers insurance solutions, including accounts receivable insurance. Rather than an individualized policy, there are set rates based on the country and customer, payment terms, goods being sold, and coverage sought. But like private accounts receivable insurance, EDC insurance will cover most of your loss if the buyer goes bankrupt, defaults, or refuses payment for a number of reasons.
at 1-877-363-3276. Once registered, it is simply a matter of visiting the MPA website and completing the transaction form before making a sale which you want to insure. If the sale is to a North American buyer, insurance can usually be arranged within 48 hours. It can take a week for insurance to European buyers and up to two weeks for other international sales. There is an annual $100 application fee for each buyer you insure sales to, as well as a premium payable on each transaction. “MPA provides Canadian growers with the opportunity to sell their production on open account terms all over the world,” Sullivan says. More details can be found at www.mpa.fna.ca .
Other benefits Ross Purdy, senior manager of agriculture and agribusiness at BMO, believes there can be additional financial benefits to carrying accounts receivable insurance. For instance, an insured sale of a commodity allows for a higher valuation of that commodity in the farm’s financial statements. Accounts receivable insurance reduces the financial risk for the bank or lender as well, and a better financial position could increase the borrowing capacity of the farm. Purdy also points out accounts receivable insurance could enable a farm to sell production on extended payment terms which may result in better prices or more market opportunities. Accounts receivable insurance could also protect farmers who defer receipts of sales into the next tax year. Purdy cautions farmers to carefully evaluate the company offering insurance. “Look at their track record, especially if you are seeking to insure international sales.” Meanwhile, growers in Canada may not have all the protection they think they have. For instance, the CGC currently licenses nearly 150 grain buyers in North America, but the list of companies that are not required to be licensed or that are exempted from CGC licensing is much longer. This list includes elevators that only ship producer cars, seed dealers, distilleries, feed mills, feedlots and many others. Even the list of licensed grain companies is constantly changing, and the absolute minimum due diligence for growers is to check the list of licensed buyers prior to making a sale to ensure that company is licensed. That list can be found at http://www.grainscanada. gc.ca/licensee-licence/licensed-agreeeseng.htm. (In Ontario, farmers can check the licensing status of a grain buyer at www.agricorp.com/en-ca/Programs/GFPP/ Pages/CheckLicence.aspx.) The grain industry is changing and so are the regulatory bodies which protect growers. There are a host of new buyers and new marketing opportunities, and at the same time, protection systems that were in place in the past are being dissolved. Together this adds up to more risk of non-payment for grain deliveries. That means insurance that can protect against non-payment is something you may now want to consider. CG
Taking on the giants With Winnipeg-based Versatile taking aim at the full-line manufacturers, the battle is set to begin By Scott Garvey, CG Machinery Editor t’s enough to set us thinking about the old 1960s TV show “Land of the Giants.” In today’s farm machinery market, the Big Three corporations with their full-line brands are the giants, and to say the least, they dominate the business on a global scale. Market leader John Deere set a new record for equipment sales in its fiscal 2012, hitting US$33.5 billion. By the time AGCO, the smallest of the three, releases its financial report, expected net sales should easily surpass the US$8.8 billion it racked up in 2011. Anyone who wants to battle it out for market share with companies of that scale is facing a daunting task, but that’s exactly the situation Winnipegbased Versatile finds itself in.
Yet Versatile isn’t shying away from a fight. In fact, the company has been aggressively working to carve out a bigger piece of the market pie for itself. Even so, with 2012 revenues of just C$361.2 million, Versatile has a lot of ground to cover before the leading equipment manufacturers’ group gets defined as the Big Four. Nevertheless, the optimism is building at Versatile’s corporate headquarters. “It’s an exciting place to work,” said one of the company’s newest product marketing managers during a media event a year ago, and in the intervening year, the excitement has continued to grow. On a visit to the company’s Winnipeg facility in early January this year, the excitement was palpable.
Marty Cook took over as director of sales at Versatile in mid-December. Photo credit: Versatile
New tractors move down the Versatile assembly line at the company’s Winnipeg, Man., plant. Photo credit: Scott Garvey
FEBRUARY 15, 2013
management I was there to meet Marty Cook, Versatile’s brand new director of sales for North America, and in the process, I had a chance to wander through the corporate offices with Adam Reid, the company’s director of marketing. Amid the construction workers renovating and expanding office space was an entirely new section now stuffed with a significantly enlarged workforce of engineers. Over the past four years, the company has been following through on a promise made by Dmitry Lyubimov, president of Buhler Industries (which is the corporate entity behind Versatile and Farm King brands) to move the company to full-line manufacturer status. So far, many of the gains on that front have come through the acquisition of other companies, such as Ezee-On and Feterl. But that office full of engineers is now also contributing to the effort too. They’re designing new machines in house, such as the ML Series air drill introduced last summer (which won an AE50 engineering award). And Reid promises there is more to come, with new product announcements scheduled to take place over the next few months. “I think there is going to be a real buzz generated by some of those products,” Reid says. It’s into this environment that Cook has landed,
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and he’s expected to deliver a strategy that will turn those engineering achievements — and products from new acquisitions, if there are any more — into increased sales. Cook has found himself in exactly that position before. He worked for a variety of agricultural and high-tech companies before coming to Versatile, cutting his teeth at firms like Ramboc, Novariant AutoFarm and Topcon. What really links all those companies together is their focus on digital technology, which may offer a clue as to what senior management at Versatile sees as a key element for the future. “The technology is just as important as the iron is today,” says Cook. “I think horsepower is still a piece of the puzzle. But you need to put some focus on (technology). I think the bell curve is turning up for technology on a tractor.” However, Versatile is a company with a reputation primarily for simple and reliable equipment. “We’re known for simplicity, reliability and ease of service,” acknowledges Reid. “But as we’ve gone down the road of having more precision-farming options available, and now that we have sprayers and air drills, it (technology) is not something we can put in the back seat anymore. I think what Continued on page 46
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YOUNG FARMERS: AGRICULTURE’S FUTURE. 46 country-guide.ca
Marty brings to the table is a voice that has a lot of technology experience.” Would more emphasis on digital technology move the brand away from its traditional customer base? “Where we walk the line a little bit is we still have that traditional customer,” says Reid. “As we lay out our plans for the long term, technology is clearly going to play a role in that. Our integration strategy is how do we make that technology as simple and user friendly as we can so it doesn’t alienate that traditional Versatile buyer?” So the trick is to keep the company’s core values of simplicity and reliability as it moves to meet the demands of an increasingly digital world. “The philosophy is going to be the same,” promises Reid. “But the products are going to be a lot more varied. Our big challenge going forward, as always, is just making sure we’re mixing the right technology with our products, so we’re still appealing to our historic base of customers but attracting new buyers to the brand.” An ideal short-term sales target for the company might be to first grow into market niches that need only a moderate technology level. “In some major row crop markets they don’t necessarily want fancy technology, so the telematics technology is easy to adapt to those tractors,” says Cook. “That’s where we’d be a great fit.” As well, some of those row crop markets, particularly in the southern U.S., represent virgin territory for the brand. As the company’s product line continues to expand, that region could become the source of valuable new sales. “There are tons of opportunities,” says Cook. “Especially in the south. Our potential (there) is through the roof.” Integrating new technologies around its simple-and-reliable mantra means it wouldn’t be necessary to rebrand the company. Cook believes Versatile can still embrace technology from that perspective, and he will try to make that happen. “Coming from a technology background, I’m always looking for ways to increase that aspect of the business,” he says. The simple-and-reliable brand, which was prized mainly by family farmers in the past, may also become something even the very large corporate farms come to value in the future. “I think that can be even more important,” suggests Cook. “The larger you scale the farm, the more important those things become.” Machines that are simple to maintain and operate become even more valuable as finding qualified farm workers gets increasingly difficult. “Those professional farm hands that were around in the past just aren’t available anymore,” says Reid. Whether or not it’s due to that reputation for simplicity, Versatile’s marketers have noticed increased interest in the brand’s equipment at recent machinery shows around the country. “Our presence at Regina (Canada’s Farm Progress Show) last year was one of the best trade shows we’ve ever done,” says Reid. “We were run off our feet. To stand there and see a lineup of people for three days was really exciting. It was good to see a lot of people come into the booth and say, ‘I don’t have a Versatile tractor, but it’s good to see you guys back again.’ “Of course the next step is to get that guy to say, ‘Hey, I’m going to buy this tractor,’” Reid adds with smile. The job of making that happen with increasing frequency now rests with Cook. CG FEBRUARY 15, 2013
Farm fresh fun At Snyders Family Farm, success begins by throwing out all those traditional ideas of what a farm is supposed to be By Jeanine Moyer
y any definition, Snyders Family Farm isn’t your traditional farm. You might say, in fact, that it’s a completely upside-down sort of farm, because for the Snyders, their main crop in a very real way is the people who they attract to their place every fall, not the crops or animals that they produce in their fields and barns. Even the Snyders have a very hybridized view of what they are trying to do. “We don’t sell pumpkins, we sell memories,” says Meghan Snyder who, along with her husband
John, owns and operates the 120-acre farm located in Bright, Ont., 20 minutes west of Kitchener-Waterloo. Or… it might be that the Snyders actually have a very sophisticated view, and one that puts them closer to the mainstream of agriculture than you would initially think. The Snyders’ agri-tainment destination has become a popular fall attraction featuring a 10-acre pumpkin patch, fall flower and decor retail location, 16 daytime family fun attractions and a nighttime Fear Farm — an elaborate haunted hayride and barn. Continued on page 48
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process designed to make their farm even more successful the following year.
And however you define it, the farm is a success. On one evening alone this past October, the Snyders hosted 1,700 guests on their farm operation.
Success means you have to…
Thirteen days of production Some farmers would consider the Snyders lucky since they have almost an entire year to plan their production season. But Meghan says they need that year, because everything depends on those six weekends when they are open — a total of 13 days. “It takes a whole year to produce,” Meghan says. Nor do they take any breaks. As soon as the fall harvest season and Halloween festivities are over, the Snyders are right back at the drawing board, measuring and evaluating every aspect of the operation in a
“We don’t invest in things like irrigation equipment on our farm, we invest in bubble machines and sugar for our cotton candy.” — Meghan Snyder 48 country-guide.ca
John may not have realized he was a trailblazer when he jointly purchased the farm in 2002. Land prices seemed astronomic, although they were far from today’s highs, but the question for new farmers was already the same as today. How could he make enough income to farm full time on 120 acres? In this case, the answer came from the previous farm owners who had already started a small retail location and pumpkin patch on the farm. John added to the existing on-farm business in 2004 when he launched Fear Farm, the nighttime haunted attraction. Together, John and Meghan have grown the business over the years, maximizing their earning potential through seasonal agri-tainment attractions. The success and popularity of the on-farm destination is a combination of good ideas, good marketing, and a lot of hard work. “And you have to like people,” says Meghan, pointing out that she and her husband host thousands of people at their home as their guests each year. She also says those guests have high expectations, saying “people expect an experience and they demand you do it well.” It’s the details like making sure Google Maps can FEBRUARY 15, 2013
Photo credit: David Charlesworth
b u s i n e ss
business locate their farm, and posting signs directing visitors to the baby change station that keep the Snyders awake at night, because it can often be the smallest details that affect a guest’s experience on the farm. The Snyders consider their farm operation an attraction, rather than a retail location. Their emphasis on creating memories and experiences helps them focus and meet consumer’s expectations. “We don’t invest in things like irrigation equipment on our farm, we invest in bubble machines and sugar for our cotton candy,” says Meghan. It’s a different way of thinking. For instance, when they bought their bubble machine, they couldn’t calculate how many more bushels of one crop or another it would help them grow. Instead, they had to ask how much impact it would have on their customers, and how much more business would be created by that extra investment in fun. “We’re gonna try to blow your mind today,” Meghan says, slipping into the marketing jargon. “And this is just the beginning.”
Farming the public On-farm agri-tainment is gaining popularity especially with the current marketing trend that sees more companies inject more farmers in consumer advertisements. But, just because consumers like to see farmers in mainstream marketing doesn’t automatically mean they will come to your farm. “You can build it, but they won’t come unless you make it an attraction,” says Meghan. It’s not enough to just grow a patch of pumpkins and invite consumers to come pick them — you have to invest money in marketing and advertising, develop distinctive ideas and ultimately, create a unique experience that can’t be found anywhere else. The best advice the Snyders can offer to other farmers considering the agri-tainment business is to make an important decision — are you going to farm crops or people? In Meghan’s opinion, you can’t do both, because you need to commit 100 per cent of your focus on one or the other. In fact, this is the main strategic idea driving their farm, and it can be summed up in just three words. Focus is essential. That’s why income shouldn’t be the only motivation in developing farm attractions, Meghan says, because a key learning for the Snyders has been that while they have built their operation to a financially secure point so they can both FEBRUARY 15, 2013
work full time on the farm, it takes more than money to keep them going. “It’s the feedback that gets us through the year,” Meghan says when she describes the elated feeling she gets overhearing a child say that a visit to their farm is better than Christmas, or the chuckle she and John share knowing their haunted Fear Farm attraction has made adults wet their pants. John and Meghan also make sure they pass on positive comments to their more than 70 seasonal staff members as a form of motivation. Staffing is a priority for the Snyders and a lot of effort goes into recruiting and hiring, because “good people will keep you inspired,” says Meghan. A new group of employees is trained yearly before the farm opens to the public with an emphasis on treating visitors as guests, not customers. Last year, John and Meghan also developed a theme for their staff, challenging them to turn farm guests into farm fans. The Snyders success wasn’t built overnight, “and it isn’t always smooth,” admits Meghan. The couple has dealt with chal-
lenges of developing new attractions and ideas, zoning complications and dealing with day-to-day encounters with the public. Industry support for their operation is limited since it is so unique and isn’t always recognized as a traditional farm. The Snyders are members of the Ontario Farm Fresh Marketing Association, however, and often get together with owners of other Ontario agri-tainment and retail locations to share ideas. John and Meghan were also finalists in Ontario’s 2012 Outstanding Young Farmers’ finalists, nominated by Ontario Farm Fresh. Such a short season — 13 days — means the Snyders must get everything right the first time. They’ve had 10 years to ensure everything runs smoothly, but are constantly adding new ideas, attractions and features to their farm to put a smile on every visitor’s face. Their enthusiasm, attention to detail and love of the fall season continue to bring thousands of guests to their unique farm operation, and every year John and Meghan are proud to count their harvest in laughter, smiles and memories. CG
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Twenty minutes of praise Performance reviews may seem foreign to most farmers, but there’s growing evidence that they do work By Maggie Van Camp, CG Associate Editor
ven though it was 7 p.m., the thermometer was still pushing a very humid 100 F when I rushed out the door one day last summer on my way to a human resources conference at Guelph. As I headed to the car, however, I could hear my 81-year-old father-in-law hammering away, repairing an old barn floor to get it ready for a load of straw. He’s never received an ounce of praise for his labour, nor has he given it. Yet he’s the most driven person I know. That example of stubborn independence and selfmotivation formed a kind of counterpoint to the whole theme of the conference — motivating employees and family through feedback and communication. The message was that tomorrow’s farmers are being forced to transition themselves into people managers instead of task-doers, and not surprisingly, we often do it poorly. Still, the message was clear, and hard to argue against. Yes, we can get better at motivating our people so we get more out of them, and yes we can get better at preventing and at solving interrelationship problems, but it takes time, openness, and patience, not to mention a healthy dose of belief. But it doesn’t have to be impossible to get started, says Gregorio Billikopf, agriculture human resources specialist at the University of California, especially if you focus on an acheivable objective like adopting performance reviews. Billikopf says one key ingredient of people management is topping performance reviews and negotiations with a big dollop of praise. In fact, he recommends an ego-boosting 20 minutes of it. Yes, you read that right. I can almost visualize my father-in-law chuckling as he reads this. However, Billikopf’s approach has been amazingly successful on the large employee-dependent farms he consults, and he is convinced that sincere praise effectively puts employees at ease during performance appraisals. Although people vary in their desire for improvement, Billikopf says generally they want to know how well they’re performing. Plus, once they’re relaxed and feeling good about themselves, they’re 50 country-guide.ca
also more likely to be grateful for constructive information on how to improve shortcomings and maybe for an offer to help. “It’s got to be at least 20 minutes’ worth,” says Billikopf. “Most people are just waiting for the hatchet in performance reviews, and it takes this long for them to relax.” Billikopf’s systematic approach to performance appraisals turns traditional roles upside down. With his negotiated performance appraisal, the employee is in charge and the supervisor or manager acts more as a coach than a judge. The focus is on helping individuals assume responsibility for improvement, rather than on assigning blame and discipline. “This is about getting people to talk to each other, not about the supervisor judging,” says Billikopf. “More people are motivated by praise than by disciplinary process.” The process starts two weeks ahead of the appraisals when managers/supervisors make a list of all things the employee does well, including two examples of why this makes a difference to the overall operation. At the same time they meet with the group of employees to explain what’s going to happen and assign three written lists that the employees are to prepare ahead. These include a list of ways the employees perform well, secondly how they have shown recent improvements and thirdly how they need to improve. Additionally, employees are to think of ways the farm and supervisor can help them thrive and be more successful, and the employees are also responsible for coming up with ways to measure improvement. Essentially, in other words, the managers transfer a substantial amount of responsibility for improvement to those being evaluated, which reduces defensiveness and puts employees in control of their own review. Two weeks later, the manager meets with each employee individually and starts by asking them to share their first list — ways they perform well. Even if the manager thinks it’s a negative and not a positive, at least this may help reveal the subordinate’s perspective, or be an opening for discussion as it FEBRUARY 15, 2013
Farmers are being forced to transition themselves into people managers instead of task-doers, and not surprisingly, we often do it poorly
might fall into the needs improvement category. Too much of a good thing is still too much. “The goal is to have them join in the praise of themselves,” says Billikopf. “This is a celebration.” Once done, managers read from their own list and add why it’s important to the farm, and also restate the ones already mentioned. Details and specific examples will make it easier to accept this feedback as honest. “Learning how to give powerful, earnest compliments is an investment that will pay off with dividends,” Billikopf says. FEBRUARY 15, 2013
Now that they are relaxed and feeling pretty good about themselves, employees are asked to share some things to improve and things they’re still improving. The subordinate reads out loud areas of possible improvement and the person doing the appraisal listens and crosses off these ones on their own list, and records the ones they missed. Both the person doing the review and the employee should have written some suggestions, but it’s up to the employee to lead this discussion. This works well, Billikopf says, because it’s human nature to prefer to
point out our own shortcomings rather than have someone else do it. The manager doesn’t need to repeat what the subordinate says, just keep track of it and offer support to help improve. Also ask for ways to measure improvements, exploring questions like: How will we know in a year if that goal was met? In Billikopf’s experience, leaders who sincerely look for positive behaviour have fewer problems giving constructive feedback or suggestions. Finally the manager states any weaknesses not already discussed, using what Billikopf calls the smallest hammer. If the employees don’t get it right away, give more details and add a few examples, if necessary. That’s why it’s important for the manager to think about these things ahead of time. If things start getting tense, Billikopf suggests the manager mention something from the first list. Also, asking the employee for alternative solutions is good since it leads into the final list of what the supervisor can do to help. Which brings us back to the purpose of the review — not to assign blame but to look for solutions. Billikopf also suggests a brief followup meeting a month or two later to discuss what has or has not worked so far. This is a way to point out specific obstacles preventing people from reaching their full potential. His clients have found by having this appraisal process, they’ve been able to avoid conflicts or deal with disagreements before these balloon into conflicts. “It gets people talking and it helps people look at the past and make agreements for the future,” says Billikopf. If you have middle management doing these appraisals, Billikopf suggests starting with their own performance appraisals so they learn how to do it by sitting on the other side of the table. Sometimes facilitators sit in on these meetings to help everyone learn how to present their own thoughts and focus on positive change instead of defending positions. Sometimes Billikopf teaches both parties how to do this through role play. Getting people to praise others and accept compliments can be surprisingly difficult. After all, for so many of us, it’s way outside our humble but proud nature. CG country-guide.ca 51
w e at h e r NEAR NORMAL
ld y C o ow a k s Sn bre t ou BRITISH COLUMBIA
F rai requ n / en sn t ow
NEAR-NORMAL TEMPERATURES AND PRECIPITATION
M sp ild M el ar ls ch
l onaw i s o ca Oc n / sn rai
S tor my at tim es
ld Co owy Sn
MILDER THAN NORMAL
M NE ILDE AR R T -T HA PR O ABO N NO EC IPIT VE-N RMAL ATI OR ON MA L
COOLER THAN NORMAL
look for some heavier snow or rain. Colder, often snowy north.
Mar. 17-23: Pleasant on a few days this week with thawing temperatures but a couple of colder, blustery days bring snow or rain to the south. Intermittent snow and cold north.
February 24 to March 23, 2013
Feb. 24-Mar. 2: Seasonal to cool although a few highs could hit double digits in southern areas. Fair aside from occasional rain on the coast changing to intermittent snow elsewhere. Mar. 3-9: Temperatures vary but trend toward normal values. Blustery at times. Pleasant overall but a couple of cooler outbreaks bring rain west and heavier snow east/north. Mar. 10-16: Fair but disturbances bring two or three unsettled days with rain on the coast and a snow/rain mixture elsewhere. Chance heavy precipitation. Seasonal to cool temperatures. Mar. 17-23: Temperatures moderate and climb to double digits in the south and above zero north. Fair but occasional heavier rain west with snow or rain east and north. Windy at times.
Feb. 24-Mar. 2: Seasonal but mild spells bring thawing on a couple days in the south. Bright skies but with scattered heavier snow, chance rain on two or three days this week. Windy at times. Mar. 3-9: Seasonal temperatures overall with a couple of milder days and thawing in the south. Generally fair but snow or rain falls on a couple of occasions, chance heavy in places. Mar. 10-16: Expect changeable weather this week as fair, pleasant days interchange with windy days and periodic snow or rain. Blustery winds from the mountains create variable temperatures. Mar. 17-23: Seasonal to occasionally milder with extensive thawing in southern areas. On a couple of windy, cooler days 52 country-guide.ca
Feb. 24-Mar. 2: Sunny on a few days with changeable temperatures and minor thawing south. On a couple of occasions expect heavier snow, chance rain. Blustery at times with drifting. Mar. 3-9: Bright, mild days interchange with unsettled, windy and cool outbreaks this week bringing occasional snow, mixed with rain south. Chance heavy precipitation in a few areas. Mar. 10-16: Thawing takes place on several days this week in spite of a couple of cooler, windy outbreaks and sub-zero lows. Sunshine dominates apart from scattered heavier snow or rain. Mar. 17-23: Seasonal to occasionally cool although thawing occurs on a few days. Look for sunny skies to alternate with periodic snow or rain, possibly heavy in a few regions. Windy.
Feb. 24-Mar. 2: Blustery at times with drifting snow and changeable temperatures. Minor melting south and sunny aside from snow, chance rain on a couple days. Cold, snowy north. Mar. 3-9: Bright skies and some melting alternates with a few unsettled, windy and cool days. Occasional snow, possibly mixed with rain south. Chance heavy precipitation in places. Mar. 10-16: Sunny but snow, some rain, falls on two or three days, risk heavy in some regions. Temperatures on the cool side but thawing takes place on a couple milder, windy days.
February 24 to March 23, 2013 NATIONAL HIGHLIGHTS Lengthening days and milder southerly winds will begin the job of loosening winter’s grip on the country in this period. This will be most evident over the eastern half of Canada where milder-than-usual temperatures are anticipated. Several weather systems will follow the milder air from the Great Lakes eastward to the Atlantic provinces. This will increase the likelihood of heavier-than-normal snow and rain in many of these areas. Meanwhile, from British Columbia eastward to the Prairies and into northern Ontario and northern Quebec a changeable weather pattern is expected. This is likely to result in variable weather conditions with temperatures and precipitation averaging close to normal values. In a few areas of Canada where snowfall amounts were greater than normal, rapid warming may cause local flooding in March.
Where’s my weather page? Look in every second issue for your month-long Country Guide weather forecast during the winter months when we’re publishing every two weeks. Prepared by meteorologist Larry Romaniuk of Weatherite Services. Forecasts should be 80 per cent accurate for your area; expect variations by a day or two due to changeable speed of weather systems. February 15, 2013
When fear gets in the way “I am an old man and have known a great many troubles, but most of them never happened.” — Mark Twain By Pierrette Desrosiers, psychologist and coach
ear is a normal human reaction. We would not have survived as a species without it. Most of the time in daily life, however, we harbour several fears that are often disproportionate, irrational, exaggerated or even unconscious. They become an obstacle to personal and professional development, proper business operation, teamwork and effectiveness in general. If not controlled, they often produce conflicts or prevent us from resolving them. When I coach farmers, communication problems often originate in their fears: • “It irritates me when he goes along behind me to ‘redo’ my work or what I’ve said and talks to me in a disrespectful way.” • “I would like to retire and rest a little. I’m tired. I would like to work fewer hours, but my son calls me the moment I’m not on the farm.” • “I have the impression that I do more than my brother does, that he gets the best jobs and that I’m treated as if I were an employee.” Have you told yourself any of that? Very often, agricultural producers tell me that they have shared very little about what they want or don’t want, their fears, needs and limitations. Why? Because they are afraid of: • Being judged • Being challenged or openly criticized/publicly ridiculed • Being dominated • Being betrayed • Being misunderstood • Being used and manipulated • Revealing a weakness or being seen as incompetent • Feeling bad • Other people’s reactions • Not being loved anymore • Not being respected anymore • Creating a conflict And you? What fears hinder you in your work and daily life? What is the effect of those fears on your work relations, on your teamwork, on the smooth functioning of a future meeting, and on your ability to give and ask for all the information necessary to make the best possible decisions? How do those fears impact on your effectiveness, and on your profitability? FEBRUARY 15, 2013
When you feel uncomfortable or unable to correctly formulate what you are thinking, ask yourself: • What am I afraid of? • What is the basis of my fear? (For example: I’m afraid I won’t be respected anymore because I mention that I’m tired.) • If that were to really happen, would it be all that bad? • Could I live with the consequences? • Over the short, medium and long term, what are the consequences of not talking? • Are the consequences of not talking more harmful than talking? Allowing anxiety to paralyze you is a problem because although avoiding the underlying issue works well in the short term, it only makes things worse overall. When you feel anxious and avoid the situation, your anxiety level decreases. However, your problem is not actually solved. Your frustration and dissatisfaction are still there, and will probably worsen with time. This means that avoiding our fears is a winning strategy in the short term but a losing one in the long term. Being afraid and letting your fears win will limit what you can get in life, what you can become as a person, and the goals you can achieve in both your personal and your professional life. Mark Twain has said, “Courage is not the absence of fear. It is acting in spite of it.” It’s important to act and follow through with your plans despite your fears and your desire to avoid pain and disappointment. The fears will go away as you act. Remember: • Forty per cent of our worries are about events that never happen; • Thirty per cent of our worries are about events that have already happened; • Twenty-two per cent of our worries are about harmless events; • Four per cent of our worries are about events we can do nothing about; • Four per cent of our worries are about real events over which we have some power. CG Pierrette Desrosiers is a work psychologist, professional speaker, coach and author who specializes in the agricultural industry. She comes from a family of farmers and she and her husband have farmed for more than 25 years. (www.pierrettedesrosiers. com) Email: email@example.com. country-guide.ca 53
By Leeann Minogue
Those trees on the Sampson place Little did Elaine know when she moved to the farm from town that getting back to town would be such a big part of the job eff and his father Dale had been gone less than half an hour when their wives heard them stomp the snow off their boots on the step and come back into the house. The men were taking their coveralls off in the porch when Jeff’s boy Conner came toddling up, wide eyed. He stopped, looked at his dad and spoke in a slow, loud voice. “Car! Road! Snowbank!” “That’s right, Con-man,” Jeff said, picking up the boy and hugging him hard. “You and your mom had a pretty good adventure out there, didn’t you?” The men came in and joined Jeff’s wife Elaine and Dale’s wife Donna at the kitchen table where they were drinking hot chocolate. Conner raced off to play with the old set of Lego Donna had hauled up from the basement. “Whew,” Jeff said. “You were right. That SUV’s totalled. There’s no point dragging it back to the yard. We’ll call a tow truck and get it hauled to the insurance adjuster in town.” Earlier that afternoon, Jeff had taken a break from clearing snow around the Hansons’ yard when Brian Miller drove in. Jeff had been confused to see his wife and son climbing out of the passenger side of Brian’s truck. 54 country-guide.ca
“I picked these two up on the road two miles north,” Brian told him. “Your wife slid off into the ditch.” “Are you OK?” Jeff said, taking Conner out of Elaine’s arms. “Car! Road! Snowbank!” Conner said. “We’re OK,” Elaine said. “Shaken up. It happened so fast. I got a bit too far over to the edge and the next thing I knew, I lost control. I was terrified, but I didn’t want to shout, and scare Conner.” “I’m just glad you’re OK,” Jeff said. “We’re OK. But I wrecked the SUV. I heard a lot of crunching.” “Oh geez,” Jeff said to Brian, “I’m always saying she drives too fast on the gravel.” “Nah, this could’ve happened to anyone” Brian said. “It was up by the old Sampson place, where the snow’s all built up. Somebody oughta go in there and cut down those trees.” “Yeah,” Jeff said. “And that layer of ice doesn’t help.” “Thanks for picking her up, Brian.” After Brian left, Jeff took Elaine and Conner into his parents’ house. “Dad,” he called in from the porch. “Could you give me a hand?” FEBRUARY 15, 2013
“I don’t think I’ve pulled a car out of the ditch since your sister left home,” said Dale. “I’m out of practice.” As soon as Dale and Donna came in from the living room, Conner ran to his grandparents, yelling “Car! Road! Snowbank!” “What happened?” Donna and Dale both asked. Elaine explained again and Jeff said, “I’m going to take the front-end loader tractor up and see if I can’t pull the SUV out of the ditch and drive it home.” “I don’t think you’ll be able to drive it,” Elaine said. “Might as well take a look,” Jeff said, grabbing some spare coveralls out of his parents’ porch closet. “I don’t think I’ve pulled a car out of the ditch since your sister left home,” Dale said to Jeff as he pulled on his own coveralls. “I’m out of practice.” The men left, and Donna turned on the kettle to make some hot chocolate. Elaine started to cry. “Don’t do that,” Donna told her daughter-in-law. “You’re OK. Conner’s OK. We have insurance.” “I could’ve killed Conner.” “Don’t even think that,” Donna said. But Elaine cried harder. Donna brought Kleenex and hot chocolate with extra marshmallows, and finally Elaine sniffed and pulled herself together enough to talk again. “I didn’t know there was going to be so much driving when I moved out here,” Elaine said. “I mean, I knew where the farm was. And I knew how far it would be to town. But I didn’t know what it would really be like.” “I know,” Donna said. “You’ve been on the road a lot lately.” “Twenty-seven miles! Twenty-seven miles each way to get to the playschool board meeting today. And yesterday to meet with the accountant. And twice the day before to take Conner to see the health nurse and to have dinner with friends. That’s over 200 miles! And I don’t even feel like I’ve been anywhere!” Donna had been doing this sort of math in her head for the past 30 years. “I know,” she said. “And I can’t even look at the price of gas on the sign at the Co-op. It just makes me sick. And the environment?” FEBRUARY 15, 2013
Donna nodded. “If we thought too much about those things, we’d either have to leave the farm, or be hermits out here. We have to live our lives.” “That’s part of the problem! There were two days last week when I couldn’t even get to town.” “This has been a rough winter for driving,” Donna said. “I had to stop listening to the CBC,” Elaine said, still sobbing. “Every morning that woman goes on and on about how bad the roads are. It was making me scared to leave the farm.” This made Donna laugh. “They do sometimes get carried away on days when it’s not that bad.” Then they heard the men coming back in, and Elaine went to the bathroom to blow her nose. Not much later, Dale’s father, Ed, came in. “Is everybody all right?” he hollered from the porch, before the door was all the way open. “I saw the car in the ditch!” “They’re fine Dad,” Dale shouted back. Ed pulled his boots off and came to join the family. “Quite a bit of snow built up by that old Sampson place,” Ed said. “I figured somebody would hit the ditch before the end of the season. You think the SUV’s totalled?” “Yeah,” Jeff said. “There’s no way it could be worth fixing. She hit a big rock at the bottom of the ditch.” “Lloyd Richardson’ll be glad to hear it,” Ed said. “Since Trina left home, I don’t know how he’s been keeping that autobody shop in business.” “She had a lot of accidents?” Elaine asked. “My sister had at least one accident a month that winter she turned 17,” Jeff said, shaking his head. “Remember that time she slid into that steep ditch south of town and hit that fence post? I still can’t believe she made it out of that one.” “I remember that winter,” Dale said. “So does the Ford dealer. Insurance bought us two new cars.”
“Wow,” Elaine said. “This is my first accident.” “Really?” Jeff said. “Well, sure,” Elaine said. “But I guess I didn’t drive that much, before I moved out here. These days, it sometimes seems like all I do is drive.” “You’ll get used to it,” Ed said. “Maybe you’ll learn to like it. Gives you a good chance to look around and see what all the neighbours are up to.” When Ed laughed at his own comment Conner heard him and came running in to tell his grandpa the news. “Car! Road! Snowbank!” “I’m going to have to start taking you down to Wong’s Café to hear the guys on coffee row,” Ed told Conner. “Your story’s got a lot of plot, but you’re going to have to learn to make up some extra details.” CG
Trait Stewardship Responsibilities
Notice to Farmers
Monsanto Company is a member of Excellence Through Stewardship® (ETS). Monsanto products are commercialized in accordance with ETS Product Launch Stewardship Guidance, and in compliance with Monsanto’s Policy for Commercialization of Biotechnology-Derived Plant Products in Commodity Crops. This product has been approved for import into key export markets with functioning regulatory systems. Any crop or material produced from this product can only be exported to, or used, processed or sold in countries where all necessary regulatory approvals have been granted. It is a violation of national and international law to move material containing biotech traits across boundaries into nations where import is not permitted. Growers should talk to their grain handler or product purchaser to confirm their buying position for this product. Excellence Through Stewardship® is a registered trademark of Excellence Through Stewardship. ALWAYS READ AND FOLLOW PESTICIDE LABEL DIRECTIONS. Roundup Ready® crops contain genes that confer tolerance to glyphosate, the active ingredient in Roundup® brand agricultural herbicides. Roundup® brand agricultural herbicides will kill crops that are not tolerant to glyphosate. Genuity and Design®, Genuity Icons, Genuity®, Roundup Ready®, and Roundup® are trademarks of Monsanto Technology LLC. Used under license. country-guide.ca 55
10623A_MON_GEN_stewardship_legal_countryguideresize.indd 8/9/12 10:29 1 AM
Clear out the clutter … so you can focus on what’s really important By Helen Lammers-Helps
t was economist John Maynard Keynes who predicted in 1930 that we’d have a 15-hour work week within 100 years. It’s hard to know if he meant to include farmers in that vision, but we can be confident he never anticipated the pressures and the time commitment involved in running a modern operation. In fact, farmers today can sometimes feel more overwhelmed than their parents and grandparents ever did, partly because so much less of farming is in the muscles and so much more of it than ever before is in the head. That’s why Country Guide asked two experts to weigh in on how you can create an efficient and organized office, and also on how to use that office to better manage your time. Not only will you feel less stressed, but you’ll be more efficient and you’ll achieve your goals faster as you focus on the things that really matter. As always, a bit of planning is the most important ingredient when it comes to setting up an efficient office, although it’s a step that’s too easy to ignore. Instead, laments Colette Robicheau, a professional organizer in Halifax, N.S., an office can just grow organically, getting more and more disorganized every time you need to find space for a new piece of equipment. Or like too many others, you may start with a trip to the office supply store to look at desks with56 country-guide.ca
out thinking through what you really need, agrees Sue Rasmussen, a decluttering expert in Coon Rapids, Minnesota. It sounds basic but both Robicheau and Rasmussen recommend starting with a look at the tasks you perform on a day-to-day basis. Keep track of what you do in the office, and when you do it, says Rasmussen. “Be specific. Write down ‘answered email,’ ‘made a call to a supplier,’ ‘wrote a funding proposal.’” It doesn’t have to be anything fancy, Rasmussen continues. “Just jot it down in a notebook.” Also, make note of what equipment you needed to perform each task. Then, by grouping tasks with the equipment needed, you can create zones of activity, says Rasmussen, and you can make sure each zone has the equipment at hand so you can perform the task as efficiently as possible. It isn’t rocket science, but it’s a useful and even an eye-opening exercise, and even if you’ve been running your business for a while, it’s a good idea to try it, says Robicheau. The nature of your work may be changing, she explains. For example, perhaps you are spending more time at your computer and rarely use your fax machine anymore. For most people, the three key pieces of furniture will be a good desk, a good chair and a filing cabinet, says Rasmussen. Robicheau stresses the importance of choosing furniture based on function. She FEBRUARY 15, 2013
warns that if you don’t pay attention to the ergonomics of your office you could be setting yourself up for a lifetime of health issues from repetitive stress injuries or a back injury. The chair is the most important, says Rasmussen. “Make sure it is completely adjustable. You should be able to sit with feet flat on the floor and your arms at a 90-degree angle to the keyboard.” When it comes to desks, Robicheau says many people choose a desk that’s too small. “An L-shaped desk is best because it gives you extra workspace.” One of the biggest sources of stress for people today is the deluge of emails and paper. “People are flooded with information and when they get behind they feel like they will never catch up,” says Rasmussen. Robicheau recommends dividing the information you keep into one of three categories and filing it accordingly. There’s the “Action” category, which is information that you need to have at a click or within easy rolling distance. There’s “Reference” material which can go on a desktop or in a filing cabinet. And there’s “Archive” information which can be kept farther away, or even in a closet, the basement or the attic. With so much information coming in, Rasmussen says the key is to learn to make decisions about what to do with incoming mail and email as quickly as possible. She urges people to “Shred and delete. Shred and delete. Shred and delete.” Rasmussen uses a gardening analogy for managing email. In gardening, weeding and thinning are important if you want your favourite plants to grow well. Weeding means getting rid of the things that are not what you want. Thinning means getting rid of some of the good stuff, simply because there is too much of it and because you need to create room for the very best to flourish. “Let go of the guilt and let go of the ‘shoulds,’” Rasmussen says. If you have papers or emails and you can’t decide whether to keep them or not, Rasmussen suggests taking a deep breath and deleting or tossing them. And she recommends thinking twice before printing emails or articles. “Research has shown about 75 per cent of papers that get filed never get used again,” she says. If the information is readily available online, there’s no point FEBRUARY 15, 2013
in printing it since the online version will be the most up to date. Clutter stifles our energy, whether it’s print or electronic, Rasmussen adds, so clean out both paper and email folders at least once a year. For paper, Rasmussen suggests having one inbox where everything goes, including bills, invitations, newsletters, etc. Once a day, or once every two or three days, go through the papers and deal with everything in there. Events and task items get added to your planner so there is no need to save these emails or papers. “Use your planner to empty your inbox,” she advises. This also avoids the clutter of multiple sticky notes stuck on phones, computers, walls, etc. When it comes to electronic files, Robicheau says there is no excuse for losing files. There are external software programs such as MozyPro, Carbonite and Box.net that you can use to back up your hard drive in case of an emergency. You can also keep important files on a USB memory stick or CD. To allow several people access to electronic files, there are many cloud sharing options available including Google Drive, DropBox and Microsoft SkyDrive. Remember, though, that your goal is to share files that are worth sharing, not sharing a million things that no one will ever need or look at. Computers let us store more information than ever before, but we’re kidding ourselves if we think that this automatically means we can be better managers. Instead, we still need to give ourselves an opportunity to think about the big things, and to think about them one at a time. In other words, stop as much clutter as possible before it starts getting in your way. Don’t let information into your system unless it will actually help you. “Learn to say no as often as possible,” Rasmussen advises. “That way you can focus on the things that are really important.” CG
Manage email too It’s easy to get 25, 50, 100 or even more emails every day, and it’s just as easy to take a huge hit in both your office efficiency and your overall productivity by taking time to read and process them all. Sue Rasmussen and Colette Robicheau suggest these tips for taming your inbox. • S et up rules so different types of emails automatically go into specified folders. • U nsubscribe from lists you don’t want to be on (there’s usually a link at the bottom of the email for unsubscribing.) Ask friends and family not to forward jokes to you. • Only check email once in the morning and once in the afternoon. • U se good subject titles. Change the subject title when a thread has changed directions. • If it only takes a few minutes, deal with the email right away. • If you have multiple email addresses, check to see if each one gives you true value or if it is complicating your life. Alternatively, forward all emails to one location by rule, so you only have one in-box to check. • When clearing out a backlog, start with the most recent emails first. If necessary, clear out a small section at a time (try setting the timer for 10 minutes) instead of tackling everything at once and getting overwhelmed. • S et up a reminder notification in case you don’t hear back from someone you’ve emailed. • Get proficient at using “search and find” commands to locate emails. • Sometimes picking up the phone is faster than sending an email. Know when to use email and when to call.
RESOURCES Both Rasmussen and Robicheau have websites with lots of useful information to help you clear up the clutter and become more efficient. Sue Rasmussen’s website: http://www.unclutter-organize-transform.com/organize-files.html Collette Robicheau’s website: http://www.organizeanything.com/ If you want to hire a professional organizer to help you, check out the Professional Organizers of Canada at www.organizersincanada.ca.
h e a lt h
Getting pregnant — Sometimes it’s not easy By Marie Berry ne in seven couples will have problems conceiving, and if you’re among them, it can be frustrating. The basics seem simple enough. An egg or ovum joins with sperm to form a fetus, but sometimes it just doesn’t happen, as shown by Canada’s fertility rate of about 35, representing 35 live births in a year per 1,000 women aged 15 to 44. There can be various reasons for a couple’s infertility, but in about a quarter of the cases no explanation can be found. Older age, especially for women, can reduce fertility, and unfortunately nothing can stop you from growing older. A family history of difficult pregnancies or low fertility rates may also point to a problem that is hereditary.
If you have been trying to conceive for about a year without success, getting checked out is the first step. Causes can be found in three-quarters of cases If you have been trying to conceive for about a year without success, getting checked out is the first step. Low sperm counts, inactive sperm, fallopian tube problems, or ovulation irregularities may be the cause and sometimes these can be corrected. Being overweight or underweight reduces fertility. Eating healthy, being active, and maintaining an appropriate body weight will also increase your overall health. Environmental contaminants such as air pollution, solvents, lead, herbicides, and pesticides can also be linked to changes in fertility. These are best avoided and if you need to handle them, remember to use the appropriate protection. Chronic obstructive pulmonary disease or COPD is an inability to breathe due to obstruction of airways. The condition can begin when you are younger, but disabling symptoms are more frequent over 50 years of age. Not being able to breathe is uncomfortable, unsettling, and unhealthy. Next month, we’ll look at COPD and what you can do at any age to avoid the shortness of breath.
Another environmental risk is heat, especially because of its effects on sperm, so be cautious with hot tubs, for example, and with tight underwear. Disease conditions have the ability to reduce fertility too. Obviously, conditions such as endometriosis that involve the reproductive organs can impact fertility. Any type of cancer has the potential to affect fertility, as can cancer therapy. Sexually transmitted infections can lead to pelvic inflammatory disease and possible infertility as well, and imbalances, not only of sex hormones but of others like thyroid hormone, cause changes in fertility. It is important to identify and treat any medical conditions that can alter fertility. Sometimes drugs can be the culprit in reduced fertility. Chronic use of non-steroidal anti-inflammatory drugs such as ibuprofen and ASA is linked to lower fertility. Antipsychotic drugs used to treat mental health conditions cause a decline in fertility. As well, excessive consumption of caffeine has been shown to affect fertility, as have illegal substances such as cocaine and marijuana. Besides avoiding the various causes of infertility, there are some steps you can take to increase your chances of pregnancy. Eat healthy. Following Canada’s Food Guide is a great place to start, remembering to include folic acid in your diet to prevent neural tube damage. The recommendation is 400 micrograms of folic acid for the first three months; green leafy vegetables, brown rice, and fortified cereals are good sources. If you smoke, you are more likely to miscarry and have a baby with a low birth weight. Researchers also think that smoking lowers fertility. Quitting is certainly a healthy choice! There also seems to be no safe amount of alcohol during pregnancy. Fetal alcohol spectrum disorder can occur regardless of how little you drink, and it is unclear as to what other factors may be involved as causes. Trying to get pregnant can be stressful, and stress may also affect fertility. Relax, get sufficient sleep, and use stress busters like time management, breathing exercises, breaks from work, and even taking a walk. Increasing your chances is your aim, and many of the strategies can improve your overall health as well, which certainly is a win-win situation. Marie Berry is a lawyer/pharmacist interested in health care and education. FEBRUARY 15, 2013
“Please join us for a celebration of our 50th wedding anniversary.” We enjoy these events, especially when children and grandchildren express appreciation for the honoured couple. As I listen to the speeches, I recall my early years as a minister. I presided at many marriages. It was pleasant work, even when the bride’s mother became obsessive about arrangements. I wonder how those couples, so filled with hope and love on their wedding day, have fared over the years? In traditional wedding ceremonies the couple promises to stay together “for better or for worse.” Vina was the housekeeper at the theological college I attended. Her job was to clean the corridors and classrooms. She constantly complained about her husband, who drank excessively and could not hold a steady job. In my youthful idealism I moralized, “Well, Vina, you married him for better or for worse.” She retorted, “Yea, but he don’t get no better.” Many of us “don’t get no better” but our spouses put up with us. Why do some marriages last while others fail? The bride in the first wedding I performed turned out to be a polygamist. She told me she was single, but she was legally married to three other men. She stayed with the groom for a few hours then ran off with the best man. I worried that I would be in trouble with my bishop and the law, but an understanding supervisor encouraged me to continue performing marriages. Other marriages last “until death do us part.” A retired farmer from southern Saskatchewan told me how he left the family farm to join the army during the Second World War. He was sent to England where he noticed a young woman “throwing heavy sacks of groceries onto a lorry.” “I said to myself, ‘she would make a good farmer’s wife.’” He turned to the beaming grey-haired lady beside him. “I persuaded her to come to Canada and she has been a wonderful companion for more than 60 years.” Some couples are not as fortunate as this veteran and his war bride. Kathleen Norris, the author of Dakota, wrote: “My grandfather practised medicine for 55 years in an isolated town in northwestern South Dakota. Whenever he would bring in a partner, usually younger physicians, my grandmother always used to say that it was the wives who would determine whether or not they would stay. Rural life asks a great deal of women, and its rewards are not always evident to outsiders.” Norris says the documentary “The Farmer’s Wife,” filmed in the 1990s but still relevant, “tells the truth about what it takes to make a marriage. When the going gets rough, Darrel and Juanita Buschkoetter (subjects of the film) are smart enough to realize they need help, and turn to their priest and, briefly, a marriage counsellor. One of the most moving revelations to unfold in the film is the way in which Darrel and Juanita come to recognize that ultimately, the marriage is up to them. They are the only two people who can make it work. And like the farm, their marriage is worth fighting for, even if it means change, even if it means discarding the old idol of “the way we’ve always done it,” or “the way our parents did it.” The Buschkoetters struggled with enormous farm debt. They almost lost the farm and their marriage. Norris says, “I was struck by Juanita’s profound observation that as bad as their financial crisis had been, it was of little significance compared to the crisis in their marriage.” Suggested Scripture: Ruth 1:16-17, Matthew 19:4-6 Rod Andrews is a retired Anglican bishop. He lives in Saskatoon. FEBRUARY 15, 2013
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Women take over the diner
ILLUSTRATION: RICK KURKOWSKI
Dan Needles is the author of “Wingfield Farm” stage plays. His column is a regular feature in Country Guide
ow that a Korean couple runs the Kingbird Cafe, the traditional hot beef sandwich has been replaced by Wok Wednesday. We’re still reeling from the shock, because green vegetables haven’t appeared on the menu in the diner since the Depression. (There were the Pale Peas of Petunia, which are related to green peas by marriage, but it’s not that close.) The menu change and the smoking ban have brought new faces to the diner, notably women. The Kingbird had been a man’s preserve since Mac MacKenzie’s mother, Flossie, added a lunch counter to the filling station in 1937. The first week she started serving soup and sandwiches to the community, the place filled up with the retired, the infirm, the verbally incontinent and the bewildered. Legend has it we’re still using the same deck of cards Flossie handed out when someone complained about the service. Women have never been excluded from the diner. They just preferred not to advertise that they had nothing to do and all day to do it. “I’m going to drive a stake in the floor beside you guys and see if you’ve moved when I come back,” said Roseanne Pargeter, stamping her boots on the mat. She joined the long table along the window where her sister board members of the High Heels Co-op were attending their weekly power lunch. A couple of years ago, a dozen women including my wife, pooled their savings and bought the abandoned Bijou cinema and the High Heels Strip Club next door to it (this 60 country-guide.ca
was a port city for many years, after all). They have since converted the ground floor into a sprawling indoor marketplace for local food and the upstairs into artists’ studios. What was once a symbol of rural decay is now jammed with people day and night. It started out as the Hundred Mile Market, but people still called it the High Heels, a habit that has proven hard to break after three generations. Eventually the women bowed to public pressure and put the old neon sign back up on the building, with the hemline lengthened and the martini glass removed. Across the street at the Kingbird, their lunch table is now longer than ours and the conversation much louder. But then, who can get excited or need to raise his voice when talking about seeding depth or pre-emergent herbicide? “Can we borrow him for a minute?” asked Roseanne, pointing at me. “We’re having trouble sourcing free-range chicken.” Roseanne’s husband Bert raised an eyebrow. “You want to sit with the girls now?” he asked. “They’re buying my chickens, which is more than you guys do. I’ll be back in a minute. A minute turned into a half-hour. Chickens gave way to lamb chops, which led to a discussion of pork chops and hamburger, stuff that I produce in small quantities and usually give away. Roseanne’s sister-in-law Heidi has found a
bunch of part-time livestock enthusiasts like myself and she’s arranging a steady supply of local meat. It all sounded great but I pointed out that the regulations don’t allow you to sell chickens out of a retail outlet without quota. Heidi shrugged and said, “You don’t raise chickens. You just have ducks, don’t you? There’s no restriction on ducks.” I think Heidi must have taken her business training in a Soviet labour camp because she is very creative. When I finally turned back to my table, it was empty. I just heard a CBC radio documentary “The New Revolutionaries” that quoted economists, social scientists and politicians about the way women are changing a chaotic world. They concluded that if we are going to move forward on age-old issues like poverty, conflict and how to feed ourselves, it is women who are going to break the logjams and make us think differently. Sitting in the Kingbird listening to Roseanne, Heidi, my wife and several others talk about business, food, art and families — often in the same sentence — I got the unmistakable impression that the experts were on to something. It’s the same feeling I get listening to my kids — that warm, wistful and scary sensation you get when you know your job is being handed over to someone with more energy and optimism than you have. It’s the realization that you are in the process of being replaced. F e b ruar y 1 5 , 2 0 1 3
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