AGRI-BUSINESS
Nuts & bolts
THE LOH-DOWN
Michael Loh joins Farm & Country's columnist ranks this issue. The Loh-Down will seek to identify international marketing opportunities for Ontario producers. Among the hats he's worn: Ontario's trade representative in Tokyo, and co-ordinator of export development for the Ontario Soybean Growers' Marketing Board. He currently serves as the international marketing executive of the Outdoor Farm Show and runs an export management company in addition to a cash crop farm in Flamborough.
Japan and Taiwan offer excellent export opportunities for
Canadian sweet
corn. To meet consumer demand, Japan imports three times as much
canned
corn (over 62,000 tonnes in 1997) and four times as much frozen
corn
(50,000 tonnes in 1997) as it produces. In Taiwan, local sweet
corn
production is sold almost entirely into the fresh grocer market,
leaving
the processed corn market wide open.
Canned sweet corn is considered a popular, daily necessity item and is available at most general-merchandise retail establishments and grocery stores in Japan. Despite the product's well-developed history, continued growth potential exists, drawing on consumer demand for quickly and easily prepared foods. At more than 86,000 tonnes, consumption of canned sweet corn jumped nearly 10 per cent in 1996 alone, fueled by demand from working couples and singles who experience long commutes and hectic lives.
The U.S. accounts for more than 90 per cent of sales of canned corn to Japan. New Zealand, Thailand and France are other significant suppliers, with Australia and Canada exporting less significant amounts.
Because of a lower overall Japanese corn crop in 1996, domestic canned corn production was 22,263 tonnes, down 12 per cent from the previous year. Frozen corn production fell to 10,280 tonnes, sliding down almost 20 per cent, according to the Japanese Canners Association.
The U.S. dominates the canned sweet corn market in Taiwan with a 98 per cent market share in 1995 (14,260 tonnes).
Frozen vegetable imports on rise
Japan's total frozen vegetable imports have been on the rise for
several
years, with a 1996 total of 604,037 tons valued at 84,337 million
yen
(C$917 million), up 10.1 per cent and 25.3 per cent respectively
from the
previous year. Typical frozen vegetables include potatoes, peas,
beans,
green soybeans, spinach, taro, broccoli and mixed vegetables as
well as
sweet corn. While the U.S. dominates frozen vegetable exports
with a 44.3
per cent share in 1996, Canada exported 22,261 tonnes to Japan
worth 2,832
million yen (C$31 million). This represented a 3.7 per cent
volume share of
imports and 3.4 per cent share in yen value.
The U.S. led the export of frozen sweet corn in 1996 with a 82 per cent share; New Zealand accounted for nearly all of the remainder. However, Japan has been importing increasing amounts of widely merchandised frozen Canadian sweet corn (164 tonnes in 1995; 280 tonnes in first half 1997).
Frozen corn imports to Taiwan are more diversified, but the U.S. enjoys a 55 per cent market share. Other important suppliers are New Zealand, Australia and Canada with 24, 14 and six per cent market share.
Import tariff rates for canned sweet corn into Japan range
between 11.3
and 16.2 per cent, depending on whether sugar is added during
preparation
or preservation. The rate for Taiwan - based on cost, insurance
and freight
charges (CIF) - is 17.5 per cent. Imports of frozen corn into
Japan incur a
10 to 11.6 per cent tariff, while the rate is 25 per cent for
Taiwan, CIF.
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Corn and soy prices holding for summer
Corn prices are lower than most farmers expected. From a high of more than US$3/bu. in October, the May 1998 future slid below $2.50 in April. The 50 cent per bushel drop in U.S. futures translated to a greater drop in Canadian terms, with some elevator bids down 75 cents from the autumn high.Normally, corn prices move higher from harvest into May. The seasonal odds are especially strong from early March through April. Counter-seasonal price movement from January to April (like this year) has occurred in about 25 per cent of the years since 1970. Usually, when prices slide into early spring, they bottom and enter sideways ranges mid-April through mid-June. Then, weather conditions in late June or early July determine whether futures burst higher or break lower out of the sideways range.
Last month I outlined good-weather and bad-weather scenarios for summer and fall prices for 1998 corn. Following that analysis, the U.S. Department of Agricul-ture (USDA) released a supply-demand forecast that boosted the forecast for old-crop stocks going into the new growing season. The government raised its forecast by about 250 million bushels to 1.2 billion, blaming smaller domestic usage as well as a poor export pacecaused by Asian financial woes.
The government partially offset the bearish stocks data with a bullish prospective plantings report. USDA said that U.S. farmers intend to plant about one million acres less than trade expectations, at 80.78 million acres.
On the bottom line, for all the negative news and bearish price action of the past few months, not a lot has changed, at least in terms of the outlook for new-crop corn. Yes, there's a lot more old-crop corn out there than expected, and you're forced to scale down your price hopes for the grain you're storing. But for the crop going into the ground this spring, previous projections are on track. You can bet on a harvest break by the December future to the US$2.15 to $2.25 area in the event of record-setting yields; you can look for around $2.30 to be the low in the event of average growing conditions; and you can expect an explosive, possibly record-smashing bull market in the event of drought.
Soy will lag corn
Soybean futures also fell from November through April. The May
future slid
from US$7.50 to under US$6.30/bu. Some Ontario elevators sank
from C$9.76
to $8.60.
The declining soy market should come as no shock. It was widely known for months that the 1997 U.S. crop was a record-breaker, and that South America would produce more than ever.
The old-fashioned seasonal odds for an up tick in soy prices from February through May could be muted somewhat in the future. Bigger and bigger acreages in South America could see to that. From 25 million tonnes in 1986, production is now over 50 million and it could hit 65 million tonnes (about 2.39 billion bushels) within five years. This would put South Amer-ica's crop almost on par with the U.S.
On top of the South American crop, the market has to cope with forecasts for a huge 1998 U.S. acreage. USDA's March prospective plant-ings report pegged soybeans at 72-million acres. That beats the 1979 record of 71.4.
Exceptional yields on this huge acreage could knock the November future to US$5.25 at harvest; maybe even $5. Average conditions might result in several weeks of trading between US$5.50 and $6.25. With drought you could see US$7.50 to $9.
Weather is still the key to price direction, of course, but the
fundamental data indicate that any drought-driven bull move in
soybeans
will lag that of corn. Or with good growing conditions, beans
would be
hardest hit. The price relationships in the months ahead will
favour corn.
Market analyst and commodities specialist John DePutter operates
a
telephone hotline, Ag-Alert (519-433-0133), and publishes a
monthly
newsletter.
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Dealers still wishing on rainbow
Don't look for competing lines at your local farm equipment
dealership
just yet.
Despite a push last year to win the right to sell different-coloured equipment, Ontario dealers say it's business as usual heading into 1998.
"On this front, I've been somewhat of a failure," a dejected Jerry Beernink told fellow dealers at the Ontario Retail Farm Equipment Dealers' Association (ORFEDA) convention in March.
Beernink and others fought hard against the so-called "dealer purity" demands made by companies, but the Arkona New Holland dealer says efforts fizzled when they failed to win the support of the auto dealers. If changes to the Competitions Act had gone through, "it would have been a criminal offence for a company to terminate our business because we were selling a competing product," Beernink told dealers.
"The fun has just begun. Middle management in the major companies are telling us how we need to run our business."
Beernink says it's more critical than ever for dealers to have a
"large,
independent voice" such as ORFEDA.
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Cecil Rae and his breachy black mare
"I had another nice black mare," Cecil Rae told me one day in the
midst of
a long conversation.
His memories that particular afternoon ranged from going on harvest excursions out West in 1919, to helping build the stone gates at the Mount Forest Fairgrounds in 1959 with his pal Seymour Woods. As with any chat with Cecil, it inevitably got around to happy and sad memories of the many horses he'd owned over the years at his Egremont township farm in south Grey county. As he put it, "I did a little dealing then.
"We were getting along good," Cecil said, getting back to his new black mare. "But she was sort of breachy. You know what 'breachy' means?" he asked, and without a pause continued, "She would jump the fence and get into the grain field."
We were off. Elastic arm bands holding his shirt sleeves off his wrists and a favourite straw fedora covering his still red hair at age 91, Cecil Rae wasn't your typical flamboyant-type story teller. Rather, he was a quiet-type, the kind who'd say just enough to lubricate your imagination.
Born just a couple of years into the 1900s, Cecil had seen plenty of changes. He could tell you the pros and cons of the hand-built round stook as opposed to the long stook, because he did plenty of both in the hot sun. "I wore my shirts out right to the ribs," he recalled.
Like many of the older families in this part of Ontario, the Rae family pioneered here in the mid-1800s, coming from Islay, Scotland.
The outside trim of Cecil's house always had plenty of evidence of thick high-gloss enamel well applied by brush. I first met him when he was 91, and there still was nothing he enjoyed more than re-pointing some bricks or pouring a new concrete sill on a window.
"I broke her in," he recalled of the black mare. "Oh, she was a dandy. I liked her awful well. She was a regular pet. She would put her head on my shoulder. I had this lane all the way back to the farm, and here they got into the grain. The colts and all.
"I put them out of the field; I just shooed them back into the lane. I didn't know until after, but there was a sharp point of the rail fence sticking out. And they kind of jammed going through the fence, and here she had the sharp point of the rail run right through her between the ribs and into her bowels.
"So I fixed the fence, and when I came home I saw her coming through the main gate with her head down. There was just a handful of this rail broken off and sticking out from her side.
"I phoned the vet and he said, 'You'll have to shoot her.' There was a nice black mare and she had a three-month old colt. I raised the colt by hand. A little wee star on her face.
"That was in 1954, and after that we got rid of all the horses. We got tractors," he said, and then launched into memories of how in 1956 he decided to quit farming and go to work in town. "It was like being on holidays," he said.
Cecil passed away this spring in his 97th year. The death of a
storyteller. I guess I thought I'd have him for-ever.
Campbell Cork writes and lives in Mount Forest.
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OFAC slogan winners
The Ontario Farm Animal Council has announced the winners
of its 1998 "Get the Message Out!" slogan contest co-sponsored by
Farm & Country. Applause, please, for...
First: Farmers...we're in business with earth.Paul Brissette, Stoney Pointe,
wins a weekend in Niagara Falls
Second: Farmers don't treat the land like dirt.Crystal Mackay, Campbellville,
wins a one-year subscription to Farm & Country
Third: Agriculture, the original recycling system.Karen Gillan, Guelph,
wins a one-year OFAC membership
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UNEARTHED
Notes from All Over
Power plants and swimming pools
Sales of "Family Favourites," a collection of favourite recipes from Maple Lodge Farms' founding May family, have already helped put $2,000 in the coffers of Toronto's Daily Bread Foodbank. Combining 11 recipes, a brief history of the May family and chicken nutriton facts, the cook-booklet costs $2. Call Maple Lodge Farms toll-free at 1-888-664-4444 for details.
More pesticides are dumped into U.S. swimming pools than are
sprayed on
farm fields and orchards, say the University of Guelph's Dr.
Gordon
Surgeoner and Dr. Michael Owen of Iowa State Universty. The pair
cited
statistics at Guelph's Integrated Crop Management Symposium that
North
American lawn care companies apply more pesticides, by volume,
than farmers
in each country, according toOntario Christmas Tree News. Most of
the
pesticides added to pools are to control algae.
Farm & Country recently received a phonecall from Rajiv
Surendra, a
13-year-old West Hill, Ont., student who was trying to locate a
source of
buckwheat hulls.
The hulls have become quite a popular commodity thanks to TV and
magazine
star Martha Stewart, who has raved about the benefits of
buckwheat hull
pillows.
Apparently hulls are a favourite pillow filler of the Japanese,
who claim
the hulls remain cool in summer, warm in winter and earn high
marks for
comfort. After a little leg work we found that the No.1 source of
buckwheat
hulls is Desert Air, Wash., farmer Walt King, who claims his
buckwheat hull
business grossed more than US$100,000 last year. The cheapest
hulls Surenda
could locate were from a B.C. company asking $89 per 18-pound
bag.
Farm & Country made a few inquiries around the Ontario farming
community
and was unable to find a local source. Anybody looking for a new
niche
market?
Power plant has a new meaning. Minnesota Valley Alfalfa Producers
(MnVAP),
headquartered in Granite Falls, Minn., says the Northern States
Power Co.
hopes to supply 75 megawatts of electricity (enough to power
about 80,000
homes) by turning alfalfa stems into a generator-fueling gas,
according to
the Farmer magazine.
MnVAP's 290 farmer-members currently supply 70,000 tons of
alfalfa
annually. Stems and leaves are used to produce 25 per cent
protein feed
pellets. Using just the leaves, it hopes to raise the protein
level to 28
per cent. The power plant will require 350,000 tons of stems
annually.
U.K. frozen food retailer Iceland has guaranteed that from this
month on
its own-label foods will be free from genetically modified (GM)
ingredients, reports Farmers Weekly.
Iceland chief executive Malcolm Walker says the firm has locked
in
suppliers, mainly from the U.S., that will segregate GM varieties
from
conventional crops.
A spokesman for environmental group Greenpeace expressed delight
at
Iceland's move, claiming there was now no reason for retailers to
force
"genetically engineered soya down our throats."
The Canadian Cattlemen's Association has inspired the wrath of
some
long-time advocates of orderly marketing. Last month, the CCA
appeared
before the Senate agriculture committee to offer support for the
current
incarnation of the Canadian Wheat Board. CCA director John
Prentice argued
that control
of the wheat board, which is currently run by
government-appointed
commissioners, should not be turned over to an elected group of
farmers,
the Western Producer
reported.
The CCA charged that a farmer-controlled board would find it hard
to
resist artificially driving up prices to gain the good graces of
grain
farmers at re-election. The CCA said the victims of this abuse of
power
would be livestock producers.
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