SEMI-ANNUAL MEETING
A highlight of the OCPA 1999 semi-annual meeting held in Woodstock
on September 9 was the line-up of excellent speakers. Brian Doidge of Ridgetown College, University of Guelph,
started the program with an analysis of price prospects, including an overview of recent enhancements in U.S. grain
subsidy programs. His Market Trends column is published elsewhere in this issue (see also the safety net newsletter
items below).
Doidge reported that U.S. subsidy programs now favour American soybean production over corn, a reversal of the
situation experienced for most of the past 15 years. Brian said this could mean a greater depressing effect on
world soybean versus corn prices; Ontario farmers might want to consider shifting more acreage to corn in 2000.
Some time was also spent discussing the need for Ontario to develop identity-preserved corn marketing mechanisms
so that the province can be in a better position to serve the needs of different customers, including those who
want corn which is not genetically enhanced.
Ross Daily, formerly of CFPL-TV, London, and now a financial planner with Scotia-McLeod, followed with a highly
critical commentary on Ontario agriculture. He does not believe the Ontario agricultural industry can adapt to
the production of identity-preserved corn, and criticized agricultural biotechnology, manure management, farmer
(non)use of the Internet, and the attractiveness of farm home properties. It was beneficial for corn farmers to
be exposed to this criticism, even if the audience was somewhat unreceptive to his messages.
Peter Sikkema of Ridgetown College, University of Guelph, spoke about corn weed management, with particular attention
to new herbicides which will be available for use next spring. These new herbicides include: Converge, Axion, Summit,
Ultim One Pass (which is a twin pack of Ultim + Distinct), and Distinct Total (which is a twin pack of Accent +
Distinct).
Bob Friesen, president of the Canadian Federation of Agriculture (CFA), was the fourth speaker. He presented an
overview of CFA activities and policies in several areas, including safety nets and trade. The CFA seems deeply
committed to a position that safety net programs must be WTO “green” to avoid countervailing duties, despite the
lack of similar concern in the U.S. and European Union about the greenness of their support programs. (The U.S.
has shown – in the case of Canadian beef – that anti-dumping duties are an equally effective means of hampering
Canadian imports.) Unlike Daily, Friesen spoke positively about biotechnology, though in more guarded tones than
those generally used by Ontario crop groups (his caution may be a function of the CFA membership base). OCPA appreciates
efforts by the speaker to build better relationships between CFA and commodity groups, such as the Ontario Corn
Producers’ Association.
The luncheon speaker was the Honourable Ernie Hardeman, Ontario Minister of Agriculture, Food and Rural Affairs
(OMAFRA), in one of his first speeches to a farm organization since his appointment as minister in June. Hardeman
covered a number of subjects but dwelt extensively on the low level of support which Ontario agri-food receives
from Ottawa (relative to scale of provincial agri-food output), compared to other provinces. This is a theme which
OCPA has emphasized for many years, and we welcome the minister’s support. Hardeman is likely to act more aggressively
on this issue than any other Ontario agriculture minister in recent memory. Thanks, Mr. Minister.
COMMITTEE REPORTS AND RESOLUTIONS
During the afternoon business meeting on September 9, OCPA committee
chairs presented summaries of recent activities and future goals, and answered questions from the floor. Copies
of these written reports are available to any member on request. They are also on the OCPA web site (www.ontarocorn.org).
Six resolutions were considered, five of which were approved, and one referred. Resolutions were approved calling
for: • the retention of Market Revenue Insurance (MRI), crop insurance and NISA; • two interim MRI payments per
year (as well as the final payment); • the level of coverage with MRI be increased to the 90 per cent level; •
OCPA to continue lobbying for greater equity in federal safety net spending, and • “inventories [to] be valued
at fair market values consistent with Revenue Canada provisions and accepted industry standards,” in the Ontario
Whole Farm Relief Program (and Agricultural Income Disaster Assistance program of Agriculture and Agri-Food Canada).
A resolution was referred to the OCPA Research and Technology Committee which asked the association to request
seed companies to stop using seed corn liability forms for commercial use of genetically enhanced corn hybrids.
These resolutions will guide OCPA directors in their efforts during the coming year.
CORN BIOTECHNOLOGY
Corn biotechnology was a central theme during the semi-annual meeting,
being featured in most of the speaker presentations, and in business meeting discussions during the afternoon on
September 9. OCPA directors and staff cautioned members about the difficult communication battle which lies ahead
in efforts by this organization and others to inform the public about the positive aspects of agri-food biotechnology
(because of coordinated opposition coming from the Sierra Club, Greenpeace, the Council of Canadians, and many
other activist groups). None the less, OCPA delegates voted nearly unanimously, and without dissenting vote, to
identity such communication as a top priority. Delegates felt the Ontario corn industry has too much at stake to
concede defeat in efforts to advance technology offering opportunities for better crop yields and product quality,
safer pest control methods and lower costs of production.
OCPA agri-food biotechnology communication efforts are being coordinated closely with those of AGCare, an affiliation of field
and horticultural crop farm organizations with similar interests. OCPA and AGCare are developing working relationships
with a number of other provincial and national groups, including the Consumers’ Association of Canada and Ontario
Agri-Food Technologies which have positions on ag biotechnology very similar to those of the farm groups. However,
intensification of the anti-biotech efforts of other groups is also anticipated for this fall and winter.
The present uses of corn biotechnology – Bt corn resistant to European corn borer, and hybrids resistant to certain
herbicides – already offer significant benefits to farmers, consumers and the environment. However, the benefits
of other technology expected to be introduced for commercial use within two- to five years time are more substantial.
OCPA directors are especially concerned about new races of both Northern and Western corn rootworm – now in the
U.S. Midwest – which wreak havoc on first-year corn, effectively removing the value of crop rotations as a means
of controlling these insect pests. Applications of soil-applied insecticides have increased dramatically where
these new races have become established, and surveys show this now exists in parts of Michigan and Ohio. The hope
is that new Bt corn hybrids, with specific resistance to corn rootworm, will be available for commercial use by
the time the new pests reach Ontario in two-to-three years time.
The total Ontario use of soil-applied corn insecticides for corn rootworm control decreased from about 150,000
kg/year in 1983 to 16,000 kg/year in 1998 according to OMAFRA survey data. This was a result of increased use of
crop rotations. Hopefully Bt-corn-rootworm-resistance technology will prevent a reversal of this trend, with associated
increases in potential environmental problems and farmers’ expenditures for pesticides.
The other developing technology of special interest is biotech-based resistance to Fusarium moulds and mycotoxins. The research to develop resistant corn – being co-funded
by OCPA, Ontario Pork, several seed companies, and two levels of government – is proving fruitful. However, several
more years of research and testing (including for human and animal health safety) will be needed before these hybrids
can be used commercially. The potential value in producing corn essentially free of toxins, for human and livestock
food/feed purposes, is large.
Hopefully, these benefits will not be killed in infancy by the phobia being created by anti-biotech/anti-business
groups this fall.
At the same time, we need to seek means to better insure that farmers share in the benefits of the new technology,
as well as consumers and large companies.
CORN PROCESSORS AND GENETICALLY
ENHANCED CORN
A major meeting involving
OCPA, corn processors and representatives of the Ontario seed corn and grain
trade industries occurred on September 8 in London, to review plans for ensuring
that processors receive only EU-approved corn this fall. There is general comfort
that farmers and dealers will take steps to ensure that processors’ needs are
respected. Indeed, this should not be too difficult given that only about two
percent of the 1999 crop involves unapproved hybrids, and the processors only
use about one-third of the total grain crop. Many elevator locations will only
be accepting corn grown from approved hybrids in 1999/00. But a large number
of elevators will be accepting all corn. A partial list of elevators
accepting all hybrids is published elsewhere in this magazine. The list is incomplete,
however, and many elevators have stated that they may change their position
depending on future circumstances. Producers growing E.U. unapproved hybrids
are advised to check with their customers or other local delivery locations
before harvesting corn this fall.
An issue OCPA will be monitoring closely this fall is Casco’s intention to import U.S. corn from at least one location
(Anderson’s at Toledo/Maumee, Ohio) which will be accepting deliveries of both approved and unapproved corn hybrids
this fall. (See also Brian Doidge’s Market Trends column.) Casco has been informed that the goodwill of Ontario
farmer activities to respect their needs regarding 1999/2000 corn purchases will depend on the integrity of the
company’s own purchasing policies.
There is no indication as yet that Ontario-based corn processors will be following the lead of ADM in the U.S.
in segregating purchases of non-genetically enhanced corn this fall – presumably for higher-priced sales to certain
buyers. However, if Ontario-based buyers want to pursue the same route, this should be possible, for suitable price
premiums.
OCPA is watching those North American food processors who have announced decisions to avoid the use of genetically
enhanced “organisms” in the manufacturing process. We hope that the public and media will be diligent and ensure
these companies are indeed honouring their commitments... commitments which involve much more than (non)purchases
of genetically enhanced corn, soybeans and canola. For example, almost all rye has been genetically modified (chemical
treatment to double chromosome number, to produce tetraploid rye) for many decades. Many barley varieties have
been genetically enhanced for about four decades. (These varieties arise from crosses between barley and a wild
species, Hordeum bulbosus; the resulting petri-dish, tissue-callus material is treated first with a chemical to
double the chromosome number, and then with other chemical and/or nutrients to induce the calluses to develop into
plants.) In addition, genetically enhanced microorganisms and/or enzymes are used in the manufacture of beverage
alcohols, cheese, and a host of other food products. It will not be easy to prove and certify that foods are free
of genetically enhanced organisms.
AAFC AND AGRICULTURAL BIOTECHNOLOGY
Another biotech concern of OCPA directors is the continuing propensity
of Agriculture and Agri-Food Canada (AAFC ) to channel biotech research funds preferentially to Western Canada.
Although OCPA was informed last spring that about half of $17 million in new AAFC funds in the 1999/00 federal
budget for biotech research would be targeted to Central and Eastern Canada, (with about 22 per cent being for
corn research), the resulting breakout is about two-thirds for AAFC research at Saskatoon and Winnipeg, and about
14 per cent for corn...and this is after about $7 million will be removed “off the top” for some other “national”
interests. While the money for corn research is appreciated and will be put to good use, the continuing bias in
federal spending is of concern.
We note also that the National Research Council (NRC) received $17 million in new biotech research money in the
same budget. Of that portion targeted for agricultural research (estimated to be at least half), it is understood
that all will be going to Saskatoon.
The Saskatoon Star-Phoenix carried an announcement in mid-September of $20 million in new federal money over three
years coming via the NRC and AAFC for expanded biotechnology research in that city.
There is serious talk of a new larger allocation of federal money for targeted “genomics” research with perhaps
a third of the total commitment coming to agriculture. Ottawa has chosen AgWest Biotech in Saskatoon to head up
the agricultural team. While University of Guelph researchers are involved somewhat in the planning process, with
discussions about the use of some of the new money for corn and soybeans, this also sounds like a primarily Western
initiative.
Federal agriculture minister the Honourable Lyle Vanclief has stated his intention to ensure a more equitable allocation
of AAFC spending (including research spending) across provinces. But actions to date show no change in policy since
he succeeded the Honourable Ralph Goodale, whose pro-Saskatchewan biases were (are) well known. And AAFC staff
continue to trot out statistics attempting to mask the distortion by crediting the AAFC spending account with price
benefits enjoyed by supply management farmers as a result of large import tariffs. (Curiously, they refuse to include
income losses experienced as a result of federal regulatory impediments to the use in Canada of technology available
only in competing countries, an issue especially relevant for horticulture.)
MARKET REVENUE INSURANCE
UPDATE
The best guess is that the final 1998/99 Market Revenue Insurance
(MRI) payment will be about the same size as the interim payment distributed in May – about 13 cents/bu. This is
after subtracting one-third to cover producers’ share of premium costs.
To date, delays in Ottawa have prevented the OMAFRA from making a formal announcement about the 1999/2000 MRI program.
However, it is understood that the 1999/2000 support price will be about the same as in 1998/99, about $3.32/bu.
(economist Brian Doidge estimates it at $3.34/bu for 1999/2000 and $3.39/bu for 2000/2001.)
An appeal process is now underway, with the first meeting having occurred on September 17. Cliff Leach of Brant
County (and former OCPA president) represents corn farmers on the appeal panel. Those who did not receive an MRI
interim payment in May should be calling Agricorp (or OCPA) immediately, to inquire about appeal processes. In
many cases, Agricorp has been able to solve problems without having to use the appeal panel.
New producers are also encouraged to make sure they are in the MRI program. The deadline for enrolment in the 1999/2000
program has been extended until December 31, 1999. Participation depends upon the submission of 1999 planted acreages
and final yields, and an underwriting process by Agricorp staff to estimate an historical average yield base.
Make sure you are in this program. It is difficult enough to make a living growing corn (and other grain and oilseed
crops) this year in Ontario with Market Revenue Insurance. Without MRI coverage, it is essentially impossible.
Contact Agricorp (1-888-AGRI-999) for details.
Ontario grain and oilseed groups have asked that the MRI program continue at least until we know U.S. farm support
plans for after the year 2002 (when so-called “transition payments” are scheduled to end) and until after the outcome
of the next multinational trade negotiations are completed. With the current MRI fund account balance (about $310
million, after accounting for the 1998/99 interim payment), accumulated interest, and new annual government contributions
of about $25 million per year, there should be enough money in the MRI program to meet this objective (i.e., for
another three to five years).
The key question is whether the Government of Canada will permit this to occur. Finance Canada is considering withdrawing
$112 million contributed to the plan (as part of federal contributions to safety net program funding in Ontario)
prior to April 1, 1995. If this money is lost, and Ontario withdraws an equivalent contribution of $70 million,
there will not be enough money to sustain the MRI program.
Once again we note that even with this program, Ontario’s share of federal spending on safety net programs – let
alone total agri-food programs – will continue to be much less than Ontario’s relative output of non-supply managed
agricultural production.
OCPA thanks Brian Doidge for a recent analysis comparing government support for a typical 500-acre corn-soybean-wheat
grower farming in Ontario versus Michigan (200 acres each of corn and soybeans, 100 acres of winter wheat). Although
an analysis completed by Doidge in 1997 of 1992-1996 average support had showed government assistance to be roughly
equivalent between the two locations, the situation is now dramatically different. Doidge’s analysis shows that
the farmer would have received an average of $28.52 per acre in Ontario for the 1998 crop and $103.61 (Canadian
currency) per acre for the identical farm situation in Michigan. For the 1999 crop, even though Ontario assistance
will be up to an estimated $48.50 per acre (primarily because of larger expected payouts for soybeans), the Ontario
support will still be well below the estimated $90.51 per acre for the U.S. grower. Note that these numbers were
developed before knowing the total assistance to be provided in 1999 to U.S. farmers. The final U.S. number could
well be much larger.
This is not a level playing field, even with Market Revenue Insurance support. Without it, the discrepancy would
be far greater.
OCPA directors have not yet dealt with the resolution passed at the 1999 semi-annual meeting calling for 90 per
cent support under MRI. In the near-term, this will be difficult to achieve, even recognizing the large discrepancy
between Ontario and the U.S., and the continuing imbalance in federal assistance across provinces. In the longer
term, it’s hard to judge what might be possible.
OWFRP/AIDA
In light of earlier comments here, it’s curious how the focus of
national discussions on safety net support – primarily to address income needs of grain and oilseed farmers – continues
to be on the national Agricultural Income Disaster Assistance (AIDA) program (known in Ontario as the Ontario Whole
Farm Relief Program). The national discussion is being dominated by the Canadian Federation of Agriculture, primarily
because the new national advisory committee is stacked with CFA appointees.
The CFA does not seem to be hearing the loud cries coming from Western grain farmers who say AIDA cannot fill the
need. These cries are consistent with the conclusions which OCPA and other Ontario grain and oilseed groups reached
last fall. A support program based on 70 per cent of a three-year average cannot work when grain-farmer income
is depressed for many years in succession, because of the excessive production caused by continuing large U.S.
and EU subsidies. Farmers in those countries are farming for government programs, and make no bones about it.
It’s interesting that the chant, “GRIP, GRIP, GRIP” coming from farmers in the audience, has drowned out politicians
at more than one prairie farm rally this year. And a number of Western farm groups including the Saskatchewan Wheat
Pool and Agricore have written directly to the Prime Minister requesting additional support for grain and oilseed
farmers, apparently bypassing both the CFA and Minister Vanclief.
Tinkering with AIDA, as is being proposed by the CFA and the national committee, is not good enough. Perhaps what
is needed is a return of the national GRIP program, or some other national grain and oilseed support program designed
to address the harm caused by equivalent programs in the U.S. and EU. But don’t expect this to come easily. The
national leadership for change, if such is to occur, will have to come from other sources – such as grain and oilseed
commodity organizations.
OCPA does acknowledge that AIDA/OWFRP has been of value for many farmers, especially those involved in pork and
beef production.
NEGATIVE MARGINS AND CROP
INSURANCE
OCPA has special concerns about an expected decision by Minister
Vanclief to extend AIDA program coverage to cover negative margins, or at least a portion thereof. The rationale
seems to be twofold – continuing strong pressure from the Canadian and Ontario federations of agriculture, and
a concern that Ottawa will not spend all of its AIDA budget of $900 million (even though the best guess is that
at least $550 million in federal funds will be spent in the first year, alone, of a two-year program). But what
happens if Ottawa spends too much in year one, and does not have enough for year two? Prorated payouts in year
two? The CFA response is that Ottawa should provide more money if this need arises.
There seems to be little enthusiasm at the provincial level to match a potential federal decision to cover negative
margins – even recognizing that the original deal was for provinces to cover 40 per cent of total program costs.
Full coverage of negative margins would increase program costs by an estimated 30 per cent. An analysis by OMAFRA
staff shows that about 11 per cent of AIDA program recipients in Ontario would receive this benefit, or about 600
farmers provincially. The total cost of AIDA/OWFRP is expected to be about $75-90 million for Ontario for 1999,
not counting negative margins.
For OCPA, the biggest concern for all of this involves the effects on crop insurance. OCPA is grateful for an analysis
completed by staff of the Ontario Federation of Agriculture (OFA) of the effects of AIDA/OWFRP on crop insurance,
with or without coverage of negative margins. OCPA staff has extended the OFA analysis to include a typical corn-soybean-wheat
farm (no livestock) where yields are depressed equally for corn and soybeans by inclement weather (no effect assumed
for wheat yields). The analysis shows that, if crop prices are assumed to be the same in the current year as in
AIDA-base years, then a yield decline of only 14.5 per cent for corn and soybeans will trigger an AIDA payout.
AIDA as presently structured (negative margins not covered), would cover yield losses of between 14.5 and 48.5
per cent of normal. If negative margins are covered, yield losses of up to 100 per cent would be covered.
In other words, AIDA as presently structured provides about 85 per cent crop insurance coverage, without the need
for crop insurance premiums, as long as the yield loss is not greater than about half. If negative margins are
covered, the coverage is equivalent to 85 per cent coverage, even in the event of a total loss.
The analysis shows that coverage with AIDA is even better when crop prices in the current year are less than the
average of the base years. If current year crop prices are 15 per cent below average, for example, AIDA provides
the equivalent of 100 per cent crop insurance coverage, without the need for crop insurance premiums, according
to calculations based on the OFA analysis.
AIDA is already a major threat to crop insurance. With full coverage of negative margins, the value of crop insurance
could be dramatically reduced for those primarily dependent on sales of corn and soybeans for their farm income.
We expect that it’s much the same for grain and oilseed producers in other provinces. This is consistent with the
advice of accountants who have contacted OCPA in recent months reporting that a dominant factor determining whether
crop farmers are eligible for AIDA/OWFRP assistance in 1998, in drought-affected counties, is whether they participated
in crop insurance or not.
We understand similar conclusions have been drawn internal analyses completed by agricultural officials within
both the Canadian and Ontario governments.
Bob Friesen, president of the Canadian Federation of Agriculture (CFA), told OCPA directors and delegates at the
semi-annual meeting that he is committed to ensuring that AIDA does not hurt crop insurance, but CFA presented
no good ideas as to how this can be done. Federal government officials have stated that the concept of subtracting
“deemed” crop insurance benefits from AIDA payouts, for those not having crop insurance, is not practical given
the complexity of the calculations (5-10 year yield bases for crop insurance calculations, versus three-year financial
records for AIDA, as an example), and the diversity of crop insurance programs across Canada.
But it’s good to have someone within the CFA finally acknowledging that there is a threat to crop insurance.
Federal agriculture and agri-food minister Hon. Lyle Vanclief seems eager to proceed with negative margin coverage.
This will benefit very few Western Canada grain farmers and could be the biggest threat to crop insurance ever
imposed by a Canadian minister of agriculture.
A CAUTION ON CROP INSURANCE UNSEEDED
ACREAGE COVERAGE
At the risk of further undermining the credibility of crop insurance,
the Government of Canada announced in early summer that it would be providing $25/acre to farmers who were unable
to plant crops in parts of the Canadian prairies this year. The payment came, in part because of national TV coverage
for sure, but also because of the inadequacies of the unseeded acreage benefit (USAB) programs in Manitoba and
Saskatchewan. Unseeded acreage coverage has been available as an optional program in Manitoba (which few farmers
used), and was only provided at $25/acre in Saskatchewan.
Ontario farmers should be aware that the coverage level is also not high in Ontario. USAB coverage is provided
at one-third of maximum (i.e., as compared to situations where crop loss occurs after planting), and is only provided
if 100 per cent of spring-seeded field crop acreage is enroled. The last widespread calamity of a similar nature
occurred in Ontario about 10 years ago when many farmers in the Niagara Peninsula and Essex County were unable
to plant because of continuous spring rainfall. As a result of that situation, OCPA and OMAFRA launched a major
review to determine how greater benefits could be provided, especially in cases where substantial portions of the
total farm acreage could not be seeded. A catch was that premium costs would become much higher than the existing
$1/acre charge for USAB coverage. After considerable analysis, and discussion at crop commodity group winter meetings
in Niagara, Haldimand and Essex, producers voted strongly in favour of making no changes to the crop insurance
USAB program. So that’s the way it continues to date. The protection provided by USAB is not high.
CORN PRICES (September 13, 1999)
| Period: Oct. 1 - July 31 |
Approximate Tonnes Marketed |
Average Weighted Price |
| 1998-99 |
3,385,800 |
$117.77/tonne |
| 1997-98 |
2,020,000 |
$147.11/tonne |
|
1996-97 |
2,571,100 |
$151.07/tonne |
| The above figures are based on levies received by OCPA for commercial sales. | ||
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