“This is not 2022 or even the early parts of 2023; this is a return to historic-type margins,” says Darren Bond, a farm management specialist with the Manitoba government. “I think that profit is still attainable for this upcoming year but we’re going to have to work a lot harder for it.”

Speaking at a farmer meeting in early February, Bond compared commodity prices from December 2023 to current prices, and there were significant reductions across the board on already depressed values.

“Canola seems to be a dog lately. The analogy of marketing canola in this type of environment is like catching a falling knife. Do you grab it or wait for it to hit the floor? But how far away is that floor? That’s the challenge.”

Oats were the one outlier in the bunch. While they decreased in value, they weren’t beaten up as badly as some other crops.

The cost of production also remains at historic highs.

“This is not going to surprise anyone, but last year was the most expensive crop that we ever put in,” said Bond — and the upcoming year looks to be a close second he adds.

Bond says older farmers may remember the days of managing tight margins, but production costs this high are something new, and that means more risk.

He shared a list of the top eight crops in terms of profitability. With current commodity prices, along with his department’s $200 per acre estimate of fixed costs (machinery and land payments), there is little to no profit to be made on any crop.

The worst was barley, at a net loss of $191.21 per acre. The best was oats, with a net loss of $2.49 per acre. However, Bond pointed out that these numbers don’t necessarily reflect reality on every farm.

For instance, the profitability of corn (a net loss of $150 per acre) is based on 135 bushels per acre.

“Those of us that are in corn country may look at that and say that’s crop failure,” said Bond. “160 to 180 bushels per acre might be a better number, and if you put those numbers in there, obviously corn doesn’t look as bad.”

On the other side of the equation, the $200 fixed costs estimate could vary based on the farm’s debt and equity. Bond said a simple way to calculate a farm’s fixed costs is to add up payments for equipment and land and divide them by the number of acres.

Using that calculation, Bond found that, on his farm, canola was break-even and oats looked to provide a $100 net profit per acre.

Deciding where to shed or pick up acres should be fairly simple, he added.

“One of the easiest ways to improve profitability on the farm is to focus on crops that give you the best return. It might upset the environmentalists, who say you have to have an eight- or 10-crop rotation. But if you just grow your top four profitable crops and dump the rest, that is one heck of a good way to increase profitability on the farm.”

One silver lining is that fertilizer prices have come down, but Bond warned against getting too excited about that.

“Looking at the last quarter 2022, we saw some pretty decent grain prices and some pretty high fertilizer prices,” he said. “But look at 2023 to 2024: commodity prices, for the most part, are down a quarter, and nitrogen prices went down by about a third.”

That’s only half of the equation. Using those numbers, the gross revenue loss from the reduction in commodity prices amounted to about a $150 decrease per acre, while savings on fertilizer costs are about $50 per acre.

“Fertilizer is still expensive,” said Bond. “But the last thing that we should be doing is cutting inputs. It’s about protecting our yields.”

To manage these decisions, it’s helpful to revisit the 4R principles of fertilizer application.

“I love the environmentalists and sustainability folks, but for me, it’s all about the money,” said Bond.

In terms of the bottom line, source is the least impactful of the 4Rs, but there are good opportunities to improve profitability with the other Rs.

In terms of timing, Bond said there is a $15–$25 per acre saving that can be realized by choosing spring application instead of fall.

“Generally speaking, we are 20 per cent more efficient with a spring application versus a fall application.”

In terms of placement, there will be less fertilizer lost to volatilization when a farmer chooses a banded application over broadcasting. But, again, when looking at the bottom line, extra equipment costs for banding might change that equation.

Nevertheless, Bond said grain farmers could see another $35 to $40 per acre, based on 120 pounds of nitrogen, by moving from broadcast to banding, and even more when it comes to phosphorus and potash.

Correct rate will make the biggest difference, he said.

“It’s about protecting our production. Under-fertilizing is going to cost you.”

Taking canola based on $15 per bushel, Bond estimates that $40–$70 could be left on the field if insufficient fertilizer is applied.

“We’re in a tight margin situation and just can’t afford for that to happen. We need to protect that yield.”

In the end it comes down to good management and minding the bottom line, he said.

“Any investments that we make in equipment, land, what we put on our crops, what we put in our soil, whatever the case may be, need to provide a positive return. If they don’t, you need to question why you are doing it.”

The post Making a profit in 2024 could be challenging for farmers appeared first on Alberta Farmer Express.

Bayer on Oct. 30 announced integration of the two platforms, which it said will allow grain farmers in Canada and the U.S. to connect their marketing data in Combyne and the agronomic data FieldView gathers from their field equipment.

Seeded-acreage and yield data from FieldView can thus allow Combyne users to accurately track the total bushels available to market without needing to export, upload and enter data twice, Bayer said.

Once a farmer reviews the available FieldView data, using Combyne’s Import Review function, the harvested and projected-yield figures in Combyne will automatically update with the actual figures.

That in turn will make Combyne’s data on percentage sold and net marketed position more accurate, “using your real numbers off the combine instead of rough estimates,” according to Combyne’s website.

Incoming FieldView data will also allow a Combyne user to “know how much of your harvest is already committed and better manage your forward contracting.”

That means a “fuller and more accurate picture of current-year harvest totals and projections for future years to easily update crop contract and storage positions, and enable up-to-date crop marketing decisions,” Bayer said.

Combyne was released to the public in late 2021 by Ottawa Valley farmer Alain Goubau’s company Combyne Ag — previously known as the developer of the grain marketing tool FarmLead, which was sunset in 2020.

Combyne is meant to serve as a record-keeping and decision-making support tool, gathering information on grain storage balances, contracts, deliveries and settlements across multiple buyers — as well as net overall marketed positions per crop.

According to Bayer, which acquired Combyne Ag in January, the Combyne platform allows farmers to manage grain trade documents in one place for a clear view of contractual commitments, delivery status, storage positions and cash flow projections from grain sales, and thus better manage contract risk and delivery logistics.

“With accurate bushel quantities populating your marketed positions, you can better manage things like how forward contracted you are, how much of your harvest is already committed, and where things stand when it comes to your storage and deliveries,” Goubau, now CEO of Bayer’s Combyne Ag arm, said in Bayer’s Oct. 30 release.

“By working with FieldView, delivered grain outcomes in Combyne can eventually be connected back to the fields they originated from and the management choices made on those fields, for better mapping of quality specs such as grade and dockage from delivered loads,” he said.

That, in turn, allows for “field-level profitability insights — mapping actual revenue from sold crops against cost of production per field.”

Climate FieldView, which came to Bayer when it bought Monsanto in 2018, was launched in the U.S. in 2015 and in Canada late the following year.

It was developed by Climate Corp., a Monsanto arm since 2013, as a single platform to unite data from each piece of precision ag equipment, for access via smartphone, tablet or desktop. — Glacier FarmMedia Network

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Viterra — whose owners include mining and trading giant Glencore and the investment management firm for the Canada Pension Plan — has decided not to continue its origination and export programs out of Russia after July 1, it said in a statement.

“After this decision, our main task is to save jobs and support the remaining infrastructure. Management plans to continue its grain export business as a new independent Russian exporter, aiming to maintain the competitiveness of Russian grain on the global market and provide the most viable conditions for Russian producers,” Demyanov said.

Russia is the world’s largest wheat exporter.

Viterra and sanctions-hit Russian lender VTB share ownership of a grain terminal in the Black Sea port of Taman. Viterra said on Thursday that it was assessing options to transfer its business and assets in Russia to new owners.

“The details and terms of further infrastructure deals are under discussion,” Demyanov said.

“Once all details have been agreed, Viterra’s shareholders and the buyers of the infrastructure assets will apply to the Russian government commission in charge of foreign investment for approval of the transactions.”

Viterra’s announcement comes a day after rival Cargill said it would take a further step back from the Russian grain market.

Russia’s agriculture ministry said in a separate statement that Viterra’s decision will not affect the amount of Russia’s grain exports.

— Reporting for Reuters by Polina Devitt, Sybille de La Hamaide and Olga Popova.

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The group on Wednesday reported a jump in annual net profit to $1 billion, joining other global crop merchants in benefitting from high prices and strong demand in a year marked by Russia’s invasion of fellow grain exporter Ukraine (all figures US$).

LDC wants to accelerate capital expenditure, including on “complementary” acquisitions, to between $800 million and $1 billion annually during the rest of this decade, CEO Michael Gelchie said in an interview.

That compares with 2022 investments of $549 million, which already marked a rise from $372 million the prior year.

“That can and should be in the form of greenfield or brownfield or M+A-type investments (…), whether that’s core merchandising or in innovative business that really diversifies our portfolio,” Gelchie said.

Last year’s investments included the acquisition of Australia’s Emerald Grain. The deal price was about $102 million, subject to closing adjustments, LDC said in its annual report.

Improved results and the sale of a stake in 2021 to Abu Dhabi holding firm ADQ have eased pressure on LDC and main shareholder Margarita Louis-Dreyfus after years of modest profits and mounting debt.

Like its peers, LDC has been developing food ingredients activities, including plant-based proteins, to tap into consumer trends and be less reliant on commodity markets.

The group announced in December the creation of a food and feed solutions division.

Gelchie declined to give an outlook for LDC this year but said turmoil in the banking sector and rising interest rates may increase market volatility further.

Higher interest rates could dampen commodity demand and prices in the near term, though the longer-term outlook for commodities appeared bullish given an energy transition that has already boosted oilseed crushing margins for renewable fuel in North America, he added.

Regarding upheaval in the banking sector, Gelchie said LDC had no exposure to Credit Suisse and had “secure relationships” with its banks.

He declined to comment on any exposure to Credit Suisse for chairperson Louis-Dreyfus, whose holding firm had a reduced loan arrangement with Credit Suisse worth around $240 million as of September 2021.

— Reporting for Reuters by Gus Trompiz in Paris.

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The program provides an unofficial grade along with quality information for crops to help farmers with marketing.

Producers who are not currently registered for the Harvest Sample Program, but who would like to take part this year, have until Dec. 12 to register at the Canadian Grain Commission website.

[RELATED] Selling to an unlicensed grain buyer

There is no charge to participate, and registered participants can send in samples until Dec. 30. They will receive an emailed report that includes an unofficial grade along with other quality results including dockage, falling number, vomitoxin (DON) and protein and oil content.

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The sale includes the sunflower processing plant in Voronezh.

Bunge and its rivals ADM, Cargill and Louis Dreyfus — part of the so-called ABCD quartet of global grains traders — had begun scaling back their Russian operations in March, following the country’s invasion of Ukraine.

Bunge on Monday did not reveal financial details about the deal. Exoil Group did not immediately reply to a request for comment.

Bunge invested US$130 million in construction of the Voronezh plant which it opened in 2008, according to the Russian version of its website. The plant has annual capacity to process 540,000 tonnes of raw material which makes it possible to produce more than 200 million bottles of sunflower oil.

“We are grateful to the team for continuing to deliver essential food and feed in this challenging environment,” said Bunge CEO Greg Heckman.

The company has been scaling back its Russian grain trading activities in recent years, including the sale of its Rostov grain export terminal last year.

— Reporting for Reuters by Arunima Kumar in Bangalore.

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“The Canada Grain Act hasn’t been reviewed since 1971, and from 1971 to 2021, we’ve seen significant changes on the farm,” said Alberta Wheat chair Todd Hames. “It’s an old act, so it’s time to make it new.”

Ottawa is reviewing the act and the role of the Canadian Grain Commission, and both need an overhaul, said Tom Steve, general manager of Alberta Wheat and Barley.

“The nature of the grain industry and farming has changed dramatically, and we believe it’s time to look at what the Canadian Grain Commission should be doing and what it should potentially stop doing,” he said, adding the agency should move from being a “service provider to predominantly being a regulation and enforcement agency.”

The first step is to scrap its outward weighing and inspection services — work that can be done more efficiently by the private sector, said Steve.

Currently, the grain commission inspects grain for export — and then most large grain companies pay a third party to do a second inspection.

“Those vessels are inspected twice in 70 to 80 per cent of the instances,” said Steve. “So what we’re actually seeing is the cost of not one but two inspections end up being charged back to the farmer through lower prices at the farm gate.”

That’s not sensible, said Alberta Barley chair Tara Sawyer.

“I don’t want to be charged twice for the same test. A third party can do it for us,” said Sawyer, who farms near Acme. “There’s still a role for (the grain commission) regulating and enforcing how grading methods are done wherever their standards are used for quality assessment.

“That’s their wheelhouse and that’s where they can expand their role.”

There also needs to be a way to deal with newer quality parameters for wheat such as falling number (an indicator of sprouting damage) and DON, said Steve.

“Because those are not grading factors, the grain commission doesn’t have the full authority to help farmers adjudicate disputes,” he said. “This is a frustration for farmers when they’re dealing at the local elevator and grain companies are imposing discounts on issues that the grain commission doesn’t have the power to provide any sort of third-party adjudication on.

“What we’re hearing from farmers is that they’d like to see the grain commission more active in helping them exercise their rights to dispute grading decisions by grain companies.”

Producers should also have longer to dispute grading results, added Sawyer.

“When we’re talking about falling number and DON, we’re asking that the timeline to dispute be available in a larger window — five business days from the date of delivery,” she said. “As it stands right now with the way farms deliver grain, we’re not always there, whether we’re using truckers or other third parties for delivering our grain.”

The commissions would also like the government to pay more of the bill for the Canadian Grain Commission (CGC), which gets most of its revenue from outward weighing and inspection services.

“We think it’s unfair that farmers have to bear that cost. The taxpayers of Canada should shoulder some of that responsibility,” said Steve. “The federal contribution to the cost of operating the CGC is very low, so farmers are paying over 80 per cent of the cost of operating the CGC. Those costs affect our competitiveness.”

The cost of grain commission services should also be on the invoice a farmer gets when delivering grain, added Hames.

“Right now, farmers aren’t really aware of what they’re paying for the CGC,” said the Lloydminster-area farmer.

Lowering these sorts of regulatory costs are key for Prairie producers, added Steve.

“We’re the farthest producing region from international tidewater in the world,” he said. “So every cost factor that’s added into the system along the way will make us potentially less competitive.”

But not everyone in the industry agrees.

While the Western Canadian Wheat Growers Association and the Western Grain Elevator Association back such changes, other Prairie farm groups are opposed, including Sask Wheat, the Agricultural Producers Association of Saskatchewan, and Keystone Agriculture Producers.

“To maintain Canada’s international reputation for high-quality grain, the CGC must ensure all grain leaving Canada meets buyer specifications,” the latter, Manitoba’s main farm group, wrote in its submission for the federal review.

But Canada’s reputation as a producer of top-quality grain won’t “take a hit” just because an act that hasn’t been reviewed since 1971 is modernized, said Hames.

“Our reputation is strong, and that’s in part because of the grain commission and what it’s done,” he said. “We can’t move forward into the future if we don’t change the CGC. The risk we face is being stuck in this old world and getting left behind.”

The post Cut grain inspection costs to stay competitive, say Alberta farm groups appeared first on Alberta Farmer Express.

“Farmers in Alberta along with growers in other Prairie provinces have more grain storage than most of their worldwide competitors,” said Ryan Furtas. “However, having storage capacity can be a marketing advantage, but capturing a higher price by storing grain is not a guarantee.”

Prices are seasonally lowest at harvest time because supply is high and so is the pressure on the grain-handling system.

“Customers who utilize grain, oilseed and pulse crops tend to require a consistent supply over the entire year,” he said. “Storing grain short term — three to four months — or longer term — 10 to 11 months — following harvest can improve producer returns and allow farmers to provide product at times when deliveries are otherwise slow.”

Both canola and wheat, the province’s two largest crops, have futures markets for price discovery. But others — including durum, barley, flax and field peas — don’t, and can be subject to more extreme price swings. Sometimes these crops can remain in storage for more than a year as producers try to wait out market downturns.

The actual cost of storage is more than just the purchase price for the grain bin. Setup costs can be significant if it includes a concrete floor, temperature monitoring system and aeration. Annual depreciation needs to be considered along with repairs and maintenance, and that can amount to an annual cost of upwards of 25 cents a bushel, said Furtas.

Moreover, grain bin prices have been steadily climbing over the last five years, he added.

In 2015, the cost of a 5,000-bushel bin was about $3.80 per bushel. That increased to $4.80 per bushel in 2020.

“Steel, both corrugated and smooth walled, grain bin prices are driven by both market demand and steel prices,” he said.

And demand in Alberta has been strong.

According to Statistics Canada’s July 2020 survey, Alberta producers have approximately 27.5 million tonnes (just over one million bushels) of permanent on-farm grain storage capacity, compared to 25 million tonnes just five years ago.

“The Statistics Canada report also states that approximately nine per cent of reported grain stocks using temporary on-farm storage such as grain bags,” said Furtas.

Still, “the overwhelming preference” is for permanent storage.

“It boils down to each individual’s situation,” he said. “Generally, permanent storage is preferred to maintain grain quality and for the ease of use.”

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California-based FBN, which has operated in the U.S. since 2014 and expanded to Canada in 2017, announced Tuesday (Sept. 15) its farmer members may now have “access to a select range of ever-expanding products and services without having to pay an annual membership fee.”

The fee, which in Canada last year was $800, paid for access to the company’s seed, input and insurance e-commerce sites, farm data analytics, grain marketing services, input financing, satellite imagery and aggregated data on crop performance and input efficacy, gathered from information provided voluntarily by other FBN members.

Under the new free-membership model — which still requires farmers to register with the company — fees may apply for “certain product and service offerings” other than FBN membership, the organization said Tuesday.

“Farmers have had many hard years in a row. But this year was the hardest. As a company we do not want any current or prospective members to worry about membership costs,” FBN said in its announcement.

FBN, which today operates in Australia as well as Canada and the U.S. with about 14,000 members in all, said it’s now “stepping up to provide access to a select portfolio of offerings, all of which are focused on creating transparency, competition and helping you lower your costs and increase your profit potential.”

FBN’s arrival in the Canadian marketplace led earlier this year to the launch of an investigation by the federal Competition Bureau — not into FBN itself, but rather into other major agribusinesses’ and wholesalers’ response to the company’s entry into Canada’s seed and crop input markets.

A Federal Court judge in February ordered several companies to hand over records and communications, related to the bureau’s probe into allegations that a number of manufacturers and wholesalers had either refused or restricted supply to FBN.

The bureau said at the time it was also “investigating whether some of these entities may have engaged in co-ordinated behaviour against FBN,” but emphasized there was “no conclusion of wrongdoing at this time.” — Glacier FarmMedia Network

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“Do you know if the company you’re delivering to is licensed?” the commission asked in a recent tweet.

A complete list can be found under ‘Licensed grain companies’ at the Canadian Grain Commission website. There are 159 licensed grain companies on the list (which was updated Nov. 22, 2018) that are required to post security (typically in the form of a bond or letter of credit).

“This list includes all grain companies that are licensed as a primary elevator, process elevator, terminal elevator, or grain dealer,” the commission states on its website.

“If a company is not on the list, it is not licensed. Unlicensed grain companies are either exempted from licensing, outside the jurisdiction of the Canada Grain Act, or in violation of the act. Unlicensed grain companies do not provide security, and none of the protections of the act apply, including payment protection.”

Last fall, the commission decided that it would remain ‘seller beware’ when it comes to delivering grain to feed mills. The grain commission also said it will continue to exempt agents with primary or process elevator facilities and producer railway car loading facilities from licensing and posting security.

“After consulting with the sector, the commission has decided that grain handlers that fall under one of these three categories may operate without a Canadian Grain Commission licence as long as they continue to meet the conditions associated with their respective exemptions,” the agency said in September. “This decision reflects the clear feedback provided by stakeholders, as well as an analysis of the relative risks these types of operations pose to producers and the grain quality assurance system.”

The commission is also reminding producers it will have staff at upcoming farm shows who can answer any questions about grain grading. It will have a booth at FarmTech in Edmonton on Jan. 29-31; at Agri-Visions in Lloydminster on Feb. 13-14; Ag-Expo in Lethbridge from Feb. 2 to March 1; the Peace Country Classic Agri-Show March 7-9, and the Smoky River Ag Show March 14-16.

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