'Stay the Course' is the Message

At the recent annual conference in March which included the Ontario Corn Producers’ Association, the Ontario Wheat Producers’ Marketing Board, the Ontario Soybean Growers’ and a new addition, the Ontario Coloured Bean Growers’ Association, as General Manager, I presented a report to the delegates in the OCPA annual general meeting portion of the three day event. The report covered what I would consider to be the two main subjects of which we would receive the bulk of inquiries around; the Risk Management Program (RMP) and OCPA finances.

Working my way through my second year as General Manager, to say I have experienced some exciting times would be an understatement. As a sector, we have moved from a period of some of the worst farm incomes on record, to a period of much better pricing opportunities. Now I can already hear the disclaimers qualifying the second part of that statement, and recognize that much of the positive media messaging out there would suggest that every producer in the province is receiving that one day top dollar for their entire corn crop. The reality of course is that producers have been chasing the market up and the average selling price is much lower than these articles would tend to communicate, that is when the crop bids are still available to be locked in.

Getting back to the poor crop years of 2004, 2005 and 2006; the well thought out strategy which was developed was the RMP. If you think about it, both of these past and present marketing circumstances have created different challenges for the program; back in the planning stages, it was about securing support and implementation, although there is still the outstanding support from the federal government yet to be obtained. Currently, many farm businesses have taken actions to secure market pricing for crops grown not only in the current growing season but future ones as well. This may call into
question the value of the RMP during the 3 year pilot phase. Remember, I mentioned the RMP was designed to become a part of a farm business plan, with some of the design characteristics such as variable coverage levels, to allow for the changing environment that is the cyclic nature of the industry. If you run the math, the lower levels offer some pretty cheap options, especially if you consider this year’s marketing opportunities should make cash-flowing these premiums much easier than in the past.

Another thing you might want to consider, the RMP Advisory committee, which has G & O representatives who sit at that table, has run different pricing scenarios that suggest in the case of corn, there is the outside chance of an RMP payment, if the sector does not experience some mid $5.00/bu prices from here on out,. So, don’t dismiss the possibility of a payment because, as the sector is finding out, the costs of growing corn are increasing which makes the RMP support price even higher. Many who have been around this industry for any length of time know that these prices will come down; the real question is when that will occur.

During the joint conference on Tuesday, a couple different speakers made reference to the RMP. The Minister of Agriculture, Food and Rural Affairs Leona Dombrowsky, talked about the RMP pilot and some of the challenges needed to be overcome. One point she reiterated; the RMP will be subject to an
assessment at the end of the 3 years of which many principals will be examined. One of those which could affect the extension of the program would be enrollment. That is something producers will impact directly. Cal Whewell, a risk management consultant with FC Stone, weighed into the debate indirectly as well, by making the following comments; general business principles suggest that the profit taking that producers are currently taking advantage of today, within the context of the business environment, will be shortlived. Keep some of these points in mind when you are making your final decisions regarding your RMP enrollment this spring.

In terms of OCPA finances, certain scenarios such as the proposed MOU to merge the corn, soybeans and wheat boards into one organization continue to make it a topic of discussion. It is no secret the execution of the OCPA board four pronged strategy over the past couple years has been costly to the organization. However, from the beginning, a plan, based on conservative estimates to deal with these financial realities, was approved by the board and successfully implemented; all under the watchful eye of OCPA’s financial auditor. Part of the plan has included carrying a skeleton staff, prioritizing OCPA
board activities and putting into place repayment agreements to service outstanding liabilities. Granted, the bigger crop and increased acres of recent years have helped improve OCPA’s cash position; what it really means is that OCPA needs to continue to successfully manage the situation to continue
to improve its financial position. Again, any of this can be verified; one way is through the auditors report at the annual meeting and the other is our audited financial statements.

The OCPA strategy continues to look for ways to better serve the membership. As the MOU continues to develop, OCPA is looking to address some of its human resource concerns through sharing resources where possible with the wheat and soybean groups. OCPA’s position, even prior to the undertaking
of the countervailing duty case was to not become staff ‘heavy’. That is not fair to the staff we may be hiring and is not showing any responsibility to existing staff. OCPA is also slowly adjusting priorities back into areas such as Market Development and Research. To date, there has been a great deal of
constructive feedback regarding the joint conference. This information is very important to making sure we continue to offer a venue that is beneficial to all stakeholders involved. Make sure to provide any input to the respective organizations such that we may continue to offer a valued event.