With U.S. ethanol plants adding corn oil extraction in increasing numbers, about half the distillers grains coming into Canada is a low corn oil product, said Eduardo Beltranena, feed research scientist for Alberta Agriculture and Rural Development. For the Canadian swine industry, especially in Alberta and Saskatchewan, that makes it a less desirable and less cost-competitive product. "We're basically now being very clear with pork producers that they need to determine what is going to be delivered," Beltranena told EPM. "They have to have a contract and the contract has to specify a minimum of 10 percent fat. If [ethanol] plants cannot guarantee that, we basically just forget about it-it's not going to make it to Western Canada, to Alberta and Saskatchewan."

 

Before corn oil extraction became widely used by the U.S. ethanol industry, corn DDGS, with its higher oil content, had a competitive advantage to wheat DDGS, primarily produced at Canadian ethanol plants. Wheat and wheat-corn blend DDGS yield a product with 36 percent protein content, he said. On the other hand, corn DDGS produced in the U.S. has more than twice the fat content, or 10.5 percent, than wheat DDGS. Corn DDGS that has had the corn oil removed, however, is comparable to the oil content in wheat DDGS, at 5 percent.

 

For swine diets, which should be formulated on the basis of net energy, high protein, high fiber DDGS isn't as desirable as high-oil corn DDGS. "We just lose too much in the process of digestion, and only about one-third of the energy is then available to the pig," he said, adding that chickens, another monogastric animal, are in the same situation.

 

It's the cost of transportation that's the kicker. In general, Ontario and Quebec source their DDGS from the corn-ethanol plants in far southern Ontario, located east of Michigan. British Columbia is closest to corn-ethanol plants in California while Manitoba and western Ontario aren't far from ethanol plants in North Dakota. Two providences, Alberta and Saskatchewan, aren't very close to any corn-ethanol plants.

 

In other words, the further away from corn-ethanol plants that produce DDGS, the bigger the cost spread between low corn oil corn DDGS and wheat DDGS is likely to be. "Once you get into the prairie providences, you'd be competing with wheat DDGS, which has a higher protein content and it will probably have a little less oil than the corn DDGS, the new reduced oil corn DDGS," he says, adding that,  "If you cost it on grams of available lysine, there are other lysine sources that are cheaper." That list includes canola meal, wheat DDGS and even soybean meal imported from the U.S.

 

It all depends on DDGS price, of course. Recent prices put corn DDGS at $265 a metric ton and wheat DDGS at about $180 a metric ton. Back in September, however, corn DDGS was $228 a metric ton. "In the western providences, Saskatchewan and Alberta, it will come in and out of the diet," he said.

 

Assuming swine producers purchase corn oil DDGS that has not gone through the corn oil extraction process and depending on price, Beltranena published a fact sheet in November that demonstrated cost savings for feeding DDGS, both wheat and corn, as the DDGS percentage increases in the ration. Based on September prices, he found $7.78 in savings per 1,000 kilograms, for every 10 percent increase in wheat DDGS in the ration. For corn DDGS, the savings was $6.69 per 1,000 kilograms, for every 10 percent increase in the ration.

 

Holly Jessen, ethanolproducer.com, December 29, 2011

 

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In a post-monopoly world, the Canadian Wheat Board will disappear altogether, or it will become the "eBay" for grain exports by bypassing the grain-handling system with container shipments.

Or it will become something in between.

It all depends on who was talking at the recent two-day conference here organized by the universities of Saskatchewan, Regina, Manitoba, Alberta and Lethbridge.

But beyond the fate of the board, conference speakers considered some of the other changes facing farmers as they enter a new era of grain marketing. And like it or not, there are some big changes in store as the federal government continues with its plan to end the monopoly as of Aug. 1, 2012.

New challenges include the impact on producer car economics and short line railways, the rise of railway market power and pressures to harmonize Canada's grain grading system with the United States. Then there's managing basis risk, and of course, the difficulties facing a voluntary wheat board.

One thing is for sure, how things flow won't necessarily be based on pure economics. Nor will they be driven by loyalty.

At best unimportant

Murray Fulton, an agricultural economist and professor at the University of Saskatchewan's Johnson-Shoyama Graduate School of Public Policy, said a voluntary board will "at worst disappear and at best be reduced to an unimportant player," he wrote in a recent paper.

 

Canada's top four-grain buyers - Viterra, Cargill, James Richardson International and Louis Dreyfus - own 72 per cent of the West's country elevator capacity.

"Even if the voluntary Canadian Wheat Board was able to get everything else, which I think would be unlikely, you'd be looking at a market share of 25 per cent," Fulton said. "That would be just on the borderline of being viable."

Terminal elevator ownership at Vancouver, Canada's leading wheat export port is even more concentrated. The top three firms own 90 per cent of the capacity, said Bill Drew, with Nearco Transportation Consulting. The same firms own 100 per cent of terminal space at Prince Rupert and 86 per cent of Thunder Bay's.

Viterra can source all the grain it needs through its country elevators and Richardson needs even more terminal space, Drew said. Cargill is the only firm that needs to source more grain. However, instead of striking deals with farmer-owned country elevators or the board, Cargill is more likely to buy more elevators, he said.

Mark Hemmes, president of Quorum Corporation, which is the firm hired by the federal government to monitor Canada's grain handling and transportation system, is less pessimistic. He said he expects country and port terminal owners will handle grain for others.

"Grain handlers are business people and will look to increase their handle any way they can," he said in an interview. "It's about optimal asset utilization and improved bottom line."

Terminals are also obliged under the Canada Grain Act to receive grain if they have space, he said.

eBay for grain exports

Meanwhile, Barry Prentice, professor of supply chain management at the University of Manitoba's I. H. Asper School of Business, said the board can be the "eBay" for grain exports using containers to bypass elevators and port terminals.

The end of pooling for eastern shipping costs means more grain will flow west, making Thunder Bay and Great Lakes-St. Lawrence Seaway ports residual outlets, Drew said. The Port of Prince Rupert is one of North America's most efficient grain exporting terminals with many advantages, including more available railway capacity and being closer to many Asian destinations. But Prentice predicted its owners will maximize use of their individually owned terminals in Vancouver.

Higher freight rates?

The new wheat board will no longer be allocating rail cars and therefore can't offset railway market power, said James Nolan, an agricultural economist at the University of Saskatchewan.

American transportation consultant Terry Whiteside warned if the statutory cap on railway earnings for hauling grain is removed, farmers will pay 30 to 40 per cent more to ship grain.
 

Agriculture Minister Gerry Ritz has said if farmers paid more, they'd get better service. However, there no such plans to scrap the cap, said Paul Martin, a director-general with Agriculture and Agri-Food Canada.

Some fear an open market will undermine the quality of Canadian wheat exports.
 

"I suspect there will be pressures to have greater harmonization (to reduce costs) amongst these countries," said North Dakota State University agricultural economist Bill Wilson.

"I'm guessing you're going to have more pressure in this country to have more access to our varieties."

In the U.S. the lack of variety registration and specific end-use standards sometimes results in inconsistent results for millers and bakers, Wilson said.

Crop Development Centre barley breeder Brian Rossnagel said Western Canadian farmers should continue to focus on producing high-quality grain. "(Y)ou need to recognize that you cannot compete with many of your competitors in... yield per acre," he said. The growing season is too short and usually too dry.

 

Allan Dawson, Manitoba Co-operator, December 29, 2011

 

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With both extremely wet and dry conditions happening in the same growing season, it is not a stretch to call 2011 a strange year in Manitoba, but it has helped prove the effectiveness of perennial and annual forage seed blends known as "polycrops" in dealing with extremes of weather.

"One thing that became very clear this year is that having something green and growing in the spring takes moisture out of the soil," says Oliver Joslin, who farms near Rossburn, Manitoba. "I saw for myself how much better the soil is for having something growing on it as opposed to nothing at all."

And that applies even if it's only weeds. Joslin made a post-harvest kill of thistles on some of his land in the fall of 2010, but with the very wet spring in 2011 he wasn't able to get the tractor into other areas. However, he was able to seed the unsprayed areas where the volunteers had already begun to grow.

Although 2011's fickle weather was tough on yields in many places, it's provided a unique opportunity to really understand what happens under both conditions.

Seed blend

Joslin experimented with a polycrop for the first time on 25 acres and was one of two farmers who hosted summer field tours organized by the Manitoba Forage Council, Manitoba Grazing Clubs and Ducks Unlimited Canada in association with local holistic management clubs.

Polycrops are a mix of different crops sown together to improve soil health. They can be used for silage or grazing and depending on the blend help improve soil fertility and structure in order to lessen their dependence on farm inputs. Initial work shows that plant diversity improved emergence and production of the polycrops. In addition, customized blends were created to address various soil issues.

For example, use of radish and turnip helped break down soil compaction and till layers. Polycrops in Manitoba are being explored to improve native pasture by providing complementary grazing, improve cattle gain and lengthen the grazing season.

Multiple uses

"Cover crops improve soil health, increase organic matter and encourage microorganism activity that enhances nutrient cycling and the availability of nutrients for plant growth," says Mike Thiele, Manitoba Grazing Club co-ordinator.

Polycrops can be used as greenfeed, be grazed or left for ground cover to help trap snow and maintain rainfall on the land instead of losing it to leaching, evaporation or runoff. They are also very useful for building organic matter in the soil, and the diversity of species means that the crop is more resilient to changing weather conditions. The mix can be adapted to suit specific growing areas and soil types, making them a versatile addition to the grazing plan.

On his Rossburn-area farm, Joslin's polycrop blend included 30 lbs of oats, 50 lbs of peas, one lb of turnips, one lb of forage radish and one lb of hairy vetch seeded directly into oat stubble the first weekend in June. No fertilizer was added apart from a starter mix at seeding. The crop received a light rainfall after seeding but then remained dry until late summer. Despite low growing-season moisture, the crop was lush and weeds were few.

Aside from providing good ground cover and using subsurface moisture, the polycrop also produced a valuable forage stand. Joslin's option included strip grazing the field in the fall, baling the crop as feed, or harvesting what he estimated would be about 3,500 lbs of silage per acre.

Cost for the seed was around $250 for the 25 acres, which is fairly reasonable, says Thiele. "A polycrop doesn't have to be expensive," he says, adding overall input costs shouldn't exceed $20 to $25 an acre and the seed mix can actually be any combination of seed a farmer may have lying around.

"The more diversity the better," says Thiele. "The idea is to have lots of different species so the odds of getting good germination of some of them are better whatever the conditions."

Several benefits

Diversity of plant species also helps prevent insect problems by discouraging the over-predominance of any one type of pest that typically occurs in a monoculture. Diverse root types help improve the water infiltration ability of soils. 

"Using turnips and radishes in the mix, for example, is useful as each have different root types and they each occupy a different part of the soil profile," says Thiele. "So it helps to break up hardpan and allow moisture to penetrate and move through the soil profile." The root vegetables stay in the ground and decompose to also help build organic matter.
 
The concept of seeding a mixed blend polycrop has crept into Manitoba from North Dakota, says Ducks Unlimited agronomist Ken Gross. Gabe Brown, a beef producer near Bismarck North Dakota, developed the concept of a polycrop as part of his strategy to save his mixed farming operation after hail wiped out his grain crops in the mid-90s.

Brown says that when his lender pulled the ripcord after annual crops failed, he decided he might survive financially without cash cropping so he embarked on a wild venture to harvest everything with his cattle. His farm made a recovery that is nothing short of miraculous, now involving a rotation that encompasses crops purely for grazing, crops taken for silage or hay, and a few crops for grain again.

Brown's grazing techniques are also highly advanced, using cells for super-efficient "harvesting" by the cattle, as well as stimulating growth of the perennials species used. The response of his soils and crop yields has been phenomenal, yet Brown experiments with scads of "crazy" new ideas all the time. "We try to fail on at least one thing every year," he says.

Gross says while the concept of a diverse mixed stand makes sense, the challenge may be to find a combination of crops that do well in the Manitoba climate. "One advantage they have in North Dakota is a longer growing season than we have here in Manitoba," says Gross. "Some of the cooler season crops like annual cereals do well, but some other species such as hairy vetch are warm season crops that may not work every year."

The crop blend can be designed to address specific objectives on each farm. It can be tailored to use up excessive moisture, include plants with root systems that help break up hardpan or compaction layers, help fix nitrogen in the soil, and contribute to improving soil organic matter.

While all this is happening to benefit soil structure and productivity, the crops also produce a valuable forage crop. "The main interest of Ducks Unlimited is similar to most ranchers - water and grass," says Gross.

"We are supportive of any practices that help make farmers more productive and sustainable and the concept of polycrops might be one more strategy that fits in their overall farm management."

Article courtesy of Manitoba Forage Council and Ducks Unlimited Canada

 

Angela Lovell, Grainews, December 30, 2011

 

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Canada's Prairie farm belt is the driest it has been in five years, raising concerns for cattle and winter cereals in a region that has been recently more prone to floods.

 

Large pockets of Alberta, Saskatchewan and Manitoba have received less than 40 per cent of normal precipitation during the past three months, especially northwestern Saskatchewan and northeastern Alberta around Lloydminster and in southwestern Manitoba, according to federal agriculture department maps.

 

The rest of the Prairies have mostly collected between 40 and 85 per cent of normal amounts of rain and snow.

 

"We have a lot of winter ahead of us and things can change in a hurry," said Trevor Hadwen, agroclimate specialist for the federal government's Drought Watch program. "(But) the fall period was very dry on the Prairies and that is a concern."

 

Mild temperatures have been favourable for cattle, but dry conditions are a major concern to ranchers who rely on snow to replenish dugouts that will water their cattle in spring, said Travis Toews, a rancher near Beaverlodge, Alta.

 

"The severe lack of moisture (from) late summer right through 'til now, it has us wondering what the spring might hold," said Toews, president of the Canadian Cattlemen's Association.

 

In 2009, Alberta had a severe drought that extended into summer, stunting pasture growth and forcing ranchers to scramble to find other ways to feed cattle.

 

However, Environment Canada is forecasting colder and wetter conditions than usual for January through March, consistent with the usual impact of the La Nina weather phenomenon, Hadwen said.

 

Months away

 

Dryness in parts of Argentina and Brazil have driven up grain markets in recent weeks on fears of lower corn and soybean yields. With the exception of fall-seeded cereals, Canadian crops are still months away from seeding.

 

The Prairies are Canada's biggest growing region for wheat, canola and oats, and the most important cattle-raising region.

 

Warm, dry autumn conditions were ideal for farmers finishing up the harvest, but they also prevented soil moisture levels from rebuilding before winter, Hadwen said. A lack of winter precipitation added to short moisture levels, but it is too early for farmers to worry much about seeding prospects, he said.

 

"A spring storm can make that up real quick."

 

Canada is the world's biggest exporter of spring wheat, canola and oats, and the third-biggest beef shipper. Flooding in parts of Saskatchewan and Manitoba during the past two years left some farmers unable to plant and slowed crop growth.

 

Winter wheat, which makes up about 12 per cent of Canadian wheat production, needs snow cover before damaging, colder temperatures arrive, and also to keep more soil moisture from evaporating, said Bruce Burnett, director of weather and market analysis for the Canadian Wheat Board.

 

Ontario, which grows most of Canada's winter wheat, has had closer-to-normal precipitation for the past three months.

 

Rod Nickel, Country Guide, January 3, 2012

 

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Prices of some foods may ease slightly in 2012 due to a slowing global economy but are unlikely to drop drastically from the high levels reached last year, the new director-general of the U.N.'s Food and Agriculture Organization said on Tuesday.

 

Jose Graziano da Silva, the Brazilian who replaced Senegal's Jacques Diouf at the helm of the FAO at the start of 2012, said volatility in food markets was likely to continue and that more people would be at risk of hunger due to economic instability.

 

"Prices will not be going up as in the last two to three years but will also not drop down. There may be some reductions but not so drastic, in the short term," Graziano da Silva told a news conference in Rome.

 

"Volatility will remain, that is clear," he said.

 

Global food prices measured by the FAO hit a peak last February but have been falling since June as crops have improved and concerns about global economic turmoil have reined in demand growth.

 

High food prices have helped fuel inflation and contributed to the civil unrest which created the so-called Arab Spring last year.

 

Graziano da Silva said he did not expect the economic slowdown in Europe to impact funding for FAO projects, because the amount countries donated was such a small proportion of gross domestic product that they were unlikely to cut it.

 

But he said the slowdown was likely to increase the number of people at risk of hunger in the world, which the organisation estimated at 925 million people in 2010.

 

"We will have more work to do, with more people hungry, more people unemployed, and we will need new ways to assist them," he said, as he began a term of three and a half years.

 

Focus on Africa

 

The 62-year-old agronomist, who is the first Latin American at the helm of the U.N. agency, said he would focus efforts on poor countries that are most in need of outside help and that his priority would be Africa, particularly northern Africa.

 

He plans a visit to the Horn of Africa early this year, where drought and famine are affecting millions of people.

 

The FAO is the largest U.N. agency with an annual budget of some US$1 billion and 3,600 workers. It is fighting food crises across the world that have been aggravated by price volatility.

 

Graziano da Silva, the former head of the FAO in Latin America and the Caribbean and a former minister for food security in Brazil, will need to bridge a divide between donor countries and developing countries to foster consensus and avoid paralysis in the organization.

 

He plans to cut bureaucracy and reduce perks for top management and he also wants to decentralize operations and give more authority to local outposts, he said.

 

The FAO adopted reforms after an assessment funded by its members in 2007, which said it risked "terminal decline" due to its weak governance and lack of transparency and accountability.

 

But last year Britain threatened to pull out of the organization unless it improved its performance, and some donors such as the United States have initiated agricultural development projects of their own.

 

Catherine Hornby, Reuters, January 3, 2012

 

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A research project offering support and advice for climate change adaptation in South Africa is among dozens of initiatives sharing $1.2 billion in loans and grants sent overseas over three years from the Canadian government as it tries to distance itself from "hot air" and the Kyoto Protocol.

 

But observers note there is still a long way to go before an emerging global green climate fund establishes its own guidelines and criteria to ensure accountability and results from the massive investments.

 

The International Development Research Centre, an arm's-length Canadian Crown corporation that is distributing millions of dollars of the climate funding, said that research is the first step toward identifying credible projects and ensuring federal dollars are spent well.

 

"This is really kind of a critical priority because in my view, there's a whole lot of noise around (adaptation issues), but not that many effective projects," said Mark Redwood, a program leader on climate change and water at IDRC.

 

The corporation chose seven research projects in Africa, working with local stakeholders that deliver development projects on the ground to find the most effective investment options.

 

"One thing that they observed and which I also noted is that there are many, many adaptation projects that would not pass basic criteria for a development bank or a private investor," said Redwood, who specializes in urban and environmental planning. "The benefits are difficult to identify, sometimes with climate change adaptation. The field is still sorting itself out a little bit, so basically there's a disconnect...between those projects and the number of projects that a development bank could fund."

 

Fast-start funding, a key commitment by developed countries in recent international climate change negotiations, was supposed to build a foundation for a global green climate fund, worth about $100 billion per year by 2020, to help developing countries cope with escalating impacts of global warming on their economies and way of life.

 

But lacking any tools to measure the value of dollars spent, the proposed fund is different from the Clean Development Mechanism and other provisions under the Kyoto Protocol that allow private companies or countries to invest in projects that measure and track the level of emissions reductions.

 

"There's no standardized reporting format (to evaluate the value of fast start funding announcements by countries) and either you believe it or you don't,'' said David Waskow, climate change program director of Oxfam America. "We don't have those measurements and so we have countries putting out their own numbers and their own formats...without any clarity."

 

Prime Minister Stephen Harper and his government have repeatedly slammed the Kyoto agreement for provisions that allow the former members of the Soviet Union to benefit from "hot air" payments, giving them credit for emissions reductions that occurred after 1990 due to an economic collapse.

 

But Environment Minister Peter Kent, who confirmed in December that Canada would formally withdraw from Kyoto, said that his previous role as a reporter in regions such as South Africa has influenced his own support for promoting foreign assistance as part of his government's climate change policies in a post-Kyoto regime.

 

"My experience as a correspondent gave me an enduring belief in the way well-targeted assistance can make a real difference in the lives of people," Kent said at a private event organized by IDRC in Ottawa on Nov. 25, before he left to attend international climate change talks in Durban, South Africa. "Money isn't a solution, definitely, to all problems, but assistance that helps local solutions emerge, the kind of assistance that IDRC is known for, offers a truly great return on investment."

 

Lindiwe Majele Sibanda, the CEO of a policy network that is leading the research in South Africa, explained that the project would combine climate change science with a social, economic and agricultural analysis to determine the future of agricultural development in the region. As a result, it would produce information to help local farmers, investors and governments choose new projects and ensure that they are productive and successful.

 

"At the end of the day, we want to be able to give some evidence in terms of what crops can we grow in these districts, what type of farmers can adopt the recommended technologies and what investments should our governments be putting in place to either equip the farmers at the household level with the appropriate assets who are coping with climate change," she told the event, recorded in an IDRC video that was posted on the YouTube website.

 

David Sawyer, who heads the climate change and energy program at the International Institute for Sustainable Development, a Winnipeg-based think-tank, said the overall concept of the green climate fund has the potential to leverage more investments in support of economic development, reduction of emissions and adaptation to climate change impacts than existing mechanisms under the Kyoto agreement. Sawyer, an environmental economist, said this is mainly because of rigid criteria that require the projects supported by Kyoto to be assessed primarily on their capacity to reduce emissions.

 

Redwood added that ultimately the investments can also have direct benefits on the Canadian economy, particularly in the African research on agriculture that help protect crops that influence global food prices.

 

"The projects that focus on agriculture are very much on mitigating the impacts of fluctuating prices," he said. "We all know that there's a whole range of reasons why commodity prices are fluctuating, but I feel quite comfortable saying that climate change probably will be one of the biggest factors that affect food prices."

 

Mike De Souza, Postmedia News, December 28, 2011

 

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