National exposé is not a balanced view: MPC

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4 The Manitoba Co-operator | December 13, 2012 OPINION/EDITORIAL Laboratories in the field The Deerwood Soil and Water Management Association received some welldeserved recognition at last week’s Manitoba Conservation District Association annual convention. It was awarded the prestigious L.B. Thomson Conservation Award by Agriculture and Agri-Food Canada, an award that is presented annually to an individual or group that demonstrates the same passion and commitment Laura Rance towards soil and water conservation of its Editor namesake, the former director general of the Prairie Farm Rehabilitation Administration. Thomson practically lived out of his car transversing the Prairies during the 1930s in a bid to stop the soil erosion that threatened to turn the region into a desert. Farming folks around Deerwood, an area perched on top of the Manitoba escarpment west of Miami, Man., were facing a similar crisis, albeit on a smaller scale when they formed the association in 1983. Whenever it rained, or during the spring snowmelt, the water’s rush to escape was tearing their farms apart, along with much of the downstream municipal infrastructure. “In 1990, the DSWMA and some of its partners started the South Tobacco Creek Watershed Study. The project began with the construction of 26 small dams in the headwaters of the escarpment, a novel concept for watershed management at the time,” says the AAFC release announcing the award. Novel is a polite way of putting it. There were many, including engineers, who said the idea was just plain loco — a waste of time and money. The naysayers were wrong. “Not only did this concept prove to be successful, it led to significant findings on run-off characteristics in small Prairie watersheds which numerous organizations and professionals use today to advance the knowledge and science of water management and/or for implementing sustainable management practices on Manitoba landscapes,” their citation reads. What began as a bid to save themselves has evolved over time into what is now nationally recognized as a “living laboratory,” a place for scientists to come and study ecological issues as they interact with farming. Time and time again farmers and landowners in the area have demonstrated their capacity to co-operate with the needs of researchers looking to assemble reliable, replicated data while carrying out commercial farming operations. That is no small feat while juggling the time and economic pressures of modern farming in an ever-changing natural environment. The outside attention it has attracted puts a pleasant face on farming at a time when agriculture is increasingly perceived by the non-farming public as being in conflict with the natural environment. It is a strong public-private partnership. In accepting the award on behalf of the association, area farmer and one of the founding members Les McEwan noted the research area covered by the association has expanded from the original 27-square-mile footprint to take in the entire Tobacco Creek watershed, some 400 square miles. “We hope this living laboratory we have will someday be the research arm for the conservation districts of Manitoba,” he said. It’s an intriguing idea, especially since the province is promoting the idea of conservation districts, not only becoming watershed based, but changing their names to “watershed authorities.” This implies a larger role in water management policy, enforcement and research. Face of extended grazing Another tale of successful public-private research partnerships came to light last week as the Canadian Forage and Grassland Association honoured grassland researcher Duane McCartney with its first-ever leadership award. McCartney, who spent his career with Agriculture and Agri- Food Canada, knew it was possible to practise extended grazing on the Prairies; he knew producers who were doing it. But it wasn’t widely practised when McCartney began looking at the idea in the early 1990s. It was the beginning of the BSE crisis in 2003 that provided the impetus for rapid adoption of new ideas. Publicly funded researchers working with producer groups were able to show ranchers how they could significantly lower production costs with little required by way of capital investment — something that is highly unusual in modern agriculture. “We basically found that we could lower the cost of wintering cattle by about 45 per cent compared to the traditional way,” McCartney says. “We basically look at being able to extend the grazing season as the biggest cost saving that ever hit the beef industry,” he says. “The farmers created it. All the researchers did was look at the systems, look at the economics, look at the herd health aspects and put the extension packages together.” laura@fbcpublishing.com CGC’s Elwin Hermanson on wheat variety registration Here is what Canadian Grain Commission’s Elwin Hermanson said to a panel discussing Western Canada’s wheat variety registration system at the recent Grain Industry Symposium in Ottawa: Ithought all of you added good content into this discussion. The one seat that perhaps should have been filled up there that wasn’t was that of an end-use customer. Those are the people we hear the most from when it comes to variety registration… It’s the end-use customer who has to buy what we grow. I know, being a farmer myself, the coffee shop talk is always how many bushels to the acre did you get? And the more bushels to the acre I got, the bigger my cheque was... and the more prosperous my farm was. But if you grow a crop that yields better but doesn’t have a market, or doesn’t have a market at a price that pays the bills, that’s not going to totally solve the problem. I think part of the failure in the past is we’ve had the tools and we’ve had the varieties but we have not matched our marketing strategies to take full advantage of the (wheat) classes that were in place. I’m pleased to hear about the discussion about the CPS class (being expanded) because we feel there is great potential in that class and there is also potential to steer that CPS class perhaps in new directions that would meet some of the market challenges that we face. I think we’ve been negligent in that regard in the past. The other important thing to note is... we do now have the general purpose class. We’re no longer shackled by KVD — kernel visual distinguishability. If there’s a variety that doesn’t meet the high milling qualities that Canada has been known for, there is an opportunity to develop in that class and hopefully get more than feed prices... That was a marketing issue. It wasn’t a quality issue or it wasn’t a variety registration issue. I think we need to get our heads around that. The other thing I want to mention is environment is really important and we saw that this year. Actually we had winter wheats in Manitoba — Canadian registered varieties — yielding well over 100 bushels to the acre. They were of excellent quality and they were yielding better than winter wheats in the United States that had a different environment than they usually have. Environment plays a role. In Canada we have an environment where we have to seed most of our grain in the spring and it’s not finished growing until it gets to the hottest part of the year when the days are the longest... and then we’re harvesting it when the days begin to get shorter and cooler. The environmental differences are important consideration when we’re determining what varieties will perform well in Canada. This isn’t a defence for the status quo. I do believe there needs to be changes and there will be changes. I base that on the fact that there have been changes. The system is flexible and the system that we have now is industry driven. It’s producers, it’s seed developers, it’s breeders, it’s seed marketers that are involved in this process of recommending varieties. The last point I want to make is there are more varieties approved than there are developed (commercially). Some people are saying the variety registration system is a blockage to new varieties coming forward. That has not been the case. The case has been the fact that some varieties have not been picked up by the marketplace and that’s a different issue and needs to be thought through. OUR HISTORY: November 30, 1978 Our Nov. 30, 1978 issue reported on the Canadian Wheat Board’s controversial decision to tender for 2,000 hopper cars using producers’ money. The board said the new cars were essential to meet a growing backlog, which was described elsewhere in the issue as being above the record gluts in 1969-70. Board officials said a federal government refusal to buy an additional 4,000 cars and to repair 1,500 boxcars was a “turning point” in the decision. Given the grain glut, delivery quotas were a big issue and more than 125 briefs had been presented to a committee that had been struck to recommend changes to the system. Federal and provincial agriculture ministers had agreed to principles for a new national stabilization program in which farmers’ cash costs of production would be covered, plus 100 per cent of the average margin over the past five years. The Crow rate was mentioned in three articles in the issue, including one in which it was criticized by University of Saskatchewan agricultural economics professor and later Premier Grant Devine.
The Manitoba Co-operator | December 13, 2012 5 Letters By Daryll E. Ray and Harwood D. Schaffer In recent weeks we have seen a flurry of reports of record or near-record cropland prices across the Corn Belt. On Thursday, October 25, 2012, an 80.47-acre tract of land in Iowa sold for $21,900/acre. Earlier in that week, another parcel of prime Iowa farmland sold for $19,100/acre. In Nebraska, 1,855 acres were sold on November 8, 2012 for $15.13 million or an average of $8,156.33/acre with some parcels selling in excess of $11,000/acre. North Dakota saw an 80-acre parcel of sugar beet and potato farmland going for $800,000 or $10,000 an acre; it too was sold on November 8. This past week, Drovers Cattle Network reported Indiana and Ohio land sales ranging from $5,817/acre to $11,194/acre. A Corn and Soybean Digest article reported, “Iowa farmland prices have risen steadily in recent years. The value of tillable land jumped an average of 7.7 per cent in the state over the past six months, according to a recent farmland survey released by the Iowa Farm & Land Chapter No. 2 Realtors Land Institute. The value of Iowa cropland for potential corn production increased nearly 21.9 per cent over the 12 months ended in September, according to the survey.” “North Dakota farmland values rose an average of 14 per cent in 2011, according to a survey by the North Dakota Chapter of the American Society of Farm Managers and Rural Appraisers,” reported a November 9, 2012 article in Prairie Business. According to Farm and Dairy, “data from the Ohio Ag Statistics Service shows an increase of 13.6 per cent for bare cropland in Ohio for 2012.” The same article said, “the Chicago Federal Reserve Bank and Purdue University both conducted surveys in June 2012 and found that cropland values in Indiana had appreciated 10-18.1 per cent from one year ago.” But it doesn’t stop there. According to a Business Week online article by Alan Bjerga, the increase in farmland prices does not stop at the U.S. northern border; “the promise of a Canadian Corn Belt has helped push farmland values nationwide up 27 per cent from 2007 to 2011, to $1,610 an acre… The northward creep of the Corn Belt is turning Canadian farmland into a long-term investment play on global warming, says Tom Eisenhauer, president of Ottawa-based Bonnefield, a farmland investment firm We welcome readers’ comments on issues that have been covered in the Manitoba Co-operator. In most cases we cannot accept “open” letters or copies of letters which have been sent to several publications. Letters are subject to editing for length or taste. We suggest a maximum of about 300 words. Please forward letters to Manitoba Co-operator, 1666 Dublin Ave., Winnipeg, R3H 0H1 or Fax: 204-954-1422 or email: news@fbcpublishing.com (subject: To the editor) that owns 15,000 acres across the country.” In some cases in both the U.S. and Canada, those paying these prices are neighbouring farmers while in others it is people looking at farmland as an investment. In either situation the factors driving the willingness to pay higher prices are similar: • High crop prices; • Low interest rates that make investments in bonds unattractive and the taking on of farmland mortgages at these prices possible; • A possible increase in taxes on longterm capital gains in the U.S. provides incentives for landholders to sell land; and • Federal Crop Insurance which can provide stable returns in the case of low prices or production problems. • In addition, high prices have provided some farmers with the cash that they need to continue investing in the purchase of additional acreage. For U.S. northern-tier and southern Canadian farmland, global warming and the introduction of new short-season corn varieties that yield well has allowed high-priced, higher-yielding corn production to supplant the growing of wheat and other small grains. At the same time, it can be argued that high land prices are driven by underlying fundamentals. In the Farm and Dairy article, “Farmland value and rent outlook 2013,” author Barry Ward writes, “with strong balance sheets in spite of the drought, many farmers will continue to be in the land-buying mode. The Income Method of Capitalization, an appraiser’s method of valuing assets, yields high land valuations based on 2013 projections for returns to land and interest rates… “For example, using a $287.50/acre ‘return to land’ (the midpoint of the projected soybean ‘return to land’ for 2013) and a four per cent capitalization rate, farmland would be appraised (valued) at $7,187.50/acre.” Others are not so sure. In a New York Times article, “Across Corn Belt, farmland prices keep soaring,” authors Ron Nixon and John Eligon write “two Fed surveys and sales data have raised concerns from bank regulators about a potential farmland bubble, similar to the housing frenzy that helped set off the financial crisis. A year ago, rising farmland prices prompted regulators to warn banks not to relax lending standards. In July, the Kansas City Fed held a symposium to discuss concerns about a bubble. Balance in markets an oxymoron Paul Earl bleats a call for “farmer involvement” in the Nov. 22 Manitoba Co-operator because farmers lack voice achieved by the real Canadian Wheat Board power. He correctly suggests “very substantial imbalances of power” between farmers, between grain companies, and between farmers and grain companies exist post Harper’s rogue action Aug. 1. “Balance” in markets is an oxymoron. Negotiating balance is the very reason that the majority voice of farmers voted to keep the CWB. A deaf Conservative government chose to listen to the minority voice of the anti-CWB grain companies and removed the farmer voice and power from the market price negotiation. Increased share of the farmers’ market price is now claimed by the exchange, by the elevator, by storage, COMMENT/FEEDBACK How high can land prices go? The critical question marks are future crop prices and the ability of revenue insurance to help offset lower grain prices A dragonfly lands on a stalk of wheat ready for harvest during sunset on the Canadian Prairies. Land prices on the North American plains are experiencing unsustainable growth, some experts fear. photo: REUtERS/todd KoRol “Any time you have an asset that doubles in value over a decade, there is cause for concern about how sustainable that growth is,” said Richard A. Brown, chief economist at the Federal Deposit Insurance Corporation. Whether current land prices are sustainable or a bubble largely depends on whether recent factors that have positively affected land price increases continue into the future. Interest rates are unlikely to go into the stratosphere in the near future and there will always be farmers looking to add acreage to their farms. The critical question marks are future crop prices and the ability of revenue insurance to help offset lower grain prices. What if the U.S. produces 3.5 billion to four billion additional bushels of corn in each of the next couple years? This could easily happen if corn yields return to trend levels and farmers plant the corn acreage they brought into production the last couple of years. That would not be a problem if there is a corresponding jump in demand. But demand prospects look much different from what was experienced in the previous five years or so. Clearly corn demand for ethanol will not repeat the explosive growth of earlier years. High feed prices and widespread drought have destroyed a significant portion of prospective livestock feed demand and U.S. exports are likely to be affected as much by our export competitors supplying additional grain as importers demanding more grain. by certain loss of quality brand, and by rail since Aug. 1. He should concern himself with the companies who squawk gleefully to merge and gain profit from farmers. Earl’s view of freedom includes only individual farmer knowledge of the market. Oddly, he does not answer, that when farmers have united they increased their benefit. Real CWB unity represents greater individual freedom. The “producer direct sale” allowed for his qualms about freedom. Friendly market advisers will talk on and on about supply shortages and demand slippage. The real CWB-farmers’-voice answer of negotiated price premiums among various buyers in more than 70 countries should be returned. The plunder of the Canadian Wheat Board and the establishment of a conservative wheat barley CWB is two-legged pestilence. Ian L. Robson Deleau, Man. Revenue insurance provides farmers nearly a “home free” card when crop revenue drops during — or just following — times when grain prices are abnormally high, but provide little to no meaningful protection during extended periods of severely depressed prices. (Editor’s note: That buffer no longer exists in Canadian support programs. Canadian revenue protection insurance under AgriStability was recently lowered and the eligibility adjusted so that farmers are compensated based on the lesser of their reference margin or allowable expenses. In most circumstances, that means payments will be based on 70 per cent of allowable expenses. Previously, it was as high as 85 per cent of their reference margin, based on eligible sales.) Two or three years of 14-billion- to 15-billion-bushel corn crops would most likely cause prices to be severely depressed. Since it is unlikely that revenue insurance could be the saviour it has been this year and given the political climate for the next Farm Bill, it is very possible that net income in the years ahead will not support current land prices, let alone further increases in land prices. Then again with continuing weather-based yield shortfalls and the resulting high crop prices… Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural Policy, Institute of Agriculture, University of Tennessee, and is the director of UT’s Agricultural Policy Analysis Center (APAC). Harwood D. Schaffer is a research assistant professor at APAC. http://www.agpolicy.org. Blame the government, not Hydro This is a hot topic that has been widely debated for a number of reasons. Unfortunately the lead line of the article “Manitoba Hydro just doesn’t understand modern farming and its Bipole III route will cause headaches...” is not accurate. The current route for Bipole III has been forced upon Manitoba Hydro by the provincial government. The nerds and bean counters at Hydro would much rather run Bipole III down the east side of Lake Winnipeg, but that route has been prohibited for reasons that, to this day, remain unclear. Don’t target your frustration on Manitoba Hydro, target it on the provincial government that dictated the much longer and more expensive route. Cliff Duke Beausejour, Man.
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