November 2005
Index
As of mid-October, about 27,978 applications had been received for the Ontario 2003 CAIS program (tax) year with 98% (27,439) already processed. Government payments (Federal and Provincial combined) for 2003 CAIS totaled $169.9 million triggered by 10,942 participants (39.8% of applicants) averaging $15,527 per payment. The $169.9 million in total government CAIS payments is far short of the $208 million projected annual average for Ontario for the five-year funding period of CAIS. Moreover, only 33.4% of the 10,922 field crop applicants triggered a 2003 CAIS payment averaging just $6,118; both results are significantly below all other ag sectors in Ontario.
For the 2004 CAIS program (tax) year, 29,276 CAIS participants secured coverage and 9,569 have been processed to date. Of these, 4,068 (42.5%) triggered payments totaling $67.0 million to date and averaging $16,487. However, the same trend for field crop producers remains with only 37.3% of processed participants triggering a payment averaging just $6,122. Both statistics are again significantly below all other ag sectors in Ontario.
CAIS participation, at 29,276 applications for the 2004 program year, remains far short of the 36,006 who were enrolled in the 2002 NISA program in Ontario; but the number of participants is up about 3,000 from mid-July.
Projections for 2004 CAIS payments suggest payments totaling $253 million to 15,727 participants who trigger payments averaging $16,094. However, the pattern where CAIS provides less support individually to Field Crop sector participants remains, with payments averaging $10,380.
CAIS and Crop Insurance Linkage and Rebate
Of serious concern is the very slow progress being made on processing Crop Insurance (CI) premium rebates for eligible 2003 CAIS program participants. Those producers who triggered a CI claim in 2003 may be eligible to receive a rebate up to the amount of their CI premium paid if the CI claim reduced their CAIS payment (ie. saved CAIS money). CAIS participants will be processed automatically to determine eligibility for, and the amount of, any rebate. However, the processing of about 7,500 possible participants is proceeding slowly and by hand. At last information, it is not likely that claims will be processed and all cheques mailed until perhaps early spring 2006.
Federal and Provincial Ag Ministers to Meet Nov. 21
The next Fed/Prov Ag Ministers meeting is scheduled for November 21. Several issues relating to CAIS are to be discussed and resolved with Amending Agreements hopefully signed where applicable (fees and negative margins).
CAIS
Fee
At their July meeting, Ministers agreed in principle to replace the CAIS deposit
with a fee to be implemented for the 2006 program (tax) year. The fee would
be 0.45% of a participant's reference margin. The minimum fee would be $45 (corresponding
to a $10,000 reference margin) plus the $55 administrative cost share = $100.
The maximum fee would be $20,000 (corresponding to the $4.3 million reference
margin needed to generate the cap of $3 million in benefits). The deadline for
payment of the fee and CAIS coverage selection is within the first 4 months
of a participant's tax year, which means April 30, 2006 for those participants
with a calendar year end. With a projected 28,471 CAIS participants in Ontario
and a total reference margin of $2 billion, total fees would be just over $9
million, averaging $317. The 11,287 field crop CAIS participants in Ontario
would pay $2.2 million in fees, averaging $199.
CAIS
Reference Margin Choice
Ministers are to discuss and consider allowing participants a choice between
Olympic and 3-year averaging in the determination of Reference Margin. Both
are allowable under WTO rules and participants in Ontario's Farm Income Disaster
Program were permitted to choose. In Ontario, for 2003, 2004, and 2005 choice
would increase benefits by about $50 million on average and the number of producers
receiving benefits by about 16% on average. Choice provides more support during
downturns, accelerates recovery of reference margins after downturns, and provides
additional benefits without reducing benefits to any producer. Of course, governments
are concerned the choice simply increases costs.
CAIS
Negative Margin Coverage
Ministers agreed in principle in July to no longer restrict producers to two
negative margin payments in a five-year period. Producers with a negative reference
margin, but who have positive margins in 3 of the 5 years in the reference period,
would be eligible for negative margin coverage. In Ontario, negative margin
coverage would increase benefits for 2003, 2004, and 2005 by about $2.25 million
on average. The number of producers receiving benefits would increase by less
than 1% on average, or about 100 producers per year, with the majority of producers
benefiting being beef cow/calf operations.
"Farmers Feed Cities" Campaign
"Farmers Feed Cities", an initiative of Ontario agriculture's unified voice, is driven by the need to achieve a fair and equitable standard of living for all Ontario farmers. An expansion of the Ontario grain and oilseed sector's campaign launched in June, the "Farmers Feed Cities" campaign has 3 objectives:
1) Provincial government commitment to permanent risk management tools for 2006 and beyond to stabilize and revitalize rural Ontario.
2) Provincial and federal government commitment to a 2005 down payment on long-term programs for those commodities in need.
3) Increased awareness of the cause and effect of the current state of agricultural income by the general public.
As part of the unified voice, the seven commodities representing the Ontario grain and oilseed sector developed the following position:
1) Our industry is in distress due to foreign agricultural subsidies that artificially depress crop prices.
" In the US, 92% of direct payments to farmers go to the grain and oilseed sector. US prices for grain and oilseeds determine the prices for Ontario's crops.
" Artificially low prices for crops in Ontario means that our Canadian Agricultural Income Stabilization (CAIS) program reference and production margins are also artificially low and declining.
" CAIS cannot meet the needs of Ontario field crop producers because support declines artificially over time.2) Ontario's Grain and Oilseed sector is a foundation for other areas of agriculture and the rural economy.
" We are the largest crop sector of any Canadian province, generating receipts of $3.6 billion in 2004.
" On Ontario's total cropland of 3.6 million hectares, 85,000 farm operators devoted 2.4 million hectares to grains and oilseeds.
" Without a sustainable G&O industry, Ontario's livestock, feedstock for food and industrial processing, and products for direct human consumption would become dependent on other countries. Dependence on other countries' feedstocks can be compromised in situations of trade disputes or environmental disasters.3) Our issues cannot be solved with a short-term fix - we need long-term solutions to provide stability to agriculture and the rural economy.
" Until trade injury is addressed on a global scale through WTO negotiations, Ontario farmers need our Risk Management Program to give stability for financial planning and business development.
" Short-term funding will not solve the debilitating effects of trade injury Ontario's grain and oilseed farmers face in the long-term. Farmers need planning and stability, and we cannot return year after year.
" Funding for RMP fits within the overall objective of "Farmers Feed Cities" to double Ontario agriculture's share of the provincial budget from 0.7% to 1.4%.
" Ontario agriculture contributes about 10% of the provincial GDP.
" Total government payments to agriculture in Ontario (federal and provincial combined, all programs) totaled $674.4 million in 2004, which was only 7.8% of total farm cash receipts. That compares to 11.7% in Manitoba, 13.2% in Quebec, 17.8% in Alberta, 20% in Saskatchewan, and 13.3% for all of Canada.4) Ontario grain and oilseed farmers have developed our Risk Management Program (RMP) to make CAIS work more effectively for our sector.
" RMP is essentially price insurance that requires more marketing and financial management on the part of participating producers.
" RMP also requires participants to pay a premium, which would total about $100 million annually in Ontario.
" Over the last 5 years, RMP would have paid an average of $342 million per year to Ontario' field crop producers (net of the premium cost).
" However, only about $222 million would be "new funding" (above what CAIS would have paid out anyway). The Ontario government's share would be $88 million in new funding required annually (the balance would come from the federal government).
Variable Cost Increases for Corn In Illinois
The University of Illinois released an interesting study on September 30, 2005 (FEFO 05-18) detailing variable costs for corn and soybean production in that state. "On Illinois grain farms, variable costs for corn are projected to be $55 per acre higher in 2006 than in 2002. Similarly, variable costs for soybeans will be $20 per acre higher in 2006 than in 2002. In percentage terms, cost increases are 33% for corn and 19% for soybeans over the four-year period from 2002 to 2006. Increases of this magnitude have not occurred in recent history and will cause reductions in farm profitability."
About 1,500 Illinois grain farms participate annually in the Farm Business Farm Management program. Variable costs include fertilizer, pesticides and seed, drying and storage, and machinery-related (ie. fuel, repairs, and machine hire) items. These variable costs do not represent all costs faced by grain farms, which also include farmland rent, depreciation, overhead, interest, and labour.
Per acre corn costs are projected to increase US$13.75 per year from 2002 to 2006, reaching a high of US$221 per acre in 2006. "This recent US$13.75 yearly increase compares to an average yearly increase of US$1.20 per acre from 1981 through 2002." Increases in costs have occurred in all cost categories since 2002 with fertilizer costs leading the way due to higher nitrogen prices driven by higher petroleum prices. "Fertilizer costs are projected to be US$28 higher in 2006 compared to 2002, pesticides and seeds are US$17 per acre higher, drying and storage US$3 per acre higher, and machinery-related items are US$7 per acre higher." Given generally higher grain corn moisture content in Ontario than Illinois at harvest time, Ontario drying and storage costs are likely higher than as quoted here for Illinois.
NK Brand has 24 New Agrisure Trait Hybrids for 2006
Ten years after being the first company to introduce hybrids containing European corn borer resistance (BT corn), NK is launching a broad line of 24 new hybrids with Agrisure traits for 2006. The new hybrids will cover the range in maturity from 82 to 115 days. NK has combined elite germplasm with Agrisure traits, producing hybrids with the Agrisure CB (corn borer resistance), Agrisure GT (glyphosate tolerance) and LibertyLink (Liberty herbicide tolerance) technology.
Jeff Jorgensen, NK Brand corn product manager, recommends that growers choose hybrids by focusing first on the genetics that best suit their farms. Then producers should look at traits and technologies that help them manage specific production challenges. Jorgensen also mentioned that development efforts are currently underway to expand the Agrisure line to include corn rootworm resistant choices within the NK Brand portfolio for 2007.
University of California Scientists Find Herbicide Resistant Horseweed in California
According to this story, horseweed, a weed that five years ago was only seen occasionally in California, is now growing prolifically on vacant lots, vineyard floors, canal banks, roadsides and gardens. One explanation is that biotypes of horseweed have evolved which are unaffected by the most commonly used herbicide called glyphosate.
Horseweed, also known as mare's tail, is a particularly sinister vegetative foe. Each plant will produce approximately 150,000 to 200,000 seeds that a breeze will spread for hundreds of yards. UC Cooperative extension weed management farm advisor Kurt Hembree stated that one sees the weed everywhere. In 2000, he had a garlic field with just a few horseweeds. Now, that field is completely infested.
Distinct Herbicide Receives Additional Registrations
BASF was recently granted two new label registrations for the use of Distinct herbicide in field corn. One was for control of tall waterhemp, and the other for control of field horsetail.
According to the
manufacturer, for control of tall waterhemp, Distinct should be applied post-emergent
at the 2 to 6 corn leaf stage. Control of field horsetail can be achieved using
a registered tank mix of Distinct and Ultim 75% DF at the 2 to 6 leaf or weed
stage.
Distinct is a selective post-emergent herbicide used to control annual broadleaf
weeds in field corn. It provides growers with excellent crop safety together
with powerful weed control for early or late post-emergent applications. Distinct
can be applied alone for control of many broadleaf weeds or as part of approved
tank-mixes with Option, Accent 75 DF or Ultim 75% DF for a wider spectrum of
weed control including many grassy weeds. Be sure to always read and follow
all label directions.
US Roundup Ready Corn Acreage up 40% Over Last Year
Monsanto recently announced that US growers planted Roundup Ready Corn 2 on more than 24 million acres in 2005. That represents roughly 30 percent of the USDA estimated 81.6 million acres of corn planted, and is an increase of 40 percent over the 2004 Roundup Ready corn plantings. These numbers offer a glimpse into the USDA's official biotech acreage numbers, which according to the June Acreage report, show that biotech hybrids were planted on 52% of the corn acres.
Monsanto claims that one of the main factors which are responsible for driving this growth is the October 2004 approval of the Roundup Ready Corn 2 (NK603 event) for European Union food and feed usage. This action opened up markets for US growers, and ended channeling requirements for grain with the NK603 event.
Argentina OK's New GMO Corn Developed by Syngenta
In late August, Argentina, the world's second largest exporter of corn approved a new genetically modified (GMO) corn made by Swiss giant Syngenta. The variety (known as GA21) is very similar to the Roundup Ready corn developed by Monsanto, which is resistant to the herbicide glyphosate.
Despite this approval, the Argentine government is forecasting corn acres to decrease to 3.0 million hectares for the 2005/2006 crop year, down from 3.32 million hectares in 2004/2005. One of the main reasons cited for this decrease is that GMO soybeans are cheaper and easier to grow. However, the government wants to encourage farmers to plant corn, which they feel is important for replenishing soil nutrients.
Transfer of Research Stations and Agricultural Colleges to ARIO
The ownership, management and operation of 14 research stations and 3 agricultural colleges are being transferred to the Agricultural Research Institute of Ontario (ARIO). The facilities are currently operated by the Ontario Realty Corporation, which reports to the Ministry of Public Infrastructure Renewal. This transfer of facilities and their operating funds to ARIO is consistent with the recommendations made to the Premier, during the Premier's Agri-Food Summit in December, 2004. The goal of this transfer is to increase collaboration and investment by federal and industry partners and ensure more efficient use of resources by matching infrastructure investments with research priorities. The facilities are scheduled to be transferred by April 1, 2006. As ARIO is an operational agency of OMAFRA, the transfer maintains government responsibility and ownership.
The Agricultural Research Institute of Ontario is a crown agency established to set priorities for agri-food research, in conjunction with government and the industry. The ARIO is a corporate body comprised of up to 15 members appointed by the Minister of Agriculture, Food and Rural Affairs. The members of ARIO are farmers and agribusiness people, and reflect the broadly based nature of the province's agriculture industry.
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