What's Ahead for 2008

As is the case every year, when one looks back on the recent events of 2007, it would have been a hard outcome to predict. Forget about the markets, which many experts suggest are experiencing market situations that will make it hard to predict short and long term forecasting; 2008
promises to play out many scenarios which had milestone accomplishments amid initiation periods that started well before that.

One of the major surprises had to be the finish to a near-record Ontario corn crop planting. A greater than 2.1 million acre crop, thanks in a large part due to the poor planting conditions for what was likely a record crop of winter wheat the previous fall, seasoned experts were suggesting it was some of the most ideal planting conditions they had ever been a part of. Soil conditions, moisture and temperature had many giddy at the record potential for this crop, knowing full well Ontario had just come off three record setting provincial years that was gradually inching that milestone higher. Then, unless you were located in eastern Ontario, the taps seemed to shut off with much of the province falling into a drought. Late summer brought some isolated showers; however, variability and quantity did not lend too much optimism that the crop would be saved. Into the harvest season we go and producers are surprised with the higher corn yields. Agricorp’s most recent crop insurance reporting has the provincial average pegged at roughly 135 bu/acre for 75 percent of the reported acreage. By the way, 135 bu average is the provincial five
year average which includes the record breaking yields of recent years, which means there is likely something to be said for the genetic improvements being made in the corn industry in the area of drought tolerance. One prediction for 2008 that can be made with some certainty, 2008 corn acres will be lower than 2007. The 2007 harvested winter wheat crop was right around 600 thousand acres; the fall planted acres are estimated at 1.35 million acres which will come at the expense of Ontario’s other cash crops, and some of those acres will come from corn.

Another topic to watch in 2008 will be Canada’s national agricultural programming. Just prior to Christmas 2007, the Agricultural Policy Framework (APF), originally set to expire in March 2008, was extended a year. This means government will be working hard to finalize their work on the next generation APF called ‘Growing Forward’ by March of 2009. There are industry consultations which will be held with organizations such as the Ontario Corn Producers’ Association, (OCPA) leading up to the implementation of Growing Forward. The industry has had a sneak peak at the initial programming; AgriInvest and AgriStability received enough provincial voting support that an announcement prior to Christmas 2007 introduced the plan. Producers should be receiving the necessary paperwork to become involved in this program. There are still outstanding questions to be answered, such as where these producer accounts will be held, that are sure to be answered in the coming months.

With these two programs, this new APF will also include the programs AgriRecovery and AgriInsurance. The grains and oilseeds industry is very much aware of the shortfalls of the APF programming coming to a close, and have similar concerns the new suite of programs under Growing Forward will echo similar weaknesses. That is why the Grains and Oilseeds Safety Nets Working Group will continue its hard work on AgriFlex, a
program designed to compliment the other programs where they will fall short, offering the regional flexibility to agricultural industries in need. An example of where AgriFlex would work for grains and oilseeds would be to fund the 60 percent currently missing from the Risk Management Program.

Speaking of the Risk Management Program (RMP), likely the greatest accomplishment for grains and oilseeds in 2007, payments for this program have already flowed to most of the producers who enrolled prior to the December 2007 deadline. This is a key message – payments have flowed which means average prices have been lower than the support prices in the RMP, meaning grains and oilseed producers are still struggling to
recover their costs from the market place. These producers are often exposed to the reverse side of the argument – how high grain prices are driving the livestock industries out of business. This is not to say the hog and cattle industries are not in trouble; recent feed costs are higher than they have been, and are certainly weighing on the bigger issues such as the exchange rate and slaughter capacities that are devastating the industry. However, there is a piece of legislation called the U.S. Farm Bill that is up for renewal and the direction of the proposed replacement does
not deviate much from the negative impacts of the expiring one. High prices in the market always come down, and that will happen someday with corn, at which point RMP will become even more important. Ontario grains and oilseeds will continue to work towards making the current 3 year pilot a permanent program. It is also realized that the 2006 crop year has never been addressed, and producers are still climbing out of the financial hole dug in that disastrous, three year timeframe. Part of 2008’s strategy is to secure the 2006 shortfall.

Lastly, one highly discussed topic has surrounded the proposed Memorandum of Understanding (MOU) that would join OCPA, the Ontario Wheat Producers’ Marketing Board (OWPMB) and Ontario Soybean Growers (OSG) into one organization. The OCPA board of directors remains hopeful that
all is not lost as we remain committed to the process to date, and the countryside continues to provide direction so that OCPA can carry out your wishes. We want to continue delivering on the promise of one organization, as we have been over the past three and half years.

As always, make use of the opportunity to converse with your OCPA director. The input of the membership on any relevant topic is valuable for providing direction to the organization. The OCPA staff is also at your disposal; if there is something we can help you with, be sure to phone or e-mail us.