Hursh Consulting & Communications Inc.

Maybe it’s the sky high price of canola. Maybe it’s the tightening stocks to use ratio on many commodities. Maybe it’s all the uncertainty in a pandemic-stricken world. Whatever the reason or reasons, new crop production contracts are more widely available than usual for this time of year and some are worthy of consideration.

Saskatoon’s Crop Production Show in early January has often been the time frame for companies launching new crop offerings. The 2021 version of the show is a COVID casualty so that interaction between farmers and buyers has been lost.

As we head into Christmas, new crop contracts have been available for quite some time on flax, all types of mustard and feed barley. Now, postings are showing up for red lentils, yellow peas and Canary seed.

In Saskatchewan, depending upon your location, new crop feed barley can be locked in for as high as $4.50 a bushel picked up at the farm. These are deferred delivery contracts meaning you still have an obligation to deliver even if you have a crop failure.

On new crop flax, contracts with an act of God clause have been readily available at around $14 a bushel FOB farm. With brown flax currently selling at $18 or more a bushel, the new crop price may seem like a letdown, but it’s still an attractive offering relative to historical values.

New crop contract offerings are the norm for mustard. Companies and end users like to have some of their supply assured. When farmers see canola in the $14 a bushel range, mustard buyers know they need to up their game to assure a supply. Mustard acreage, even in southern Saskatchewan and Alberta is tiny compared to canola.

It appears some buyers are willing to pay just over 20 cents a pound for new crop red lentils. That seems unlikely to elicit a lot of interest since it’s well below what the market has been paying this fall.

Yellow peas are a similar story. With current prices increasing to well over $9 a bushel, a contract price that’s $2 less may not have much appeal.

Of course, contract prices can and do change. Mustard prices have edged upwards since the first contract offerings came out. Perhaps there’s more upside potential on red lentils and peas, but that isn’t assured.

It’s always a balancing act between market realities and farmer expectations. The current price of Canary seed at 31 to 32 cents a pound is the highest in many years. New crop contracts are apparently being offered in the 24 to 25 cent a pound range. A couple years ago, that would have been exciting, but expectations are now higher.

Some farmers rarely if ever price any crop in advance, believing better prices will almost always be available after harvest.

Production contracts are certainly a double-edged sword. I’ve signed some that I came to regret, but others have been good money makers. If the price is profitable and near the top of the historical range, it’s comforting to have a bit of price certainty.

Most act of God contracts are for only 10 bushels an acre; it’s not as if you’ve priced everything you hope to produce. But it is a starting point that provides some protection in case the market goes sour.

I follow what various market analysts are predicting, but you can’t take that to the bank the way you can a new crop production contract.

The Liberal government’s new climate plan boasts that most Canadian will receive more in rebates than they pay in additional carbon tax, but nothing in the plan explains how Canada’s export-reliant industries are supposed to remain competitive.

Farm fuel is exempt from the carbon tax and one assumes that will continue to be the case as the tax rises from the current $50 to $170 a tonne by 2030. The 79 page document released by the government is actually silent on the matter.

However, the tax is very costly for farmers in numerous other ways. The carbon tax on natural gas and propane for grain drying has received a lot of attention. Less obvious are the rising costs for manufacturing and transporting fertilizer and the cost of moving grain to export. In fact, almost all other input costs feel the impact.

The purpose of an ever more onerous carbon tax is to direct Canadians to lower carbon alternatives. For most farmers, the ability to pivot is minimal and for farmers serving export markets the opportunity to recoup their extra costs from the marketplace is practically non-existent.

Most other export-oriented industries face the same dilemma. Liberal chest thumping about a new green economy with well-paid jobs is pie-in-the-sky wishful thinking as compared to the certainty that existing industries will be severely disadvantaged.

The economic theory is that putting an increasing price tag on fossil fuels will encourage greener alternatives. Interestingly, the government obviously doesn’t believe that will be adequate on its own since their plan also calls for pumping billions of dollars in taxpayer money into renewable energy projects, energy-efficient building retrofits and subsidies for buying zero-emission vehicles.

The plan also recycles the promise to plant two billion trees over 10 years at a cost of $3.16 billion. If you’re wondering why planting trees sequesters carbon, but agriculture is not given credit for doing the same, it’s really a matter of meeting the Paris Climate Accord which calls for carbon decreases from the base level.

Trees already growing and current farming practices are “business as usual” and don’t count for emission reductions.

Watch for action on fertilizer use. The plan notes that direct emissions associated with synthetic nitrogen fertilizer application have increased approximately 60 per cent since 2005. A national emission reduction target for fertilizers is set at 30 per cent below 2020 levels.

In fairness, the plan does set aside money to “help farmers adopt commercially available clean technology.” Watch for the next Canadian Agricultural Partnership between the feds and provinces to have an emphasis on measures to “boost climate-smart agriculture.”

Shortly after the carbon tax bombshell, the Liberals announced their Clean Fuel Standard whereby the lifetime carbon footprint of liquid fuels will need to be reduced over time. This will jack up the price of fuels over and above the carbon tax and from this increase farmers will not be exempt.

Benefits to biodiesel and ethanol production from the Clean Fuel Standard should trickle down to the farm gate, but that all depends on the details.

The Liberals misled Canadians last year when they said the price on carbon would not go up. For that, they deserve to suffer re-election ramifications. However, to capitalize on the deception, the Conservatives will need a viable carbon reduction plan of their own. Simply criticizing the Liberal plan won’t be enough.

The noose continues to tighten around glyphosate as more companies refuse to purchase grain that has had a pre-harvest application. Three recent examples have materialized. These are in addition to the oat and pulse crop buyers that have been shunning crop treated with glyphosate for the past few years.

Roquette, the company building a $400 million pea fractionation facility at Portage la Prairie has announced the IP production system it will use for contracting its pea supply. Along with requiring certified seed, an environmental farm plan, three quick production reports through the year and no soybeans on the field for the past two years, suppliers will not be able to use pre-harvest glyphosate or diquat (Reglone).

Pre-harvest glyphosate isn’t supposed to be used as a crop desiccant, but pre-harvest use is a good control measure for many perennial weeds. Diquat, on the other hand, is a true desiccant for terminating crop growth.

You can’t blame Roquette for wanting to eliminate herbicide residues. The U.S. maximum residue limit is quite low for diquat and glyphosate is being demonized even when the residue is way below allowable limits.

Producers will weigh the production requirements against the price premium Roquette is offering, but the Portage location is working against their IP requirements. There are many drier regions of the Prairies growing lots of peas that have less need for pre-harvest products. Plus those areas aren’t growing soybeans, which are almost impossible to separate from yellow peas.

Example two in the recent glyphosate banning bandwagon is Barilla, the worldwide pasta manufacturer. Greg Viers of Barilla America talked about the company’s sustainability project at the Prairie Cereals Summit held in Banff back in December. He also referred to it during the January 30 Durum Summit held in Swift Current.

The company is offering a premium for durum that has low glyphosate residue. In future years, the residue limit will continue to drop as the company responds to consumer concerns. At least Barilla realizes that producers need to be compensated to change production practices. However, you have to wonder if no pre-harvest use will eventually become the norm.

Number three is Kellogg. Known for its breakfast cereals, the iconic company has reportedly bowed to a shareholder pressure group with a commitment to phase out pre-harvest glyphosate on its oat and wheat purchases by the end of 2025.

Disturbingly, Kellogg refers go glyphosate as a “pre-harvest drying agent” for wheat and oats. This is propagating a popular misconception. If glyphosate is used according to recommendations, crops are nearly mature before application and there is little or no crop dry down achieved. Correspondingly, there should be a minimal amount of residue in the seed.

Unfortunately, consumers don’t understand maximum residue limits. For them, any residue is wrong and they don’t differentiation between parts per million and parts per billion.

Sadly, some crops that never see a pre-harvest glyphosate application are going to show trace amounts. Testing has advanced to the stage where you can find minute traces of almost anything anywhere.

The Keep it Clean campaign urges farmers not to apply glyphosate until the seed is below 30 per cent moisture in the least mature plants in the field. Alas, the campaign is too little, too late.

While glyphosate may continue to be registered for pre-harvest application in the U.S. and Canada, buyers are steadily limiting our marketing options even when the product is used properly.

A new religion is sweeping the world – the religion of climate change. Like many of the ancient religious dogmas, it relies more on faith than evidence and also like traditional religions, it runs the risk of becoming fanatical.

For the firm believers, evidence of climate change devastation is everywhere. Every weather anomaly is now caused by or at least magnified by climate change. The world will end if we don’t take action. It’s a noble cause that particularly appeals to young urbanities.

People need a cause, something to believe in. While places of worship may have trouble filling their pews, there’s seems to be no shortage of people who want to attend climate change rallies. And like many religions, it’s your duty to attract others to the fold.

If you are a non-believer or even a sceptic, you are to be scorned and shunned. Being an agnostic or even an atheist is perfectly acceptable in modern society, but if you question any part of climate change theory, you’re an enemy to the human race.

Flexitarians are drawn to Beyond Meat burgers because they’ve been told it’ll help save the climate. No use getting into the intricacies of how cattle utilize land unsuitable for crops and feed unsuitable for human consumption, they’ve been told that meat production has a higher carbon footprint and that’s all that matters.

Beyond the trendy activities, most of the activists spend their time calling on governments to take action. “Reduce greenhouse gas emissions before it’s too late,” they lament. Somehow, many seem to believe governments can solve the issue without affecting how people live, work and play.

The majority of people are in favour of action to address climate change. Even for most sceptics, reducing fossil fuel consumption where feasible seems like a good plan.

But how many people are willing to support actions that cost them a significant amount of money or that force them to change their lifestyle?

Here’s a simple example. Reducing highway speed limits by 10 kilometres per hour would save a great deal of fuel and also save lives. The only cost would be more time to get from point A to point B. That would seem like a small sacrifice on the altar of climate action, but it would be wildly unpopular.

Interestingly, green is the new red. Saving the climate somehow aligns with sticking it to the rich and the big corporations. Just make the rich pay for whatever is needed to save the planet.

Canadian oil and gas is villainized and we shouldn’t have pipelines to export it. The world should use oil from Saudi Arabia instead.

There are some inconvenient facts that the climate change religion doesn’t like to hear.

Canada accounts for 1.6 per cent of global greenhouse gas emissions so whatever we do in this country has a negligible impact. Try having a climate action rally in China.

The world’s climate has always changed and it would still change if human greenhouse gas emissions were dramatically curtailed. There are factors at play beyond the activities of humans. Any climate change comes with positives as well as negatives.

The warnings of impending doom are increasingly shrill, but has your life actually been affected? Farmers would seem to be the most at risk from climate change, but the weather risks faced by producers in this country don’t seem much more daunting than past generations.

How many acres do you farm?

It may seem like a straight-forward, natural question, but it isn’t always a comfortable question to answer. Plus the answer can be open to a lot of interpretation.

If you engage in conversations at farm trade show booths talking to vendors of anything from agronomic services and products to machinery, you’ve probably been asked the question repeatedly.

In many respects, it makes sense. Companies wanting to sell you something have a better idea of your needs if they can understand the scope of your operation. A 2,500 acre farmer is more likely to be in the market for a 40 or 50 foot drill than a 70 or 80 foot version.

But it often feels like you’re being judged. If you have a relatively small acreage, you’re not very successful and you’re not a good sales prospect. “Please keep moving so I can talk to bigger farmers with more money to spend. You probably can’t afford what I’m offering.” They may not say it, but you wonder if they’re thinking it.

Unless you can throw out an impressive acreage, it almost feels like you aren’t validated. Even the survey companies that call and email incessantly, desperate to meet their response quotas might disqualify you from answering because your acreage of a particular crop doesn’t meet the specifications.

Many small to medium sized producers are approached by large acreage farms asking if their land is for sale or rent. The prevailing opinion is that only big farms have a future and smaller operations are just wasting their time.

News flash. Small to medium sized grain farms can be profitable and progressive. While the trend to larger operations will continue, don’t judge a farm’s success simply by its acreage.

Consider a farm that’s 6,000 acres. That may sound like a pretty good size, but what if three families are trying to make a living from those acres? And what if most of the acres are rented rather than owned? What if the cash rent is exorbitant? And what if the family relationships are strained and everyone isn’t getting along?

What about that farm with less than 2,000 acres? Maybe the land is paid for and they’re growing some higher value crops, watching their costs and making a good living. Maybe they have some strong off-farm revenue streams which will give them a lot of staying power if the grain economy hits a rough stretch.

Some producers are absolutely driven to farm a larger and larger land mass. Their definition of success seems rooted in continual expansion. Some want to operate under the radar. Others like to flaunt their size.

A large gross income doesn’t necessarily equate to a strong net income. While some large farms are making boatloads of money, others aren’t doing as well.

For those with small to medium sized acreages (however you want to define that), there’s no need to apologize and no need to feel second rate. By the same token, there’s no reason to harbor resentment against others just because they farm larger acreages.

There’s a place for all of us and we have mostly common concerns and needs.

But the next time you hear ‘how many acres do you farm’ realize that it’s a loaded question carrying a great deal of baggage and probably a number of caveats.