There’s increasing anguish over grading standards. The Canadian Grain Commission always says that it tries to apply all the grading standards equally from one year to the next, but a lot of the grading factors are open to human interpretation. Beyond the official standards, buyers are often able to blend grain to come up with an improved grade while processors can use gravity tables, cleaners and colour sorters to achieve an improved result. However, you can’t make a silk purse out of a sow’s ear. This year, the quality problems are so pervasive that buyers and processors are likely to have more limitations on what they can achieve. There’s a viewpoint among producers that buyers always benefit from the downgrading – that they sell grains, oilseeds and specialty crops at a higher grade than what they buy from farmers. Due to the competitive nature of the business, I believe this benefit is limited. In fact, buyers can easily be offside on the grade of the product they’re shipping and it can cost them a lot of money. For producers, the best advice is to have lots of accurate samples of what’s in each bin. Show those samples to reputable buyers to see what they can do with it. Buyers and brokers are inundated with samples this fall so it may take a while to find the best marketing options. I’m Kevin Hursh.
The just released Pulse Market Report from Saskatchewan Pulse Growers has a couple of very different opinions on whether producers should be holding lentils for higher prices or selling them before prices go down. Mark Tycholiz from the special crops brokerage company TradeMark Grain does not believe lentils prices are going to weaken. He points to all the lentils that are going to be unusable for anything but livestock feed – perhaps 15 per cent of the crop. On top of that, he believes that only 25 to 30 per cent of this year’s production will fall into the top two grades. Tycholiz also points out that there’s been dramatic upward movement in the entire grain complex. His conclusion is that there’s lots of time to market lentils. Martin Chidwick of Bissma Pacific has a different view. Chidwick says if you can get 16 to 20 cents a pound for No. 3 grade red lentils or 20 to 25 cents for Extra 3 reds and if you enjoyed a 30 to 40 bushel per acre yield, you might want to take your money and thank your lucky stars. He says you won’t want the low quality around your neck come next summer. His advice is to look at the bottom line and not get too greedy. After reading the Pulse Market Report, growers may not know what to believe, but at least they’re hearing from some analysts with definite opinions. I’m Kevin Hursh.
The National Farmers Union has generated a lot of attention by its efforts to block a comprehensive trade deal between Canada and the European Union. The NFU claims to have received a secret draft of the text and they say the deal would be bad news for Canadian agriculture. Perhaps the revelation raising the most concern is that Canada would have to adopt a tougher form of Plant Breeders’ Rights. The NFU is also worried about the future of supply management and the Canadian Wheat Board. It’s interesting to note that the Grain Growers of Canada has a completely different view. Representing a large number of grain based groups across the country, the Grain Growers issued a news release last Friday to support the deal. They claim to have been closely consulted at every step of the negotiations by both federal and provincial negotiators. According to Grain Growers of Canada president Doug Robertson, “Grains, oilseeds and pulse growers as well as our beef and pork producers all have a lot to gain with increased market access to the huge EU market,” With any trade deal, there’s always give and take. However, a deal with the EU is unlikely to be as scary as what the NFU is saying. I’m Kevin Hursh.
What do you consider big when it comes to a grain operation? What about cattle? What’s a big cow-calf operation? Consider a grain farm that grows 30 bushels per acre of wheat with the wheat worth $5.50 a bushel. It takes about 1,500 acres to have a gross return of $250,000. On canola, assuming a value of $10.50 a bushel and a 30 bushel per acre crop, a gross return of $250,000 is reached with only 800 acres. Those are small acreages compared to the size of most farms. In a cow-calf operation, let’s assume weaned calves at 550 pounds and a price of $1.25 per pound. To reach a gross return of $250,000, you need to sell more than 360 calves, which implies a cow herd of about 400.
If you’re running 400 cows, you’re considered a pretty big cattle producer. If you have 1,000 to 1,500 crop acres, you’re considered small fry. A profit of $100 per cow might seem like a dream come true and maybe we’ll get there in the years ahead with the contraction that the North American beef herd has seen. But $100 per cow profit is only $40,000 on 400 cows. It’s only $10,000 on 100 cows. The average herd in Saskatchewan is less than a hundred cows. I’m Kevin Hursh.
With the fall calf run underway, cow-calf producers are rejoicing over the dramatic improvement in prices. However, there is still very little profit. The Western Beef Development Centre has been doing an extensive cost of production analysis with producers and they’ve just published the 2008 results. A total of 18 Saskatchewan herds were used for the analysis. The average herd size was 241 cows. The average weaning weight was 545 pounds and the average weaning percentage was 89 per cent. The average price back in 2008 was only 97 cents a pound. The breakeven point if you include the value of unpaid labour was $1.21 a pound. Thus there was an average loss of $110 per cow. Taking unpaid labour out of the mix, the loss per cow was still over $70. Prices this fall are a lot better than they were in ’08, but assuming the costs are similar, producers are on average going to be making a profit of only a few cents per pound. Higher cost producers will still be losing money. Producers need even better values for their calves to be making much money. Check out the cost of production analysis on the website of the Western Beef Development Centre (www.wbdc.sk.ca). I’m Kevin Hursh.