March 2007

Index

CAIS Update

As of February 2, 2007, 95% of the 2005 CAIS applications were processed. An average payment of $15,053 was paid to 11,967 of 25,402 Ontario
applicants. Total payments for the 2005 CAIS program year amount to $180.1 million at the beginning of February. Ontario field crop applicants triggered 5,378 payments totaling $45.9 million with an average payment of $8,528.

For the 2004 CAIS program year as of February 2, 2007, 11,479 of 26,475 participants triggered payments of $191.2 million with an average payment of $16,658. Ontario field crop participants triggered 4,049 payments totaling $31.3 million with an average payment of $7,727.

As of February 2, 2007 for the 2003 program year, the number of producers triggering payments increased slightly to 11,415 and the amount of
payments is $180.5 million with an average payment of $15,810.

Processing of 2006 applications for off-calendar year ends will begin by late February.

myCAIS
Information for myCAIS, including user names and passwords, will be mailed by the end of February. To date, approximately 2,300 applications had been submitted electronically for the 2005 program year.

CAIS Fees
To be eligible for the 2006 CAIS program year, applications needs to be submitted by June 20, 2007 and the 2006 CAIS fees must have been paid.
Although the 2006 CAIS fee was due December 31, 2006, producers can pay it up until April 30, 2007 with a penalty. Fee Options Notice (FON) and CAIS fees for 2007 will be mailed by the end of March.


Fair Market Values
Agricorp has posted the 2006 Fair Market Values for January to December on their website (www.agricorp.com) which will be used to value all crop and livestock inventory on Schedule 2, as long as the Fair Market Value is reasonable for the farm operation.

2007 CAIS Interim Payments Now Available
CAIS participants who wish to receive 2007 program year assistance early, can obtain the 2007 CAIS Interim Payment Applications which are now
available.

To apply, CAIS participants must submit the completed 2007 CAIS Interim Payment application forms to Agricorp by the end of their fiscal period or
by December 31, 2007, whichever is earlier. Application forms can be downloaded from www.agricorp.com.

Efforts Being Made to Advance Doha Round

Approximately 30 countries, including Canada, held an informal meeting of ministers in Davos, Switzerland, in late January in an attempt to continue multilateral trade negotiations.

In a press release, the Canadian government stated that the WTO negotiations are important to Canadians since we rely heavily on trade and the
negotiations provide the opportunity to level the playing field for all counties through the strengthening of trade rules.

The WTO Ministerial meeting in Davos represents the first significant meeting of ministers since the suspension of the Doha Round in July 2006. At that time, negotiations reached a stalemate on issues pertaining to market access for agriculture and non-agricultural market access, and agricultural domestic support.


 Farm Income Forecast

Agriculture and Agri-Food Canada, in collaboration with Statistics Canada and the provincial governments, finalized their farm income forecast for 2007.

Canadian Crop receipts are expected to increase by 14% in 2007 while overall Net Farm Incomes are expected to decrease by 2%. The decrease is
due to increasing expenses and lower program payments.

Nationally, program payments for 2007 are forecasted to be $3.7 billion, down 17% from 2006 and 15% lower than the 2001-2005 average. The government attributes some of the decrease to producers winding down their NISA accounts.

The figures for Ontario indicate that crop receipts will increase by only 1% in 2007 while Net Farm Incomes are forecasted to decrease by 15%.


Government Investment in Ontario Agriculture Important to Industry's Growth

The Ontario Federation of Agriculture (OFA) made a presentation to the Standing Committee of Finance and Economic Affairs in February. OFA President, Geri Kamenz, advised the Standing Committee that if the provincial government wants to realize a healthy provincial economy, it
needs to pay more attention to the economic health of agriculture and the province’s farmers.

The Senate of Canada interim report, Understanding Freefall: The Challenge of the Rural Poor and the 2006 report of the Organization for Economic Cooperation and Development (OECD) support the claim made by Kamenz.

Kamenz urged the committee to call on the provincial and federal governments to work in a partnership to deal with immediate farm income concerns, in particular an investment in viable risk management and income support programs as developed by the farm sector. Kamenz further stated that there is an immediate need in the farm community to recover serious losses from 2005 and onward.


APF Consultations

Agriculture and Agri-Food Canada have been seeking input from Canadians on the Next Generation of Agriculture and Agri-Food policy. A series of
public consultations were held during January and February and discussion documents for the different pillars have been available on their website. If you missed the public consultations, you can still participate through the on-line consultations up until March 5, 2007. Visit the website, http://nextgen.dialogue circles.com/.


AIC Releases New Study

In a study released by the Agricultural Institute of Canada (AIC), Sustaining Agriculture in Canada through Innovation and Diversification, indicates that how a farm markets its products is more important than how it producers them.

The report was prepared to start an informed debate on redefining and sustaining agriculture in Canada. Farmers who focus on innovation and
diversification in both marketing and production at the farm level improve profitability, was stated in a press release as the major finding.

“Big Farms, Small Farms” was a report done previously by AIC which found that farm size was no longer a factor in net profitability. It was found that many farm families reduce their time running the farm business and seek off-farm employment to subsidize their operations when there is a lack of farm profitability.

The reports are available on AIC’s website www.aic.ca.

Ontario Changes Election Date

According to a report in the Globe and Mail, the next Ontario election will take place on October 10 instead of October 4 due to a conflict with
a religious holiday.

Protect Your Moving Parts

The theme of this year’s Canadian Agricultural Safety campaign is “Protect your moving parts!” There are many farm machines and devices that can grab, cut, smash, and entangle fingers, hands, toes and feet resulting in injuries and even death.

The year-long campaign focuses on pinch points, crushes, entanglements and the importance of guarding. In support of the campaign, the
Canadian Federation of Agriculture and Pioneer Hi-Bred Limited have partnered with the Canadian Agricultural Safety Association to produce a farm
safety poster.

Producers are encouraged to hang the posters in their machine sheds where it will serve as a reminder to anyone working around farm machinery. The posters are free and are available by calling 613-731-7321, emailing farmsafety@cfafca.ca or by downloading it from the CFA website www.cfa-fca.ca.

Food Freedom Day 2007 - If you ate today, thank a farmer!

Tuesday, February 6 was Food Freedom Day, the day when the average Canadian consumer has earned enough income to pay their individual grocery bill for the entire year.

Canadian consumers are reminded of the fact that we enjoy an abundant, safe and secure food supply in Canada and at a relatively low cost.

In a press release from the Canadian Federation of Agriculture (CFA), it is stated that according to the most recently available statistics, Canadians spend about 10.2 per cent of their disposable personal income on food and beverages. By February 6 Canadians will have earned 10.2 per cent of their income for the year.

Canadian farmers continue to take only a very small percentage of the consumers’ food dollar at the grocery store. The box of corn flakes that cost almost $3.50 in the grocery store pays only $0.11 to the farmer who grew the corn. At the same time Canadian farmers have continued to improve the environmental sustainability of their operations and implement innovative new programs to ensure the safety of food right from the farm gate.

CFA President, Bob Friesen, also stated that a home grown food supply is essential for a self-sufficient country, and a sustainable farming sector is
essential in maintaining that home-grown food supply.

Canadian Food Safety and Quality Program

The Traceability Grant Program and Traceability Pilot Project under the Food Safety Initiative (FSI), which is one element of the Canadian Food Safety and Quality Program, were officially launched on February 12, 2007. The Canadian Food Safety and Quality Program enhances Canada’s reputation as a producer of safe, high-quality food products.

Outbreaks of illnesses due to food-borne diseases, in Canada and around the world, continue to show the need for efficient systems to trace a food product to its origin (including all raw and packaging materials if any are used), as well as track the product to its current location to conduct an effective recall and reduce the scope of the outbreak.

Traceability is defined as “the ability to trace and follow food, feed, food-producing animals or substances through all stages of production and distribution”. Funding will be available for a traceability grant program and for traceability pilot projects for small and medium sized facilities throughout the agrifood-chain in Ontario.

For more information or application forms contact the Ontario Ministry of Agriculture, Food and Rural affairs at 1-866-641-3663, by email at
FSI.omafra@ontario.ca or their website at www.ontario.ca/omafra.

Food Security Through a Seed Vault in the Arctic

On the Arctic island of Svalbard, not far from the North Pole, the Svalbard International Seed Vault will be carved into the frozen rock as revealed on February 9 by the Norwegian government. The vault has been designed to protect the agricultural heritage of humankind. Seed samples will
be collected from nearly every food crop of every country. Construction of the seed vault will begin in March 2007 and will be open in the winter
of 2008.

The Arctic seed vault is part of a comprehensive global strategy being implemented by the Global Crop Diversity Trust in their efforts to protect
collections of crop genetic diversity around the world.

Are You Insured? – Farm Insurance Policies

With some of the heavy snowfall and ice we experienced in February, we have seen some stories in the press about farm structures or sections of roofs collapsing from the weight of the snow and ice. In one case, it was reported that the farm’s insurance policy would not cover the damage. The question is, are your out buildings, including barns, covered for this type of damage or what may be called “Snow Load Coverage” under your farm policy? Farm insurance policies vary from insurance company to insurance company. OCPA has been advised by some that separate coverage is required for farm out buildings.

Cash Advance Programs Update

There has been much confusion with multiple programs running, especially with the Enhanced Spring Credit Advance Program (ESCAP). As a reminder to producers and elevators, regardless of which cash advance program the producer may be participating in, deductions must be made on
sales and remitted to the administrators. Contact Kimberly Denommee at 519-767-4138 if you have questions pertaining to the cash advance
programs.

Agriculture and Agri-Food Canada is beginning to release details on the new Advance Payment Program which will be available starting with the 2007 crop. For more details, refer to their website, www.agr.gc.ca/app.

USDA Corn Acres Projection for 2007

The USDA released its preliminary 2007 projections for corn acreage on February 14 at 86 million acres, soybeans at 71 million acres and all wheat at 60 million acres. In 2006, corn acres were 78.6 million acres, soybean acres were 75.6 and wheat acres were 57.3 million acres.

New Strains of GMO Key to Meeting Ethanol Demand

In a recent report, it was stated that DuPont claims that new strains of genetically modified corn will play a key role in meeting increasing ethanol demands in the US. Current demands are cutting into US supplies.

DuPont indicates that developing new hybrids and getting them into the market more quickly, is a challenge for plant breeders. Their seed division Pioneer is spending between 9 and 11 percent of revenues on research and will hire 25 more scientists. The research will focus on boosting yields by making plants more weather, bug and weed resistant, as well as creating corn types more suitable to ethanol production.

Yield Effect of Corn After Corn

Preliminary acreage estimates indicate that more corn acres will be planted in 2007. Some producers may consider not following normal crop rotations this year and plant corn after corn. This raises two questions; 1. What is the expected reduction from growing corn after corn?; 2. is the rotation effect less with higher yields?

In a study conducted by Southern and Southwest Research and Outreach Centers in Minnesota and at the Arlington Research Center in Wisconsin, the finding was that yields from growing corn after corn were on average 9% lower than rotation yields. Even with the higher yields we have now
have, producers should expect a lower yield from growing corn after corn versus more normal crop rotations.

4-H Ontario Receives $15,000 Donation

Monsanto Canada Inc., on behalf of its DEKALB seed brand, donated $15,000 to 4-H Ontario in February. The funds will be used by 4-H Ontario for
program development and for local 4-H support in the growers’ communities.

Brazilian Ethanol Alliance With US

The US ethanol industry could be hurt by an ethanol alliance with Brazil that would allow additional imports of ethanol, as reported in a DTN story.

The US is concerned about partnerships that could lead to the alteration or elimination of the 54 cents per gallon import tariff on ethanol. All ethanol producers, both domestic and foreign, benefit from a federal 51 cents per gallon gasoline blender’s tax credit for every gallon of ethanol blended with gasoline. US-produced ethanol has an advantage over imported ethanol.

According to reports, Brazil and the US are working on a “new energy partnership” and the US expects to sign accords within a year to promote
technology-sharing with Brazil. Reports indicate that the US will encourage other Latin American countries to become biofuel producers and consumers.

Canadian Agri-Food Policy Institute Receives $15 Million

The Minister of Agriculture and Agri-Food, Honourable Chuck Strahl, recently announced that the federal government would invest $15 million in the Canadian Agri- Food Policy Institute (CAPI).

CAPI, an independent, not-for-profit organization is run at arm’s length from the government to provide a neutral venue for input into agricultural
policy making.

The $15 million will allow CAPI to withdraw up to $1 million per year, plus interest income, through 2022 to cover eligible expenses for undertaking policy research and promoting policy dialogue.

$134 Million Investment to Boost Commercialization of Agri-Based Innovation

The Agri-Opportunities Program is a five-year Agriculture and Agri-Food Canada program that will focus on the commercialization of new agri-based products, processes and services. The federal government announced a $134 million investment into the program in late January.

The Agri-Opportunities program will help get ideas from the drawing board into the market. Funding will be provided for projects that can be expected to increase market opportunities for the Canadian agricultural industry across the value chain and generate demand for primary agricultural products, such as grains, oilseeds and other traditional and non-traditional products.

Eligible applicants include aboriginal groups, agencies and corporations, Canadian agribusinesses, co-operatives, foreign companies (that have a
Canadian subsidiary), individuals, non-governmental organizations and corporations, non-profit and for profit business entities, academic institutions.

For more information on the Agri-Opportunities Programs, call 1-866-367-8506 or send an email to Agri-opps@agr.gc.ca.

AGRIS Co-operative Acquisition of Wheatley Elevators

On February 14, 2007, AGRIS Co-operative announced they had acquired the Maple Leaf Foods interests in Wheatley Elevators Ltd., which gives
AGRIS Co-operative a majority control of Wheatley Elevators. In addition, Wheatley Elevators has acquired the soybean export assets of Maple Leaf Foods.


 Clean Water Act – Information Sessions

Information sessions on the Clean Water Act are being hosted by four conservation authorities that make up the Lake Erie Source Protection Region (Kettle Creek Conservation Authority, Catfish Creek Conservation Authority Long Pont Region Conservation Authority) and the Grand River
Conservation Authority. The sessions are scheduled from 7:30 p.m. to 9:30 p.m. for each of the evenings as follows:
• Wednesday, March 7, Aboyne Hall, Wellington County Museum, Fergus
• Thursday, March 8, Tillsonburg Community Centre, Lions’ Den, Tillsonburg
• Wednesday, March 14, New Hamburg Community Centre, New Hamburg
• Thursday, March 15, Cainsville Community Centre, Brantford

RSVP to Janet Bain, 519-621-2761 or email at jbaine@grandriver.ca.


 Potash Prices Increasing

Potash prices increased by as much as $5 per tonne in early February due to a pricing deal reached by a major Chinese fertilizer firm Sinofert Holdings Ltd. and Canpotex Ltd. Canpotex Ltd. is jointly owned by Saskatchewan potash producers PotashCorp, Agrium Inc. (TSX:AGU) and the Mosaic Co.

China will take a larger share of the available potash supply this year, especially from suppliers in the Soviet Union, according to Canadian Press.


DuPont Agriculture & Nutrition Increases Investment in Plant Biotechnology

According to a press release in late December by DuPont, DuPont Agriculture & Nutrition launched a plan to increase investment in plant genetics,
biotechnology and other highvalue growth opportunities, while further improving competitiveness in low-growth areas of its nutrition and crop
protection businesses by reducing operating costs about $100 million a year.

DuPont plans to reinvest all of the $100 million savings into its seed business to expand the company’s competitive advantage in the seed market
and increase the speed to market of seed products with nextgeneration biotech traits.

These changes include the closing or streamlining of manufacturing units at 10 sites and the reduction of approximately 1,500 positions globally, with most of the changes expected to be completed in 2007.

DuPont states in the press release that North American seed orders for 2007 planting are strong. Sales of corn hybrids with “triple stacks” are expected to be 10 times higher than 2006.


Global Biotech Area Surges Past 100 Million Hectares

In mid January, Clive James issued the new figures of the International Service for the Acquisition of Agri-Biotech Applications (ISAAA) report. The report shows that in 2006, global biotech crop area increased 12 million hectares or 13 percent to reach 102 million hectares for the first time and
achieving the second highest growth in the past 5 years.

Growth for the period 1996 to 2006 is equivalent to an unprecedented 60-fold increase, the highest adoption rate of any crop technology. Additionally, the number of farmers planting biotech crops reached for the first time, 10.3 million from 8.5 million farmers in 2005.

Clive James, chairman, founder of ISAAA and author of the report, expects these adoption levels to continue accelerating throughout the second decade of commercialization. By 2015, ISAAA predicts more than 20 million farmers will plant 200 million hectares of biotech crop in about 40 countries. More information can be found at http://www.europabio.org/GBEne_180107.htm

When Buying Organic Makes Sense – And When It Doesn’t

In a recent Wall Street Journal article, Betsy McKay was commenting that grocery store shelves are increasingly crowded with pricey organic versions of everything from milk and eggs, to hot dogs and beer. But, according to this story, some of the options pitched as healthier may not always be worth their higher price tags. The organic food industry has mushroomed into a juggernaut with nearly $14 billion in sales in 2005 and
annual growth of roughly 20 percent. One big reason food makers and retailers are scrambling into the business: shoppers often are willing to
pay a fat premium for anything with the word “organic” on the box.

Many scientists say organic food isn’t necessarily more healthful than conventionally produced food, and some conventional foods are already
low in chemicals and high in nutrients. For instance, most of any chemical residue on a nonorganic banana or orange gets thrown away with the peel anyway, nutrition and environmental experts say. So careful consumers who want food that packs a health benefit in addition to supporting a
cleaner environment may want to consider what organic foods are really worth the higher prices.

In terms of nutrition, some studies, some of which are funded by the organic-food industry, have found higher levels of antioxidants and other
nutrients in organically grown corn, strawberries, peaches, tomatoes and other produce. Alyson Mitchell, associate professor and food chemist at
the University of California, Davis, has conducted some of the studies and was cited as saying that even if organic produce does have more
antioxidants, it’s not clear that they offer nutrition benefits to humans. Recent E. coli outbreaks have made some consumers wonder if eating
organic baby spinach or other produce might reduce their risk. Food safety experts say that’s not the case. Robert Tauxe, a food borne diseases
official at the Centers for Disease Control and Prevention, was quoted as saying there are issues about growing produce whether it’s organic or
conventional.

Michele Peterson Murray, a spokesperson for the National Cattlemen’s Beef Association, the Denver based trade association for U.S. beef producers, was quoted as saying that it is their belief that there is no safety difference between certified organic and conventional beef. An adult
woman produces 253,000 times more estrogen every day than what is found in a 3 oz. serving of beef.

GMO’s: Measures Against Bt10 in US Exports to be Lifted

In a recent European Commission press release, Member States voted on January 16, 2007 in favour of lifting the EU requirement for all imports of US corn gluten feed and brewers’ grain to be certified as free from the GMO Bt10. The certification requirements were introduced in April 2005, following an alert from the US authorities that this unauthorized GMO had been inadvertently exported to the EU. Member States were also required to carry out thorough monitoring of GM food products on their markets and report back to the Commission on any findings of Bt10. Bt10 was only detected once (in May 2005) in a US shipment to the EU and on this occasion it was stopped at the border so the contaminated product did not
reach the EU market. The last case of Bt10 detected in the USA was in early November 2005 and Syngenta, the company responsible for developing Bt10, has taken a series of measures to ensure that this GMO is no longer propagated. The Standing Committee on the Food Chain and Animal Health therefore agreed with the Commission that the emergency measures against Bt10 are no longer necessary. However, as a precautionary measure, Member States must continue to carry out random testing for Bt10 at the current level for six months. Should any traces be detected, the national authorities must immediately send a notification through the Rapid Alert System for Food and Feed. More information can be found at: http://ec.europa.eu/food/food/biotechnology/index_en.htm

New President Named for Pioneer Hi-Bred

On February 16, 2007, Pioneer Hi-Bred Limited announced that Dr. Ian Grant has been named the new president, replacing former president, Jim Gumpert.

In 1991, Grant joint Pioneer as a canola research director and transferred to corn research in 1997. For a number of years, Grant served as director of product commercialization and characterization, first for Europe and later on a worldwide basis. Grant earned his doctorate in plant breeding and genetics from the University of Guelph.

Gumpert will focus on additional responsibilities in his role as market sales manager across Pioneer’s Northern Market.

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