Collecting on Harvest '98
Corn prices have plunged $1.30 per bushel from last harvest. On farms lucky enough to have escaped this year's drought, a 200-acre crop with a 120-bushel per acre yield has dropped $31,200 in value from last year.Soybeans are selling for 30 per cent less, and the wheat price is also in the tank. The only things that haven't dropped are the amount it costs to grow the crops, and the size of the operating loans and mortgage payments that must be met this fall.
The year epitomizes the kind of income implosion that has led governments over the years to draft an array of stabilization and safety net programs, offering taxpayer help to try to keep the vital farm sector on its feet. So what can farmers expect in government help? The short answer is: something, but not a lot, from the market revenue insurance program. Best hope, instead, is to use the new interim withdrawal system to tap into NISA accounts.
Corn
There won't be any market revenue cheques this winter to cover prices that plunged through 1998. Simply put, prices for the 1997 harvest didn't fall far enough.The crop is expected to finish the year with an average just over $3.70 per bushel, says Don LeDrew, Ontario Corn Producers Association manager. The support price that would trigger a market revenue payout is $3.43.
LeDrew sees a greater payout chance on the 1998 harvest. The support level is $3.32 per acre, calculated as 85 per cent of the indexed average price over the past 15 years. By contrast, the association expects that average market price to wallow somewhere near $3 per bushel.
Matt Tulloch, spokesman for Agricorp, which runs the market revenue program, says growers could expect cheques to cover two-thirds of the difference between the average market price and the support price. (The remaining third is retained as a kind of farmer-paid insurance premium.) The payment would also apply to 85 per cent of the farm's historical yield.
Typically, payments could be expected in December following the end of the crop year, so growers harvesting corn this fall wouldn't see a cheque till December 1999. LeDrew says, however, that the price drop is so sharp OCPA will likely press for an interim payment, perhaps in time to help with planting costs next spring.
Soybeans
There's even less hope of a market revenue payout in soybeans. The average price through to mid-July for the 1997 harvest was $9.17 per bushel, reports Kim Cooper, marketing specialist for the Ontario soybean board. The market revenue support price is $8.16 per bushel.Despite sinking prices this fall, odds of a payout on the 1998 harvest are no better than even. The new support price for market revenue is $7.81. Statistics Canada is predicting the crop will average somewhere between $7.35 and $8.15. The midpoint in their predictions is $7.75.
Wheat
The program lumps all winter wheats together, so growers with high-value hard red get the same payment as growers shipping soft wheat, explains William McClounie, wheat board manager.The 1997 pools averaged $152.63 per tonne as the landed price. From that, Agricorp deducts $12 per tonne for transportation and elevation to back the price up to roughly $140 per tonne at the farm gate. That in turns works out to $3.82 per bushel, compared to the support level of $4.15.
While the gap is 33 cents per bushel, the program keeps one-third as a farmer-paid premium, so the actual payment to growers would be about the 21 cent level. As well, the payments apply to 85 per cent of the farm's historical yield, so a grower with a 70-bushel average can expect a cheque for about $12.50 per acre.
Bigger cheques will likely be triggered on the 1998 harvest. The board is projecting a price average of $3.35 at the farm gate, compared to a support price of $4.01 per bushel.
The board expects to lobby for an interim payment in time to help with 1999 planting expenses.
White beans
White bean growers can expect in October to get a payout of $2.72 per bag in market revenue coverage on the 1997 crop, says Bob Readings, board manager. Growers received interim payments of the same size in March.Will there be a payout on the 1998 harvest? In the volatile bean market, it's hard to predict month to month, let alone a whole year. The support level is $24.57 per hundredweight bag, compared to pre-harvest price indications of about $28 per bag.
© copyright 1998 Agricultural Publishing Company Limited.
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Five options for selling wheat
New pricing tools give growers more control, keeping pricing separate from production and deliveryBY TOM BUTTON
Like your neighbours, you have to sell all your wheat through the marketing board. But you don't have to sell it for the same price.New pricing tools give growers almost as much control over their wheat prices as they have with corn and soybeans. Starting this fall, wheat growers have five choices: they can (1) sign forward contracts; (2) sign minimum-pricing contracts; (3) lock in their basis; (4) sell at harvest for cash; or (5) lump their crop in with the pool, getting an initial payment at harvest followed by a final cheque a year later.
Bothwell cash cropper Bob Huckle sees it as a chance to make sure you don't miss the market highs, while steering clear of market lows. Huckle, who teaches wheat marketing for the Ontario Agricultural Training Institute (OATI), also says it gives growers a chance to obey the fundamental rule of marketing: "Keep the pricing separate from the production and delivery."
Until two years ago, growers didn't have any options. Everybody was paid the same pool price.
For the 1997 harvest, the board started a forward contracting system where farmers could pick a Chicago-based price by mid-June. Last year, it widened the time frame and added a wrinkle so growers could use the program to take all their cash at delivery.
New for the 1999 crop are the minimum-pricing and basis contracts, explains Jim Whitelaw, the board's marketing manager. As with the forward contracting system, however, the board will publish a daily offer for each contract type.
There are two key differences between forward contracts and minimum pricing contracts. With forward contracts, the grower locks in a specific price for a specific number of bushels (500 bu minimum). The price is based on how much it costs the board to take a covering position through Chicago.
The minimum pricing contract, by contrast, is just what it says: a minimum. Early September, for instance, the board was offering $3.88 per bushel for minimum pricing contracts for July/August 1999 delivery. Growers who sign up are guaranteed they'll get that price. If the Chicago price moves up between now and mid-June, however, growers have the right to lock in a higher price.
Technically, the system starts with the board buying put options at Chicago. From now until the end of November, it will match its minimum pricing contracts with options having a US$3 per bushel strike price on the July futures. After November, it will switch to options having a US$3.10 per bushel strike price on the September market.
That explains the second difference between minimum pricing and forward contracts; the minimum pricing wheat price is lower, since it's based on the cost of buying the option. In early September, for example, the forward contract price was C$4.18 per bushel, 30 cents a bushel higher than the minimum price offer.
Huckle, who often uses options for selling corn and soybeans, says growers should focus on the fact that minimum pricing contracts will let them take advantage of price rallies, while making sure they won't be hurt if the price falls. "Most years, the best pricing opportunities are early, sometimes even before the crop is planted," he says. "The exceptions are the years like 1995 and '96 where the price rockets up."
Whitelaw adds that at current minimum pricing levels, growers can lock in a price that will cover their production costs. "This way, you're speculating on the size of your profit. Otherwise, you're speculating with the whole price."
Also new for 1999 is a basis pricing system. With low prices and a dollar that appears to be bottoming out, Whitelaw thinks there will be few takers. Early September, the board was offering C$1.15 over Chicago for harvest delivery. "It isn't attractive," says Whitelaw.
Uncertain, too, is how many growers will sign up for any of the marketing alternatives. For the 1998 harvest, only 101 of the board's 17,000 growers sold via forward contract and cash pricing, accounting for 250,000 bushels from the 45-million bushel crop.
Whitelaw says the board office was geared up for round-the-clock, but had only about 20 growers price their crops at delivery. In other years, with stronger prices, he believes the sales price could be hectic.
Huckle says there are important lessons for marketing. "The problem with high-price years like 1995 and '96 is that we get spoiled," Huckle says. "We wait for the old prices to come back instead of looking at what we might actually be able to get from the market.
"The questions we should be asking are how much risk are we carrying, and can we live it?"
© copyright 1998 Agricultural Publishing Company Limited.
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Pre-harvest bean spraying a matter of timing
BY TOM BUTTON
Picking the right time to spray is the key to getting best results from late-season herbicide applications that clear out weed escapes pre-harvest.Spray too early and unripe beans will shrivel inside their pods. Spray too late and weed stems and seed heads will still be so wet at harvest that they'll gum the combine and stain the beans.
Growers in the white bean belt have the most experience with the sprays, called desiccants because they are used to "desiccate" or dry out the crop and weeds. In soybeans, the sprays are used most often on high-value natto and tofu varieties, where a clean harvest is a must.
"There's no question, the sprays do work," says Brian Hall, provincial government crop specialist based at Clinton. "You do, however, have to make sure you get good coverage."
It's also hard to pinpoint desiccants from a precise profit and loss standpoint, Hall adds. There aren't any magic formulas about how many weeds or how many weedy patches you need before it makes economic sense to spray. Mostly, he says, it's a case of "you'll know it when you see it."
The two herbicide choices are Roundup and Reglone. Roundup is the better option in fields with perennials, since the late-season spray will help keep the weeds out of future crops. Roundup may also do a better job in fields with dense stands of weed escapes where it may bedifficult to get good coverage. Reglone, however, will turn weeds brown in as little as three days, compared to 10 to 14 days for Roundup.
But don't expect miracles. Neither spray will knock the berries off nightshade plants, so they won't prevent dockage at the elevator for staining.
© copyright 1998 Agricultural Publishing Company Limited.
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Deciding on a desiccant
Roundup Pre-HarvestWait until 80 to 90 per cent of the crop's leaves have dropped, recommends Monsanto rep Brian Legassicke. Moisture should be 30 per cent or less.
Post-application wait 10 days if it's sunny and warm, or 14 days if the weather turns cloudy and cool before harvesting. Transorb should cut one to two days off the waiting period.
Weeds will still show a greenish tinge, Legassicke says, but will have lost enough moisture to ensure combine efficiency.
Expect excellent control of quackgrass and dandelion, even if there's been frost. Thistles are less hardy, but can take a couple of light frosts and still be able to pump the Roundup from their leaves down to their roots and rhizomes. Milkweed control is more chancy - the weed tends to mature and shut down sooner than other perennials. If the plants are still green, Legassicke says results should be "reasonable."
Annuals also vary in cold hardiness. Ragweed can survive a hard frost, while pigweed is sensitive and lamb's-quarters is in between. All should be controlled by Roundup, however, under the theory that the chemical will get what the frost misses.
Reglone
Actually called Reglone Pro because the new formulation is pre-blended with a wetter, this is the choice for edible bean growers. Reglone isn't systemic, so it won't translocate to perennial roots for long-term control. But it will kill just about anything green that it touches - usually within three days.Zeneca rep Jim Anderson says soybean growers should focus on spray coverage. Boom height is critical, since Reglone won't move up inside the plant. It isn't too rare to see a field that's completely brown except for the seedheads that were above the spray pattern. Since those seedheads are high in moisture, that indicates a poor job.
Use water rates instead of high pressures to get the spray into the canopy: High pressures can cause fogging and drift. Anderson recommends keeping water rates at 20 US gallons per acre, and adds "30 is even better."
© copyright 1998 Agricultural Publishing Company Limited.
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Despite early fears, there hasn't been an explosion in Pursuit-resistant pigweed this year. Still, weed watchers are seeing a steady spread.So far, the infestation is being measured in the low to mid tens of thousands of acres, not hundreds of thousands. The technical teams that confirmed resistance in two Brigden area fields last year found 20 this summer.
Weed expert Gabrielle Ferguson is telling soybean growers to take a look at fields with a history of at least three years using Group 2 herbicides, including Pursuit and Pinnacle, and the corn herbicides Ultim, Elim and Accent. The flumetsulam active ingredient in the Broadstrike family is also Group 2.
Trouble signs include dark green pigweed spikes standing over top a maturing soybean crop. Be especially concerned if pigweed is the only escape. If there are other species, it's likely that the explanation has less to do with resistance than with an overall breakdown in weed control-soils too dry for pre-emerge activation, perhaps, or equipment failure.
Ferguson's advice is to clip a couple seedheads and set them aside in a paper bag. Then, destroy the other plants before harvest so your combine won't turn into a de facto seeder for next year's outbreak.
Your local county ag office will help you get your seed heads to Ferguson at the University of Guelph. The only way to get a foolproof diagnosis is for researchers to grow the seed out and spray the seedlings.
Cyanamid rep Scott MacDonald wasn't expecting a big jump in Ontario's resistance acreage this summer. "The U.S. has had resistance since 1992, and still only five per cent of the acreage is affected," MacDonald points out.
"To get resistance, you have to do a lot of things wrong, and you have to keep doing them wrong - no rotations, no tankmixing."
Ironically, 1998's tough weed control season could prove a setback for Group 2 resistant pigweed. In order for populations of resistant biotypes to take over a field, resistant pigweeds need to pollinate each other.
In fields that are always sprayed with Group 2 herbicides and always get good weed control, the only pigweeds that escape would be resistant weeds. So they can interbreed and build a seedbank of resistant seeds.
As long as growers recognize they have Pursuit-resistant pigweed, they don't have to fear weedy fields, MacDonald adds. By rotating and using tankmixes, the pigweed can be kept in check. "You don't really have to do anything you shouldn't be doing anyway," says MacDonald, adding the company will meet with affected growers to plot a field-specific spray strategy.
Knowledge is vital, Ferguson says. "This isn't a problem that goes away by ignoring it."
© copyright 1998 Agricultural Publishing Company Limited.
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