August 10, 2012

 

 

In a summer of devastation for farmers in the US Midwest, their counterparts on the Canadian Prairies are on the verge of harvesting bumper crops.

 

Marty Jespersen, a fourth-generation farmer in southern Alberta, is plucking heads off stalks of his wheat crop, inspecting for bugs, fungus, and hail damage.

 

"A quarter of my farm is gone," he says. But grain prices will save his skin - and more.

 

Combines and swathers are already in the fields in parts of western Canada - Jespersen's neighbours are among the early starters - as producers seek to cash in on a rare combination of stellar crops and record prices.

 

The wave of good fortune, which comes at the expense of US farmers whose crops were lost to a scorching drought, is not only making a difference in grain producers' pocketbooks, but also their mentality toward the marketplace.

 

Richard Phillips, the executive director of the Grain Growers of Canada and a farmer from Tisdale, Sask., used to spend his time answering calls from farmers asking the lobby group to beg for assistance from Ottawa. Farmers still call, but they have different demands now.

 

"My phone does not ring with people calling for government help anymore," Phillips said. "People are making a living from the marketplace.

 

"Today, we hear a lot of questions such as 'How do we get more markets open so we can continue to sell at these prices? How do we get the railway system working more efficiently?' It is all about the business of farming now, not about government support."

 

The potential bumper crop comes just as farmers gain the right to sell their grain outside the Canadian Wheat Board. Just weeks before its monopoly over wheat, durum, and malt barley sales ended on August 1, the CWB changed the way it pays farmers, offering to pay about 75% of the projected pool price for spring and winter wheat shortly after producers deliver the grain to elevators, up from about 65%. The remainder is paid through potential adjustments and a final cheque.

 

Now, the CWB is taking on that extra price risk. "We're in a competitive marketplace, and we want farmers to find our programmes really attractive," Maureen Fitzhenry, a spokesperson for the CWB, said. "One of the things that they do find attractive is getting money quicker."

 

Canadian farmers like Taber's Jespersen, who voted to end the CWB's monopoly, still need weeks of good weather before declaring this growing season a success. But unlike their American counterparts, his crops have potential.

 

The USDA has designated 50.3% of all counties as "disaster areas," mainly due to drought. In response, US Agriculture Secretary Tom Vilsack last week expanded the country's emergency measures, allowing livestock producers to use about 3.8 million acres of "conservation land" to counter the shortage of hay and dry pastures. Further, he cut farmers slack on paying insurance premiums because the drought has hurt their cash flow.

 

All of this has sent prices of key grains soaring. Wheat prices are up about 40% since the middle of June; corn prices have shot up 60%.