Barn boss a referee and coach - The Western Producer

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84 NOVEMBER 22, 2012 | WWW.PRODUCER.COM | THE WESTERN PRODUCER AGFINANCE CDN. BOND RATE: 1.3092% 1.50% 1.40% 1.30% 1.20% 1.10% 10/15 10/22 10/29 11/5 11/9 11/19 AGFINANCE EDITOR: D’ARCE MCMILLAN | Ph: 306-665-3519 F: 306-934-2401 | E-MAIL: DARCE.MCMILLAN@PRODUCER.COM | TWITTER: @DARCEMCMILLAN Once formed, the co-op hopes to attract 650 producers. | FILE PHOTO LAMBS | MARKETING Red tape ties up lamb co-op Provincial approvals needed | The co-op hopes to increase market share for domestic lamb BY ROBERT ARNASON BRANDON BUREAU The Canadian Lamb Producers Co-operative was expecting to market sheep this fall, but regulatory delays have pushed plans back until next year. “Our goal was we were going to be functioning by the fall of 2012. Now, with the delay, we’ve told producers early in 2013,” said Gord Schroeder, general manager of the Saskatchewan Sheep Development Board. The co-op is waiting for regulatory approval from provincial authorities before it can proceed on the project. “It’s a national co-operative and we need to (satisfy) the criteria in every province for selling shares,” Schroeder said. “Before we can go to producers and start signing contracts and selling BY SEAN PRATT SASKATOON NEWSROOM Legumex Walker Inc.’s third quarter results were just as disappointing as those posted a week earlier by its competitor, Alliance Grain Traders. Both pulse processers have been hit hard by falling pea and lentil sales. “Despite a strong performance in our bean business and growth from our acquisitions in the U.S. and expansion in China, we experienced a slowdown in sales for certain of our GORD SCHROEDER SASKATCHEWAN SHEEP DEVELOPMENT BOARD shares, we need to have some securities commissions approvals.” The co-op plans to sell Canadian branded lamb to retailers and consumers in an effort to gain market share from imported lamb, mostly from Australia and New Zealand. It says on its website that the market for lamb products is worth $600 million a year and could double if lamb is consistently available at grocery stores and butcher shops. Only active sheep producers will be able to join the co-op, which will have its head office in Saskatoon. Terry Ackerman, the former general manager of Organic Meadow Co-op in Ontario who is setting up the new lamb co-op, said sheep producers are positive about the concept. “Over 150 lamb producers have signed and submitted their (information request) forms and are waiting to purchase membership and investment shares,” he said in a Manitoba Rural Adaptation Council publication. “Our plan is to recruit 650 producers in the next 24 to 35 months.” The co-op intends to pay its members a price premium of five cents per RESULTS | THIRD QUARTER Pulse company’s earnings hurt by poor pea and lentil exports commodities, especially lentils and peas, which dampened our Q3 results,” Legumex president Joel Horn told investment analysts in a conference call. Revenues for the quarter were $56.5 million, up from $41.4 million for the same quarter a year ago, although the quarter was only 79 days because the company began operations on July 14., 2011. Sales were bolstered by strong bean shipments from the company’s plants in Manitoba and Minnesota. Beans are a high-value product, which helped mask the poor performance of the company’s Canadian pea and lentil processing facilities. Earnings before interest, depreciation and amortization for the quarter was a loss of $2 million compared to EBITDA of $1.9 million for the 79-day period a year ago. One analyst noted Canada’s pea and lentil exports were good for the quarter. Horn said shipments were driven to places where Legumex has a lower market share and a lot of pound over prices in Ontario. It also plans to pay western and eastern Canadian producers the same price. Western Canadian farmers typically receive a $20 to $25 freight discount on lambs shipped to Toronto and other major markets in Central Canada. “Our feasibility studies have been done on a national pricing system. It doesn’t matter where you live in the country, you’re going to get paid the same price,” Schroeder said. A federally inspected slaughter facility in the West will be needed to offset the discount, but the co-op doesn’t plan to build a plant. Schroeder said details on how the co-op will offer a consistent price in spite of the shipping differential will come in the near future when the coop begins selling memberships. product went out in bulk while the company usually ships containers. Sales were also hurt by reports of a good Canadian pulse harvest. “Buyers of certain products postponed purchases based on the expectation of a larger and less expensive new crop,” said Horn. “We also passed on some low margin business due to heightened credit risk.” Horn is confident the third quarter results were an anomaly. He sees normal sales in the fourth quarter. 1.030 1.020 1.010 1.000 Bank of Canada 5-yr rate Nov. 19 AG STOCKS FOR NOV. 12-16 GRAIN TRADERS NAME EXCH CLOSE LAST WK PRAIRIE PORTFOLIO FOOD PROCESSORS FARM EQUIPMENT MFG. FARM INPUT SUPPLIERS NAME EXCH CLOSE LAST WK Agrium TSX 97.81 96.07 BASF OTC 80.00 79.95 Bayer Ag OTC 83.49 83.28 Dow Chemical NY 27.74 29.36 Dupont NY 41.95 43.34 BioSyent Inc. TSXV 0.99 0.96 Monsanto NY 85.23 86.43 Mosaic NY 49.52 51.57 PotashCorp TSX 37.37 39.04 Syngenta ADR 74.45 75.68 TRANSPORTATION CDN. DOLLAR: $1.0013 0.990 10/15 10/22 10/29 11/5 11/9 11/19 Worries about the willingness of the U.S. Congress to compromise on a fiscal cliff solution pressured stocks lower. For the week, the TSX composite lost 2.6 percent, its sharpest weekly decline since May. The Dow lost 1.8 percent, the S&P dropped 1.5 percent and the Nasdaq fell 1.8 percent. Cdn. exchanges in $Cdn. U.S. exchanges in $U.S. ADM NY 24.96 25.39 Alliance Grain TSX 11.74 13.30 Bunge Ltd. NY 70.33 71.49 ConAgra Foods NY 27.74 27.77 Legumex Walker TSX 6.00 6.88 Viterra Inc. TSX 15.71 15.77 W.I.T. OTC 13.25 13.25 NAME EXCH CLOSE LAST WK Assiniboia FLP OTC 50.55 50.55 Ceapro Inc. TSXV 0.06 0.06 Cervus Equip. TSX 18.80 19.89 Ridley Canada TSX 9.25 9.25 Rocky Mtn D’ship TSX 10.45 11.20 NAME EXCH CLOSE LAST WK BioExx TSX 0.08 0.09 Hormel Foods NY 30.87 29.61 Maple Leaf TSX 10.90 11.00 Premium Brands TSX 16.94 18.00 Smithfield NY 20.83 20.76 Sun-Rype TSX 5.59 5.71 Tyson Foods NY 16.88 16.81 NAME EXCH CLOSE LAST WK AGCO Corp. NY 43.21 44.32 Buhler Ind. TSX 5.50 5.45 Caterpillar Inc. NY 81.93 84.95 CNH Global NY 44.43 44.10 Deere and Co. NY 85.25 84.29 Vicwest Fund TSX 11.10 11.86 NAME EXCH CLOSE LAST WK CN Rail TSX 85.06 86.38 CPR TSX 90.20 90.10 Toronto Stock Exchange is TSX. Canadian Venture Exchange is TSX Venture or TSXV. NAS: Nasdaq Stock Exchange. NY: New York Stock Exchange. ADR: New York/American Depository Receipt. OTC: Over the counter. List courtesy of Ian Morrison, investment advisor with Raymond James Ltd. in Calgary, a division of CIBC World Markets Inc. Member of CIPF and IIROC. Listed stock prices come from Thompson Reuters and OTC prices from Union Securities Ltd. Sources are believed to be reliable, but accuracy cannot be guaranteed. Morrison can be reached at 800-332-1407. CONSTRUCTION OF LEGUMEX WALKER’S PACIFIC COAST CANOLA PLANT IS ON SCHEDULE. IT SHOULD CRUSH 1,000 TONNES PER DAY BY THE END OF 2013
MONEY IN YOUR POCKET GRANT DIAMOND Governments have consistently lowered taxes over the last several years for business in general but especially for small business. It was intended to provide a stimulus for business and employment growth in this important sector of the economy. However, to a certain degree, the Small Business Deduction (SBD) also worked to stimulate a large increase in the number of small Canadian corporations that file their taxes under SBD rates. About 30 years ago, the government started clamping down on what it called Personal Service Businesses (PSBs) masquerading as small Canadian corporations. Generally speaking, the Canada Revenue Agency considers a person operating a business to be a PSB corporation if that person provides services to a client corporation that would normally be provided in the same manner if the person was an employee of the client corporation. The term “incorporated employee” is frequently used to describe this situation. What concerned the government was the loss of higher–taxed, salaried employees to lower taxed corporations. The government appears to be rethinking the strategy, or at least attempting to stem the loss of tax dollars as a result of this favoured treatment. The federal finance department AGFINANCE TAX ASSESSMENT | DEFINING PERSONAL SERVICES Small business deductions complex CHICAGO, Ill. (Reuters) — CHS Inc. saw quarterly earnings jump 75 percent from a year ago, boosted by strong commodity prices and a global network of facilities. The Minnesota-based company, the largest farm co-operative in the United States, is making initial investments in Canada’s grain industry. It reported net income of $360.9 million for its fiscal fourth quarter ending Aug. 31, up from $206.5 million a year earlier. Net income for the fiscal year ending Aug. 31 reached $1.26 billion, up 31 percent from the previous year. It was the first time a U.S. agricultural co-op surpassed $1 billion in annual earnings, according to CHS. The co-op joined bigger rivals Cargill Inc. and Bunge Ltd., two of the world’s largest agricultural trading houses, in attributing solid results to networks of employees and facilities. Last month, Bunge said it doubled quarterly profits by mobilizing its global grain network to supply customers hit by the worst U.S drought in Corporations providing personal services might attract an audit. | FILE PHOTO recognized this threat to government revenue and acted to remove the SBD and the ability to claim most ordinary expenses from companies that the CRA determines are actually PSBs. The lowering of the general business tax rates over the last several years and the introduction of new tax rules in 2006 that were more favourable to PSB corporations have essentially taken some of the sting out of measures designed to curb the proliferation of PSBs. The CRA began putting significant audit pressure on small incorporated businesses to curb the incidence of companies providing personal services but claiming the SBD. It recently performed more than 200 audits and determined that almost half were actually PSBs. Information technology (IT) consulting and contracting businesses have been a particular target. Here is an example I recently encountered of how this could affect farm businesses. A husband and a spouse each have an active corporation that is subject to the SBD. The husband’s corporation operates the farm while the wife’s corporation provides IT and computer consulting services. She also works on the farm. In the past, work conducted by the CO-OP | FINANCIAL RESULTS Record profit for CHS Inc. more than 50 years. Cargill’s quarterly earnings more than quadrupled from a year earlier. “The strength of our diverse CHS business portfolio, along with a strong domestic and global footprint, combined in fiscal 2012 to allow us to successfully navigate continued market volatility,” said CHS president Carl Casale. CHS is owned by 350,000 farmers and ranchers, either directly or indirectly through 1,100 smaller co-ops. Owners of CHS stock, which is traded on Nasdaq, are non-voting shareholders. CHS bought Alberta farm retail supplier DynAgra Corp. in September and opened a small grain marketing office in Winnipeg last year Also in September, CHS Inc. announced plans to build a $1 billion nitrogen fertilizer plant in Spiritwood, N.D., to open in the last half of 2016. The company supplies energy, crop nutrients, grain, livestock feed, food and food ingredients as well as insurance, financial and risk-management services. spouse on farm-related activities was paid as salary and an accompanying T4 slip was provided. This would then be taxed at the marginal tax rate applicable to the spouse, which invariably would be higher than the SBD tax rate. The question then is, would it not be more favourable tax wise for the spouse’s corporation to invoice the husband’s corporation for work done and thus be taxed under SBD rates? The problem is that the work done for the husband’s corporation would be considered as work provided by a PSB. Claiming it under SBD rates would almost certainly attract an audit and reassessment by the CRA. Grant Diamond is a tax analyst in Kelowna, B.C. with FBC, a company that specializes in farm tax. Contact: fbc@fbc.ca or 800-265- 1002. THE WESTERN PRODUCER | WWW.PRODUCER.COM | NOVEMBER 22, 2012 VITERRA SALE | CHINESE APPROVAL China OK not tied to Nexen: Ritz CHICAGO, Ill. (Reuters) — Federal agriculture minister Gerry Ritz doesn’t think China’s review of Glencore’s takeover of Viterra under its anti-monopoly law is tied to Canada approving a Chinese takeover of a Canadian oil company. The review by China’s commerce ministry, which could take until Dec. 10, is the final regulatory hurdle for Glencore International PLC’s $6.1 billion takeover of Viterra Inc. China is also waiting to hear if Canada will approve state-owned CNOOC’s $15.1 billion takeover of Nexen. Dec. 10 is Canada’s deadline to rule on that transaction. “They’re treating these very differently, which of course they are,” Ritz said. “One is an investment into their country, predicated on what Glencore will do into the future. The other is an investment into Canada.” MIKE WILSON AGRIUM 85 If the Chinese approval comes in December, Agrium Inc. expects to close its $575 million purchase of Viterra farm retail stores in the first quarter of 2013, Agrium chief executive officer Mike Wilson said. Assuming the Glencore-Viterra deal closes as scheduled, Agrium will file for a review by Canada’s Competition Bureau in late December and hopes to close the deal late in the first quarter. Agrium would get 232 Canadian farm retail outlets as well as 17 stores in Australia. We’ve built a better midge trap. AC ® AC Shaw VB MIDGE TOLERANT WHEAT ® Shaw VB MIDGE TOLERANT WHEAT Best midge tolerance Highest yielding CWRS in Sask Seed Guide Get AC ® Shaw VB today, only from SeCan. Developed by Agriculture & Agri-Food Canada, Winnipeg. ‘AC’ is an official mark used under license from Agriculture & Agri-Food Canada. Genes that fit your farm® is a registered trademark of SeCan. *Based on the economic threshold of one midge per 4 to 5 wheat heads at flowering = estimated 15% yield loss if not controlled. Higher midge levels can lead to greater losses. 15% X 40 bu/acre X $6.00/bu wheat = $36.00. Genes that fit your farm. ® 866-665-7333 www.secan.com
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THURSDAY, NOVEMBER 22, 2012 VOL. 90
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WEEDS | RESISTANCE BY ED WHITE WINN
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ICON GETS IMPROVEMENTS Jerry Schiel
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DURUM | PRODUCTION OUTLOOK BY ROBIN
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MARKET RALLY | DROUGHT MARKETS THE
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& OPEN FORUM B.T. CORN | GM VERSUS
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CIDA (Canadian International Develo
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CANADIAN WESTERN AGRIBITION | BISON
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THE WESTERN PRODUCER | WWW.PRODUCER
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ORGANIC CONFERENCE | TILLAGE BY KAR
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FARMLIVING FARM LIVING EDITOR: KARE
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ENTREPRENEURS | FARM SALVAGE FARM L
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I took my husband’s name Q: when
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BY BARBARA DUCKWORTH CALGARY BUREAU
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CANOLA | DISEASE BY BARB GLEN LETHB
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BRITISH COLUMBIA | LIEUTENANT GOVER
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