Winnipeg Free Press - PRINT EDITION

Bet the farm on this harvest

Farmers lifted by high yields, soaring prices year after flood

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One year after many farm fields were swamped by flooding, producers are hauling in a bumper crop and benefitting from sky-high prices for a harvest that promises a provincewide payoff.

Yields are trending above average at about 50 to 100 bushels per acre. The latest 10-year average is 43 bushels per acre, the latest crop report, released Monday, shows.

"The buzz in the agriculture industry is the remarkable confluence of good yields and excellent prices," said Doug Chorney, Keystone Agricultural Producers president.

But that buzz will ripple well beyond the bins now being filled by combines out in the fields. Chorney said their research shows for every $1 earned at the farm gate about $14 is put back in the economy.

"There are 62,000 jobs in Manitoba directly linked to agriculture and agri-food processing," Chorney said. "There are numerous opportunities for Manitobans not engaged directly in farming to benefit. It is a good thing for the farmer to be successful because everyone benefits in the economy across the board."

Consider the case of Olympic Builders Supply. It started out 30 years ago building metal structures for the agriculture industry but had to shift to commercial and industrial markets because of a series of challenges farmers and livestock producers faced over the years. However, good news on the farm is good news for Olympic.

"It's swinging back," Doug Gaudry, Olympic's general manager, said. "Our agriculture business is up about 15 per cent over last year. Far more so than in previous years."

How strongly is the agriculture business swinging back? At the Keystone news conference Monday, Chorney dug his hand into a hopper full of spring wheat that yielded 50 bushels to the acre and goes for a record price of nearly $9 a bushel.

Wheat prices have soared by about 25 per cent since June, United States Department of Agriculture statistics show.

Expectations are high for a solid harvest. Results from a recent Reuters poll indicate the prospects for a record-breaking Canadian canola crop and the biggest Canadian wheat crop in three years.

Steve Hofer of Starlight Colony near Starbuck doesn't need a pollster to tell him how good crops are in his area. "So far, harvest is way above the average of the last five years. We are enjoying a bountiful harvest."

On top of that, there are three million more acres seeded in Manitoba alone that were under water in 2011.

But it's not just Hofer and the two to-three per cent of the Manitoba population engaged in primary agriculture production that will benefit from such bounty.

Trucking firms will have more business shipping all those bumper crops and it means equipment suppliers will get an uptick in their business, mirroring Olympic's experience.

"It looks like it's going to be a very good year across the board. Cash will be pouring in across the Prairies," said Sylvain Charlebois, an agricultural economist at the University of Guelph in Ontario.

In 2010, agri-food processing and the food-service industry accounted for $10.1 billion in economic activity in Manitoba.

It does not take complicated economic calculations to imagine that will increase with a larger crop and higher prices.

Agricultural production is one of the largest commodities shipped by truck around Manitoba, said Bob Dolyniuk of the Manitoba Trucking Association.

"If farmers are not growing, planting and fertilizing, then those trucks are not moving," he said.

"If they are not harvesting, then there is no product to be moved around."

Charlebois said the current good times will mean enhanced demand -- and prices -- for agricultural land. Owners of larger farms will seek to become even more efficient by buying up smaller operations.

The food-processing industry, which was hit hard when the Canadian dollar spiked for the first time five years ago, has since adapted and found new ways to succeed besides taking advantage of a cheap dollar in the export market.

"They have brought other things to the game," said Dave Shambrock, president of the Manitoba Food Processors Association.

"We're seeing growth in startups and companies that are being very successful in niche markets."

Companies such as Manitoba Harvest Hemp Foods & Oils, whose wide range of hemp food products are found in major retailers across the continent, have found success in those niche martets.

Higher feed prices cut into hog producers' bottom line

WHILE just about every crop producer in Manitoba is looking to have a good year in 2012, hog producers are crying the blues.

Feed costs are up close to 50 per cent because of strong grain prices and they're driving some Manitoba hog producers out of business.

Karl Kynoch, chairman of Manitoba Pork, said Manitoba hog producers are looking at about $130 million in losses over the next six months.

"It's now costing us about $160 to $180 in feed to finish a hog and prices today are about $160 to $175 per hog," he said.

The industry is caught in a cycle where feed prices are high at the start of the low season for hog prices, which typically doesn't pick up until the spring.

"And it's not like we're in the widget business where, if prices are low, they can just keep their inventory on the shelves until they go up," he said.

Even though processors are doing well -- HyLife in Neepawa is looking to hire 250 more people this year -- hog production in Manitoba has decreased to around eight million hogs this year from more than nine million head a few years ago.

The Starlight Colony near Starbuck produces grain on about 6,500 acres but also operates a 650-sow hog operation as well as raising chickens and turkeys.

The wheat and grain business is great, but not the livestock side.

"One good thing leads to a challenge to make ends meet on the livestock side," said Starlight's Steve Hofer. "We need to see commodity prices on hogs and chicken and turkey follow up and be passed on to the consumer."

Kynoch said a 15-cent per pound increase in the retail price of pork would wipe out the $130-million that hog producers expect to lose.


-- Martin Cash

Republished from the Winnipeg Free Press print edition August 21, 2012 A3

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