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Index

Safety Net Update
At press time, (mid October) there wasn’t a lot of news on the federal safety net front. The Honourable Lyle Vanclief, Minister of Agriculture and Agri-Food, has apparently met with his cabinet colleagues to discuss various safety net issues. These include negative margins with AIDA, pressures from Western Canada, Market Revenue Insurance, and others, but no final decision has been made.

Vanclief and his cabinet colleagues can expect to hear more from Western Canada in the coming weeks, now that the Prairie harvest season is over and regional farm meetings have begun. Liberal candidates fared poorly in two recent Prairie elections, and there will be pressure on their Liberal colleagues in Ottawa to “do something.” In addition, an NDP government in Saskatchewan lost almost all of its rural seats because of farm unrest, and similar angst undoubtedly affected the Manitoba election result.

The focus in Ottawa is still on AIDA and the possibility of negative margin coverage, despite its threat to crop insurance. But that’s not where the discussion lies along rural roads in the West, where farmers are seeking something more specific to cropping. Expect to see mainstream Prairie farm organizations endorsing the cries from ad hoc groups for acreage- or production-linked payments, and abandoning the AIDA-centred approach being advocated by national offices in Ottawa. Some Prairie farmers have told OCPA that election results in two provinces would have been different if GRIP programs for grain farm income support were still in place. And until something is instituted in that region as a counterpart to GRIP, specific for grain and oilseed production (where most EU and U.S. farm subsidy support is targeted), the unrest will intensify in the West.

The problem is compounded by the fact that when Manitoba and Saskatchewan ended GRIP, they used some of the money saved to increase subsidization for crop insurance. Governments now pay almost all of the costs for crop insurance coverage up to the 50 per cent level. Though governments pay a declining percentage of premium costs for incremental coverage above this level, the farmer’s bill is never 50 per cent of premium costs, like it is in other provinces. Which politician is now going to tell these farmers this may be taken away if better coverage is to be provided on the price side?

(It’s enigmatic how ineffective this enhanced crop insurance coverage was during the wet field conditions of 1999 in these provinces. The government response was to provide further assistance.)

And Ontario arguments about a more equitable share of federal safety net spending are being heard by some in Ottawa, thanks, in part, to the strong words being voiced by Ontario Premier Mike Harris and the Honourable Ernie Hardeman, Ontario Minister of Agriculture, Food and Rural Affairs, on this issue.

Decisions are still pending on negative margin coverage with AIDA. The federal minister seems to be torn between pressures from the Canadian Federation of Agriculture (CFA) to move immediately on this issue – and related concerns about making sure that “all of the money is spent” – versus a growing recognition that the result could be a death notice for crop insurance, especially if the program is made permanent as CFA has requested. If Ottawa does move to cover negative margins, there is no guarantee that provinces will follow suit for their 40 per cent share of program expenditures.

The Ontario Agricultural Commodity Council (OACC) is reviewing this issue at a special safety net meeting October 26. The OACC believes negative margins should not be included in calculations of AIDA payments, in either the current or reference base years.

There is no news yet from Ottawa on the state of the $112 million in historic base federal funds in the Market Revenue Insurance program account. As described in earlier newsletters, this money is needed to ensure that the program is sufficiently well funded to meet expenditures over the next three-to-five years. We appreciate the support we are getting from the Government of Ontario, and Ontario Members of Parliament in Ottawa, on this issue.

Market Revenue Insurance Appeals
The long-awaited Market Revenue Insurance (MRI) appeal process is now in place, with former OCPA president Cliff Leach of Brant County representing corn producers on the appeal committee. The first formal appeal meeting is expected to occur in November. Producers who have concerns about eligibility for MRI benefits should contact Agricorp immediately (1-888-AGRI-999), or OCPA.

The deadline for enrolment in the 1999/2000 MRI program has been extended to December 31, 1999. If you’ve grown any grain and oilseed crop (including corn silage, and other forms of these crops for on-farm feeding) in 1999, you should be enrolled. Prices for most Ontario grain and oilseeds are terrible at present – about the lowest, ever, in real-dollar values. Make sure you’re enrolled in MRI and NISA, the two complementary programs designed to help address such situations.

Remember that MRI provides compensation equal to two-thirds of the difference between the MRI base price (estimated at about $3.34/bu for 1999/2000) and the 1999/2000 Ontario average price, on 85 per cent of your historic average yield (as assessed by Agricorp, based on your own submitted final yield records), multiplied by 1999 seeded acreage (as shown on Final Acreage Reports, which must be submitted to Agricorp).

Agricorp Review
OCPA congratulates the board of directors of Agricorp on its decision to initiate an external review of operations. Agricorp which has operated now for about three years, represents a unique and complex business entity. It’s a crown corporation and is expected to operate in a manner which reflects both government priorities and business principles – not an easy task. In addition, it is expected to manage traditional service programs such as crop insurance (albeit in new and imaginative ways) and also pursue new business ventures in a profit-oriented manner. This creates special management needs.

An external review after three years of operation makes good sense, and the results will be valuable for guiding both directors and management staff in decision-making processes which lie ahead. It’s important that the review be done in an independent manner, perhaps by someone with expertise in the realm of other service-oriented businesses – not necessarily agricultural in nature.

Crop Insurance
Members of the OCPA Safety Net Committee, chaired by Mat Menich, OCPA director for Brant-Norfolk (and OCPA second vice-president), met with the Agricorp Crop Insurance Committee in late September. OCPA recommended corn crop insurance premium costs be lowered for 2000 in keeping with low corn price expectations. It is expected that the optional unit pilot project will be repeated again in 2000, pending consideration of a permanent program in 2001.

Some of the discussion centred on the Agricorp computing system, noting that limitations in Agricorp computing have continued to restrict many Agricorp functions, including the number of crop insurance options which can be offered. Agricorp is spending a large amount of money upgrading its computing system before January 1. It’s critical that the end result be a system far superior to that which exists now.

Labeling of Genetically Enhanced Foods
Although there are lots of doubts about the wisdom of labelling genetically enhanced foods – and questions about how to do it (see this month’s editorial) – the Government of Canada, in cooperation with the Canadian Council of Grocery Distributors and other organizations, has embarked on a process of voluntary labeling of “foods obtained through biotechnology.” The review is being coordinated through the Canadian General Standards Board (CGSB), the same group which recently announced standards for organic foods.

The CGSB is known for its slow, deliberate approach. The organic standards took years to develop, partly because of differences of opinion within the committee. There is no reason to expect a quick solution for the biotech mandate either.

A committee of 40 voting members has been structured to oversee the process. Ken Hough of OCPA is one member. Jim Fischer of AGCare is another. There are 38 other members, including representatives from other farm groups (one organic producer), several universities, food associations, environmental and consumer groups, and more. This will not be an easy process. Nor is the outcome predictable, though one would hope for more common sense than exists in European labeling rules.

The OCPA position will be that if food is to be labeled, the scope must include all foods which have been genetically engineered, and not just those which the activists have targeted because of their links to certain companies.

What to Plant Next Year?
OCPA is repeatedly hearing producers ask what they should plant next year, and there are no easy answers. The OCPA position – which is based in part on the extensive discussion which occurred at the September semi-annual meeting – is strongly in support of genetically enhanced (GE) crops which have been approved by Canadian regulators, where these options provide superior benefits.

All major seed corn companies intend to continue to offer GE hybrids for sale next year. This includes the sale of Roundup Ready corn, even though it has not yet been approved for importation into Europe. Biotech enhancement has much to offer as benefits for farmers, consumers and the environment, and choices must continue to be available.

Market considerations must figure dominantly in producer plans. Price differentials may become permanently established between GE and non-GE crops, though the size of these differentials is hard to predict. Price premiums are most likely for sales to Europe (not a normal market for Ontario-grown corn), corn processors (who may choose to segregate for different markets, even though their plants are not well designed for doing so), and those exploiting specialty markets (a modified version of organic). Insistence on non-GE corn seems less likely for traditional feed markets, both in Canada and for export (e.g., the Eastern U.S.). Indeed, there may be a preference among some livestock feeders for Bt corn because of its generally lower levels of mould infestation and potential mycotoxins.

Producers will have to weigh potential marketing restrictions for GE corn with the benefits, including better pest control and lower per-bushel costs of production.

Rules for tolerances remain to be sorted out. At press time, proposals have come from Europe of a one per cent tolerance, though it is unclear what this means exactly, or how it will be measured. It could prove to be analytically difficult to do the assays, recognizing the degree of genetic variability in enhanced protein or DNA content which is likely to exist. The early indication from Europe is that enforcement may depend on certification versus measurement – such as already occurs with most organic produce. This will come at a cost.

That said, a one per cent tolerance should be possible, even with a crop with wind-blown-pollen such as corn, though it could require separate removal of headlands, depending on what crop is grown in adjacent fields. Of course, if the premium is right, growers might be willing to take more extreme (and expensive) precautions, to ensure that the buyer gets what the buyer wants to pay for.

Growers may want to line up alternative sources of seed – even recognizing the complication this will represent for the seed companies – to keep options open until closer to planting time. One positive feature is that the concerns over GE crops should serve to temper comparative prices for GE seed versus conventional hybrids – though this should not be expected too quickly.

Genetic Enhancement and Corporate Control
Last month’s OCPA editorial dealt with genetic enhancement and corporate control. Unease about corporate control of the food system is one of the three top concerns about agri-food biotechnology in rural Canada (the others are costs, and market opportunities for GE produce). This issue is driving the agenda for many activist groups as well. While urban consumer surveys don’t identify corporate control of the food system via biotechnology as a major matter, we’re suspicious that the public unease is also greater than these surveys show, at least if the tone of letters to urban newspaper editors is any guide.

Journalist Jim Romahn voiced an opinion, several months ago in the Kitchener-Waterloo Record, that if current agri-food biotech products had been developed solely by universities and government labs, there would probably be very little public dissent. He’s probably right. Most of the genetic engineering of crop plants which began before World War II was done at universities and government research labs, without a peep from activist groups.

The issue of control needs to be addressed, and the best means of doing so would seem to entail steps to ensure the existence of adequate competition. At present this seems to apply for some of the technology, but not all. Monsanto appears to have dominant control of core transformation technology – i.e., technology for transferring genes between species (by Agrobacterium or gene guns, the two prominent methods). And while the company has licensed this technology to some competitors, it has no legal obligation to do so.

The University of Guelph, using contract funding provided by the Ontario Ministry of Agriculture, Food and Rural Affairs, for example, has developed a superior biotech alfalfa variety (better yield and winter hardiness) which it cannot market because it includes biotechnology patented by both Monsanto and DuPont.

Access to this core technology is especially difficult for smaller plant breeding companies, a key reason why some of them have recently sold out to larger corporate players.

Perhaps a mechanism is needed to ensure that competitors, including small companies, and public breeders, have access to core technology, and at a fair price – through a royalty on seed sales perhaps, which could be either negotiated or set by arbitration.

The need for (and design of) this might be part of the work plan for the new national biotechnology advisory committee appointed by the Government of Canada in early autumn. It’s also worthy of consideration by large biotech companies eager to find ways of improving their image, and of addressing public and producer concerns about the “control” issue. If there is assurance of the existence of lots of competition, then concerns about control will diminish.

In a similar vein, it’s important that Canadian regulatory procedures designed to allow the use of generic glyphosate products (such as Zeneca’s Touchdown) on Roundup Ready crops be advanced as quickly as possible – hopefully in time for the 2000 season. This will also help address concerns about excessive corporate control.

OCPA is not anti-big business, but recognizes that the control issue must be addressed.

Corn Moulds and Mycotoxins
Most Ontario corn producers should be aware by now that higher-than-normal levels of Fusarium mycotoxins are prevalent this fall. Concern seems to be centred on townships near London and Woodstock, but it’s not clear whether the problem is worse here, or whether there has simply been more testing done in this area.

We express appreciation to extension specialists in the Ontario Ministry of Agriculture, Food and Rural Affairs who spotted the problem early and issued extensive information and advice on how to minimize the problem. The recommendations included early harvesting, and thorough cleaning of grain during and after combining. (Fusarium-infected kernels tend to be lighter in density.) Farmers feeding questionable corn to hogs may wish to have the crop tested.

Extensive coverage of the issue is provided in OMAFRA’s CropPest newsletter, issue 17 (October 1) which is available from OMAFRA offices or on the Internet at www.gov.on.ca/OMAFRA/english/crops/field/news/croppest/1999/cp17sep99.htm.

Testing services are available through Agri-Food Laboratories, Unit#1, 503 Imperial Rd., N., Guelph, Ontario, N1H 6T9 - (519) 837-1600, Quality Swine Co-op, P.O. Box 53, Shedden, Ontario, N0L 2E0 - (519) 764-2300, Agribrands Purina, Zimmerman St. S., P.O. Box 303, Strathroy, Ontario, N7G 3W3 - (519) 245-2690, Shur-Gain, RR#4, James St. South, St. Marys, Ontario. N4X 1C7 - (519) 349-2152, Agri-Analysis, P.O. Box 760, 1131 Erie St., Stratford, Ontario, N5A 6W1 - (519) 273-4411, and Laboratory Services, University of Guelph, Stone Road West, Guelph, Ontario, N1H 8J7 – (519) 767-6299.

OCPA is hoping for a longer-term solution through biotechnology. But in the meantime, Fusarium moulds continue to be a problem which corn producers and corn users must endure.

Some recent research from Iowa State University shows that mould and mycotoxin contamination is less in Bt corn hybrids. The extent of the reduction will depend on the extent to which European corn borer larvae are the primary route of infection.

White Corn
OCPA congratulates Ridgetown College, University of Guelph, and researchers Dr. Art Schaafsma and Brian Doidge on their success in 1999 in growing field-scale plots of white corn. The program involved seven farms in Kent and Essex Counties, each growing three hybrids on a total of 15 acres. The quality of at least one test hybrid is excellent with test weights of about 59 pounds/bu, a good white colour, and yields where drought was not excessive in the vicinity of 180 bu/acre. Two field days have occurred for dry corn millers and buyers, including some from the U.S. Batch processing evaluations are scheduled at King Milling in Chatham (a division of Lauhoff, a major U.S. white corn dry miller); and at Hostess Frito-Lay’s batch testing facility in Colorado.

While the scale may be modest for the near term, there are good reasons to anticipate this may be the beginning of a whole new identity-preserved, specialty-crop industry for Ontario.

This project has been funded by OCPA, Agriculture and Agri-Food Canada, the Ontario Minister of Agriculture, Food and Rural Affairs, Pioneer, Novartis, Cargill, W.G. Thompsons and King Milling.

JBL and Commercial Alcohols
The advice from Casco is that pre-engineering work is proceeding as planned and that a formal announcement on construction plans for the new JBL corn-based citric acid plant for Port Colborne might be anticipated in late 1999 or early 2000.

Reinstallation of dryers for byproduct grains is continuing at the Commercial Alcohols plant at Chatham with a return to full operation expected late in 1999. (The plant has been operating at about two-thirds capacity.) Re-engineering work at the plant also includes plans for enhanced odour-reduction capabilities, hopefully to occur in the first half of 2000.

With stronger global petroleum prices, and rock-bottom corn prices, the economics of fuel ethanol production are better now than they have been for several years. Newsletters reveal that several U.S. gasoline suppliers are shifting to greater ethanol usage for this reason. Another reason is increasing public distrust of MTBE which is an alternative source of “oxygenated” octane enhancement for gasoline, but which has been found to contaminate groundwater in several American states.

OCPA-Casco Research on Usage of Damp Corn
The successful project completed by OCPA and the University of Guelph in cooperation with the Casco plant at Cardinal last fall and winter will be repeated in 1999/2000. Brian Doidge, Ridgetown College, University of Guelph, Dr. Ralph Brown, School of Engineering, University of Guelph, and Don Kenny, Stittsville, OCPA director for Region 2 (also chair of the OCPA grain trade and marketing committee), are leading this initiative. An estimated 5,000 tonnes of corn, scheduled for delivery in late February are involved in the 1999/2000 project, up from 1,500 tonnes in 1998/99. There is interest in a similar project at London. Interested growers should contact OCPA or Shelley Wybo at Casco (telephone: 519-680-4406). Discussions are continuing with Casco on the benefits of this program to both the company and corn producers, and on how the economic benefits should be shared. There are different opinions within corn processing circles on relative starch yields per tonne of dry corn equivalent with damp corn compared to artificially dried corn. This needs to be clarified, possibly through added research. Data from the 1998/99 pilot project indicated a better-than-average starch yield with damp corn held through until January and March before processing.

Iogen, Ethanol and Corn Stover
Another interesting project in eastern Ontario involves efforts by a small company, Iogen (located near the Ottawa airport) to produce fuel-grade ethanol from high cellulosic materials. At present, the feedstock of choice is corn stover, though the logistics and economics of large-scale corn stover procurement for ethanol manufacture remain to be sorted out. Cost is of the essence since analyses show that every $10/tonne increase in the landed price of feedstock increases the cost of ethanol manufacture by about 3 cents/litre.

The economics of stover production and supply is dramatically different from grain corn for ethanol production. Although corn stover may be priced cheaply in the field – though it’s not free because of its value for building soil organic matter and supplying nutrients, and for erosion control – it can be more expensive to harvest and transport than grain corn, because of its bulkiness and generally higher water content. In addition, it must be harvested late during the calendar year.

Other feedstock sources could be cereal straw and hardwood timber waste. Apparently softwood lumber waste is difficult to process with existing Iogen technology. Switch grass is also being grown experimentally for this project though its cost of production may be higher than for corn stover, recognizing that the latter is a byproduct of grain production.

The Iogen project is being funded in part by Petro-Canada and partly by Natural Resources Canada. This project represents one of several exploratory initiatives by Petro-Canada on the potential large-volume usage of ethanol-enhanced gasolines. It’s understood that the company has been testing the use of the latter for some time.

Greenhouse Gas Emission Update
The initial phase of the Government of Canada’s current work plan on global warming and greenhouse gas emissions is nearing completion as the various “tables” submit information to federal authorities on potential reduction strategies. OCPA was represented directly on the “sink table” and the resulting report suggests annual increases in soil sink storage of carbon dioxide (actually, organic matter made from carbon dioxide) in the vicinity of 18 million tonnes of carbon dioxide per year, through reduced tillage and less summer-fallow acreage (the latter in Western Canada only) by the years 2008-2012. This is equivalent to about 20 per cent of the total greenhouse emission from Canadian agriculture, including carbon dioxide emissions from vehicles, transportation and input manufacturing, and emissions of methane and nitrous oxide (expressed as carbon dioxide equivalents). For background details, see the summary in the August-September issue of the Ontario Corn Producer (also at www.ontariocorn.org/as99art1.html). Canada faces a continuing battle to have this benefit recognized internationally. Fortunately, the U.S. is becoming a much stronger ally in these efforts.

The “agriculture table” is still completing its report which is expected to focus on strategies for reducing emissions of methane and nitrous oxide. The targets will be ruminant fermentation, manure management and the application of nitrogen fertilizers.

The long-term Canadian strategy remains unknown, but will obviously dominate Government of Canada environmental activities in coming months. The government has a rather large pool of money for communication efforts and many groups, including several from agriculture, are offering to help spend it.

OCPA believes the need is not for global warming literature, but, rather, for new research information. How do we guarantee more consistent yields with no-till corn? How do we fertilize our crops so that the nitrogen applied can be used more efficiently, leaving less to escape as nitrates or nitrogen oxides? How do we better reduce nitrogen and methane losses with manure storage and application? How do we improve the feed conversion efficiency of ruminant animals, especially when fed high-roughage rations (where methane emissions are highest)?

There are lots of win-win opportunities here – to lower costs of production, and meet other environmental goals, while also reducing net greenhouse gas emissions. But the primary need is for better scientific and technical information, rather than Environment Canada-style promotional literature.

It’s not clear yet whether government funds will be available to support needed longer-term research – i.e., for three years or more, the time required to conduct meaningful field trials.

The Regina-based Prairie Farm Rehabilitation Administration (PFRA) is also pushing for new funds to finance land set-aside programs. PFRA has many friends in Ottawa, including a key cabinet minister from Regina. However, land set-aside programs seem like a questionable use of money which could be better used in funding research. And what happens when set-aside lands return to production – as they inevitably will some time in the future – and all that stored carbon is released when annual cropping returns?

A new factor in Ottawa is the Honourable David Anderson, the new minister of environment who has served notice that he is unwilling to let Natural Resources Minister Goodale continue to be the federal “agenda setter” on global warming. Anderson is talking about increased energy taxes, despite repeated assurances by Prime Minister Jean Chretien that this will not occur. There should be some interesting behind-the-scenes power struggles in the coming months.

Greg Stewart
OCPA is pleased that the Ontario Ministry of Agriculture, Food and Rural Affairs has made permanent the position of Greg Stewart, Ontario’s corn extension specialist. Stewart had to re-apply for his job and compete against some quality candidates. In a short time period, Stewart has established himself as one of North America’s top corn extension professionals. OCPA has made a long-term commitment to co-fund this position, an arrangement which may be soon matched by several other farm groups. One advantage to OCPA, along with the obvious benefits of having a top-quality provincial corn specialist, is that Stewart can also function as a special advisor to OCPA on key issues – as, for example, in our efforts to manage issues relating to use of genetically enhanced corn.

Thanks to Ontario Ministry of Agriculture, Food and Rural Affairs and the University of Guelph (the third partner in the cooperative venture – the university provides an office space, computing access, and some secretarial support), and our congratulations to Greg Stewart.

Correction on Tetraploid Rye
OCP would like to correct an error contained in the OCPA October newsletter. Only about one per cent of Canadian rye is tetraploid.

CORN PRICES (October 14, 1999)

Period: Oct. 1 - August 31

Approximate Tonnes Marketed

Average Weighted Price

1998-99

3,675,700

$117.67/tonne

1997-98

2,278,500

$143.96/tonne

1996-97

2,785,300

$150.61/tonne

The above figures are based on levies received by OCPA for commercial sales.

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