THE WESTERN PRODUCER | WWW.PRODUCER.COM | MARCH 20, 2014
& OPEN FORUM TRANSPORTATION | FARMERS OUT OF POCKET
WRITING AWARDS | NAAJ
Backlog in grain, backlog in democracy
U.S. awards recognize WP reporters
BY JAN SLOMP
elieve it or not, there is a relationship between the backlog in prairie grain and the Fair Elections Act. Here’s how. As prairie farmers wait anxiously for the backlog in grain transportation to be resolved and for prices that at least cover the cost of production, agriculture minister Gerry Ritz and friends continue to meet with devotion in the sanctuary of “free-dumb.” Farmers on the Prairies can no longer afford these bizarre ideas from Ritz and Co. One of their proposed solutions is to lift the revenue cap for rail companies, which are required by law to move grain. As a constrained, monopolized system, railroads would enjoy even higher profits if allowed to create a bidding war that would have farmers paying even higher freight rates. It has always been clear that mountains and long distances to ports have stopped prairie farmers from receiving the full world market price for their grain. In the early 1900s, western grain farmer were outraged over the monopoly power of the Canadian Pacific Railway, grain dealers and millers. Their frustration spurred them to demand a stake in the game, organize themselves and work co-operatively to form the prairie pools. The Canadian Grain Commission, created in 1912, had the power to enforce regulations governing grain movement from farmgate to loading point. The federal government created the Canadian Wheat Board when farmers demanded fair and stable prices and protection against exploitation by grain traders.
JOANNE PAULSON, EDITOR
Could a farmer-controlled agency help solve transportation woes, asks the author. | Farmers lobbied hard to keep the Crow Rate to maintain equity in grain transportation costs. These and other mechanisms helped ensure that land-locked prairie farmers could compete successfully in the world market. Western anger is rising again because other than a greatly diminished grain commission, these hard-won institutions have been demolished by Ritz and his ilk. The current chaos in grain transportation is caused by the loss of the CWB’s co-ordination at port terminals and the lack of enforcement of the statutory obligation for rail companies to move prairie grain. The CWB, with its single desk authority over sales, railroads and port facilities, ensured the system worked efficiently to achieve premium grain prices and minimize transportation costs for prairie farmers. Now to the Fair Elections Act and its relationship to grain transportation. Canada’s chief electoral officer, who reports directly to Parliament, exposed the unethical interference of the Conservatives in the lead-up to the last federal election, for which
their knuckles were soundly rapped. Not surprisingly, the Conservatives’ Fair Elections Act will weaken the chief electoral officer by turning his investigative powers over to a commissioner appointed by the director of public prosecutions. This commissioner will report to the prime minister instead of to Parliament as a whole. The government’s undemocratic behaviour regarding the new elections act is something prairie farmers have previously seen. Even though prairie farmers repeatedly elected a majority of CWB directors who supported the single desk, the Conservatives disregarded the requirements of the CWB Act for a producer vote and unilaterally dismantled the single desk. The farmerelected board was terminated. Likewise, the chief electoral officer, who is the protector of Canada’s democratic processes, has been stripped of power and his former authority given to a puppet of the prime minister. If minister Ritz wanted to improve transportation and farmers’ grain prices, he would consult with Allen Oberg and other former directors of the farmer-elected CWB board, who
WILLIAM DEKAY PHOTO
made grain move well and also managed to sell several classes of wheat for premiums that have since vanished. He would also talk to Adrian Measner, the CWB’s former chief executive officer, who was removed by the Conservatives and brought to heel in much the same way as the chief electoral officer has been. According to the proposed 2014-15 budget, the federal government is using $349 million to help sell what is left of the CWB to the private grain trade. Conservatives also appropriated $200 million of farmer-owned CWB assets when they ended the single desk. What would happen if Ritz and Co. gave farmers that $549 million to create a farmer-controlled agency to coordinate prairie grain transportation, with the authority to discipline railroads , and to buy or build port facilities to export prairie grain? Just imagine that. Jan Slomp is president of the National Farmers Union and an Alberta dairy farmer.
INSURANCE | GLOBAL AG RISK SOLUTIONS
New revenue insurance option worth considering HURSH ON AG
private revenue insurance program called Global Ag Risk Solutions is gaining traction across Western Canada. More grain producers are considering it for the upcoming year. Of course, dropping grain prices have everyone concerned about their margins. GARS now has a software program that allows producers to see the support that would flow from Crop Insurance, AgriStability and GARS in various price and yield scenarios. Farmers need to have at least five years of accrual-based financial statements to be considered for GARS insurance. The premium is
based on how well they have performed financially. GARS covers the three big input costs — seed, fertilizer and chemicals — as well as a margin of the farmer’s choice over and above the input costs. The margin can be $25, $50, $75 or $100 an acre. Farmers’ historical input costs per acre are calculated, which are automatically covered if they go as much as 40 percent above them. In my specific case, the seed, fertilizer and chemical costs for the crops I’ve been growing, plus the 40 percent allowance, means I have coverage of up to roughly $160 per acre. On top of that, I’m considering a margin of $75 an acre. With that, my coverage will amount to whatever I spend on the three big inputs plus $75. I could choose a margin of $100, but it would cost about $4 an acre more. In my case, the price tag is roughly $11 an acre with the $75 an acre margin. Remember that everyone’s premium might be different. I had GARS coverage last year. Like
any insurance product, you hope you don’t collect. This year, the company can provide a much clearer picture of how the program functions in relation to the government safety nets. It punches in a farmer’s crop insurance numbers, seeding plan, projected input costs and the AgriStability reference margin to show what would happen in the event of yield and/or price shortfalls. My best coverage net of premiums is from staying in AgriStability and buying GARS, which provides better support than crop insurance, in my case. It’s important to note that AgriStability benefits are reduced by payments received from GARS and crop insurance. However, farmers who rely solely on AgriStability without having either crop insurance or GARS would see their AgriStability trimmed back if they were in a negative margin situation. AgriStability still seems to provide good support and its premiums are cheap, even with recent cuts. How-
ever, confidence in the program is low, and it is notorious for being slow to make payments. Even though the numbers show that I’ll be better off buying GARS and dropping crop insurance, I’m not likely to do so entirely. Its premiums drop dramatically at 60 or 50 percent yield coverage. I’ll likely stay in crop insurance at some minimum level to maintain the establishment benefit and the coverage for unheeded acreage. Having GARS will also change my hail insurance needs. I’m in an area with high hail premiums and my land is all in a block. Although my thoughts may change through the summer, depending on how the crop looks, I’ll likely start out with little or no hail insurance. Each producer has different circumstances, insurance needs and appetite for risk. GARS won’t be a fit for everyone, but it’s worth considering. Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at email@example.com.
Ed White and Mary MacArthur win at ag journalists organization
first met Ed White when I was a much younger reporter at the Saskatoon StarPhoenix and had been sent out to learn something about the agriculture beat. Agriculture is a remarkably complex file, and I was terrified. One of the brilliant things I did in a story many moons ago was refer to $7 wheat, which was the futures price — not the farmgate price — and I failed to differentiate. To put it mildly, I heard about that. In those days, I would run into Ed at conferences and events. I was pretty sure he would never fail to mention what kind of a price he was quoting. But after a while, I was less intimidated. Ed, like the late and dearly missed Adrian Ewins, was helpful and supportive. Without those two, this one-time daily business reporter would have been sunk on the ag file. I may have worked at a different paper, but these WP reporters seemed to care only about agricultural reporting and helped me get it right. (They stopped short of sharing scoops.) Now, I get to work with Ed, although he is based in Winnipeg. I hardly have to mention that he writes all kinds of news for us, and is an expert in markets with a Derivatives Market Specialist designation. Indeed, Ed is among the best ag columnists in North America. I have proof. He took first place in the North American Agricultural Journalists writing competition in the column category for a collection of three pieces published Feb. 7, May 30 and June 27 of 2013. I a l s o g e t t o w o rk w i t h Ma r y MacArthur of our Camrose bureau, who received an honourable mention for a Nov. 7 news story entitled Military solution creates farm problems. My personal view, although I’m biased, is that Mary’s Stampede steer disqualification stories were equally as good. Mary is a determined, fair and unrelenting reporter who will not give up until she gets to the bottom of a story, regardless of obstacles in her way. This is obvious in the many awards she has won over the years at The Western Producer. It was nice to see Canadians do well at NAAJ, which is largely populated, of course, by U.S. journalists. Editor Laura Rance and reporter Shannon vanRaes of The Manitoba Co-operator also took awards. You’re in good hands, dear readers.