Behind the Lines - August/September 2014

Tuesday, August 5, 2014

Reporters and editors know they are onto a story when a couple of them arrive at the same conclusion at the same time for different reasons.

One of the geneses of our cover story on skyrocketing beef prices (starting on page 12) was a Canadian Cattlemen's Association newsletter noting that the cull cows the Ottawa Food Bank could buy for $400-$500 a head a decade ago, in the aftermath of the BSE crisis, now command more than $1,500 each. The reason? The cow herd in Canada has been reduced by 25 per cent since then.

The cut is even deeper in Ontario – 33 per cent – as producers plowed up pastures and hayfields to plant high-return cash crops. Writer Jim Algie also noted the soaring beef prices and visited the sales barn in Keady, which serves cattle producers in the key counties of Grey, Bruce and beyond. He found that cow-calf operators were enjoying unprecedented prices, while others in the system expressed concerns about the sustainability of returns. Would buyers ever get their money back when those cattle go to market next fall?

That was in May and, when we spoke to local cattle producer and trader Ken Schaus again in June, he noted that prices were even higher. Normally, one of the ways that producers can reduce risk is to use futures. Based on June prices and Schaus's own break even calculations, using futures markets to lock in a price on cattle delivered in the late fall would result in a $30-a-head loss. So are these cattle prices a new and welcome "normal" for producers in recovery from the BSE crisis a decade ago, or an unsustainable bubble? Time will tell.

Also causing concern because of possible unsustainability is farm debt, which Statistics Canada estimates reached an incredible $78 billion at the end of last year. Debt servicing charges are now one of the top costs on the farm, even with low interest rates, according to our Ottawa columnist Barry Wilson. His commentary on what Canadian Federation of Agriculture president Ron Bonnett refers to as "a ticking time bomb" is on page 48.

A combination of a generally late spring this year and good prices has resulted in a record number of acres being put to soybeans. Consulting agronomist Pat Lynch reminds us that soybeans "are a big negative" for Ontario soils and outlines a number of choices. This year, at Canada's Outdoor Farm Show there will be a massive demonstration showcasing conservation tillage to handle red clover, an old favourite.

After a generally late spring across Ontario, the factor of weather comes into play. Starting on page 36, Seedbed columnist and Agriculture and Agri-Food Canada soil scientist Keith Reid tells us how to reduce drought stress in our fields. Meanwhile, professional weather forecaster Phil Chadwick notes that some new ways of communicating weather "risk" are being tested and on the way to farmers, one of the key groups of clients for Environment Canada. Chadwick's weather column is on page 46. BF

ROBERT IRWIN & DON STONEMAN