Index

• OMAFRA Budget
• Safety Net Programs
• Safety Nets - Other Provinces
• Crop Insurance
• Grain Financial Protection
• Thank You to Hostess/Frito-Lay
• Corn Extension Position
• Ethanol Plants
• Corn Seed Research Levy
• Biotechnology Reviews
• Greenhouse Gases, Agriculture and Soil "Sink" Capacity
• "Tony Vyn" Position
• Changes at AGCare
• Pesticide Container Recycling
• Thanks to AAFC, Ridgetown for Input Price Survey
• Corn Prices

OMAFRA Budget

The Ontario Budget announced on May 5 was a disappointment to Ontario farm groups. The joint lobby effort, called the Farmers of Ontario, involving the Ontario Federation of Agriculture, the Ontario Agricultural Commodity Council and supply management boards, had felt that a reasonable case had been presented for greater public investment in the Ontario agricultural and rural sector. The reasons included:

• Lower provincial spending on agriculture and food in Ontario, relative to size of the agri-food GDP, than in most other Canadian provinces,
• The substantial decline in provincial spending on agriculture and food since the late 1980s and early 1990s (in contrast to large increases for other ministries)
• The importance of agriculture and food to the Ontario economy and the potential for growth; and, perhaps most importantly,
• The fact that Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA), has been obliged to take on major new responsibilities in the ”rural” area without a corresponding allocation of new funds. The farm community welcomes the fact that rural issues are being addressed -- to an increasing extent, by OMAFRA rather than other ministries who are less familiar with agricultural needs -- but the expansion should not occur at the direct expense of agricultural programs.

The budget did announce $35 million over four years for a new rural job creation strategy, but details are still sketchy.

On another positive note, there was no cut in safety net program spending for 1998/99 (no increase, either). However, the ministry is being obliged to cut spending on internal operations by another two per cent for the current year, which is actually about 3.5 per cent when the effect of inflation is included. It’s not clear where a ministry which has already been reduced in size substantially over the past eight years will find the “savings.”

We express the same concern which we’ve had for some time: The Government of Ontario has shown an inclination to chop long-term core funding for OMAFRA, while announcing shorter-term glitzy programs like Grow Ontario in 1996 and the Rural Job Strategy in 1997.

There is often a scramble to find ways of spending the money through these short-term initiatives...sometimes successfully, sometimes not. An example of the latter is Grow Ontario, where only about $10.5 of the $15 million budgeted was actually spent.

We’re not opposed to change, but there is a need for a basic infrastructure for the ministry in rural Ontario. Much of the strength of OMAFRA in the past, has been its experience and familiarity with agricultural and rural needs. This cannot be replaced by short-term projects, often completed by people hired on contracts. Core funding for OMAFRA is important.

The Farmers of Ontario have a legitimate request. We hope this effort will continue despite the set back of the 1998/89 budget.

Safety Net Programs

The National Safety Net Review Committee has just about completed its task, though the wording of the final report has not been finalized (as of mid May). We’re hoping that the final changes are minor, though some groups are still seeking major revisions.

The next key event is a meeting of Canadian agricultural ministers at Niagara-on-the-Lake in mid July.
In late April, Ontario grain and oilseed leaders met with the Honourable Lyle Vanclief to discuss safety nets and issues such as the need for more equity in the allocation of federal safety net spending, and the importance of market revenue insurance. Vanclief raised questions about the trade neutrality of market revenue insurance – no doubt prompted by briefings from policy officials within Agriculture and Agri-Food Canada – but seemed somewhat satisfied with these responses • market revenue insurance is an “amber” program (and therefore consistent with World Trade Organization rules on agricultural subsidy programs), • most other Canadian farm stabilization programs – including NISA and crop insurance – are also amber (the only exception is the Farm Income Disaster Program in Alberta, and its counterparts in Prince Edward Island and British Columbia), • government spending on market revenue insurance has plummeted since the early 1990s, • market revenue insurance is needed to ensure grain and oilseed producers in Ontario remain on a level playing field with their counterparts in the United States, and • the request from Ontario grain and oilseed groups that the future of market revenue insurance be linked to U.S. efforts to phase out stabilization programs for grain producers in that country.

Another subject of discussion involved block funding. Vanclief has expressed major opposition to “block funding” as a means of allocating federal safety net funds across provinces. This view is supported by some other farm groups. However, as Ontario groups pointed out to the minister, there is already a substantial component of “block funding” in federal safety net funding, given the large amount of variability which exists among provinces in crop insurance and so-called “companion programs” (market revenue insurance is one of these). It is not clear whether the minister’s opposition to block funding means a reduction in the present amount of provincial flexibility. The same ambiguity exists in the position of the Canadian Federation of Agriculture and some other general farm groups outside Ontario.

Vanclief made no commitments relative to recommendations in the grain and oilseed brief.

Safety Nets - Other Provinces

The most interesting province with respect to potential changes in safety net program design continues to be Quebec.

The Quebec agricultural ministry seems interested in moving away from “ASRA”, the commodity-specific price support program which has prevailed for many years in that province. The Quebec government position has some support within the Union des Producteurs Agricoles (UPA), the Quebec umbrella general farm organization. However, several commodity groups, including the Fédération des Producteurs de Cultures Commerciales du Québec (cash crop producers), are strongly opposed to this change. Even more opposed is the Fédération des Producteurs de Porc (pork producers) which has organized major public demonstrations asking for an increase in support levels through ASRA. There is a clear split between UPA and some of its member organizations on this issue. The split between the position of Quebec pork producers – who continue to represent the largest provincial production of hogs in Canada – and that of the Canadian Pork Council, which opposes price-specific support programs, is also of interest.

The dissatisfaction level is also high in the Peace River area of British Columbia and Alberta where many farmers -- and some politicians -- are proclaiming that the Farm Income Disaster Program (FIDP) is inadequate to address income shortfalls caused by two successive years of crop failures. (Note that an Alberta-type FIDP program has recently been introduced in British Columbia. In fact, the British Columbia program is being administered by the Government of Alberta, on contract.) Some government officials have suggested that the problem in Peace River country is more a result of inadequate crop insurance, not FIDP. In any case, there are a lot of unhappy campers in the Peace.

Crop Insurance

As part of efforts to introduce “separate farm” coverage for crop insurance for field crops in Ontario, AGRICORP is involved in a study using actual crop records for farmers who farm several properties and who have reliable historic yield data for the individual farms. A survey has gone to all OCPA delegates and alternate delegates seeking those who have such information and who would be willing to participate in the study.

If you have crop yield records of this nature, we’d welcome your inclusion in the study. Please contact the OCPA office if you wish to receive the survey data collection forms.

Grain Financial Protection

As members are aware from previous newsletters, the Ontario Ministry of Agriculture, Food and Rural Affairs is eager to privatize all financial protection programs, including the Grain Financial Protection program which has served corn and soybean growers (more recently, canola growers) since 1984. Ministry efforts are aimed at cost reduction – see the two per cent cuts referred to in the first item of this newsletter.

Ontario grain and oilseed groups have expressed willingness to accommodate this change, in part. The plan is that grain and oilseed groups would create a new corporation under the Agricultural and Horticultural Organizations Act, and this corporation would function under authority of the Government of Ontario, but would be independently financed. Costs for operating the dealer licensing program (to ensure “financial responsibility”) and all operations associated with the financial protection program would be funded out of the existing grain financial protection program. In the case of corn, the protection fund is now about $3.8 million, and the interest earned on this, plus continuing contributions equivalent to 0.1 cents/tonne on all commercial sales, should be sufficient to pay operating costs plus address future financial protection payouts for corn. (Note that the 0.1 cents is part of the 40 cents/tonne which is deducted from corn producer cheques at the time of sale.)

However, grain and oilseed producer groups are opposed to a request by OMAFRA that producer groups cover the cost of administering and policing the Grain Elevator Storage Act. This act exists to prevent elevator operators from taking grain which is stored on their premises but owned by farmers. Our opposition involves disagreement with the principle that farmers should have to pay for protection against fraud and theft, as well as the fact that the act also covers crops other than corn, soybeans and canola.

If the Government of Ontario drops its plan for producers to finance functions under the Grain Elevator Storage Act, then grain and oilseed groups will support the proposed new legislation.

Thank You to Hostess/Frito-Lay

As part of the “Taste of Ontario” reception in the Ontario Legislature hosted by the Farmers of Ontario in late April, farm groups were asked to provide food items made from their respective commodities. In the case of corn, this involved a large percentage of the foods provided, since corn is used in the production of all livestock and poultry products in Ontario and is an essential ingredient in many prepared foods.

However, an ample supply of corn and taco chips were also available, thanks to a gracious donation from Hostess/Frito-Lay.

Thank you Hostess/Frito-Lay!

Corn Extension Position

Candidates were interviewed in early May for the position of corn extension lead (i.e., expert). An announcement is expected shortly, perhaps before this newsletter is published.

As noted in earlier newsletters, this is a special pilot project being funded jointly by the Agriculture and Rural Division of OMAFRA, and the OCPA. The person will be located in the Department of Plant Agriculture (formerly Department of Crop Science) at the University of Guelph, and will be expected to work closely with researchers at all campuses of the university, public and private extension personnel across Ontario, innovative farmers and corn experts outside Ontario, to provide coordination and communication. Our hope is that person will fill the role similar to that performed by extension experts located at U.S. land-grant universities.

The Department of Plant Agriculture, University of Guelph is also supporting the project through the provision of office space, telephone and computing facilities and some secretarial support.

This is a two-year pilot project. The assumption is that if the project is successful it will become permanent. The OCPA commitment is for the long term.

Ethanol Plants

The Commercial Alcohols Inc. (CAI) plant continues to operate at less than full capacity because of start-up problems associated with production of “distillers dried grains” (DDGs, the high-protein feed by-product). However, a new dryer will be in place in early June, so that the plant can then function at full capacity.

Although progress has been made in addressing the grading problem which existed initially at the plant (caused by excessive corn breakage in the corn sampling setup) some problems still remain. We appreciate efforts which have been made by CAI, the Canadian Grain Commission office in Chatham and private grain companies to correct this problem.

According to the Fédération des Producteurs de Cultures Commerciales du Québec, construction will begin on the second major CAI ethanol plant (also, 150 million litres per year), east of Montreal, later in 1998. The plant should be completed in late 1999. About 700 Quebec farmers have contributed financially to this venture. As a result, producers who are members of the contributing group, Pro-Ethanol, will have the first right to provide up to two-thirds of the corn (up to 10 million bushels) at a price at least equivalent to that of imported corn. Details on this formula are still being negotiated.

Thanks in part to a $2 million loan from the CanAdapt program, financed by Agriculture and Agri-Food Canada and administered by the Agricultural Adaptation Council, it is expected that the Seaway Valley Farmers’ Energy Cooperative of Cornwall will be making a formal announcement about further construction plans in the near future.

Finally, we understand that plans are afoot for a doubling of the CAI plant at Chatham, perhaps around the year 2000.

All of this is being driven by strong domestic demand for fuel-grade ethanol as a gasoline enhancer, and strong domestic and export markets for industrial alcohols (used as solvents, personal care products, etc.). CAI is exporting potable and industrial alcohol, as well as importing fuel ethanol for use in Canadian gasoline. The potential demand for fuel ethanol in Ontario and Quebec is much greater than the present manufacturing capacity.

We’re pleased to see that the fuel tax credit on ethanol used as an automotive fuel is now expected to continue in the U.S., thanks to the efforts of the National and American Corn Growers Associations, and several key U.S. congressmen.

Corn Seed Research Levy

A news release issued by the Canadian Seed Trade Association (CSTA) in late April, entitled “Seed suppliers refuse to collect OCPA tax” shows that the opposition remains strong -- at least among some seed corn companies -- for helping Ontario corn farmers provide more funding for public research on corn.

The release lists the same “proposals” which have been listed by the CSTA in previous releases, most of which would require legislative changes, and which would be far less equitable and far more administratively complex than the simple 50 cents/unit on seed corn which has been proposed by OCPA.

The CSTA release is long on rhetoric and short on information. More information is contained in an article written by John Cowan of Hyland Seeds/W.G. Thompson and Sons Ltd. in a recent issue of “Trade Winds,” produced by the CSTA. Mr. Cowan makes it clear that a major reason for opposition is that the checkoff could give Ontario corn farmers too much control over the direction of corn research in Ontario. Yet the article also says that the amount of money to be collected by the proposed seed levy ($385,000 per year, according to CSTA calculations) would be minute compared to the $10-million per year which the corn seed industry says it spends on corn research annually in Ontario. (The CSTA claims that corn seed companies spend $300-million annually on corn research related to Ontario maturity needs, though there is no indication of third-party verification of these numbers.)

This leads to an interesting question: If the $385,000 will be such a pittance, why are the companies so up-tight about its control by Ontario corn farmers?

Cowan, who is chair of the CSTA Corn Committee, raises another concern in his CSTA article that companies would still be expected to support public research themselves, even if the levy is introduced. This ignores the fact that the levy will be paid by farmers, and should have nothing to do with seed company support. Admittedly, there will be some minimal administrative cost to companies associated with the corn seed levy – i.e., for changing invoice forms andin forwarding one cheque per year to an independent fund trustee – but this should be small.

OCPA has been seeking to learn how much money corn seed companies now contribute to public corn research. We understand that no support is provided by most companies, though a few companies provide substantial support.

Finally, the CSTA raises concern that the corn seed research levy could be a precedent, and that growers of other commodities might seek similar levies. It’s disappointing that the companies do not see this as an opportunity to encourage public research, at minimal cost to them, and with the potential for major economic benefit to them as well as their customers. It’s also sad to see the CSTA being drawn into such an anti-public-research position.

All of the above reinforces a conclusion which we presented several newsletters ago – that the real concerns being raised by seed companies involve the issues of control and precedence, and that all of the fuss being created about “costly and complex administration” is just a smokescreen.

We’ll persevere.

Biotechnology Reviews

A major review of biotechnology and related government policies is underway at the federal level in Canada, led by Industry Canada. The Government of Canada had established a policy on biotechnology in about 1996 when it decided that agricultural and food biotechnology would continue to be regulated by acts such as the Canada Seeds Act, the Canada Fertilizers Act, the Pest Control Products Act, etc. However, there was substantial opposition to this from within Environment Canada and among some MPs, especially the Honourable Charles Caccia, a Toronto MP, who was a Minister of Environment during the Trudeau era, and who now chairs the House of Commons Standing Committee on Environment and Sustainable Development. As a result of this opposition, the Canadian policy is being reconsidered.

The resulting review involves several departments and a myriad of public and private meetings. OCPA made a submission noting the expected benefits of agricultural biotechnology to farmers, consumers and rural environment. We stated:

• The role of government should be to facilitate agricultural biotechnology research and development, while taking steps needed to ensure that the benefits associated with such R and D exceed any associated risks to health and environment. This can be done within the existing regulatory system for agricultural and food and associated input usage. Regulatory decisions must continue to be based on scientific assessments of risk.
  
• Labeling of “biotechnology-derived” food products should be restricted to situations where the genetic alteration is known to cause allergenic problems, or where nutritional composition has been changed significantly.
  
• It is important than Canadian research on agricultural biotechnology be encouraged, so that we do not have to rely exclusively on technology developed elsewhere. Canadian patent law must protect such Canadian research investment, both public and private.
  
• Agriculture and Agri-Food Canada, and Canadian agricultural universities, must continue to play a major role in agricultural biotechnology research, and such research must occur in all significant agricultural regions of Canada, rather than being concentrated in only one region. Efforts should be made to encourage the formation of multi-partner research teams, including researchers at several public and private centres, to ensure that Canadian efforts are coordinated, targeted, and done with a sufficient “critical mass” to be of international stature.
  
• Canadian agricultural biotechnology and related plant breeding research must continue to be eligible for research tax credits.

Greenhouse Gases, Agriculture and Soil “Sink” Capacity

In our May newsletter we raised a concern that Canada may ignore the potential of agricultural soils to serve as a sink for carbon dioxide, a major greenhouse gas, in its national plan for meeting its “Kyoto” commitments. This concern continues, though a number of events have, or are occurring, to address this concern.

One of these is a new national “table” on sinks which was created by Canadian ministers of environment and energy in late April and which has already held an initial meeting. OCPA staffer Terry Daynard is a member of this committee, representing the National Agriculture Environment Committee. The committee is reviewing a discussion paper which suggest that additional organic matter storage in farm soils could represent a sink for an additional 13.5 million tonnes of carbon dioxide per year by the year 2010. Most of this benefit is projected to come from increased soil organic matter levels associated with no tillage, though other factors such as reduced summer-fallow acreage and increased forage production in Western Canada will also be important.

To put this in perspective, Canadian emissions of greenhouse gases were estimated at 567 million tonnes of carbon dioxide equivalent in 1990, and are projected to be 669 million tonnes/year in 2010 in a business-as-usual calculation. The Kyoto commitment is for emissions at six per cent below 1990 levels by 2010, or 533 million tonnes/year, meaning a difference of 136 million tonnes (669-533 million tonnes) if the Kyoto commitment is to be achieved. Viewed this way, soil management (chiefly no tillage) could help Canada meet at least 10 per cent of its Kyoto commitment.

And this does not include benefits which are expected from other changes in technology including higher crop yields, increased usage of renewable fuels,more efficient usage of nitrogen fertilizer, more efficient use of manure, improved ruminant nutrition and much more.

Agriculture must be a key component of any Canadian strategy for reduced net emissions of greenhouse gases. Please let your MP know about the importance of no tillage and soil sink capacity for carbon dioxide (organic matter).

“Tony Vyn” Position

We’re pleased that the University of Guelph has granted permission for the “Tony Vyn” position vacancy to be filled as quickly as possible. We understand that the position will be “posted” in the near future. The process involves a search within Canada first. If no suitable Canadian citizen or landed immigrant can be found, then permission can be granted to search internationally. This is the process which was followed in the employment of Dr. Elizabeth Lee as corn breeder in the Department of Plant Agriculture, University of Guelph. (Editor’s Note: See story elsewhere abour Dr. Lee in this issue of Ontario Corn Producer.)

Tony Vyn leaves Guelph for Purdue University in August. Hopefully a replacement will be in position soon afterwards.

OCPA and other members of the Ontario Field Crops Research Coalition have written the University of Guelph and OMAFRA, asking that a second position be created in the Department of Plant Agriculture to work on field agronomic research. When Dr. Dave Hume became department chair a few years ago, no faculty member was appointed or reassigned to pick up the research which Hume had been doing in the realm of soybean production and physiology. This gap may be one of the reasons why Vyn was attracted to Purdue where there are eight faculty members working on crop agronomy. It is our view that the vacancy created by Hume’s shift to administration must be refilled quickly.

Biotechnology is an important component of crop research. But this must be balanced by strength in field crop agronomy as well. Ontario has lost a lot of professional positions in this area over the past three-five years. It’s crucial that some rebuilding occur.

Changes at AGCare

AGCare’s new chair, Jim Fischer, and his board of directors have moved quickly to strengthen the organization’s efforts in the realm of public communications. AGCare has hired Ms. Sarah Grant, a recent graduate in Food Science to work half-time on risk communications. Sarah will work the other half of her time with Dr. Doug Powell in the Department of Plant Agriculture, University of Guelph.

Sarah’s job will include monitoring the media for issues related to the use of crop inputs and crop biotechnology, and to assist AGCare in responding in a timely manner.

Pesticide Container Recycling

Another season has begun for Ontario’s successful pesticide container recycling program. An estimated 85 per cent of all farm pesticide containers are being recycled, and the cleanliness of the containers returned by farmers to dealers has been excellent. In addition the cost for this program has declined. The Crop Protection Institute (CPI) assesses a fee of 62 cents/container on all containers of pesticides up to 23 litres in size to pay for this program, and other associated costs. The fee was formerly $1 per container.

It is our understanding that the Ontario program has worked somewhat better, and more efficiently, than its counterpart in Western Canada. There are more problems with non-rinsed containers in the West. The difference appears to be that containers are returned to the dealer in Ontario, as compared to unsupervised county collection sites on the Prairies.

Interestingly, the container recycling program is shifting to dealer-operated depots in Saskatchewan, but such a proposed shift is being actively opposed in Manitoba.

Hats off to AGCare, CPI, and the Ontario Ministries of Environment, and Agriculture, Food and Rural Affairs, for the success of this program, which has effectively eliminated what was a major environmental problem a few years ago.

Thanks to AAFC, Ridgetown for Input Price Survey

OCPA expresses its appreciation, again, to Ridgetown College, University of Guelph for operating an input price survey, and for AAFC, for funding this survey. The survey involves a large number of sites across southwestern and Midwestern Ontario, plus several sites in Michigan, Ohio and Indiana.

Initial survey results for 1998 show that prices are generally similar in the two countries, with some notable exceptions. Roundup, Pursuit, Prowl, Pardner and Dual are significantly cheaper, on average, in Ontario. Frontier, Sencor and atrazine are less expensive in the U.S. Fertilizer prices tend to be, on average, lower south of the border.

Corn Prices (May 11, 1998)

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