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Area farmers hope for higher prices and spring rain
Spotlight staff
for Spotlight
As farmers in the Lesser Slave Lake and Smoky River areas and across the province get ready to seed their crops, parched fields and slumping grain prices are among the biggest risk factors on many producers’ minds, says a provincial crop analyst.
“I’m hearing a lot of concern from farmers on both of those issues,” says Charlie Pearson, who works with Alberta Agriculture and Rural Development, and speaks with producers across the province. “Many areas are starting off with low soil moisture, so everyone’s hoping for plenty of spring rain to turn things around and get crops off to a good start.”
Prices are down substantially
On the price side, many producers are anxious because crop prices have dropped substantially in the last two years.
No one anticipated wheat, canola and barley prices plunging 20 to 40 per cent between spring and fall last year, Pearson says. So far this year, prices remain down.
Wheat is in the $4-to-$5/bushel range compared to $5.50-to-$7/bu at this time last year. Canola has slipped to $8-to-$9/bu compared to $9-to-$10/bu last spring.
“We no longer have the high prices we saw in 2007 and 2008. But if you look at long-term averages on grain prices, we’re slightly above average,” he points out.
However, while the price of inputs like fertilizer and fuel have also dropped, some input costs have increased, putting a squeeze on budgets that could make it challenging to pencil out much of a profit this year, says Pearson.
Crop prices could go either way
With margins so tight, Pearson is hopeful prices won’t slide further.
“My best guess is prices will remain relatively stable at the levels we’re seeing now. But we have no way of knowing if markets have bottomed out yet.”
Pearson is most optimistic about canola because demand for vegetable oils remains strong. But he says there are a number of factors that could spur prices on all crops in either direction.
Prices could easily climb higher if weather hurts crops in a major producing region of the world, says Pearson.
“On the other hand, perfect weather worldwide and two-to-three inches of spring rain in Alberta with reasonable rain through the summer could result in bumper crops that drive up world grain supplies and drive prices lower.”
Pearson says favourable weather and abundant world crops were partly to blame for prices dropping last fall. He adds the strong Canadian dollar could send prices downward if the loonie continues to rise this summer.
Insurance deadline
With so much uncertainty around prices and weather, Pearson says it’s a good idea for farmers to look at options such as crop insurance and locking in some prices now in case they dip by the fall.
He advises producers to consider tools such as forward delivery contracts with grain companies, which guarantee prices for grain delivered this fall; or the Spring Price Endorsement (SPE) rider on crop insurance, which protects farmers if prices decline 10-to-50 per cent between spring and fall.
Pearson notes the deadline to apply for crop insurance in Alberta is April 30.
SPE paid out $80.5 million following the price drop in 2009 – the highest payout in 10 years, says Lorelei Hulston, Provincial Insurance Manager for Agriculture Financial Services Corporation (AFSC), the provincial Crown Corporation that administers crop insurance in Alberta on behalf of the provincial and federal governments.
Forward contracting can be risky
Hank Wierenga says grain prices and dry soil conditions are his main concerns as he prepares to seed 3,500 acres of wheat and canola on his farm near Neerlandia. Wierenga says wheat and canola prices are still profitable at the moment, but he’s worried that could change quickly if the dollar keeps rising. He plans to use the SPE and has already forward-contracted some of his crop to lock in prices. With such dry conditions and the risk of hail every year, he says forward contracting can be risky because if you don’t produce enough grain or the quality is poor, you still have to deliver on those contracts. “Insurance helps cover that risk because it insures your cost of production and your grade,” says Wierenga.
New crop insurance option
A major change to crop insurance this year is the option to elect Straight Hail coverage at the same time you purchase regular crop insurance.
“Until now, producers had to wait until their crops emerged to purchase Straight Hail Insurance,” says Hulston. “If they waited too long and their fields were damaged more than 25 per cent by early hail, they were no longer eligible for Straight Hail coverage on those fields for the rest of the year.
“The new Auto Elect option eliminates that risk because your hail coverage can now be in place before April 30. So when your crops emerge, you won’t be caught off guard by early hail. On average, we see about 150 hail damage claims each year across the province before June 15.”
Hulston says producers who choose Auto Elect receive a two per cent discount on their Straight Hail premium. Hail damage, low grain prices, and cool, dry conditions were to blame for most of the $444 million paid out in crop insurance claims last year across the province, she adds.
Additional changes
Other changes to crop insurance this spring include coverage of stored silage that is consumed by wildlife, says Hulston. And the Bee Overwintering Insurance program is available again after being unveiled last year. It insures producers against higher than normal death losses over winter.
“Death losses have been increasing, and until last year, producers had no protection,” explains Hulston. Producers with questions about crop insurance can call their nearest AFSC office or the AFSC Call Centre at 1-877-899-AFSC (2372) before the April 30 deadline.
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Youth can be lured over the Internet into doing things they normally wouldn’t do and it’s important for parents to watch the signs that this might be happening, say RCMP. A recent case in Slave Lake has caused RCMP concern. (Photo illustration by Theresa Seraphim)
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