July 10, 2010

Rains may affect agricultural input sales in Canada

Revised forecast from Canada's largest grain company on the number of total seeded acres across the Prairies does not convey optimism for the agricultural retail sector as a whole, according to Viterra.

Ahead of Statistics Canada's next batch of seeded acreage estimates in August, the Regina-based grain firm on Thursday (Jul 8) announced a new estimate of total seeded acres in Western Canada, between 50 million and 52 million, well below the five-year average of 60 million.

"The estimated decline in acreage is a result of weather-related planting constraints due to unprecedented rainfall in May and June, the primary seeding period for Prairie growers," Viterra said in a release.

"Approximately eight million acres went unseeded, and additionally, about two million seeded acres were lost to excess rains."

Farmers in Western Canada typically invest between CAD70 and CAD110 per acre, depending on the types of crops grown and the areas in which they are seeded, the company said, and annual agri-product sales in the West average about CAD4.6 billion.

With the lost acres in mind, Viterra said it expects industry sales to drop by 15-17 % in fiscal 2010, with the largest declines in fertiliser and chemical sales.

With Viterra's market share of about 32% of that industry, the company predicts every 1% change in retail sales will impact its own earnings (EBITDA) by about CAD2 million-CAD3 million.

"Weather conditions this year have been extremely difficult for our farm customers and we have done what we can to support them," said Doug Wonnacott, the company's senior vice-president for agri-products.