Prairie farmers are getting more than their fair share, Ontario farm groups are telling Ottawa.In the early 1990s, 4.9 per cent of Ottawa's farm spending went to Ontario, the province that produces 25 per cent of Canada's farm gate receipts, and over 35 per cent of its agri-food output.
From 1994 to 1996, in the wake of the Chretien election victory, Ontario's share has dwindled to 3.4 per cent. Saskatchewan, meanwhile, gets 37 per cent of Ottawa's farm spending, while producing 17 per cent of the country's farm gate receipts.
Ontario farm groups now say the Prairies could get all of Canada's 13,000 grain hopper cars, even though at least 500 of the cars are urgently needed in the East.
"We need those rail cars as badly as the West," says Fred Brandenburg, manager of the Ontario soybean board, and member of the corn, soy and wheat team that carried its concerns to Ottawa earlier this month.
Federal Agriculture Minister Ralph Goodale, a Saskatchewan MP, has called a special meeting of the Ontario Liberal caucus to try to dowse the claims of his pro-West discrimination.
Lyle Vanclief, federal Liberal MP for Ontario's Prince Edward County and chairman of the House of Commons agriculture committee, says the East-West imbalance isn't nearly as bad as the Ontario farm groups paint it.
"When you look at payments to the primary producer, it's three or four to one in favour of Saskatchewan, not 10 to one," Vanclief says. "I'm not saying that everything is perfectly balanced. I have some concerns too, but it isn't as bad as they're making it look."
Vanclief says the imbalance will take a big drop next year when western farmers see the end of the $1.9-billion compensation program aimed at helping Prairie farmers survive the end of the century-old Crows Nest freight rate policy. As part of that transition, Ottawa has decided it will sell its 13,000 grain hopper cars, valued at $400 million. Under the two proposals, the cars would either go to western railways, or to a coalition of western farm groups.
Brandenburg points out, however, that the changing government policies are also hurting Ontario's freight outlook.
Ottawa is slashing its spending on port maintenance, which is expected to have a greater effect on Ontario grains.
As well, the province of Ontario is looking at new limits on the length and tonnage of grain trucks that could drive up the cost of trucking.
CN and CP also plan to abandon more branch lines in Ontario. CP has announced plans to cut 1,600 kms in the East.
Yet at the same time, Ontario farmers need rail access to the U.S. more than ever, Brandenburg says. They routinely ship 40 million bushels of grains and oilseeds south of the border, up from about five million bushels a decade ago.
The Ontario groups insist that when Ottawa puts the rail cars on the market, the tender must specify that 500 cars have to be available for Ontario crops.
"These aren't the West's cars," says Saskatchewan MP Elwin Hermanson, agriculture critic for the federal Reform Party. "A lot of these cars have been used in the East in the past. There's a legitimate claim that they still be available in the East, at least part of the year."
Hermanson says Reformers are studying the Ontario claim of a federal pro-West bias. "We want to take a hard look at the numbers, to make sure we're comparing apples to apples," he says. "When we do, I think the East and West will be closer, but there still won't be parity."
Vanclief thinks the Ontario farm groups can win their guaranteed access to rail cars. The Commons agriculture committee is studying the issue, and may come out with a strong statement in Ontario's favour.
The Ontario farm groups, however, say the pro-West imbalance will get worse as Ottawa moves more of its research centres from Ontario to Saskatchewan and Quebec. As well, while the $1.9-billion Crow buy-out may be winding down, the federal government has yet to grapple with the multi-billion- dollar deficit of the Canadian Wheat Board, and outstanding debts for the Saskatchewan crop insurance program.
Who profits from high prices?
When corn is $3 a bushel, there's eight cents worth of corn in a 675 gram box of Kelloggs Corn Flakes. With corn at $6, the corn in the bright yellow box is worth 16 cents.It's a miracle of value-adding. Consumers are paying $118 a bushel for the corn they buy in Corn Flakes, based on an average $3.19 a box, and 37 boxes per bushel.
Some farmers also think it's a miracle of profiteering. They're asking, with corn prices doubling in the past year, will the price of Corn Flakes go up the eight cents that would be justified by the higher raw product cost, or will it go up more?
Former federal agriculture minister and Lambton county farmer Ralph Ferguson has no doubt. "They'll jack their prices as far and as fast as the consumer will bear," Ferguson says. Ferguson has gained cross-Canada media attention for his 'Compare the Share' reports looking at how much of the consumer's food dollar actually goes to the farmers who produced the food.
Ferguson says that in the past decade, the price of corn stayed flat, but the price of Corn Flakes has gone up 95 per cent.
"It's not just the processors," Ferguson says. "Canada has only five major buyers for grocery products. There's no real competition."
Vincent Amanor-Boadu, economist at the Guelph-based George Morris Centre, takes the opposite outlook. Amanor-Boadu doubts the Corn Flakes price will go up at all.
Processors protect themselves against price surges by hedging on futures markets, he points out. They'll never feel the full effect of this summer's price surge.
If the hedging strategy isn't perfectly successful, it still leaves them vulnerable to a cost squeeze only on the raw product, which is a small portion of their overall cost, he adds: "The box costs them more than the corn."
Amanor-Boadu says competition at the store shelf is intense. "If Kelloggs raises its Corn Flakes price and President's Choice doesn't, they'll lose market share," he says. "Nobody can afford to push their loyal customers into trying somebody else's product."
If companies are squeezed by higher grain prices, Amanor-Boadu says, they'll cut their advertising and promotions budgets rather than raise their cereal prices.
The run up in corn, soybean and wheat prices could affect a huge number of consumer items.
Higher soybean prices have driven the cost of a pound of soyoil to near 36 cents, up from 24 cents last October. Still, a pound of Parkay margarine sells at $1.79, five times the cost of the oil, even at today's high oil prices.
True cost of the soybeans, after the value of the meal is deducted, is about 21 cents.
"The problem with crops like soybeans is that they're so hidden," says Kim Cooper, marketing specialist with the Ontario soybean board. "You buy soybeans every time you buy cake mix or bread, even though you don't know."
It's tough, Cooper says, to figure out the impact of farm prices when the commodity is seventh or eighth on the list of ingredients.
It's the same with corn, says Brenda Miller Sanford, spokesperson for the Ontario Corn Producers Association. The association says corn goes into 2,500 of the 10,000 items in a typical grocery store, ranging from the corn syrup in chocolate bars to the corn starch in cake mixes.
Some commodities have a very direct link to the consumer. Jim Whitelaw, marketing manager for the Ontario wheat board, predicts bread prices will rise 20 cents a loaf this summer. "Consumers aren't prepared at all," Whitelaw says. "They aren't going to like it." They'll also ask why prices are jumping, Whitelaw adds. "Farmers are going to get blamed." Sweet cookies contain 9.8 cents worth of wheat per bag, up nearly 50 per cent from 1995, but still a small fraction of their $3-plus retail price.
Whitelaw says a typical box of pure wheat cereal that costs $3.39 for 500 grams contains 24.5 cents worth of wheat in 1996 prices, about 50 per cent over last year's cost.
Ferguson fears the long-term effect of price hikes that are blamed on farmers. "The farmers aren't the problem," he says. "It's lack of competition at the retail level. We've got to get consumers to see that, or they'll try to fix the wrong problem." - TB
Non-Guelphers want answers
By TOM BUTTON
Farm groups are stepping up their lobby to make sure the University of Guelph doesn't plunder Ontario's agricultural colleges when it takes control of them next fall.Groups representing commodities from canola to wheat have told provincial agriculture Minister Noble Villeneuve to set up local advisory committees, with members chosen mainly by farmers, to counterbalance Guelph's growing clout.
"The colleges could become little more than an add-on to programs based at Guelph, to the detriment of the total Ontario agri-food economy," the five groups said in an early May letter to Villeneuve.
Students, meanwhile, want answers about their futures, says Shannon Ward, incoming president of the students' council at Ridgetown. "There are too many rumours. We want to know what's going to happen to our tuitions and to our programs."
Rob McLaughlin, dean of the Ontario Agricultural College at Guelph, says details will emerge as the university and the province hammer out an official memorandum of understanding over the summer.
"This isn't a Guelph take-over. This is a partnership," McLaughlin says. He says Guelph didn't ask for the colleges. Instead, the ministry came to Guelph.
The province forecasts the transfer will save taxpayers $20.1 million a year, in part by laying off 20 to 25 per cent of staff at the colleges, provincial research stations and labs. McLaughlin says college tuitions will likely rise from their current $750 to a level closer to the $1,500 a year charged by most community colleges.
McLaughlin says Guelph will not force college students to take courses at multiple locations.
The four colleges will offer one diploma, backed by the University of Guelph, McLaughlin explains. Each college will offer a core curriculum so a student can get that diploma without travelling.
But the colleges will offer different sets of electives; a Kemptville animal science student might go to Guelph to learn animal health.
At Guelph, students will face higher living costs, as well as higher tuition, since they'll be charged extra for Guelph's recreational and academic facilities.
"We'll also be encouraging our Guelph students to go to the regional colleges," McLaughlin says. He points out a group of Guelph diploma students will attend the Nova Scotia agriculture college this fall to learn about fruit production. McLaughlin says the university is encouraging its degree students to take at least one semester away from Guelph, since it thinks travel can help produce a better student. "The issue is, how do we create a graduate who's a bit more worldly and a bit more of a risk taker?"
Guelph hasn't yet decided which courses will be taught at which colleges, but McLaughlin promises Guelph won't slash college staffs so it can soften the budget blow at the university.
"There is huge value in having those colleges out in regions, supporting the regions," he says. "We see all sorts of opportunities to move things out of Guelph."
Ridgetown graduate Susan McLarty, who farms in Kent county with husband Ken, says the details of which courses are taught where, and how the colleges will be administered, will be crucial to the college's future.
"I can see Guelph wanting to run the show," McLarty says. "It's very important that the advisory committees be set up, and that the farmers, not Guelph, get to decide who goes on the committees."
Gayle Bogart, manager of Agricultural Labour Pool in Aylmer, says employers won't care whether a college student's diploma is signed by Guelph or the ministry. "As long as the students can still bring the same qualifications to the job, I don't think it will matter," Bogart says.
Why some croppers are cashless
By TOM BUTTON
The top third of Ontario cash croppers make an average profit of nearly $80 an acre while the bottom third don't break even.That's just one of the findings from an in-depth study of 30 cash crop farms by Ridgetown college researchers. It sheds some light on the differences between money-making and money-losing farmers.
There's little surprise that high-profit farmers work more acres, boast higher equity, and are able to store their crops longer for higher prices.
More surprising, high-profit farms get less government aid per acre, they grow more wheat, and they're slower to switch their corn to no-till. The study also shows that profitability has very little if anything to do with heat units.
Ridgetown economist Randy Ross says the Ontario Data Analysis Project isn't a road map to successful cash cropping.
"A lot of farming is timing," Ross says. "Many farmers who got their start before 1970 are very successful today. Many who started 10 or 15 years later are still struggling."
Still, the study shows where that $80 an acre comes from, including lower production costs, higher earnings from crop sales, and lower long-term debt.
There's also a warning for farmers in 1996. High-profit farmers rent more acres than low-profit farms, Ross points out. But low-profit farms pay the highest rents.
Ridgetown economists tracked the farmers for four years starting in 1991 as part of a national survey by the federal agriculture department. The results will be used to put together computerized model farms for testing the potential impact of changes to farm policies, including safety nets. Among the conclusions of the recently-released final report by economist Peter Epp:
Expenses
- The most consistent advantage for high-profit farmers is their low machinery cost, averaging $5 to $15 per acre below costs for low-profit farms when all related expenses are included. High-profit farmers spend less than $90 an acre. Most low-profit farmers spend over $100.
- Low-profit farmers spend about $5 more per acre on seed, fertilizer and pesticides and about $30 more per acre on interest.
- High-profit farmers spend nearly $20 an acre more on hired labour.Crops
- High-profit farmers cut their corn acres faster than low-profit farmers. In 1991, high-profit farmers planted corn on 43 per cent of their land, compared to 60 per cent for low-profit farms. By 1994, both were under 35 per cent.
- High-profit farmers shifted faster to soybeans, planting soys on 37 per cent of their land in 1991, compared to 30 per cent for low-profit farmers.
- High-profit farmers plant wheat on 16 per cent of their land. Wheat planting by low-profit farmers is about 10 per cent.
- By 1994, nearly half the surveyed corn acres were grown with some form of reduced tillage. Low-profit farmers, however, were four times more likely to be using no-till than high-profit farmers.Income
- High-profit farmers sell one third of their crops in spring and summer, compared to less than five per cent at harvest. Low-profit farmers sell 22 per cent at harvest.
- In 1994, low-profit farmers got twice as much government help as high-profit farmers.
- High-profit farms had the highest crop income per acre, but low-profit farms had more earnings from custom work, and higher government payouts.Structure
- High-profit farms own about the same number of acres, but when combined with rented and share-cropped land, they work an average 1,350 acres, compared to 545 acres for low-profit farms.
- In 1994, high-profit farms reported an average equity of $1.26 million, compared to $419,000 for low-profit farms. High-profit farms showed a 75 per cent equity position, compared to 52 per cent for low-profit farms.
- Return on equity (obtained by dividing net farm income by farm equity) averages 9.3 per cent on high-profit farms. Low-profit farms, meanwhile, were losing ground at a rate of almost three per cent per year.
Still searching for the rainy day spray
It's easy to write a label for a post-emerge spray. All you have to do is type "Do not spray within six hours of rain." The real world is more complicated, and weed experts such as Jim Shaw at Ridgetown college say their phone lines light up each spring with calls from farmers who've been surprised by a sudden shower.Rain doesn't necessarily mean your spray won't work, however. A lot depends on soil and temperature conditions at spraying. It's safer to take a gamble on that cloud on the horizon if weeds are actively growing and stress-free, with their pores wide open so they'll suck in the spray.
A new silicone-based spray additive called Sylgard 309 also promises to speed up 'rainfastness', although the jury is still out.
Sylgard is a 'wetter'. It reduces the surface tension of the spray, so that when it lands on a waxy leaf surface, it won't bead up, but will spread out in a thin, even layer.
Publication 75, the provincial government guide to weed control, says Sylgard has the lowest surface tension of any spray additive on the market.
It also has the highest price. David Latter, Canadian agent for the Dow Corning product, says suggested retail is $90 for a 3.8-litre jug. At the recommended 0.25 per cent rate, it costs $2.25 per acre for every 10 gallons of spray output. Sylgard 309 was first registered in 1993, and is approved for use with Roundup, Basagran and Pursuit, although the company is working toward a more generic label listing all water-soluble post-emerge treatments.
Unlike any other spray additive, Sylgard has the federal agriculture department's approval to list rainfastness on the label. Latter says it works by spreading the spray out over the leaf surface, so it gets into the plant faster.
"If a herbicide on its own needs five or six hours to get into the plant, with Sylgard it would typically get into the leaf within about two hours."
As with most adjuvants, however, there's a lot less scientific research than there is for the herbicides that the additives are supposed to help.
Doug McLean, Strathroy-based manager of AgriVenture, a pesticide distribution company set up by independent Ontario retailers, has probably seen more fields sprayed with Sylgard than anybody else in the province.
"Under normal circumstances, I wouldn't recommend it," McLean says. "You can get the same effect from a material like Agral 90 for quite a bit less money.
"If there's rain in the forecast, or if the weeds are getting past the sensitive stage, it's worth the extra.
"I've walked the fields, there's no doubt it increases the uptake of the chemical."
In Shaw's tests at Ridgetown, Sylgard gave the best weed control results for additives he tankmixed with Pursuit and Basagran. "It works well," Shaw says. But, he adds, "It's not going to allow you to reduce your herbicide rates."
Shaw suggests that if there's rain looming, a farmer's first option should be to re-schedule the spray, not add Sylgard to the tank.
Pesticide companies are cautious. "We've worked with other silicone-type surfactants, although not with Sylgard itself," says Brain Legassicke, technical representative for Monsanto, maker of Roundup. "What we've seen is some improvement in weed control, but also the possibility of antagonism, so weed control may actually be worse if it doesn't rain."
Legassicke says he's seen very little research on Sylgard, so he's leery. "If it's so great, why haven't they involved us in doing more tests?
"Our recommendation on Sylgard is to stay away from it until such time as we have more information."
David Hughes, BASF marketing manager, says that in company weed control tests, Sylgard didn't out-perform Basagran Forte. "We don't have any data on its effect on rainfastness," Hughes says. He advises farmers to stop spraying when rain is likely, rather than buy Sylgard.
Weed researchers say rainfastness is highly variable. Monsanto, for instance, has cut the six-hour warning out of its Roundup label.
"If it's warm and you've got good growing conditions, Roundup can be rainfast in two hours," he explains. "If it's cold and the weeds are drought-stressed, six hours may not be enough." The impact on weed control also depends on application rate, he adds. If a farmer sprays Roundup at two litres per acre and gets rain in two hours, enough chemical may get into the leaves to kill the weeds. If it was sprayed at one litre, the weeds may survive.
Hughes tells farmers to keep their eyes on fields that were hit by rain after spraying. "If it was a light, misty rain, you're probably okay. If it's a half inch or more, you should worry," he says. "Keep your eye on it. If you're in doubt, call the company and we'll look at it with you."
No matter how careful farmers are, some will have to re-spray, Shaw says. "It's happened to me too," he says. "I've pulled out of the field with a few drops of rain, and then been soaked to the skin by the time I got to the barn."
Ontario farmers could use a miracle chemical, but is Sylgard the answer to their prayers? "I don't know. It might be, but I don't know," Shaw says. -TB