A report released by RBC on Tuesday titled “Farmer 4.0” estimates Canadian ag GDP could reach $51 billion by 2030, compared to $32 billion today “if the right investments in people and technology are made.”

“We believe Canada can once again be an agriculture superpower, and do it in a way that cuts greenhouse gas emissions, and supports thousands of communities that still help to define our country,” RBC senior vice-president John Stackhouse said in a release.

Before it can get there, the report noted, Canada is up against a “skills and labour crisis” in the ag sector, projecting a domestic shortage of 123,000 workers within a decade.

And by 2025, the report added, a quarter of Canada’s farmers will be 65 or older. Over the next decade 37 per cent of the ag workforce will be set to retire and Canadian youth “are not looking to replace them, with 600 fewer young people entering the sector every year.”

Canada’s share of global agriculture exports has also fallen, from 6.3 per cent in 2000 to 4.9 per cent in 2005 and 3.9 per cent today, “as developing countries like China, India, Indonesia and Brazil produce and sell more to the world,” the report said.

Also, it said, Canada imports more farm machinery than it makes, and its share of global ag investment — while still in the top five — is “only 3.4 per cent, behind that of India and Brazil.”

“We are growing our exports; we are growing our output. The problem is the rest of the world is doing it faster,” RBC’s senior manager of research, Andrew Schrumm, said on Thursday’s episode of Glacier FarmMedia’s Between The Rows podcast.

The future farmer, or Farmer 4.0, “will need to focus on strategy and systems, leaving past tasks to a new generation of smart machines,” the report said.

By the end of the 2020s, the report said, nearly two-thirds of job shortages in agriculture will require manually-intensive, lower-skilled tasks, for which the “immediate” solution will be to continue to lean on Canada’s Temporary Foreign Worker program, which could supply 27 per cent of Canada’s ag work force by 2030, up from 17 per cent today.

However, RBC said, “the eventual solution for many of these roles will be automation.”

Over 80 per cent of producers under the age of 40 report using technology, compared to 57 per cent for those over 60, the report added.

The report sees yet another agricultural revolution in progress, “where agricultural technology is shaping how and who works on the farm,” Schrumm said.

And Canadian farms, while already capital-intensive, will need yet more capital in coming years. The ag sector in Canada in 2016 held $510 billion in capital assets, over 80 per cent of which was in land and buildings.

For all that, the report said, farmers’ access to credit is “surprisingly low.” Canadian agriculture has a 1.9 per cent share of commercial lending nationwide, down from the global average of 2.9 per cent and well below countries such as New Zealand at 14.1 per cent.

And for all their “substantial capital wealth,” high operating and asset-servicing costs weigh on Canadian farms’ profitability, as expenses alone eat up about 83 cents of every dollar of sales, dragging on producers’ ability to invest in technologies or skills.

Overall, the report said, if Canada fails to “transform the way we produce food, and market it globally,” the ag sector will likely grow by only 1.8 per cent per year on its “current path of declining productivity,” bringing its output to around $40 billion in 2030 from $32 billion today.

“But if we accelerate the adoption of innovative technologies and embrace an ambitious skills agenda, our research indicates Canada’s agricultural productivity can get back in line with the recent 10-year average of three per cent. The payoff: another $11 billion of output, bringing agricultural GDP to $51 billion in 2030.”

The Farmer 4.0 report, Schrumm said, is part of a larger RBC study titled “Humans Wanted,” which explores how Canada’s workforce will need new skills “as technology permeates every task we take on.

“We think it’s a really interesting case study for the rest of the country to understand what’s happening in agriculture.”

Among its recommendations, the RBC report calls for:

• the federal government to spearhead a new “national skills strategy” for the sector, together with employers, workers, educators and industry groups, to plan for its future labour needs;
• a “bold” industry-led campaign to attract and retain more youth, women, Indigenous people and new Canadians in the sector;
• agriculture to be incorporated as a “key sector” in Canada’s learning strategy, increasing its exposure among “non-agriculture” students;
• major research and development initiatives, such as the Protein Supercluster, to be linked to education and skills development;
• reduced barriers to high-skilled immigration to agriculture and a dedicated service channel under the Global Skills Strategy;
• accelerated development of governance standards to increase access to data and insights on food production; and
• high-speed Internet for Canada’s remaining unserved 1.5 million rural and remote households within 10 years.

Education and skills development are in demand, the report notes, as 47.2 per cent of agriculture workers under age 40 have received a post-secondary or CEGEP education. Those with “only secondary schooling or apprenticeships” are decreasing in number.

Enrolment in post-secondary agriculture programs has seen a 29 per cent increase over the past decade, the report added, compared to a 21 per cent growth rate across all programs.

Aspects of Canada’s approach to ag skills development are “already groundbreaking,” the report said, such as the knowledge and “practical experiential learning” to which 30,000 students in post-secondary ag programs are exposed today.

It noted six Canadian universities (UBC, Guelph, McGill, Alberta, Saskatchewan and Toronto) today are in the top 100 agriculture and forestry programs globally, according to QS World University Rankings. — Glacier FarmMedia Network

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Data released by Statistics Canada on Wednesday showed 2017 farm equity climbed to $535.3 billion, up $34.6 billion from $500.75 billion in 2016.

“I think it points to an industry where we’ve come off of some good times over the past five-plus, 10 years, and we’re continuing to see a little bit of slowing on some perspectives,” said Craig Klemmer.

“But also, I think there is still optimism in the industry.”

While he projected a slowdown in growth, he said farm asset values will continue to appreciate.

According to the StatsCan report, farm asset value rose 6.9 per cent compared to the year previous, to $632.2 billion nationwide in 2017, mostly due to higher farmland values.

Farm real estate climbed by 7.8 per cent to $480.1 billion and now accounts for more than three-quarters of total farm asset value.

A recent FCC report showed farmland values rising by 8.4 per cent, so the two reports taken together indicate that investors are seeing opportunities, Klemmer said.

“I think, overall, where we’re sitting right now, is that we’re seeing a very balanced, stable market, where assets are increasing, revenue is increasing and debt is increasing, in kind of a fairly stable trajectory at this point.”

Market disruptions and trade concerns will affect farm revenue and need to be monitored, he said. As well, the Bank of Canada has said it will raise interest rates this year, which will increase the costs of borrowing and could stress farmers’ abilities to pay down debt.

But the farm debt-to-asset ratio points to a healthy industry, he added. That ratio reached 15.3 per cent in 2017, according to the StatsCan report, slightly above the five-year average of 15.2 per cent.

“So, I think there are some pretty good stories,” Klemmer said.

Nationwide for 2017, farmers recorded assets of $632.2 billion with liabilities of $96.9 billion.

Manitoba farmers recorded assets of $49.984 billion with liabilities of $8.981 billion; Saskatchewan farmers, $114.436 billion in assets and $14.663 billion in liabilities; and Alberta, $173.365 billion in assets and $22.375 billion in liabilities.

Farm inventory values also rose, contributing to the overall increase in asset values.

The total value of crops, livestock, inputs and poultry increased six per cent from 2016, to $47.3 billion. It marked the first year inventory values have increased since 2014.

Farm inventories of market livestock and poultry increased the most, rising to $8.7 billion, a 7.2 per cent increase from 2016. The increase was credited mainly to higher prices for calves, which rose 6.4 per cent, and steers, up 5.2 per cent.

Breeding livestock inventory values increased 5.2 per cent to $13 billion, on the back of higher prices for beef cows (up 4.8 per cent) and milk cows (up 4.1 per cent).

Higher year-ending stocks for canola and soybeans were cited as the main reason for the increase in crop inventory values.

Soybean inventory value rose 44 per cent, while canola rose 9.5 per cent, compared to 2016.

Those numbers point to the growing popularity and the high value of those two crops, Klemmer said.

Many farmers may be holding crops in their bins longer, waiting for better prices, he added.

Canola and soybeans made up 86.5 per cent of the 2016-17 increase in crop inventory value and 39.8 per cent of the total crop inventory values for 2017.

— Terry Fries writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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Bayer CEO Werner Baumann again threw his weight behind the deal, despite higher antitrust hurdles and delays in the regulatory reviews, speaking to shareholders at the annual general meeting on Friday.

“I’m convinced that this acquisition has very great potential for creating value for our company, our stockholders and our customers,” Baumann said, adding he expected the deal to be approved and closed in the near future.

If the deal is not closed by June 14, Monsanto could withdraw from the takeover agreement and seek a higher price.

The last major hurdle to clear is the go-ahead from U.S. regulators for the deal, worth US$62.5 billion including debt, but Bayer has already come to an agreement in principle on the terms of approval with the Department of Justice.

It has agreed to sell assets, which include seed, crop chemicals and digital farming activities, with revenues of 2.2 billion euro (C$3.33 billion) for 7.6 billion euros to rival BASF .

Combining with takeover target Monsanto will have synergy effects of about US$1.2 billion on adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from 2022, Bayer said — less than the US$1.5 billion targeted when the transaction was agreed in September 2016.

— Reporting for Reuters by Patricia Weiss; writing by Ludwig Burger.

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The potential deal comes as large grain traders that make money by buying, selling, storing and shipping commodity crops have struggled with global oversupplies. Thin margins have squeezed such trading operations, including those of ADM, Bunge, Cargill and Louis Dreyfus, which together are known as the “ABCDs” and dominate the industry.

Reuters, citing a source, reported last month that ADM had proposed a takeover of Bunge.

An ADM spokeswoman said in an email the company does not comment on “rumours or speculation.” Bunge declined to comment.

Bunge’s shares were up 4.9 per cent in morning trading. Shares of ADM, which is set to report its quarterly results on Tuesday, were up 1.4 per cent.

Any deal would likely face stiff scrutiny from government regulators and opposition from U.S. farmers who fear that handing more market control to ADM could hurt wheat, corn and soybean prices. The companies would probably need to sell facilities in North America, such as grain silos, to win approval for a deal, analysts said.

A tie-up could also spark a bidding war for Bunge with Glencore, which already made an unsuccessful approach to Bunge last year. Glencore could buy assets that ADM and Bunge divest as well. Glencore declined to comment.

Talks between ADM and Bunge come after a wave of merger mania has already swept through the U.S. farm sector. Last year, DowDuPont was formed through the merger of Dow Chemical and DuPont, and separately PotashCorp combined with Agrium to form Nutrien. Bayer is seeking to acquire Monsanto.

New York-based Bunge operates in more than 40 countries. Chicago-based ADM has customers in 160 countries and is the most U.S.-focused of the major grain companies. A takeover would help it grow in South America, where Bunge is a major agricultural force.

As of Friday’s close, Bunge had a market value of about US$11 billion, while ADM was valued at US$23 billion.

— Reporting for Reuters by John Benny in Bangalore; additional reporting by Tom Polansek in Chicago.

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Saskatchewan Court of Queen’s Bench on Thursday appointed Calgary-based insolvency trustee Hardie and Kelly as the receiver for Milligan Biofuels, which operates at Foam Lake, about 90 km northwest of Yorkton.

Alberta’s Crown lending agency ATB Financial had filed an application without notice Wednesday in Saskatoon to seek the hearing the following day.

Such applications, as a rule, are heard at least 14 days from the filing date, but lawyers for ATB, in their filing, described the appointment of a receiver as “a time-sensitive matter.”

ATB’s filing calls in Milligan’s debt of $490,331, mainly from a non-revolving reducing loan.

Milligan, ATB said, had granted the lender security over “the entirety of its assets,” largely in the form of a $6 million mortgage and general security agreement reached in 2011.

An affidavit filed Wednesday by Trina Holland, representing ATB’s turnaround and restructuring group, described Milligan as having “experienced financial difficulty over the past several months.”

Given “the circumstances and the nature of Milligan’s assets, it seems imprudent for ATB to await the passage of 14 days,” Holland wrote, describing receivership as the “only practicable remedy to preserve (Milligan’s) assets,” which include its equipment, machinery, land and buildings.

Milligan, which incorporated as Milligan Bio-Tech in 1996, worked with federal and university researchers to develop a “cold-crushing” system for biodiesel extraction from the oil of low-quality canola.

By 2009, the company had built and opened a biodiesel plant — the first such commercial-scale facility in Western Canada — with capacity to produce 10 million litres of fuel per year from up to 30,000 tonnes of canola.

A plant expansion in 2011 boosted Milligan’s production capacity to 20 million litres per year, requiring over 60,000 tonnes of distressed canola, sourced from across the Prairies and the northern U.S.

The company, which became Milligan Biofuels in 2012, also offered canola meal and canola-based derivatives such as diesel fuel conditioner, penetrating oil, rust inhibitor, road dust suppressant and “asphalt release agents,” used to clean asphalt-handling equipment. — AGCanada.com Network

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Farm sector equity totaled $500.3 billion for the year ending Dec. 31. That’s a 4.5 per cent increase, or $21.6 billion, from the same period a year ago, according to the report released Wednesday.

Farm equity — assets used to produce agricultural products, minus the liabilities associated with those assets — for the previous four years reached $478.7 billion (2015); $449.1 billion (2014); $407.5 billion (2013); and $365.6 billion (2012).

The $500.3 billion for 2016 represents the smallest increase year-on-year since 2009, StatsCan said in the report.

Every province except Newfoundland and Labrador (down one per cent), and New Brunswick (down 3.1 per cent) posted farm equity increases.

Total farm assets were boosted by a $27.3 billion (7.3 per cent) gain in farmland values. Farmland values rose in every province, with Prince Edward Island recording the largest gain at 13.2 per cent and New Brunswick posting the smallest farmland value increase at two per cent.

Decreasing values for livestock and poultry kept a lid on potentially higher farm asset values, with those sectors showing a $3.6 billion fall in inventory values. Cattle and calf prices were down 15.8 per cent in 2016 compared to the year earlier and were cited as the main reason for overall livestock and poultry decline.

Total farm liabilities increased $6.3 billion (7.5 per cent) to $90.8 billion.

Farms’ debt-to-asset ratio was 15.4 per cent in 2016, up from 15 per cent in 2015. That’s slightly below the five-year average of 15.5 per cent.

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“Unfortunately, farm business managers can fall into a pattern of simply signing documents, and not reviewing all the conditions thoroughly,” said Rick Dehod, agriculture farm financial specialist with Alberta Agriculture and Forestry.

“Sometimes things don’t go as planned, and security gets called on. Farm business managers may be completely unaware that the creditors are exercising their rights — as agreed to in the terms of the agreement — because they did not review the agreement.”

As a debtor, the farm business manager must be aware of his or her responsibilities, and the recourse the lender may have on default or demand. If the debtor has signed the security agreement, then the debtor has agreed to its terms and conditions.

The federal and provincial governments have set out laws with regulations that govern the rights of debtors and creditors, and the priorities of competing security claims.

“Claiming you don’t have an understanding of your responsibilities as a debtor is not a defence of the law or actions of a lender,” said Dehod. “It is imperative that you take the time to read and understand all financial and security agreements prior to signing them.”

In addition, any questions and concerns should be addressed prior to signing the document.

“If you are not sure about something related to the agreement, then seek advice from your lawyer or accountant with experience in such matters,” he said.

Alberta Agriculture has two online resources on this issue at www.agriculture.alberta.ca: A Guide to Agricultural Security Agreements in Alberta and Alberta Personal Property Security Act: What it Means to Farmers. Both can be found by searching for ‘security agreements.’

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