Agriculture

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combine harvesting wheat

One of the accepted truisms about agriculture in Western Canada is farms will continue to get bigger.
Prairie farmers began expanding almost as soon as they took up residence under the homesteading law of 1872, a trend that continues. The 2011 census of agriculture saw average farm sizes grow between 13 and 15 per cent in the three Prairie provinces during five years.
Averages don’t tell the whole story. There are viable farms that crop tens of thousands of acres, just as there are equally viable operations that still function quite nicely on several hundred. Studies show that while small farms often achieve a higher return per acre, they don’t generate enough to support the family, which is why more than half of family farms rely on off-farm income.
But both past and recent history suggest there is such a thing as too big. There were about 90 so-called Bonanza farms of between 3,000 and 100,000 acres on the northern Great Plains in the late 1800s.
Most failed within a generation. Hired management was able to leverage their scale for marketing and input purchases, but when things didn’t go according to plan — as is the norm in farming — they were unable to weather the downturns. One of their biggest weaknesses was finding labour — up to 1,000 men per farm plus the women to cook for them.
A few years ago, One Earth Farms, a subsidiary of Toronto-based Sprott Management Resource Corp., announced plans to crop up to a million acres in Western Canada. At one point, it reached 200,000. It’s now down to 5,000 acres and has quit crop production altogether to focus on producing organic beef.
Earlier this month, Broadacre Agriculture Inc., a modern-day mega-farm operating 65,000 acres of owned and leased land in Saskatchewan, entered creditor protection just four years into its business plan to become the “pre-eminent farm operator in Canada.”
According to the affidavit from its chief financial officer, its crops didn’t yield as well as expected, it fell behind on its payments and its investors and creditors lost faith. It also didn’t help that it had recently borrowed from private lenders at 20 per cent interest.
“The unfortunate reality is the company has never been profitable,” the affidavit states.
Here in Canada, where the cost of land, a lack of labour, outside capital and agronomic management have all emerged as constraints to sheer scale — the owner-operator model is the only one that has demonstrated it can thrive through multiple generations.
U.S. agricultural economist John Ikerd once characterized the big-little farm debate as having less to do with the actual acres on the farm, than the philosophy of the farmer farming it.
As Ikerd described it, a farmer who has five acres and dreams about owning 10 is a big farmer. A farmer with 1,000 acres who’d like to draw the same production and revenue from 600 is small.
It’s an important context as global attention increasingly turns to how best to increase production but not acreage.
Commodity markets are drowning right now under record world production of corn, wheat and soybeans, but global yield gains have been stagnating in recent times — a disturbing trend a team of U.S. researchers set out to quantify in 2013.
“During the 1980s and 1990s, nearly all of the increased food production was met on existing land by increasing yields,” said Ken Cassman, a University of Nebraska agronomist who worked on the study.
He noted an abrupt increase of 24 million acres of farmed land per year starting in 2000.
“This is the fastest rate of crop area expansion in human history. Some have called this an agricultural time bomb, because it is not sustainable,” Cassman said, noting an urgent need to increase yields through better management and implement policies that hold agriculture on existing area.
The answer to the big-little question remains elusive. But it seems farmers of all sizes are facing increasing pressure to grow bigger — without becoming bigger.

Full article here.

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young farmer in field

More than 60 young people took part in this year’s Ontario Young Farmers Forum.

The forum is an annual event held in conjunction with the Ontario Federation of Agriculture annual convention.

The Executive Director of Agricultural Programs for Junior Farmers of Ontario – Justin Williams – was among the attendees.

He says the delegates all appeared to have a positive outlook on the future of the industry.

Forum Administrator Amy Matheson says they also talked about the importance of telling the story about farming.

She points out that what farmers find ordinary in agriculture, non-farmers find extraordinary.

And she says while there are a lot of people talking about food, few are involved in agriculture.

The 2014 Ontario Young Farmers Forum was held this week in Niagara Falls.

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silos

In order to slow global climate change and achieve greater energy independence, Americans are showing an increasing interest in switching over to clean, renewable fuels made from home-grown crops. In fact, Congress has mandated that at least 16 billion gallons of cellulosic ethanol be added to the U.S. fuel supply by 2022.
However, estimates suggest that growing crops to produce that much biofuel would require 40 to 50 million acres of land, an area roughly equivalent in size to the entire state of Nebraska.

“If we convert cropland that now produces food into fuel production, what will that do to our food supply?” asks Maggi Kelly, UC Cooperative Extension specialist and the director of the UC Division of Agriculture and Natural Resources Statewide IGIS Program. “If we begin growing fuel crops on land that isn’t currently in agriculture, will that come at the expense of wildlife habitat and open space, clean water and scenic views?”

Kelly and UC Berkeley graduate student Sarah Lewis are conducting research to better understand land-use options for growing biofuel feed stock. They used a literature search, in which the results of multiple projects conducted around the world are reviewed, aggregated and compared.

“When food vs. fuel land questions are raised in the literature, authors often suggest fuel crops be planted on ‘marginal land,’” Kelly said. “But what does that actually mean? Delving into the literature, we found there was no standard definition of ‘marginal land.’”

Kelly and Lewis’ literature review focused on projects that used geospatial technology to explicitly map marginal, abandoned or degraded lands specifically for the purpose of planting bioenergy crops. They narrowed their search to 21 papers from 2008 to 2013, and among them they found no common working definition of marginal land.

Read the full article here.

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Young Farmer

Modern farmers and tech startups bring their digital culture to bear on farming, creating online fruit and veg shops, apps and other tools for environmental sustainability.

Old meets new economy on fields. Young people who are involved in farming aim industry innovation and there are increasing numbers of digital farmers, online veg shops and tech startups that are making agriculture their business. In Italy that’s called agriculture 2.0. There is a lot of talk about it, in view of the food-themed Expo 2015. But the theme concerns the whole Europe, where belief that agriculture industry needs new blood and innovative workers to grow is emerging.
Beyond the enthusiasm of a happy return to the land, we need to acknowledge that the percentages of farmers under 35 are still low. While in Poland they reach 14,7%, the figures are more daunting in other countries, such as Italy (5,1%), Uk (4,1%) and Portugal (2,6%). For this reason, the EU Agriculture and Fisheries Council has just approved a document to support young farmers, focused on access to credit, land and knowledge. It aims for generational change and innovation to combat the economic and employment crisis.

In anticipation of institutional incentives, a first push for innovation comes from the bottom, from young who decided to bring their digital culture to bear on agriculture, often combining ecommerce and organic farming. It’s the case of Contadini per passione, three guys who grow an orange grove in Sicily and use the web to promote themselves and sell their products. Through their website they do storytelling, by describing their activity on the fields. Social media and web marketing are used to acquire new customers, ecommerce shortens the supply chain and eliminates intermediation between producer and consumer. “Arms aren’t enough. It is finally understood that agriculture also needs brains. It needs to involve new people, smart, dynamic, brilliant, so as to improve the relationship between innovation and tradition”, 31-year-old founder Paolo Barbera said.

Oscar Green winner 2014, Straberry is a startup that grows and sells berries through sustainable technology and in two years has achieved a turnover of 1 million euros. The photovoltaic panels on the greenhouse roof enable the company to produce clean energy for itself and other 5000 people. Strawberries grow out of the soil, in hanging gutters suspended 1,50 metre above the ground. Fruit, along with jams, juices and salads, is delivered in the city by Ape cars and every consumer, by using a code, can verify when it was harvested, where and by whom, through a certified traceability system.

Ecommerce-based Cortilia is a digital agricultural marketplace that allows users to get fresh and seasonal products boxes at home from local farmers, in subscription or occasionally. Its purchase model responds to the increasingly consumers demand to eat healthily and sustainable, saving time. Here too, the farmers use the website to tell their stories and describe work behind their products. This business model has convinced investors and the company raised 2,5 million funds since its founding in 2011.

Innovative ideas are also coming from experienced entrepreneurs like Oscar Farinetti, founder of high-end Italian food chain Eataly. He plans to sell fresh products online from a big garden, which will equipped with cameras to show how vegetables will be farmed.

Then there are startups inventing apps and high-tech products to optimize agricultural practices such as Smart Ground, which simplifies activities and reduces the waste of water resources through environmental detection devices and a user-friendly software. The main aim is to promote sustainable use of water – more and more limited and subject to waste – by monitoring the amount in the soil and allowing irrigation only when and where there is a genuine need, according to the different crops.

This and other innovative tools from all around the world will be showcased during the next universal exposition in Milan.

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golden wheat field

Monsanto Co. said Wednesday it will pay nearly $2.4 million to settle a dispute with farmers in the Pacific Northwest over genetically modified wheat.

No genetically engineered wheat has been approved for U.S. farming, but it was found in Oregon in 2013.

That discovery prompted Japan and South Korea to temporarily suspend some wheat orders, and the European Union called for more rigorous testing of U.S. shipments.

Agriculture Department officials said the modified wheat discovered in the Oregon field is the same strain as a genetically modified wheat that was designed to be herbicide-resistant and was tested by seed giant Monsanto a decade ago but never approved.

St. Louis-based Monsanto said that it is settling the case rather than pay for an extended legal battle.

The company will put roughly $2.1 million into a settlement fund to pay farmers in Washington, Oregon and Idaho who sold soft white wheat between May 30 and Nov. 30 of 2013.

Monsanto will also pay a total of $250,000 to wheat growers’ associations, including the National Wheat Foundation, the Washington Association of Wheat Growers, the Oregon Wheat Growers’ League and the Idaho Grain Producers Association.

Representatives for the growers’ groups could not be reached immediately for comment.

The USDA said in September that it believes the genetically modified wheat in Oregon was the result of an isolated incident and that there is no evidence of that wheat in commerce. The report said the government still doesn’t know how the modified seeds got into the fields.

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red combine harvester corn

Canada is the world’s top agricultural trader compared to all other countries on a per capita basis, according to Farm Credit Canada’s (FCC) annual report on global trade.

In 2013, the value of Canada’s agricultural imports and exports was more than $2,100 US per person, followed by Australia at about $1,900 US per person, says the report by FCC Ag Economics entitled A 2014 Look at Global Trade.

The report takes the combined value of all agriculture exports and imports from each of the major agriculture trading countries and divides that number by each country’s respective population. “It shows the agriculture sector is more important to Canada than all other countries, including the United States, Australia and the European Union,” J.P. Gervais, FCC’s chief agricultural economist, said in a press release.

Overall, the report shows Canada as the fifth-largest agriculture exporter in the world — behind the European Union, United States, Brazil and China — and the sixth-largest agriculture importer. China and India — with their huge and growing populations — represent major markets for Canadian agricultural producers.

“The combination of rising household incomes and population growth in India and China present major market opportunities for Canadian exports of beef, pork and pulse crops,” Gervais said. “Canada appears well-positioned as an important agriculture trader in the world and the expansion of trade relations will only help to sustain and build on that.”

The removal of trade barriers for Canadian lentils to India could result in a 147 per cent increase in exports over five years, while rising incomes in China present major market opportunities for beef, the report said. However, pork will remain the preferred protein of the Chinese population.

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dry soybeans in field

Low Crop Prices to Weigh on North American Farmers’ Bottom Lines-BMO Economics

TORONTO, ONTARIO and CHICAGO, ILLINOIS

North American farmers are facing the lowest crop prices in years as a record harvest drives up supply – especially for corn and soybeans, the continent’s top crops – according to a report from BMO Economics released to coincide with the Fall harvest.

Despite the challenging environment, most farmers should weather the downturn in relatively strong form, as it comes after several years of near-record farm earnings. Soaring hog and cattle prices will also allow diversified operators to offset lower crop revenue with higher livestock earnings, noted Aaron Goertzen, Economist, BMO Capital Markets.

In the report, Mr. Goertzen also points to large crop stockpiles, muted global export demand and limited rail capacity as key factors that will likely continue to depress prices for leading crops into 2015.

Furthermore, overall crop production is not expected to drop much next year because the high cost of land and machinery will drive most producers to forge ahead with planting even though market conditions are weak. Mr. Goertzen notes that crop prices could begin to recover once the size of next year’s crop can be gauged.

“After an atrocious growing season in 2012, North American farmers are now in the process of cultivating a second straight bumper crop,” Mr. Goertzen said. “Yields on corn and soybeans, the continent’s two largest crops, approached all-time highs in 2013 and look to have blown the previous records out of the water this year,” he said.

Crop prices in North America were flirting with all-time highs just two years ago, spurred by several years of lacklustre growing conditions and the worst U.S. drought in 25 years. Crop prices have declined sharply since then, with corn and soybean prices down 34 per cent and 25 per cent year-over-year respectively.

Prices for corn and soybeans fell sharply amid rising output, with corn production up 3 per cent in North America this year, and 10 per cent over the previous record in 2010. Soybean production in North America is up 17 per cent over last year.

Crop sizes will likely remain high next year as well because farmers will have few alternatives to reallocate acreage in an environment where prices for most key crops, including wheat and canola, are low.

“Crop prices are unlikely to rebound with gusto any time soon, and scarce rail capacity will also exacerbate the supply overhang, particularly in U.S. states where oil producers compete against farmers for space on the tracks,” said Mr. Goertzen. He noted that a more moderate harvest in Canada will make transportation less problematic north of the border this year.

“Our clients have experienced a big improvement in growing conditions since the lingering effects of the drought in 2012 and delayed planting last year have worn off,” said Sam Miller, Managing Director and Head, Agriculture, BMO Harris Bank. “The result of this year’s vast crop, however, is that prices have trended downward for much of 2014. As we look ahead to 2015, margins will be squeezed with prices declining at a greater rate than costs of production. Supply and demand in grains will eventually come back into balance if there is a reduced overall supply, continued increase in global demand, and weather that would keep excess yield in check.”

The U.S. Department of Agriculture estimates that total U.S. crop revenue will decline around 7 per cent this year, or some $15 billion. BMO Economics notes that Canada will likely be hit even harder, with crop revenue estimated to be down 9 per cent for the year. The USDA expects corn, wheat and canola will all be exported in lower quantities from North America this year.

The good news is that most farmers should be relatively well equipped to handle the dip, even if it lasts a while. Since farm incomes are backing away from near-record highs, most producers should be able to weather temporarily lower profitability.

“Fluctuations in crop yields, production and prices are nothing new,” said Andrew Bowman, National Director, Agriculture, BMO Bank of Montreal. “But as a group, farmers are highly proficient risk managers and, as such, we remain confidence in their ability to manage through fluctuating crop prices.”

The full report can be downloaded at www.bmocm.com/economics.

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corn on the cob

Even before the current U.S. Farm Bill was adopted, we shared our concern that a $4-plus plateau in corn prices, which was being widely predicted, was in all likelihood no plateau at all.

A year ago many were predicting corn would average $4.50 a bushel, partly because of ethanol demand and partly because production costs had increased so much in recent years. We were doubtful.

Even so, we were shocked, but not surprised, to see a newspaper headline announcing corn prices that were well below the $2 level. It was news of an elevator in the Minot, N.D. area that priced corn at $1.73 per bushel. Yes, you are reading that number correctly — $1.73 as the result of a $1.50 negative basis on a $3.23 futures price.

And that $3.23 itself is 20 per cent below the supposed $4-plus plateau.

We agree that it took a combination of circumstances to bring about a -$1.50 basis — an anticipated bumper crop, railroad problems, full elevators, and the lack of local demand — but circumstances will not pay the bills no matter how they came about.

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european sparrow


Good news: In many cases, efforts to protect rare European birds have helped stabilize and even increased the numbers of several feathery species. Bad news: European birds in general are in significant decline, and some of the most common species, like house sparrows, are the hardest hit. According to a study published this week in the…

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pasta ingredients


Spaghetti lovers could soon see higher prices for a plate of their favourite comfort food. That’s because a rainy spring, a dry summer and a freak September snowstorm in Alberta have damaged crops, resulting in a smaller harvest. Both the quality and yields this year are poorer than in the past. And if that wasn’t bad…

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