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March 2011

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GRAIN INSTITUTION CUSTOMER SERVICE DOWN ON THE FARM...... PG 12 CGC FEE HIKES PROPOSED ............................. PG 16 CIGI CREATES MARKET ADVANTAGES ............. PG 24

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INSIDE SEE PAGE 30


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contents MARCH 2011

Features 6

Short stories

10

Urban cowboy

16

Raising a stink

21

Barely barley

24

Show not tell

26

Staying around

COVER STORY  PG 12

Serving farmers Saskatchewan writer Leeann Minogue ponders just what good customer service looks like down on the farm

Cereals garnering interest

27

Next door

28

T-K-O

32

Early warning Smart weather

34

Something extra

35

Threat assessment


the view from here GORD EDITORIAL STAFF Editor Wheat Oats & Barley: Gord Gilmour 1666 Dublin Avenue Winnipeg, MB R3H 0H1 (204) 944-5756 Fax (204) 942-8463 Email: gord.gilmour@fbcpublishing.com

editor

It’s never different

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ISSN 1714-8723 Our commitment to your privacy At Farm Business Communications we have a firm commitment to protecting your privacy and security as our customer. Farm Business Communications will only collect personal information if it is required for the proper functioning of our business. As part of our commitment to enhance customer service, we may share this personal information with other strategic business partners. For more information regarding our Customer Information Privacy Policy, write to:  Information Protection  Officer,  Farm  Business  Communications,  1666  Dublin Avenue, Winnipeg, MB R3H 0H1. Occasionally we make our list of subscribers available to other reputable firms whose products and services might be of interest to you. If you would prefer not to receive such offers, please contact us at the address in the preceding paragraph, or call 1-800-665-0502. The editors and journalists who write, contribute and provide opinions to Wheat Oats & Barley and Farm Business Communications attempt to provide accurate and useful opinions, information and analysis. However, the editors, journalists, Wheat Oats & Barley and Farm Business Communications, cannot and do not guarantee the accuracy of the information contained in this publication and the editors as well as Wheat Oats & Barley and Farm Business Communications assume no responsibility for any actions or decisions taken by any reader for this publication based on any and all information provided.

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henever I hear the phrase “It’s different this time” I have some sort of allergic reaction. I don’t actually break out in hives, but I do feel an overpowering urge to clear my throat, extend my index finger to the sky and explain why it’s never different this time. I’m beginning to lose track of the number of times I’ve heard that phrase in the past little while at farm meetings and industry symposiums. And let me tell you, for someone who’s been working in the farm press for a few years, it’s a bit jarring. It’s like an entire group of professional pessimists got a group rate on a Valium prescription. And while it’s very nice to see the generationslong funk lift from the grains sector, too much optimism can be a bad thing too. Not because optimism is bad in and of itself, but because it can blind us to risks. And according to one U.S. academic, that can be a major risk in and of itself. Daryll E. Ray, a highly regarded agricultural economist from the University of Tennessee, recently penned a newspaper column exploring some of the risks from assuming that this time is different. He did so by exploring the last time the grains industry saw the good times roll. Back in the 1970s, he explained, it was different that time too. Prices had hit what everyone assumed was a new “permanently higher plateau” on the entry of the Soviet Union into the global grain market as a buyer following a crop failure. Then-Agriculture Secretary Earl Butz was famously exhorting farmers to “plant fencerow to fencerow” and farmers succumbed to a wave of optimism and rushed out to buy land, update equipment and generally cash in. Hardly unexpected. After all, it seemed like a good idea at the time, and a whole lot of people who should have known better were telling them that the growing global population would ensure strong — and undersupplied — markets for the foreseeable future. Sound familiar? Now let’s look at how that played out in reality. Badly, as we all know. As Ray pointed out, prices weren’t the only thing on the rise. Cost shot up too, for almost everything you needed to run a farm. Then when prices fell, they dropped below the cost of production. And while some input costs did fall, the structural costs that were now built into farms across the continent didn’t. Land and tractor payments still needed to be made. And when Treasury Secretary Paul Volcker killed inflation with double-digit interest rates, he also put the final nail into the coffin of a lot of farms — especially Canadian farms.

Lacking the support of the U.S. Farm Bill, many grain growers on this side of the line took the full force of global overproduction and the resulting U.S.-EU grain war. So what about this time around? Well, it’s true, there are a lot of folks in places like China and India that have been engaged in the tough slog of climbing up out of abject poverty. As they’ve done so they’ve definitely started to eat more and better, just as you’d expect. And the world certainly hasn’t stopped adding new mouths to feed. Population growth remains near-parabolic. To say nothing of the new wrinkle — an ethanol industry that’s knocked U.S. corn exports down to levels not seen since the late 1980s. So it really is different this time, right? The cynic in me says no. And the reason is an old and shopworn one that bears repeating: Nothing cures high prices like high prices. If grain prices climb high enough, its only a matter of time until production begins to climb quickly. In Brazil alone, as Ray pointed out in his column, there remain close to 300 million acres of land that could be brought into annual crop production. Many think the treatment that’s brought these soils into production — the addition of high levels of lime to alter its pH — could bring another huge swath of land online in short order. Then there’s the largely untapped potential of the former Soviet Union. It’s suffered from chronic underinvestment and a botched land reformation in the 1990s. But if the stakes were high enough, I remain confident in the ability of Vladimir Putin to collude with the oligarchs and his willingness to make the trains run over the peasants on time. After watching how he “organized” that country’s energy industry we’d be fools to think he wouldn’t act so ruthlessly in the farm sector. And finally there’s the much-touted potential of GMO crops. So far they haven’t had any impact on yield, even though biotech boosters have been eager to claim the yield gains of hybridized canola. If there’s any steak at all to go with that sizzle, it’s just a matter of time before it kicks in. And I’ve been told for years that the gene revolution will leave the Green Revolution in the dust. So is it different this time? Haven’t got a clue. I’m a firm believer in the immortal wisdom of Yogi Berra, who said “Making predictions is hard, especially about the future.” But I also tend to think that Mark Twain might have had a point too, when he said “History doesn’t repeat. But it does rhyme.” n


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Short stories

CWB TO BUY TWO NEW LAKER SHIPS FOR $65M

The owner of Canada’s biggest domestic fleet on the St. Lawrence/Great Lakes network is brokering a deal for the Canadian Wheat Board to enter the shipping business. The CWB recently announced a $65 million deal to buy two new “laker” class vessels now being built in China for completion in 2013, as part of a larger purchase of lakers by Algoma Central Corp. and Upper Lakes Group. “Through the CWB, farmers will share in the control and the profits of Great Lakes grain shipping,” CWB chairman Allen Oberg said in a release. “This is a value-added investment with significant net benefits for Prairie producers.” The two new state-of-the-art Equinox class gearless bulk carriers are to be operated and managed for the board by Seaway Marine Transport, a partnership of Algoma and the Upper Lakes Group. “This exciting initiative will modernize the Great Lakes fleet with larger, faster ships that consume less fuel and meet future environmental standards,” Algoma CEO Greg Wight said in the same release. The CWB said its cost for the ships is equal to about $1 per tonne to be paid over the next four crop years. Great Lakes freight is a “key element” of the CWB’s supply chain, costing Prairie farmers $70 to $75 million each year. The distance to eastern Canadian ports from Saskatoon is about 3,400 miles, the board notes, making it the longest distance in the world between growing region and port and “an immense logistical challenge” for Prairie farmers to compete in export markets. The CWB “conservatively” estimates

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the contribution to its pools from owning its own lake vessels at $10 million per year after operation and maintenance costs. Upper Lakes CEO Pat Loduca described the timing as “excellent” for the partnership with the CWB, given the need to replace an aging fleet on the Great Lakes. Also, he said, the current strength of the Canadian dollar helps keep new-vessel costs down. On top of that, Oberg said, the deal wouldn't have been possible without the federal government’s move last fall to lift its 25 per cent tariff on imported vessels, thus making the purchase economically feasible. The new Equinox lakers will be able to carry significantly more cargo and move faster than conventional vessels now running on the Great Lakes, the CWB said. Newer engine technology will translate to reduced fuel consumption and 60 per cent fewer emissions than the oldest steamships still transporting grain on the Great Lakes, or about 40 per cent lower than on existing motor vessels, the board added. The move to buy bulk grain-handling assets is unusual for the CWB, which has previously said on several occasions that if its current single-desk marketing system for Prairie wheat and barley were to be deregulated, putting it in direct competition with grain handlers who own their own elevators and port terminals, the board would not survive. It wouldn't be economically feasible, the CWB has said, for it to build new elevators or port terminals of its own, and no other handler is likely to give the CWB a cut-rate deal to buy such assets from them. “Needless to say there is only merit to asset ownership if the assets can be purchased at a value that allows a competitive return,” the CWB has said on its website.

BRING BACK FOOD COMMODITY TRADE RULES: FAO Reuters news service is reporting that an arm of the United Nations is calling for a return to old-school regulations on trading food commodities. Market deregulation since 1999 has fuelled speculation on commodities markets, and that needs to be corrected to curb food price volatility, the head of the United Nations’ Food and Agriculture Organization said recently. “We have created an environment that allows pure speculation,” FAO director general Jacques Diouf said shortly after the agency’s closely watched Food Price Index had climbed to a record high in January. “This is something that would require the necessary corrections to allow still normal operations but not unlimited speculation leading to great volatility in prices,” he said. “I am calling for going back to the regulation” that had existed until 1999, he said. “Buying on the futures markets… buying only the contract and reselling it at higher prices without even seeing the commodities, that is what is not right.” The global market for agricultural commodities was “neither free nor fair,” he said, with trade barriers and subsidies in advanced economies distorting the demand and supply balance and hurting farmers in poor countries. “It is not normal that OECD countries can provide every year an average equivalent support of $365 billion to their farmers,” said Diouf. “I am not saying that farmers should not be supported — all farmers in the world, both developed and developing countries. But it has to be done in a way that is not distorting to the market and in a way that is also not jeopardizing the livelihood of poor farmers.” The FAO says the world needs to invest US$83 billion a year in agriculture in the developing world and raise overall output by 70 per cent over the next 40 years to feed a global population of 9.1 billion in 2050. “Unless we invest in agriculture… we will not have a situation that will preserve us from the shocks of tight supply due to climate change in particular,” Diouf said. Turning to foreign land purchases by private companies and governments of foodimporting countries, Diouf said it was necessary to ensure these land deals were fair, transparent and benefitted local communities and not just those investing money. The FAO, along with other international organizations, has been working on drawing up a set of principles for “responsible” investment in farmland. Diouf said negotiations on those guidelines were at an advanced stage.


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> short stories Viterra eyes Montreal grain terminal Viterra is in talks with the Montreal Port Authority to become the operator of the St. Lawrence Seaway port’s grain terminal. The Regina firm, Canada’s largest grain handler, emphasized in a recent media release that no transaction has been finalized with the port authority and discussions are ongoing. Viterra’s proposal calls for it to lease the terminal from the port authority and to operate the terminal and transfer elevator, which has total storage capacity of 262,000 tonnes. While all other marine grain terminals in Canada are privately operated, the Montreal

terminal has never had an outside operator in the past, according to port authority communications director Jean-Paul Lejeune. The port authority formally made the grain terminal available for lease by public tender in September 2010. The goal, Lejeune said, is to have the same pattern of operations for our grain terminal as for our others types of terminals, which are operated by specialized companies. Viterra noted the facility’s location in “the deepest inland seaport in North America,” offering direct shipping routes to various ports in Canada, the U.S. and Europe, as well as its connections to both Canadian National (CN) and Canadian Pacific (CP) rail lines. The terminal, which operates year-

round, currently handles crops such as wheat, corn, barley, soybeans, peas and lentils, and includes a 400-tonne-per-hour rotary-screen grain sifter. The terminal’s unloading berth, with a sidewater depth of 10.7 metres, can move 3,000 tonnes of grain per hour; the loading berth, which includes an automated loading gallery with three booms and has a sidewater depth of 8.23 metres, can handle 5,500 tonnes per hour. During its 2009 season, the facility handled combined inbound and outbound cargo of 1.687 million tonnes of grain via maritime vessels and 730,805 tonnes via rail and truck, compared to 1.471 million tonnes via ships and 845,208 tonnes via rail and truck during 2008.

Railways, mechanics agree to labour peace

Buhler to buy Alta. seeding, tillage tool maker

Winnipeg ag equipment maker Buhler Industries, best known for Versatile tractors and Farm King implements, has bought its way into the seeding equipment business. The company recently announced it has paid $14.5 million for Ezee-On Manufacturing, which makes equipment such as air drills, air carts, offset and tandem discs, post pounders and front-end loaders at Vegreville, Alta. Ezee-On, which until now was owned by Vegreville-based TerraVest Income Fund, employs 70 people at Vegreville and also runs a setup and distribution warehouse at Billings, Montana. The company’s product line “has expanded through the years and now includes a wellrounded portfolio of tillage tools, including air drills and air carts that are known for accuracy and reliability,” Buhler wrote in a release. “The line of offset and tandem discs, both for agriculture and construction, have developed a reputation for being heavy-duty and capable of handling the toughest field conditions.” Buhler pledged “additional resources” for research and development on products built at the Ezee-On plant, to “meet the growing demands of the Versatile and Farm King dealer network.” Ezee-On’s post pounders, for example, will become part of the Farm King product group. “Information on these products, which will enhance the overall product offering, will be released on an ongoing basis,” Buhler said. Buhler president Dmitry Lyubimov described the Ezee-On purchase as “another step in the process of (Buhler) becoming a full-line equipment manufacturer” with “a complete line of equipment to large-acre growers in North America and around the world. Tillage and seeding equipment is essential for that growth.” The terms of the sale involve a $7.25 million payment up front to TerraVest effective February 4) and the remainder due on or before March 31. TerraVest said in a separate release Monday that the sale of Ezee-On stems from “ongoing evaluation of each of its portfolio businesses in order to determine fair value and the related review of the future strategic direction of the fund.” The fund’s board and management are “currently assessing the optimal use of the proceeds” from the Ezee-On sale.

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Both of Canada’s major railways have reached agreement with members of their unionized workforce, averting potential strikes at the last minute. Locomotive and rail car repair staff and inspectors at Canadian Pacific Railway have reached a labour deal with the company, less than three days before a scheduled strike. The 2,100 affected shopcraft staff, represented by the Canadian Auto Workers (CAW) Local 101, will vote over the next three weeks on the tentative settlement, CP announced. CAW said in a separate statement that the tentative agreement was reached after nearly a week of around-the-clock negotiations. Neither CP nor the CAW would yet release details of the agreement, other than for the CAW to say the deal “enjoys the unanimous endorsement of the CAW-CP Rail master bargaining committee.” Local union leadership are to come to Montreal from across the country to review the new agreement, the CAW said. From there, the deal would go on to a series of nationwide ratification meetings. Details would be released following ratification, CP said. Calgary-based CP was staring down a strike deadline the CAW had set for 12:01 a.m. Tuesday, February 8. The deal between CP and its CAW-represented staff comes about two weeks after four separate CAW bargaining units reached a tentative deal with Canadian National Railway (CN). The four units, representing about 4,300 mechanical and shopcraft staff and intermodal truckers, called off their scheduled Jan. 25 strike against CN with less than a day to spare. The CAW had simultaneously announced its strike deadlines Jan. 13 against both companies. Grain growers, especially on the Prairies where rail is needed to move most crops to port, have previously warned labour disputes and work stoppages on Canada’s railways can back crops up into on-farm storage and interfere significantly with farmers’ cash flow.


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opinion > short stories

Ont. MP tables CWB “optout” for Prairie farmers

A southern Ontario Tory MP proposes to allow Prairie wheat and barley growers to “opt out” of the Canadian Wheat Board’s single-desk marketing system for at least two years at a time. Bruce Stanton, the MP for the Orilliaarea riding of Simcoe North, recently tabled his own private member’s bill to amend the federal CWB Act. Stanton’s Bill C-619 would permit Prairie growers to opt out of CWB marketing activities if they give notice within a specific three-month period each year, between Jan. 1 and April 1. The CWB would then be required to grant a license, free of charge, to such growers for the length of time laid out in their notice. Such a provision would allow predictability and stability for farmers who choose to remain in the CWB pool, Stanton said in a release. “This bill strikes a balance — by retaining all the mechanisms of the statutory marketing authority and offering the alternative of marketing outside of the CWB,” he said. The bill, seconded in the Commons by Alberta MP Brian Storseth, has already cleared first reading. “The barley and wheat that is produced by the hard-working farmers of Western Canada is a product of their own labour and investment on their own land,” Stanton said. “Yet, they have no say as to how it is marketed or at what price. This is fundamentally unfair to today's western farmers who have never had the freedom to market their product as they wish.” A Conservative MP since January 2006, Stanton has a background in hotel management and previously operated Bayview-Wildwood Resorts Limited and The Cottages at Port Stanton on Sparrow Lake, north of Orillia. Before entering federal politics, he served as a councillor in the township of Severn, northwest of Orillia, from 1999 to 2003. In the Commons, he has chaired the standing committee on Aboriginal affairs and northern development since 2009 and is listed as an associate member of over 20 standing committees including agriculture and agri-food.

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Urban cowboy Farmers must prepare to defend food prices B y

O w e n

G

R ob e r t s

lobal food prices are on the rise after having spiked over the past six months. A recent announcement by the United Nations Food and Agriculture Organization put farming on the front pages, saying worldwide food prices hit record numbers in December. Look at that again. Food prices hit record numbers. Yet, we hardly notice. Despite the fact that food is essential, it’s so cheap relative to other commodities and pursuits in the developed world, that even when it hits a peak it’s mostly a hiccup in our lives. Think about what happens when other record numbers appear. Record-high oil prices send car shoppers scurrying for Smart Cars, Honda Fits, Nissan Micras and Kia Rios. Skyrocketing interest rates (remember them?) drive home seekers to rental units. Plunging and stubbornly low temperatures prompt housebound Canadians to flock to the Caribbean. But food’s different, and I wonder if most of us had a clue that in December food prices hit the ceiling. Likely not. The pinnacle occurred during the height of consumer spending for Christmas, when almost anything goes. So what if food’s a little more expensive? Everything is expensive at Christmas. Many consumers wouldn’t notice, let alone raise an eyebrow over it. Before long, though, someone other than economists will need to answer for this spike. I suspect it will be farmers, because inevitably that’s where fingers will point. Here’s why. Many of the wholesale items found in the international food basket (the one scrutinized for food-price analysis) are straight from the farm — wheat, rice, corn and soybeans. And since June, some of them gained value by double-digit percentages. Wheat, in fact, was up almost 70 per cent. Corn rose more than 50 per cent. Again, did anyone notice? At some point, people will. Inevitably, these gains will make their way down to consumers. Processors and retailers won’t absorb them for long.

Then, farmers, it will be over to you. Ironically, it’s easier to explain the price spike globally than domestically, and graphically show the reasons it exists. For example, weather calamities in major agricultural countries such as Russia and Ukraine (drought) and Australia (flooding), as well as Western Canada (too much precipitation), led to pressure on supplies, which meant higher prices. Video captures these situations easily. But how do you graphically show chronically low prices? It’s reasonable for consumers to wonder how farmers could have existed on prices that were half as high as they are now. It’s understandable that record prices, then, could conjure up some suspicion of gouging. Farmers need to head this off at the pass. Price spikes give them a golden opportunity to recount the misery-laden past, to recount how commodity prices have been in the basement for decades. That explains why grain farmers have mostly been scraping by, having to resort to huge federal aid some years, at he same time expanding their operations to realize economies of scale to survive. The price spike is actually just getting them to where they need to be, to make a decent living. That, however, is poorly understood, and when prices rise farmers are vilified. It happened in 2008, and steps must be taken to make sure it doesn’t happen again. No one else in the so-called value chain will take the hit, and it’s easy to blame farmers. Local food’s popularity is helping warm up consumers to the concept of fairer prices for farmers. But it’s a slow process. Education, rather than price-spike pressure, is how to get there calmly and sustainably. n Owen Roberts is an agricultural communications specialist and educator who’s been with the Ontario Agricultural College and University of Guelph since the late 1980s. A former journalist and editor, he’s been a staffer at media outlets in both Southern Ontario and Western Canada. He’s also a columnist for the Guelph Mercury, where this article first appeared, and a regular contributor to a number of regional and national agriculture and food publications.


briefs

Federal food labelling rules to call out allergens, gluten

C

anada’s food manufacturers have until August next year to rework their product labels to clearly declare “hidden” allergens, gluten and sulphites. Ingredient displays on food labels will then be required to separately list any such items in plain terms at the end of the usual list of ingredients and separately prefaced by the word “Contains,” as in “Contains: Wheat, Milk.” The new rules will also require manufacturers to list components of their ingredients if they contain food allergens, gluten sources or sulphites. Thus, if a prepackaged food contains “spices” as an ingredient, that food will be required to list any allergens, gluten sources or sulphites present in those spices. “Canadians with food allergies, sensitivities and celiac disease will soon be able to make more informed choices about the foods they buy,” Health Canada said in a release. The rule will require a food allergen or gluten source to be written in commonly used words such as “milk” or “wheat.” Therefore, a common name for a plant source of hydrolyzed protein will have to be declared, such as “soy,” or

“hydrolyzed vegetable protein (soy)” but not just “hydrolyzed vegetable protein.” Spelt and kamut, both known as “heirloom” cereal grains, will be declared as “wheat.” Furthermore, mustard seed will be added to the regulatory definition of a food allergen, Health Canada said. Fining agents, such as egg white used to reduce certain types of tannins in wines, would have to be declared if they’re made from food allergens and are present in the finished wine or spirits. Also, the source of any allergen or gluten present in wax coatings or their compounds would be required to be shown on the label of prepackaged fruits and vegetables, Health Canada said. Sulphites present at levels above 10 parts per million will be treated the same as other allergens and use of a separate “Contains” statement will be optional, Health Canada said. The new rules won’t apply to food allergens or gluten that might be present in a prepackaged product due to crosscontaminations, which Health Canada said are “unique issues... beyond the scope of this regulatory initiative.”

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GMO exportability bill shot down in Commons Federal lawmakers have voted down a bill meant to prevent approvals for sale of seed of any new genetically modified (GM) crops that export markets won’t accept. While Bill C-474 — introduced in the House of Commons in November 2009 by the New Democrats’ agriculture critic, British Columbia MP Alex Atamanenko — got farther than most private members’ bills, it fell short of the votes needed to keep it alive at third reading in midFebruary. The bill had called for amendment of the federal Seeds Regulations to require that an “analysis of potential harm to export markets” be conducted before federal permission is granted for the sale of a new GM seed. Members of the Conservative government and Liberal opposition rejected 10 amendments to the bill by a count of 174 to 95, before voting down the bill itself, 176 to 97. Members of the NDP and Bloc Québecois voted in favour of the bill and amendments. “Once again we see these two major parties putting the interests of their big business buddies ahead of everyday farmers whose livelihoods can be destroyed in an instant from contamination by genetically engineered seeds and crops,” Atamanenko said in a statement Wednesday evening. Nevertheless, he said, “it has been an honour for me to bring this important debate to the forefront in the House of Commons.” Motions for the bill and amendments were seconded by Ontario MP Malcolm Allen, the NDP’s caucus chair and deputy ag critic.

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customer service

Serving farmers Your call is important to us B y

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armers are just like any customers. We like good service. Customer service has evolved from face-to-face contact to voices on the phone to impersonal web sites and anonymous email. But as much as we love to hate it, dialing a 1-800 number is sometimes the only way to resolve a problem. (I’ve found the 1-800 number for farmer information on the CWB website and dialed.) Thank you for calling the Canadian

Wheat Board. If you have a touchtone phone, please use one of the following options. If you are a farmer, press one. (I press one.) Like anyone else, when farmers buy something, especially something that’s a relatively big investment, we hope the seller will back up his service guarantees. We’ll stay loyal to a company that can send someone out to fix the tractor right away so we can finish seeding before a three-day spring rain settles in. We also like good service when we deal with government depart-

“Maybe I’d be happier if the CWB spent more money to hire more people to take this call more quickly?”

Illustration: Irvin Walkes

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WHEAT OATS & BARLEY

ments and agencies that deliver programs. If there’s an error on our cash advance paperwork, we want the Canola Growers to return our emails immediately. If we have a question about our tax return we want the Canadian Revenue Agency to take our calls right away. Do farmers have reasonable expectations about customer service? We are currently experiencing higher than normal call volumes. Please continue to hold. (Up-tempo elevator music is playing. No lyrics to sing along with.) In some ways, when it comes to serving farmers, agri-businesses have an easy gig. Canadian grain farmers are a fairly homogenous group. While the agriculture industry in general gets more diverse every day, it’s still not shocking to realize that everyone at the local herbicide information meeting is a white male between 40 and 70 wearing blue jeans and a jacket with an agricultural logo. In a big enough crowd, more than three of these guys will probably be wearing the same cap. And it’s not just the demographics. With exceptions for organic farmers, seed growers, and extra-large- and small-scale farmers, most of these entrepreneurs are following the same basic business model. Compared with trying to sell a new product to a “typical” customer that likes, say, chocolate ice cream, farmers are a marketer’s dream. And to make it even easier, farmers tend to get into business relationships for the long haul. Sure, we’ll look for a good deal or a new product, but compared with someone who buys a pair of expensive shoes or a Nissan two-door car, even a farmer who strays occasionally for a differentcolored sprayer usually maintains a close relationship with the last salesman who sold him a combine. What could be better for business planning than knowing you’re dealing with a group of people who are fairly similar and who likely want fairly similar customer service? Why can’t they please us all the time? Continued on page 14

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MARCH 2011


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> CUSTOMER SERVICE CONTINUED

Continued from page 12 Your estimated wait time is 12 minutes. (Twelve minutes? I’m sure they’re overestimating, so I’ll be pleased when they answer in five minutes.) But a marketer’s dream can turn into a customer-service nightmare. Farmers have work with the weather (or against it, depending on your point of view). Some days, we have the kind of time it takes to stand in line at Costco. In the middle of harvest, we don’t have time to phone the dealership to get the technician to our farm, let alone wait two days for him to arrive. We’re not impatient; it’s that we literally can’t afford to wait. To make things worse, all of the farmers in the area are on pretty much the same timetable. If John Deere wants to have enough specialists on hand to help all their customers during harvest and seeding, they need to keep a room full of high-priced professionals on staff year-round. This doesn’t seem like such a great business decision in January when they’re waiting for a call. The seasonal nature of grain farming affects everyone involved. Parts departments struggle to have the enough spare parts on hand without blowing the budget on inventory. Cash advance administrators plan

ahead to have enough staff to handle the paperwork and questions at deadline times. Sometimes, advance planning isn’t enough, and we have to wait. For parts, for forms, or to have someone answer our call. Our representatives are helping other callers. Please continue to hold. (That appeals to my sense of goodwill. Of course I want other farmers to get some attention, too. But maybe I’d be happier if the CWB spent more money to hire more people to take this call more quickly?) Before making this call to the CWB’s Farm Business Centre to check response time I tried calling toll-free numbers at my bank, Viterra’s financing department, and Syngenta. All of those private corporations had a live person on their end of the line in under two minutes. But of course the problem with great customer service is that we all know who pays for it in the end. I’m sure it won’t come as a newsflash to hear that there’s no free lunch and no free trip to Nebraska to tour the Case combine plant. The price of that trendy Viterra hat has already been built into the deduction on your grain cheque. When you’re ultimately paying the bill for customer service, you have to be careful what you wish for. We apologize for the delay. Your call is important to us. Please continue to hold. (This music is getting on my nerves.) Many farmers are quick technology adap-

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tors, tapping away on their BlackBerrys and ipads to access customer information from their tractor cabs. But even in the 21st century, farmers tend to be located on farms — far away from the discount high-speed details we see advertised on television. There are still farmers who can’t or won’t invest in any type of high-speed Internet, and it’s likely to be a few more years before this problem is completely resolved. Manufacturers who could lower printing and shipping costs by posting manuals online or companies who could replace phone staff with websites have to weigh the costs of irritating or even losing their “low-speed” customers in the process. Do we want cheaper customer service if it will leave some of our neighbours behind? We are currently experiencing higher than normal call volumes. Please continue to hold. (The estimated twelve minutes are almost up. I should have refilled my coffee cup before I started this call.) When you’re impatient for someone to take your call, it’s hard to remember that the other extreme can also be a problem. Some agribusinesses find it tricky to find that line between providing and service and harassing customers. It took me three phone calls to have us removed from the CWB automated call service after we came home to find an upset babysitter. “The phone rang and it was a


computer talking about an important deferral date, and you’re supposed to do something right away, but I didn’t have time to write down what!,” she sniffled, hoping we’d still pay her for the babysitting. And then there was the grain buyer who started faxing out updates to everyone on his database. He helpfully set his fax to auto-dial all of his customers so he could send the information at off-peak hours. Like a lot of farmers, our office is in our house. We were less than excited to get his updates on the ringing fax machine in the room next to the baby’s room at 3:30 am. We apologize for the delay. Your call is important to us. Please continue to hold. (These messages are starting to repeat.) Last October the Canadian Federation of Independent Business surveyed 411 of its agribusiness members (not all of these are producers) on the topic of the Canadian Wheat Board’s customer service. Twenty-two per cent of the members surveyed found the CWB’s service to be “good,” and another 48 per cent said it was “acceptable.” It’s not surprising that the study concluded that CFIB members would like to see improved customer service from the CWB. But would the CFIB truly be happy to see CWB administration costs increased so they could take my call more quickly? All calls are recorded for quality control.

“Outsourcing would be cheaper, but would these farmers want their questions answered by offshore workers who’ve never seen a combine?” Your call is now being transferred. (Here we go! But I’ve forgotten my question...) I reach a live person at the Canadian Wheat Board’s Winnipeg office after waiting fourteen minutes and 48 seconds. I test the system two more times the next day. My first call is answered in just under five minutes. The second attempt takes just over 10 minutes (with an estimated wait time of four minutes). Afterwards, I talk to Maureen Fitzhenry, Canadian Wheat Board spokesperson. She’s not surprised to hear about the time I’ve logged waiting. “We have an incredibly high volume of calls,” she tells me. In the first week of February there were 3,700 calls to the CWB’s Farm Business Centre. In the first week of December they took a nearrecord number of calls: 5,256 (733 per day). “And the questions are complex,” Maureen says. “They take time to answer since they’re related to each caller’s individual business.” When the CWB’s Farm Business Centre is fully staffed there are 18 people answering the phones; people who’ve had training with

respect to CWB programs and issues. “Many of them have agriculture degrees,” Maureen tells me. While the CWB could hire more staff to reduce caller wait times, staff training is expensive and time consuming, and what would these staff do during the times of the year when there are fewer calls? Generally, it’s those farmers who complain the most about CWB expenditures on administration who are the most dissatisfied with CWB customer service. Would they prefer higher administration costs and faster responses? Outsourcing would be cheaper, but would these farmers want their questions answered by offshore workers who’ve never seen a combine? I tried to get Maureen to agree with me that some farmers will never be satisfied, and that farmers expect too much in the way of customer service. But she was having no part of it. “Our customers deserve great service,” she said. And she went on to tell me that, in her experience, “farmers are often more pleasant to deal with than the general population.” ■

, D A E H A GO

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01/11-15158-01B


grain commission

Raising a stink CGC’s fee hike proposal hitting the fan in farm country B y

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“The government determines what package they want to put forward and it goes through their regulatory process, and if Parliament approves it, then our new fee structure comes into place.” — Elwin Hermanson, Canadian Grain Commission 16

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K a m c h e n

he Canadian Grain Commission’s recent proposal to recover all its costs from farmers has gone over about as well as a skunk set loose in the middle of a church service. The suddenness of the CGC’s mid-December announcement about increasing its fees for the first time in 20 years caught many unaware and scrambling to prepare their written responses. Doug Chorney, president of Manitoba’s Keystone Agricultural Producers (KAP), says CGC chief commissioner Elwin Hermanson made a personal presentation to KAP back in December, but that KAP still found it a challenge to deal with the arising questions and issues over the holidays. The Manitoba farm group even requested an extension on the January 31 deadline for response submissions on behalf of itself, Agricultural Producers Association of Saskatchewan (APAS), and Wild Rose Agricultural Producers (WRAP), in order to gain additional time to consult group members. KAP’s request, however, was rejected. Although it still managed to submit its response, it was not the joint submission KAP and the above groups had been considering. APAS wasn’t so lucky and missed the deadline, although its concerns were passed on to KAP and WRAP. “It was presented to us during the Christmas season so it just left us with January, which is the meeting season, to deal with it,“ says APAS president Greg Marshall. “We would have been happier if we would have had a couple of months to deal with the proposed changes.” The groups were also not particularly impressed that CGC wants farmers to foot its entire bill. Everyone agrees that the CGC provides benefits to farmers and society at large and that therefore some CGC funding should come out of the public purse. Chorney says the government should pay entirely for costs related to, for instance, food safety, market development, and the Canadian International Grains Institute. In areas where there is a shared benefit between the grain industry and the public, KAP favours a split where the government picks up 60 per cent of the costs. Chorney says KAP would be willing to consider users paying the full cost in cases where they are requesting services. The CWB is of similar mindset, remarking that services not identified as providing

“broader public good” needed to be competitive in both cost and service and could be provided by a third party. The CWB says the move will more than double the costs to farmers — who pay nearly all the user fees — by adding at least $50 million a year to their grain-marketing expenses. Such a hike not only ignores how the public benefits from CGC services, but also “would create serious conflicts of interest,” the CWB said in its written response to the CGC’s proposal. “Rather than focusing on its research, quality assurance, regulatory and food safety roles to increase the value of Canadian grain, it would risk being distracted by opportunities to maximize user-fee revenue,” the agency said. WRAP president Humphrey Banack wondered if some CGC services could be provided privately. “Right now, the only one that’s able to perform these services listed under the (Canada Grain Act) is the Canadian Grain Commission. You set a fee for one person, they can set their fees at wherever they feel they have to be. There’s no real competition in that. It kind of ties us to one master and we’re paying the entire cost… If you’re going to pay for the entire service, you’d like to make sure you’re getting the best value for those dollars spent for that service.” The CWB says a first step would be to conduct extensive business process improvement reviews with the input of key industry stakeholders. “These reviews should consider service standards, opportunities such as enhanced efficiencies in CGC service delivery and the potential for CGC accreditation of third-part service providers,” the CWB outlined in its response. The CWB recognized such changes might require regulatory change, and said that only after the business review was completed should the CGC and Ottawa consider major user fee changes. Other farm leaders agree wholeheartedly. “The Canada Grain Act is something that we have to have a look at first. Get all that in place first and then we can talk fees,” says Banack. The last major amendment to the act came in 1971, although the Harper government has twice attempted — but failed — to amend the legislation, much to the chagrin of stakeholders who felt left out of the process.


“It’s been a lot of years since it’s been reviewed and it is time to do a review of the Canada Grain Act,” says Marshall. “Government should involve farm organizations in that review because the two bills that they proposed through Parliament certainly aren’t acceptable to farm organizations and farmers alike.” Farm groups are particularly resistant to Ottawa’s previous bid to eliminate the need for buyers to be bonded, although there were differing views about mandatory inward weighing and inspections. “Producer payment security was a huge one. If we’re going to get rid of bonding for licensed grain companies, where is the protection for farmers when they sell their grain and receive a cheque? We’ve got to have protection for farmers,” Marshall says, adding APAS believes there’s value to maintaining inward weighing and inspection rules for farmers and industry alike. Banack, however, says inward weighing and inspection on grain where the ownership remains the same shouldn’t be mandated on all loads. Blair Rutter, executive director of the Western Canadian Wheat Growers Association, says there’s little value in a government inspector confirming the grade and weight on non-board crops where the grain company’s already settled with the farmer. “For many customers — the Japanese,

“Government should involve farm organizations in that review because the two bills that they proposed through Parliament certainly aren’t acceptable.” — Greg Marshall, APAS

Europe — they’ll insist on getting the Canadian Grain Commission Certificate Final. But there are other customers who may not require that — just like the domestic crushers and flour mills,” Rutter says, adding most contracts have a dispute-resolution process that allows for third-party inspection anyway. “Whether that third party is the grain commission or a private inspector, that should be between the buyer and the seller.” He believes a review of the value the CGC provides would produce a more streamlined agency, which could save farmers money. “Two-thirds of its costs are related to inspection and weighing. So let’s critically evaluate if those services are still required and if we can cut out those services, then there won’t be a need for much of any increase in fees.” NO CHOICE BUT TO RAISE RATES CGC chief Hermanson is aware of the scores of calls to review the Grain Act and the CGC’s services before hiking fees, and even

believes there’s areas in which the act should be updated. “For instance, the Grain Act is totally focused on elevators; it doesn’t visualize that grain can be shipped by containers,” Hermanson says, adding: “ Part of grain quality assurance is grain safety. We’re covered in that regard, but as grain safety becomes a growing issue, the act doesn’t specifically give us direction on the grain safety component of grain quality assurance.” Also, with the rationalization of the grain handling system — with fewer companies and fewer facilities — Hermanson has heard the argument for eliminating services like inward inspection for non-board grain going from a primary elevator owned by a company to a terminal owned by the same company. “And yet the act requires that we provide inward inspection on that grain going into that terminal. So those are some of the types Continued on page 20

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“The Canada Grain Act is something that we have to have a look at first. Get all that in place first and then we can talk fees.” — Humphrey Banack, WRAP

Continued from page 17

“Whether that third party is the Grain Commission or a private inspector, that should be between the buyer and the seller.” — Blair Rutter, WCWGA

20

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of issues that we struggle with a bit because of the fact the Act perhaps is a bit outdated.” Nevertheless, fees are going to be changed first. “The government looked at amending the Canada Grain Act that would have changed some of the services that we provide, but that bill never passed, and so now the government has asked us to review our fees with a view of cost recovery,” he says. Hermanson points out the Grain Act stipulates the services the CGC must provide, and the CGC must have the revenue required to carry out the law of the land. And with Ottawa looking to cut costs, that leaves farmers to pick up the tab. Back in the early 1990s, only 10 per cent of the CGC’s revenues were appropriated from the federal government. But unable to raise its fees since then — a decision made by Parliament in 1995 — combined with inflation and increased costs of doing business, have forced the CGC to cover roughly half its costs from the government. And that goes against the way the CGC was originally designed to function. “We’re structured as a revolving fund, and a true revolving fund can set its fees for five-year periods, so that when you have a good year, and you have a surplus, then you can apply that surplus to future years,” Hermanson says. Under such a structure, the CGC was allowed to have a line of credit to dip into during shortfalls. “But of course since we can’t set our fees, the government won’t let us go into a deficit because we have no way of recouping that lost money. So rather we have to negotiate

with the Treasury Board and negotiate the difference.” With the CGC’s fee proposal starting out from a point of full cost-recovery, it would mean some fees won’t change much while others will increase substantially. In one case — registration and cancellation — fees would actually decrease. “When grain enters and leaves the terminal elevator, we have to keep track of it,” says Hermanson, “and because of technology, it costs us less to do that today than it did 20 years ago.” The CGC has entered the round of consultations where it considers individual, specific fees and what it would need to charge in order to recover all of its costs. It will make its announcement in March, at which time stakeholders can submit their views again. After that, the CGC makes its recommendations to Ottawa, along with all the feedback it’s received. Any changes would need to be introduced into the House of Commons and Senate, and be published in the Canada Gazette. “The government determines what package they want to put forward and it goes through their regulatory process, and if Parliament approves it, then our new fee structure comes into place; what’s being projected is that there would be fee increases in our fiscal year 201213,” Hermanson says. One major potential wrench in the process would be a federal election, which would suspend the entire process. “Then it would depend on when the new government came in — whether it be this or a replacement government — whether they wanted us to restart the process,” Hermanson says. n


barley update

Barely barley Barley acres are trending downwards. Many complex reasons are seen for the ongoing shift

L B y

G o r d

G i l m o u r

ess than a decade ago, it wasn’t all that unusual for the western Canadian barley crop to top out at more than 12 million acres. In fact the crop notched those numbers for several years running, from 2000-2003. But in 2004, those numbers began falling. And outside of an occasional blip back up the numbers seem to have been trending downward, with only about seven million acres planted in 2010. Bruce Burnett, director of weather and market analysis for the Canadian Wheat Board, says there are a number of complex and intertwined reasons that this acreage has dropped over the years. Many of those factors begin in the animal sector, not the grains sector, he says. “Our livestock industry contracted a great deal over that period, especially our cattlefeeding industry, because of BSE and other issues like the strong Canadian dollar,” Burnett says. “All of that caused demand to drop.” He also says that while hard numbers can be tough to find, there’s plenty of anecdotal evidence that some of the hardest-hit livestock producers were smaller operators that tended to provide local demand for feed grains. “A lot of the on-farm feeding that used to go on seems to have been curtailed quite a bit,” Burnett said. “That was a significant portion of the demand in that market.”

And as all that was going on, barley growers were hit with a stiff new competitor in the form of dried distillers grains, or DDGs, mainly from U.S.-based ethanol plants, where they’re processing corn. The began appearing shortly after the 2005 U.S. renewable fuels mandate was passed, requiring the inclusion of 10 per cent renewable fuels such as ethanol in gasoline. By some estimates, roughly one-third of the U.S. corn crop is now used as feedstock for ethanol production. And, according to the U.S. Renewable Fuels Association, for every 56-pound bushel of corn that’s processed, there’s about 18 pounds of high-protein DDG. Alberta Agriculture grain markets analyst Charlie Pearson says there’s no doubt that when the price is right, DDGs displace other feed grains in livestock rations, which has caused other grains and oilseeds to displace barley, he says. “Feed grains, relative to canola or even wheat, have been returning less money to the farmer,” says Pearson. “In Alberta we’re seeing canola-wheat, canola-wheat rotations, where you basically have just a two-year rotation.” Corn is also generally seen as a better feedstock for ethanol production and even Canadian ethanol plants tend to be using it. Of the 1.7 million litres of ethanol fermented in Canadian plants in 2009, 67 per cent came from corn and much of the rest from wheat-

“A lot of the on-farm feeding that used to go on seems to have been curtailed quite a bit. That was a significant portion of the demand in that market.”

corn blends. That’s meant about 900,000 tonnes of domestic corn DDG production, along with further imports of more than 800,000 tonnes in 2009, along with a further 450,000 tonnes of wheat-corn DDGs. Pearson says he’s expecting the situation to reverse a bit in the coming months as corn has increased in value and any hedging activity that’s insulated the province’s feedlot operators from market movement begins to expire. “DDG is up well over $200 a tonne, up to as much as $220 a tonne today, as we speak,” Pearson says. “That doesn’t fit into livestock rations when barley is $190 or so a tonne.” However, Pearson also concedes that feedlot operators have begun to discover other advantages of DDGs as they’ve become more familiar with them. Corn DDGs, in particular, have a high protein level and “a fair bit” of oil content. One recent University of Saskatchewan study fed steers a standard control diet of 85 per cent barley grain, 10 per cent barley silage and five per cent supplement and compared the results to cattle fed wheat or corn DDGS instead of barley at 20 and 40 per cent of the diet dry matter. The most notable change in the diet was the significant increase in protein and phosphorus, particularly at 40 per cent DDGS, and a tripling of the crude fat content with 40 per cent corn DDGS. The big news however was posted by steers on 40 per cent corn DDGS. They consumed only 85 per cent of the dry matter eaten by the controls, yet gained at a similar rate giving them superior feed efficiency. The enhanced performance was attributed to the high fat content of corn DDGS, double that of the wheat, which supplied significantly more energy in the diet. Both DDGS rations beat barley in terms of efficiency that translated into lower costs per pound of gain. Prairie barley growers have also been particularly hard hit because of the geography of the ethanol industry, Burnett says. “If you look at where these ethanol plants

— Bruce Burnett, Canadian Wheat Board

Continued on page 22 WHEAT OATS & BARLEY

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> barley update continued Continued from page 21 have gone, they’re in places like southern North Dakota, South Dakota, Minnesota and western Iowa,” he said. “They were built there because the corn basis used to be terrible there. Originally their business plan was to bury the stuff, because they could make money off just producing the ethanol. They found out very quickly that can’t happen, so they’ve found markets for them, and one of those markets is definitely the Canadian livestock industry.” And the never-ending supply of DDGs seems to be changing the overall structure of the barley market by capping the potential upside, Burnett says. When barley supplies to begin to run short, it’s a relatively simple issue to switch back, he says. “DDGs are very strong competition to things like barley,” Burnett said. There are also extremely complex ways that

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the various commodity markets interact when a new player like DDGs appears, upsetting established linkages and relationships between the value of the basket of farm commodities. For example, DDGs put pressure on soybean meal prices as well as cereal feed grains, because DDGs contain both oil and energy, something soymeal has long been counted on for in feed rations. But that can have an opposite effect on canola prices because the oil content is higher in canola — which in turn might put even more pressure on barley acres in Western Canada. “It becomes a very, very complex argument at times,” Burnett said. From his position in Edmonton, Pearson added another dimension to the price argument that he admitted, tongue-in-cheek, was probably fairly predictable. “I am from Alberta, after all, so I’ll give you one guess,” Pearson said, chuckling when my

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response was the address of the head office of the Canadian Wheat Board at 423 Main Street in Winnipeg. “You do have to give them credit — they have come a long ways in the past few years,” Pearson conceded. “They have their early payment programs, the 100 per cent EPO on feed wheat, things like that. But I still don’t think farmers in Western Canada are getting the full strength of the market signals from the U.S. and international markets for feed barley.” Pearson stressed that it was often the last few dollars available in any market that tipped the scales when farmers were making their planting decisions. “The current programs are close, but it’s the last $10 or $20 a tonne that’s not getting through,” Pearson said. “Seventy-five per cent of the time the best market is the domestic one, but there’s that one year in four or five, when the Saudis present a better value.”

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Pearson suggested that this was just another factor weighing in against barley production in Western Canada. With other crops looking good, it could mean barley gets squeezed hard again this year. The latest CWB PRO of the 2010-11 crop year is sitting at $342 a tonne for No. 1 CWRS 13.5 as of press time, with CW Feed at $240, making those cash bids in Alberta for feed wheat at $190 a tonne less and less attractive. At the same time canola is on a tear. At the end of the first week of February nearby March canola contracts on the WCE were at $607 and new crop contracts for November of 2012 were at $592 and climbing. Meanwhile even designated barley was struggling to keep even with feed wheat in the CWB PRO — as of January 27 Select CW Two Row was $254 a tonne and Select CW Six Row was at $237 a tonne — $3 lower than feed wheat.

All of this underlines an unpleasant reality for barley growers. There’s only a limited market out there for top-grade barley and the market for off-grade stuff isn’t driving any new demand, and the general oversupply of the market is depressing prices for everything. And Burnett says the numbers simply don’t add up if anyone is expecting malt markets to grow enough to pick up the slack. “Even today we’re still producing more than eight million tonnes, while the malting market, both domestic and export is just over two million tonnes most years — say 2.2 or 2.3 million tonnes,” Burnett said. Even if Chinese beer consumption were to take off, it’s still a huge differential to overcome, and one that won’t happen any time soon since the market has, at best, seen slow and incremental growth. All of these trends are converging to push barley acres lower, and getting them back up

to even close to where they were won’t be a quick or easy fix, market watchers say. The Alberta government has decided the best route is to invest in research into the crop, Pearson said. Through the Livestock Feeding Initiative the province is ponying up about $8 million through the Alberta Livestock and Meat Agency (ALMA). The program will conduct research aimed at improving both the feedstock and feeding efficiency, thereby reducing the cost to livestock feeders in that province. And while the money might be coming from the livestock side of the equation Pearson says grain growers will benefit too. “They’ll be funding research on barley, oats and other feed grains,” Pearson said. “One of the side effects of picking up more investment in barley will be to keep it agronomically competitive to some of these other crops, and make it more profitable.” n

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cigi focus

Show not tell CIGI an anonymous hero when it comes to promoting Canadian field crops to end-use customers By

Andrea

“S

Hilderman

hocked,” exclaimed Troy Adams, a farmer from Estevan, Saskatchewan. “Incredible”, said Andre Berube, another farmer from Falher, Alta. Both were referring to their first impression during a recent visit to the Canadian International Grains Institute (CIGI). CIGI is the sort of organization that everyone’s heard of but, unless you’re able to drop everything and drive to downtown Winnipeg, it is tough to get your head around what the organization actually does. There’s the general knowledge answer of course, that it “promotes” Canada’s field crops. But what does that actually mean? Is it a few brightly coloured brochures? Some magazine ads in industry publications? Maybe a field trip or two? Not even close. What CIGI actually does is gives your end-use customers — millers, bakers and other food processors from around the globe — a fully immersive education opportunity that doesn’t just tell them how good Canadian crops are. It shows them. Then it lets them roll up their sleeves and learn to do by doing, if the situation warrants it. CIGI has been around for about 40 years, and the organization’s current head says in the end the work all boils down to showing the customers what Canada’s field crops can do and why they are a better bet for a business minded processor than lower quality, lower priced options from other production areas. “CIGI is in the business of knowledge transfer, innovation and technical assistance,” said Earl Geddes, the executive director of CIGI. “It’s an industry partner that supports farmer’s production. Our only business is to create a competitive advantage through technical knowledge for Canadian field crops.” Geddes was a farmer himself, harvesting 32 crops in his time on the farm. He only stopped farming after an inhalation accident made it impossible for him to continue that career. “Now, I’m focused on marketing farmers crops as effectively as possible all over the world,” he says. “I have the best job.” A big part of the reason CIGI is often an unnoticed player is the fact it doesn’t exactly 24

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stick out like a sore thumb, despite the fact that behind the facade of the downtown Winnipeg high rise where the organization is housed there are some truly unique things going on. Unlike the other office towers in the downtown core, the largest part of the CIGI facility isn’t take up by row after row of cubicles, full of office workers busily shuffling paper or shuttling electrons. Here you’ll find one-of-a-kind operations like a commercial pilot flour mill that occupies three floors and more than 300 square metres (just over 3,200 square feet). On other floors are pilot-scale commercial noodle lines, bread mixers, proofers and ovens. Just to give you an idea of the scale of the operation, the noodle line, without a few add on speciality items, is 90 feet long alone. There’s also a pulse flour mill, pasta plant and a fullyequipped analytical laboratory that contains equipment of almost every type used by food manufacturers that buy Canadian crops. The purpose of this array of equipment and facilities is for customers to come to Winnipeg to test drive Canadian crops and work out technical barriers to their use. As well there’s an important affinity-building component to the courses that comes from providing ongoing professional development for the technical staff of these food processing companies from around the globe. Any visitor to the CIGI facility can see evidence of this ongoing work of decades with each walk down the hallway. Lining the hallways are photographs of the hundreds of short-course classes that have passed through the site over the years. The faces in these pictures are a constantly evolving snapshot of your varied and expanding customer base that spans the globe, covering just about every culture imaginable. With these visitors CIGI conducts testing and research of a more practical kind. It assists bakers, noodle and pasta manufacturers and ingredient companies find the best methods to get the best results from Canadian field crops, but it goes further than that. It also looks for new and innovative ways in which crops can be utilized. For example, CIGI has conducted much research utilizing durum wheat for various kinds of Asian noodles that currently use

Australian white wheat, as well, they have promoted the use of durum in bread. CIGI technical staff are highly trained and industry-savvy. Geddes boasts that the staff at CIGI knows more about the global food market than any other organization in the world. “Our people are always evaluating market pull. What are the factors and trends that influence that pull, and what do we have here at home to supply those future needs,” says Geddes. Not only does CIGI do research and travel to customers manufacturing and quality control laboratories overseas, it runs a wide gamut of courses in its facilities for farmers, customers, and grain companies. It can do anything from putting on a short course for a specific milling company, to exploring pasta blends for an ingredient company to training quality control staff in various testing methods to educating farmers about their industry and CIGI itself. Every year, CIGI stages six programs for the CWB to educate farmers in Combine-to-Customer programs. About 25 to 30 participants, for the most part farmers, are nominated to attend each program from across the CWB designated area. “It gives farmers an opportunity to learn more about the world in which he markets grain,” according to Janis Arnold, program manager of farmer relations at CWB. The farmers are exposed to the work of organizations like CIGI, but also the Canadian Malting Barley Technical Institute, the Canadian Grain Commission including the Grain Research Laboratory, as well as the University of Manitoba which now also houses a state-of-the art grain storage research facility. “It was a whole lot more involved than I had expected. A real ‘eye opener.’ It was fantastic and I enjoyed every minute,” said farmer Troy Adams about the program. “As producers, we typically concentrate on growing crops. Once it is delivered to elevator, we tend to stop focusing on it and it becomes ‘somebody elses’ job.’ It was great to see the science and testing and work that happens on the marketing end.” n Andrea Hilderman has worked in the grain industry for 20+ years. She writes from Winnipeg, Man.


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cereal markets

Staying around Delisting still unlikely for ICE barley futures B y D way n e K l a s s e n , C o m m o d i t y N e w s S e r v i c e C a n a da

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pen interest in Western Barley futures on the ICE Futures Canada trading platform continues to remain virtually non-existent, but officials with the Winnipeg commodity exchange still hold out some faint hope the industry will again participate in the contract and avoid the delisting of the commodity. “We are not currently considering delisting the western barley contract at this time,” ICE Futures Canada CEO Brad Vannan said. Open interest in all western barley contracts declined to zero in the first week of December 2010, when participants liquidated the remaining positions in the nearby December contract. There has since been some minor interest in the nearby March future, with open interest currently sitting at a slim two contracts. No trades have occurred since those two contracts were positioned in the March contract in December. There still remains hope that future efforts will be successful in reinvigorating life back into the commodity, Vannan said.

Cereals garnering interest Higher prices may buy some additional acres — but it remains to be seen of what B y B r e n t H a r d e r , C o m m o d i t y N e w s S e r v i c e C a n a da

H

igher U.S. prices for some cereal crops and what looks like decent returns in the coming season for others seems to be translating into interest in planting. What remains to be seen, of course, is whether or not intentions translate into reality. In the meantime, however, growers penciling out cereal planting intentions are largely left with numbers in the black headed into spring. Barley seems to be the lone exception to this generally positive trend, with a number of issues such as the influx of dried distillers grains from the ethanol industry weighing in against barley values. 26

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“There has certainly been a number of circumstances that were beyond ours and the trade’s control, which put a damper on the usefulness of the contract,” he said. The downfall in open interest was tied to how western Canadian barley flows into the domestic and export market, the decline in the size of the Canadian livestock herd, the changing over to dried distillers grains (DDGs) as a feed, and the decision by producers to store excess production on farm, not in the commercial grain elevator system. There have been all sorts of advancements in the storage of grains on farm, where previously producers would move product into the elevator system, Vannan said. The grain elevators would then place hedges into the market, creating open interest. The elevators would also roll those hedges over, depending on the situation, keeping open interest high in the futures market. “There is also more of a hand-to-mouth buying and selling system in the barley industry for both domestic and export demand,” he said. Efforts to gain a broader perspective of the challenges in the barley sector were ongoing, he said, with ICE Futures Canada officials attending events such as the Western Barley Growers Association convention in Calgary next week. Market participants said the barley industry began to lose confidence in the contract quite some time ago, especially when open interest in the barley future dropped below 10,000 contracts. With only two contracts open, the future is virtually unusable as a viable pricing mechanism, they said. ICE Canada plans to be patient with the contract and hopes the trade will continue to support the commodity, Vannan said. He also pointed out delisting a commodity is quite easy, but to re-list it once it has been removed is a very detailed and prolonged process. n

Oats on upswing The value of oats on the Chicago Board of Trade (CBOT) has eclipsed the US$4 per bushel level, and producers in Western Canada hope they can soon see the same type of price. “There’s a strong correlation between Canadian and Chicago (CBOT) oat prices,” said grain merchant Ryan McKnight, president of Linear Grain at Carman, Man. Fund buyers are leading the oats rally on the CBOT, McKnight said. “When the funds decide to get into a market, oats are a favourable one, because there is often less than 1,000 contracts trading a day,” he said. “If these guys decide they want to buy 500 contracts of oats, they’re going to push the market up, because the oat market has had low liquidity lately.” In early February oats were bringing as much as $3.71 per bushel in Manitoba, $3.65 per bushel in Saskatchewan, and $3.33 per bushel in Alberta, according to Prairie Ag Hotwire. Producers have been waiting for values to approach, or even exceed, the $4 level, McKnight said. “The market needs more oats,” he said. “They’ve had a tough time keeping up with other commodities, like canola and wheat, because they can net more profits than oats. “If oats continues to go up here in the next few days, you never know, guys could be more apt to plant oats. But the market needs about another 20 per cent more acres than last year.” Wet soil conditions in the fall of 2010, and the threat of flooding across many parts of Manitoba and Saskatchewan may delay seeding operations across the Prairies this spring.

Depending where you are, McKnight said, a late spring could be good news for oats. “A lot of Saskatchewan growers tend to put them in later anyway, so a late spring could cause more acres to go in the ground,” he said. “In (southeastern Manitoba’s) Red River Valley, if oats get seeded late, the chances are it’ll be too hot in the summer when they are flowering and the quality will be poor.” Wheat over barley With wheat showing strong returns across Western Canada, it appears producers are showing more interest in wheat than barley “Wheat is garnering a significant portion of the acre increase, barley a little less so at the moment,” said Bruce Burnett, director of weather and market analysis with the Canadian Wheat Board in Winnipeg. Bill Craddock, a trader and producer in southern Manitoba, said the large difference in price between the two grains is a main reason for more wheat going into the ground. “It’s (wheat) an easy crop to grow, we sold some wheat for $8.11 the other day, and I have never sold red spring wheat for more than $8 per bushel,” Craddock said. “Meanwhile, we have a lot of barley sitting in the bin, and all we are getting bid at is $3.80 per bushel.” A couple of other factors, he added, are causing fluctuation in both price and acres. “The overabundance of feed wheat in Western Canada has hurt the barley market big-time,” he said. “The other thing is the DDGs (dried distillers grains) coming in from the U.S. to the ethanol industry, and that’s been a major factor as well.” n


GLYPHOSATE RESISTANCE

NEXT DOOR Glyphosate resistance isn’t something that’s a distant problem anymore. Our neighbours in the U.S. Great Plains region are already starting to see it B Y

G O R D

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estern Canadian farmers had better take heed. Glyphosate-resistant weeds are popping up in the northern Midwest states and it’s just a matter of time before they start sneaking over the border, says Jeff Stachler, a weed scientist at both the University of Minnesota and North Dakota State. “Giant and common ragweed and water hemp have been confirmed in Minnesota while common ragweed has been confirmed in North Dakota,” he said. “Species of concern for the future are lambs quarters, kochia and wild mustard.” Kochia is one to watch for because we know what a tough customer it is. It’s already resistant to ALS inhibitors in all three Prairie provinces and glyphosate resistant kochia has been confirmed in Kansas. It cross pollinates well so a resistant population breeds quickly. As if that’s not enough, once it’s gone to seed the stem breaks and it goes on the move as a tumbleweed. Since spring winds tend to blow to the north what’s in Kansas now will move this way with them. They might even get here faster in the grills and wheel wells of the trucks that move between Canada and the U.S. Stachler also mentioned other weeds

that we already know such as lamb’s quarters, common ragweed and horseweed. So far, Canada has only one confirmed case of glyphosate resistance and that was in southern Ontario. It was an unusual situation where soybeans were planted every year near a small airport in the hope of keeping birds away, resulting in a resistant strain of giant ragweed. There’s no denying what a fine herbicide glyphosate is. It takes out both broadleaf and grassy weeds, it’s highly effective and one application used to take care of everything. On the other hand it’s so effective that farmers became complacent about scouting after application and, although it’s taken a long time, the constant use has started to breed resistance in a number of pesky weeds. If these weeds aren’t caught fast they will become a serious problem. “It’s more important then ever before to be proactive and do the right thing because there aren’t any new modes or sites of action coming along in the foreseeable future,” Stachler said. “If we’re not going to have new ways to kill weeds then we’d better darn well use what we have appropriately.” Stachler says vigilance is the important first step. It’s vital to catch small pockets of resistance and deal with them before they become a major problem. That means a return to intensive scouting. If herbicides aren’t killing the weeds then do what you can to find them and destroy them

before they go to seed. These are not the kind of progeny you want spreading throughout your fields over the next several years. “Look for small patches no more than five or six feet in diameter and the earlier you catch it the less money it’s going to cost you to solve the problem and the more effective you’ll be in reducing the problem down the road.” he said. “I’ve seen fields where 70 per cent of the above crop foliage is the weeds, that’s not good at all and then it’s going to cost a lot of money to solve that.” Solving it is easy in theory but a little more difficult in practice. Stachler recounted a chemical sales rep in his home state of Ohio who had pretty straightforward way of dealing with ALS-resistant ragweed. He’d still use the herbicide but he’d go out and pull up any weeds that weren’t killed by the application. “He’s getting rid of the survivors and they’re not adding to the seed bank so he still has susceptible weeds in the field. It’s working.” he laughed. In this case the ounce of prevention really is worth several pounds of cure. Again, farmers have to understand how weed populations work and how they become resistant. They have to think about the keeping weeds off balance by forcing them to deal with a variety of control methods, both herbicidal and cultural. In short, farmers have to understand the role that they play in selective breeding of weeds and stop doing that. They need to preserve the efficacy of glyphosate by using other methods and other herbicides. “If you’re just going to rely on herbicides then it means two or three active ingredients that are effective on all the weeds in the field as long as you’re not going broke doing that. But you need to switch them up from year to year so you’re not using the same thing.” Stachler said. “It’s a shame but it is due to the success of glyphosate, It’s the best herbicide ever discovered, there isn’t anything better or similar to it.” ■

“A new mode of action that’s out of this world.” “It’s a Group 27 – a new mode of action that’s out of this world. So in addition to getting exceptional broadleaf control, Infinity® helps me manage the Group 2-resistant kochia, cleavers and chickweed that are a problem in this area.”

For more testimonials visit LightYearsAhead.ca

BayerCropScience.ca or 1 888-283-6847 or contact your Bayer CropScience representative. Always read and follow label directions. Infinity® is a registered trademark of Bayer. Bayer CropScience is a member of CropLife Canada.

02/11-14671F


IW M SYSTEMS

T-K-O

T B Y

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here’s no denying it. In their annual fight with weeds, glyphosate provides farmers with a brutal knockout punch, a wicked right cross that still drops a lot of opponents to the canvas. On the other hand, show them your moves too often and they’ll learn to dodge and weave so the next thing you know, the bell goes and your opponent is still standing. Weed scientist Neil Harker of Agriculture Canada reminds farmers that if they want to maintain that right cross they should remember — when your opponents have a weak spot, it’s the combinations that win the fight in the long term. In farming he calls those combos integrated weed management or IWM and this concept is just as important with herbicide-tolerant canola as it is with any non-herbicide-tolerant crop.

help maintain the long-term efficacy of herbicides. It means more options and this is really important as more and more weeds develop glyphosate resistance as they’re doing down south. “You can see the distribution and it’s mostly in the corn/soybean/cotton area where Roundup is used continuously,” Harker pointed out. “It’s a big case for not doing the same thing over and over and a warning to us in Canada, particularly southern Ontario and Manitoba, where we could grow Roundup Ready corn and soybean continuously.” IWM is about using non-herbicide tools in the cropping year. Many of them are familiar and that’s because lot of them are good agronomic practices. Harker boils it down to six important points: careful seeding and fertilizing, using competitive cultivars, getting the weeds early, using cultivars with optimal agronomics, using diverse

“We think that herbicide tolerant canolas and hybrids provide the solutions we need so we forget about integrated weed managemment.” “I think that integrated weed management has been ignored,” he told a recent meeting of agronomists in Manitoba. “We think that herbicide-tolerant canolas and hybrids provide the solutions we need so we forget about IWM.” Integrated weed management goes beyond herbicides. Herbicides, used in proper rotations, provide a powerful set of crosses and uppercuts that put weeds down for the count. IWM is the combination of weakening body blows, jabs and hooks that can put the weeds out on their own and 28

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crops in healthy rotations and concluding with careful harvesting. It’s about setting up an environment where strong crops can outcompete the weeds. It starts with careful seeding and the idea is to put a competitive stand into the ground. Harker says that, by and large, only 50 per cent of the canola that’s seeded will actually emerge. “We started looking at the factors that were important for getting more canola out of the ground,” he said. “Basically, if you’re willing to slow down a bit and make sure that you’re seeding shallow, you can go above this 50 per

cent emergence but at best you’re still under 70 to 75 per cent or less if you go too fast.” Test plots at Lacombe, Alta. were seeded with both hybrid and open-pollinated Roundup Ready varieties. The best emergence occurred in plots seeded at four miles per hour at a depth of one cm. Any faster or deeper and the stand density suffered. The seeding rate was set for 150 plants per square meter with the best stand emerging with 87 hybrids/square metre or 89 OP/square meter, close to 60 per cent. At the other speed of seven miles per hour the emergence dipped below 50 per cent. A well-seeded stand has a good shot at presenting a competitive crop. Using a competitive cultivar makes this even better. A crop that establishes well gets the jump on the weeds and has that competitive advantage. This was shown in an experiment comparing the competitive characteristics of Falcon and Phoenix barley. “Falcon is a semi-dwarf hulless variety that doesn’t come out of the ground very quickly and a test plot with no herbicides applied was full of wild oats,” Harker said. “The Phoenix, which is a taller, hulled and more vigorous variety came out of the ground with almost no wild oats visible. So it shows the incredible differences there are for integrated weed management when we plant competitive cultivars.” One of the reasons is the early establishment of a crop canopy and this actually screens out the light, a very important resource for all plants, both crops and weeds. A good crop canopy keeps light away from intruders and many of our weed species don’t germinate well in the shade. A plant canopy screens out red light and this keeps some weeds, like dandelions, in the ground. Studies showed that, under diffuse light


there was close to 87 per cent germination of dandelions after 12 days of exposure. In that same 12 days, dandelions under a plant canopy showed two per cent germination. “This has important implications for IWM because you can put on less herbicides and you can have those herbicides work better when you have a better crop canopy above them,” Harker said. The third important concept in IWM is knocking off the emerging weeds early in their cycle, preferably at the three- to fourleaf stage. Both small-plot and large-plot studies show that this can have a yield advantage of three bushels per acre if the weeds are sprayed at the one- to two-leaf stage. The longer the wait before the treatment, the more the farmer stands to lose. “You’re wasting herbicide if you’re putting it on too late, so by removing weeds early you’re saving herbicide and making them more efficient,” Harker said. The fourth factor is bringing in more rotational diversity. It’s common practice for farmers in the U.S. to grow two crop rotations with glyphosate-tolerant crops. Canadian farmers are pushing canola rotations, and this may be profitable in the short term, but pushing rotations with glyphosatetolerant canola is asking for trouble. Harker looked at one study but he pointed out that all the crops in the rotation were spring annual crops so this encouraged the culturing of spring annual weeds. “Why do you think the number one, two and three weeds in Western Canada are spring annual species?” Harker asked. “Because we plant spring annual crops over and over and over again so we’ve got wild buckwheat and we’ve got wild oat and we’ve got green foxtail.”

“It shows the incredible differences there are for integrated weed management when we plant competitive cultivars.” Harker suggested a couple of other options. One is to rotate out of spring annuals and grow perennial crops such as forages, if there is a market for them. Winter cereals may also be used to break up the spring annual weed cycle. Another trick is to cut spring crops as early cut silage. “It’s not really a different life cycle but it’s seeded later, when some wild oats are up and then you can kill them with a burnoff or tillage.” He said, “You cut them off before they have a chance to produce viable seed.” Combining optimal agronomics can go a long way to growing a competitive crop and this makes perfect sense. The more you can line up optimal growing conditions, the more robust and competitive the crop will be. Another study done with barley rotations really brought this home. Several plot studies compared five years of continuous barley with a spring annual rotation of barley/ canola/barley/peas and barley. Different factors were compared by individually and then compared together. Herbicides were applied across the board at a one quarter rate. The final comparison was the wild oat biomass within the stands. Doubling the seeding rate from 200 to 400 resulted in a 3X reduction of wild oat biomass. Changing from a dwarf variety to a tall variety resulted in a 2X reduction of wild oat biomass. Both these factors together in continuous barley resulted in an 8X reduc-

tion of wild oat biomass. In the rotation plots the results were even more dramatic. “With tall barley seeded at double seeding rate in a rotation we got a 70X reduction in wild oat biomass and this is across all locations,” Harker said. “This is a fairly dramatic reduction that had nothing to do with herbicides. It was all to do with the cultural practices when you combine the three were together there was a synergistic interaction that was much more than you might expect with any one of those things alone.” The last factor is careful harvesting. Canola is a small-seeded crop so it’s easy for a slightly high fan setting to have dramatic results, even with a swathed field. Some preliminary studies suggested that a combine pass may leave between 2,000 and 7,000 seeds on the ground with a little more than 3,000 as the average. With herbicide tolerant canola becoming one of our major weed species it makes sense to keep it in the hopper where it can be profitable rather than have it on the ground where it’s a glyphosate resistant weed problem. “We’re not determining what you can do about this but most people don’t really believe that they’re putting that much seed on the ground,” Harker said. “In terms of bushel losses, somewhere averaging a little around two or more up to four so if your canola is $12 a bushel, that’s substantial, up to almost $50 an acre losses just going out the back.” ■

“It works quickly and effectively on broadleaf weeds…” “Infinity® works quickly and effectively on broadleaf weeds, and tank-mixes really well with the grassy products we use on our wheat and barley. Its unique chemical group is another huge benefit of this product. We will definitely use Infinity again.” – Bernie Frere, Trochu, AB

For more testimonials visit LightYearsAhead.ca

BayerCropScience.ca or 1 888-283-6847 or contact your Bayer CropScience representative. Always read and follow label directions. Infinity® is a registered trademark of Bayer. Bayer CropScience is a member of CropLife Canada.

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Who is the WGRF? W

estern Grains Research Foundation (WGRF) is a non-profit organization that is farmer funded and directed. Set-up to fund research that directly benefits prairie farmers, the WGRF manages an Endowment Fund and the Wheat and Barley Check-off Funds. Each of these 3 funds are very distinct both in terms of how funds are obtained by WGRF and how funds are used. Check-off dollars are invested specifically into wheat and barley breeding research, with the goal

Check-off The WGRF check-off rate is among the lowest at $0.30/tonne for wheat, which equates to less than one cent per bushel and $0.50/tonne for barley or one cent per bushel. This money helps fund breeding programs at AAFC and Western Canadian Universities.

Research Funding WGRF invests $4-$5 million dollars annually in variety research right here in Western Canada, and works hard to ensure every check-off dollar invested into wheat and barley research leverages up to three times as much in government research funding.

www.westerngrains.com WGRF_WOB_Feb2011.indd 2-3

of developing improved varieties that grow well in farmers’ fields, are demanded by industry, and increase profitability for wheat and barley producers. The Endowment Fund supports research across all crop types, looking specifically at projects that show the most potential for farmer benefit. This fund is set-up to provide long-term stability of crop research in Western Canada.

Return on Investment WGRF has a research investment return ratio of between 4:1 for wheat and 12:1 for barley. Investing in research through the check-offs continues to be the most important way producers can improve in their industry.

New Varieties WGRF has helped support the release of more than 90 wheat and barley varieties growing on over half of Western Canada’s fields. New varieties help to reduce input costs, increase yields and can develop new market opportunities. For a full list of varieties developed visit www.westerngrains.com.


WGRF Endowment Fund Announcement Western Grains Research Foundation Endowment Fund Approves $3.8 Million Breeding Tools Initiative

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estern Grains Research Foundation (WGRF) is pleased to announce funding for a new research initiative that will strengthen and advance public cereal breeding programs across Western Canada. WGRF has approved Endowment Fund Directed Research Program funding of $3.8 Million dollars over the next five years for an initiative to develop genomic tools, increase genomic capacity, and enhance the use of doubled haploid in cereal crop breeding programs. Most Canadian breeding programs already utilize some doubled haploid and genomic technology. However, the full potential of these technologies is not being fully exploited because implementation has not kept pace with changing technology. Breeders currently rely on marker technology with limited through-put capacity, restricting breeding programs to evaluating only a few marker-trait combinations in a few targeted plant populations. Greater use of genomic technologies will mean faster, more accurate identification of the best genes available in seed germplasm to breed into varieties for commercial production. Doubled haploid technology accelerates the cycle of crop breeding. Together, these technologies can get improved varieties into farmers’ fields quicker and add to the producer’s bottom line. “WGRF is excited about the impact this breeding tools initiative can have for producers,” says Don Dewar, WGRF Vice-Chairman and Chairman of the Endowment Fund Advisory Committee. “The potential to accelerate the crop breeding cycle and speed the release of improved varieties to market is a worthwhile and powerful investment for producers to make.” The research initiative being funded is a joint initiative being lead by Dr. Curtis Pozniak at the University of Saskatchewan’s Crop Development Centre, and Dr. François Eudes and Dr. Brent McCallum, both with Agriculture and Agri-Food Canada (AAFC). “This project is truly a public collaboration” notes Dr. Pozniak. “All of the major public research institutions with activities in wheat breeding and science are contributing to the research effort. The research being conducted will ensure that breeders have access to the latest technologies to develop higher yielding, disease resistant cultivars with an end-use quality package in demand by over-seas customers. Dr. Eudes adds, “With this project, we are looking at establishing an invaluable breeding tool for cereal breeders that will shorten the cycle of wheat and barley cultivar development.”

Integrated microspore culture (IMC) derived plantlets haploid and doubled haploid.

This is one of many important strategic research initiatives WGRF will fund through the Endowment Fund Directed Research Program on behalf of Western Canadian crop producers. WGRF expects to fund initiatives in priority areas like Fusarium Head Blight / DON/Mycotoxins; Post-Harvest Handling to Address Quality/Market Access; Pest and Weather Surveillance; Agronomy; and New Crops and Crop Uses. “The decision to fund this crop breeding tool initiative for major cereal crops and the previously announced one million dollar investment by WGRF in the Phytotron renewal project at the University of Saskatchewan to support research for a broad range of crops are important steps towards keeping Western Canadian producers at the forefront of crop research.” notes Dewar. For the most up to date information on the WGRF Endowment Fund and the research and initiative we are funding please visit www.westerngrains.com

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pest update

Smart weather CWB’s Weather Farm incorporates new cuttingedge technology

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Early warning If the first weeds that arrive in your fields start to look a bit chewed up, you may have another unwelcome guest B y

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pring’s arrival is nothing, if not predictable. As the last bit of snow disappears the first spring weeds start to lift their leaves and angle them into the warming sun. And those early weed species might not be welcome guests, but they can be the canary in the coal mine for one other unwelcome early arrival. Keep an eye on those leaves and pay attention to any damage that occurs. Signs of something chewing on those leaves may be a harbinger of dingy cutworm. “They overwinter as a partially grown larva so they’ll be out feeding very early in the season, possibly even before the crops are seeded,” says Manitoba’s provincial entomologist, John Gavloski. “Often you’ll see them start feeding on the weeds in the field and whatever vegetation is there you’ll see signs of their early feeding.” Dingy cutworms are a native species and not uncommon throughout the Great Plains. Although they’re not as numerous as the redbacked cutworm, they have been on the upswing in Western Canada for the last five years or so. It’s probably due to the natural cycles we see in insect populations. Their numbers rise until natural enemies, diseases and predators, catch up with them and bring their populations back down again. Cutworms belong to the family Noctuidae or owlet moths. This is the largest family within the order Lepidoptera with 35,000 known species throughout the world and possibly as many as 100,000. Dingy cutworms have a light-coloured 32

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strip running the length of the back with a thin line right down the middle of it. Some have grey V-shaped notches pointing toward the head but all of them have four black dots on each abdominal segment. They like to hide in the soil by day and then come out at night. Even though they’re cutworms the damage they do isn’t typical cutworm damage. “They’re a defoliator. They don’t do as much cutting as redbacked cutworm,” Gavloski said. “They certainly can cut but often they’ll just nibble away so you’ll see defoliation. It looks like something has been feeding on the leaves but if you walk the field by day you can’t see any insects, you just see lots of nibbling.” You can confirm dingy cutworm by digging around in the soil near plants with damaged leaves or you can take a flashlight into the field and scout in the late evening after dark. At the moment there isn’t an established economic threshold but they are abundant then there are some insecticides registered for dingy cutworm. Since they spend the day in the soil, it’s best to spray in the evening, close to the time they would be emerging to feed. Spot spraying may be effective. In cases where there is a high population in an unseeded field, a farmer may consider working the soil. Unlike most cutworms that overwinter as eggs, the dingy cutworm is already hatched and partially grown. Studies out of Lethbridge with western pale cutworm have shown that working the soil, knocking off the weeds and seeding late can effectively starve the caterpillars to death before they pupate. This is an admittedly risky tactic since a late emerging crop would be ideal for other pests such as the redbacked cutworm. n

he Canadian Wheat Board says farmers can expect to see greatly improved weather predictions which could increase the accuracy of short-term forecasts from the WeatherFarm system, which was introduced in 2009. The new and improved system uses a weather-modelling system that’s been field tested by the U.S. National Weather Service and the U.S. Military. It then incorporates a new automated “nudging” technique that pulls data from the system’s own network of 800 weather stations and 200 government sites. This live data feed refines the predictions and results in a higher level of accuracy — the scientific consensus is that users can expect to see as much as a 50 per cent increase in accuracy in forecasts of up to 12 hours. The CWB says this will assist in everything from spring flooding forecasts to storm watches to monitoring wind conditions — all of high importance in agriculture. “With all the potential for flooding this spring, everyone will be watching the weather very closely,” said CWB weather network manager and agro-meteorologist Guy Ash. “Farming is all about the weather, so producers need their weather information to be as accurate and localized as possible.” The new forecasting model is powered by WeatherBug, a brand of U.S.-based Earth Networks, integrating weather information from more than 8,000 weather stations around the world, including its stations in Canada. Forecasts predict hourly conditions for temperature, wind, relative humidity, a heat and wind-chill index, dew point, sky cover and chance of precipitation. A new set of forecasts for each local station is generated every six hours. The enhanced forecasting, using a Weather Research and Forecasting (WRF) model, is made possible by the density of the network of 800 monitoring stations located on farms and at grain elevators across the Prairies. Launched in 2007 by the CWB, WeatherBug and grain industry partners, it has now grown to become the largest private weather network in Canada. Another valuable enhancement is the introduction of radar imaging to generate birds-eye map views of weather systems (static or animated) that can move and zoom to within one kilometer above a particular farm, allowing producers to visually pinpoint immediate weather threats, the CWB said in a media release. n


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insight

Something extra Pulse crops’ “non-nitrogen benefits” highlight the fact that soils have a complexity that we’re only just beginning to understand B Y

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onsider a single teaspoon of soil. In that single teaspoon, you can have billions of microorganisms performing a dizzying array of functions, all of which have some sort of impact on the yield and health of the crops you grow. It’s a complex and rich world and one that, in some senses, we are just beginning to truly understand. Research being done today is giving us a new understanding of what constitutes soil health, and in the years to come it will have an impact on producers and affect things such as crop rotation. This column looks at one area of research — the study of what are sometimes called the “non-nitrogen benefits” of pulses. Every grower knows that lentils, peas and other pulses fix nitrogen and leave behind some residual nitrogen for next year’s crop. But there’s a bit of a mystery in this — in some fields, we find that wheat, canola or other nonpulse crops get a boost that goes beyond what you would expect from residual nitrogen. Something is providing that extra boost. But what? In our lab, we’re “following the carbon.” A large percentage of microorganisms are decomposers that break down plant residues and free up the carbon and other nutrients in them. You might think these decomposers wouldn’t be fond of pulses. After all, pulses don’t come close to matching the amount of surface residues (the largest source of organic matter and, hence, carbon) left by canola, wheat and other non-pulse crops. The same is true under the soil surface as pulses have less extensive root systems and therefore leave behind less biomass. But not all sources of carbon are equal. The tough stalks of wheat or canola have a lot of carbon in them but contain a lot of lignin, a tough woody tissue that’s hard to break down. You find a much different source of carbon in the soil, particularly in an area called the rhizosphere, the soil very close to the roots. This is where you also find the most concentrated populations of microorganisms, many of which are frenetically feeding on compounds called root exudates secreted from the roots. Compared to woody, hard-to-decompose lignin, these compounds are like a rich syrup, and the microorganisms love them. Because the carbon is so easily accessible it’s called “labile” or “readily-decomposable” carbon, although I like to think of it as “delicious carbon.” We can actually follow this process on a microscopic level. There is a naturally occurring and stable isotope of carbon called carbon-13. Under lab conditions, we provide the plants with CO2 enriched with carbon-13 and see where it is incorporated in a plant — that is, in the leaves, stems, pods/husks, seeds, and roots. This is one of the ways to determine how pulses compare to wheat or canola as a source of delicious carbon. So what’s the big deal about this? What does it matter if pulses are a good source of labile carbon and that makes a bunch of microorganisms happy? How does that make a difference when it comes to putting extra bushels in the hopper? To answer those questions, we need to look at the other major class of microorganisms. Along with the “decomposers” are microorganisms that play very specialized roles in nutrient cycling. For example, nitrifiers convert ammonium to nitrates, which can then be absorbed by the plant, allowing it to create new root, stem, leaf, and seed cells. Not surprisingly then, microorganisms and plants have a symbiotic relationship. The plant “feeds” the microorganisms through root exudates which, in turn, increase the amount of nutrients available to the plant so it can grow and produce more root exudates… and on and on in a mutually 34

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“Sometimes it’s clear that something is giving a boost to the crop planted the year after pulses.” beneficial cycle. Some cutting-edge research is examining whether plants can actually increase the supply of certain types of exudates in order to encourage microbial activity that increases the supply of nutrients. Now we can begin to connect the dots. Pulses are a better source of delicious carbon. A more abundant supply of delicious carbon boosts microbial populations. Moreover, unlike their plant partners, microbial activity lasts longer than a season. Even during the winter they continue to function, albeit much more slowly. But when spring arrives and the next crop goes into the ground, that enriched population is ready to kick into high gear, including those microorganisms which convert nutrients into forms that plants can take up. And that puts more bushels in the hopper. At least in theory. Out in the field, we find these “non-nitrogen” benefits harder to quantify. Sometimes it’s clear that something is giving a boost to the crop planted the year after pulses. But the results are variable and the processes still dimly understood. Soil test N does not always indicate more plant-available N post-pulse, but these tests cannot capture the activity of the microorganisms throughout the growing season. And although we can say that pulse crops might foster a more diverse and resilient population of microorganisms, we can’t give detailed descriptions of just what that involves. Maybe what we are calling “non-nitrogen” benefits are really overall soil health benefits that aren’t captured by our usual measures of soil fertility, such as more labile residues for happy microorganisms to transform into plant-available nutrients, including nitrogen. Clearly there’s a lot of research yet to do, but genetic marker technology and advances in genomics are giving us new and powerful tools for conducting it. And already we can think about rotation in a new way. Traditionally, farmers rotate crops for weed-control purposes and to prevent the buildup of harmful crop-specific pathogens in the soil. New research will allow us to think about ways to ‘manage’ carbon and microorganisms in order to produce higher yields and healthier crops without additional inputs. And with the way fertilizer prices are going, wouldn’t that be nice? n Angela Bedard-Haughn is assistant professor of soil science at the University of Saskatchewan’s College of Agriculture and Bioresources. Journalist Glenn Cheater contributed to the writing of this column.


insight

Threat assessment

History tells us climates can certainly change — and that preparation for change can protect you and your farm

By Suren Kulshreshtha w i t h G l e n n C h e at e r

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n 1867, Captain John Palliser led an expedition to study the agricultural potential of Canadian Prairies and concluded much of it was wholly unsuitable for agriculture. A decade later, Canadian botanist John Macoun toured the same area and came to the opposite conclusion — a view endorsed by the new Canadian government, which supported building the Canadian Pacific Railway through the southern Prairies and encouraging settlers to follow in its wake. But this is not a case where two experts looked at the same data and came to opposite conclusions. Palliser appears to have done his survey following a seven-year drought. What he saw was an area turning to desert and had Macoun been with him at that time, he surely would have had grave doubts as well. Arriving after the drought had passed, Macoun saw something else, a land with rich potential. This is something the grain and oilseed farmers of today should bear in mind as they consider the merits, or lack of them, in the

debate about climate change. This is not to say that Palliser’s Prairie, one populated by cacti and marked by sand dunes, is about to return. But it is certainly possible. Historical climate data shows that punishing multiyear droughts were a regular occurrence for a very long time. So what we consider normal, really isn’t. Even a modest shift in climate could see a return of frequent multi-year droughts, and that would have a huge impact on Prairie agriculture. However, the impact would not be uniform: Those farmers who anticipate what might happen and prepare for it will stand a much better chance of survival than those who don’t. So this column isn’t an argument about whether or not climate change is real. Rather, it’s an argument that the threat is real enough that you should be thinking of how climate change could affect your farming operation. Even if you believe all this talk about global warming is nonsense, it doesn’t hurt to look Continued on page 36

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Continued from page 35 at the specifics of the predictions being generated by climate-change models. Let’s start with the positive side. The current models predict that Prairie grain farmers can expect to see more frost-free days, more growing-degree days, and about the same level of precipitation. That’s good news, is it not? Unfortunately, no — for several reasons. First, the models predict a change in precipitation patterns — less snow and more rain. Both have significant implications for farm management. Except for those years when there is a sudden melt in early spring, snow is a much more reliable form of precipitation because it slowly percolates into the soil where it can be utilized by emerging crops. Less snow frequently means less available moisture in spring, and when you combine that with more frost-free days — which means generally early springs — farmers will be faced with some difficult decisions on when to begin planting. This was the case this past year as farmers grappled with the decision on whether to seed earlier than normal and risk a killing frost, or to wait, and risk poor germination because the soil had dried out. Of course, most areas had excess moisture during much of the growing season, but this is another hazard of climate change — more “extreme weather events,” such as more intense downpours. As a farmer, how do you prepare for that? Well, it casts drainage in a new light. This past year, it would have been helpful for many farmers to have drainage systems which remove excess moisture as quickly as possible. But if the models are right, this won’t be a winning strategy in the future because downpours will more often be followed by weeks 36

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“The threat is real enough that you should be thinking of how climate change could affect your farming operation.” of dry weather. In that case, it could be more advantageous to find ways to retain at least some of that water on the land, in retention ponds, and to invest in irrigation systems so you can use that water when rains stop coming. Soil erosion and leaching of nutrients are also going to pose more of a threat. The models also predict warmer winters. Again, that sounds nice at first but has negative implications. Bitterly cold winters aren’t just hard on car batteries, they’re also hard on pests and diseases. There is some evidence that we are already seeing pests and diseases extending their reach northward. Combined with longer, hotter and more frequently dry summers, this has major implications for what is grown. Cereal crops are likely to suffer most, although canola also benefits from cool nights and suffers when temperatures rise into the 30s and there is little rainfall. If the models prove correct, you can expect to see more pulses being grown and also more corn. The popular wheat-canola-peas rotation model may no longer do the job it once did. What sort of rotation will replace it? Indeed, that is just one of many, many questions that producers may be facing in the coming years. And you don’t need catastrophic climate change to occur — a return to the climate that John Palliser encountered in 1867 would bring about the same scenario. It’s tempting to think, “Well, if this happens, we can’t do anything about it. We’ll just have to deal with what Mother Nature throws at us.” I wouldn’t recommend hope as a strategy. Rather, I would advise doing what you can to

strengthen the management of your farm business. No doubt, the vast majority of farmers will devote even more attention to agronomic issues: more creative crop rotations, more scouting of diseases and pests, more focus on getting seed in the ground while conditions are optimum, and so on. But all of these decisions will come with a cost and frequently, a risk. Success in farming today already demands knowing your cost of production for every field and every crop. This is going to be even more crucial if there is climate change, or a reversion to the weather patterns of Palliser’s day. Farmers will need to head into every spring not just with a Plan, but with a Plan B, and a Plan C and maybe a D, E and F as well. Each alternative will need to come with a cost estimate because each will come with a measure of risk attached. If a farmer is unable to “run the numbers,” he or she will essentially be making a blind wager. That is not a good strategy. Many in the farming community, as in society as a whole, do not believe in climate change. For a business point of view, it doesn’t really matter what your opinion is. No matter which side is right, those who pay attention to the risks, are prepared with alternatives, and are ready to implement them will have the advantage. n Suren Kulshreshtha is a professor of agricultural economics at the University of Saskatchewan’s College of Agriculture and Bioresources and has extensively studied climate change and its potential economic impact on Prairie agriculture. Journalist Glenn Cheater contributed to the writing of this column.


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Wheat Oats & Barley