July/August 2006

Index

CAISP Update

As of the end of May, 28,910 of the eligible Ontario 2003 CAIS applications have been processed. Government eligible dollars to be paid out total $176.8 million (including appeals) with 39% of participants triggering an average payment of $15,636. Within these eligible applications, field crops made up 11,194 of them; 3,677 generated average payments of $5,908 for a total of approximately $21.7 million.

For the same ending period, the eligible Ontario 2004 CAIS application processing stood at 25,587. Approximately 42% of these applications triggered an average payment of $18,323 for a total of $200 million. This places the received eligible application processing at 97% complete. To again provide a relative point of comparison for field crops; 10,008 have been processed with 3,775 receiving an average payment of $7,322 for a total of $27.6 million.

The file processing for the Ontario 2005 CAIS program has also begun. Of the 30,000 + participants who selected
coverage for this year, roughly 23% of the applications have been received. Of those 6,870 applications, 2,292 have been processed with 1,108 receiving an average payment of $23,521. Field crops have 885 applications processed;
410 have received an average payment of $9,013 for a 'farm typed' total of $3.6 million.

Also as a point of interest, the National CAIS Committee of Ontario has met 5 times to review 2003 and 2004
appeals. To date, 45 files have been presented to the committee for review and decision, of which 31 Administration decisions have been upheld.

Federal Retroactive Inventory Changes under CAIS

On May 18, 2006, the Minister of Agriculture and Agri-Food Chuck Strahl announced $950 million in new support for Canada's producers. This new budget commitment is designed to address the weaknesses in the Canadian Agricultural
Income Stabilization (CAIS) program. This $950 million is part of this government's $1.5 billion agriculture budget
commitment.

The changes are as follows:
o Adjusting the inventory valuation calculation retroactively for 2003, 2004 and 2005
o Expanding the eligibility criteria for negative margin coverage under CAIS

Payments resulting from these changes are expected to flow this fall.

Further discussions with OMAFRA after the announcement disclosed a few more details. Of the $950 million, $900 million will be targeted to retroactively change the inventory valuation used for CAIS. The remaining $50 million will be used to cover negative margin changes for 2005 and 2006. Here are a couple other key points:

o The retroactive changes would be appointed for the 2003, 2004 and 2005 program years
o No provincial cost-sharing will be required
o To stay within the $900 million available, benefits will be pro-rated to an as-of-yet unknown level (ie.
xxthe actual cost nationally would be expected to fall between $1.6 to $1.7 billion)
o Producers will not be made worse off as a result (ie. the federal government will fund the higher benefits of the
xxcurrent (P2) and P1-P2 hybrid approaches)
o Current program caps will apply (ie. maximum $3 million payment)
o The retroactive inventory benefit cannot exceed $500,000 per producer in any year
o Producers who did not join CAIS in the past will not be given the opportunity to join now
o Federal-provincial 60:40 cost sharing will begin with the 2006 program year when all producers will have the P1-P2
xxhybrid applied

To date, specifics for the program are still sketchy. However, some preliminary analysis by OMAFRA and other farm organizations are suggesting that the P1 - P2 hybrid method would increase the total Ontario 2003, 2004 and 2005 CAIS benefits by about $150 million.


 Supplementary: Current Inventory (P2) vs. P1 - P2 Hybrid Method

P2 Approach: The change in the quantity of a producer's inventory is multiplied by the market price at the end of the year (year end means period number 2 or P2). Example - if a producer had 10,000 bushels of corn in inventory at the start of the year and 10,000 bushels in inventory at the end of the year, then no adjustment is made to the producer's current year margin.

P1 - P2 Hybrid Method: The quantity of inventory at the start of the year is multiplied by the market price at the start of the year (start of the year means period number 1 or P1). The same calculation is performed at the end of the year (P2). The difference between the two calculations is the value of the change in inventory. Example - if a producer has 10,000 bushels of corn in inventory at the start of the year worth $3.78/bu (value of $37,800) and 10,000 bushels
in inventory at the end of the year worth $3.08/bu (value of $30,800), then the producer has a current year margin that is reduced by $7,000.


 Cash Advance Programs: $100,000 Interest Free (ESCAP)

Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board Chuck Strahl announced on May 18, 2006 the details of the Enhanced Spring Credit Advance Program (ESCAP), a budget commitment to ensure producers get access to more money starting this spring.

The program will:
o Double the loan maximum for spring advances to $100,000
o Keep the loans interest-free
o Extend the repayment period to September 30, 2007

Producers who have already taken their advance through the Spring Credit Advance Program (SCAP) will have the option to transfer their 2006 SCAP advance to ESCAP in order to take advantage of the higher interest-free limit and
extended repayment period.

Agriculture and Agri-Food Canada is working on the final details of the program.

OCPA and the Ontario Soybean Growers are working jointly with Agriculture and Agri-Food Canada to offer this program to corn and soybean growers.

Fall Cash Advance Program: Long-Term Loan Solutions Through Legislative Amendments

On May 18, 2006, Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board Chuck Strahl introduced amendments to the Agricultural Marketing Programs Act (AMPA) to improve cash advance programs for producers. On June 5, 2006, Minister Strahl announced that the legislative changes have been passed by the House of Commons. This legislation is being moved through the approval process quickly and could be implemented as early as this fall.

The government's amendments will:
o expand the coverage to include livestock and more crops
o increase the overall limit on advances from $250,000 to $400,000
o increase the amount of interest-free advances from $50,000 to $100,000
o consolidate the Advance Payments Program (fall) and the Spring Credit Advance Program, as a single program under xxthe AMPA.

ESCAP (Enhanced Spring Credit Advance Program) was introduced to assist producers with cash flow until the changes for AMPA were completed.


The country's farmers had a tough row to hoe last year: Statistics Canada

"Farmers had a tough time last year, with low commodity prices and a sharp drop in their net income, but there were some bright spots," Statistics Canada said Monday, June 5, 2006.

The statistics agency says net realized farm income fell to its lowest level since 2003. Harvests of canola, corn and
soybeans hit record highs, but prices hit rock bottom.

Manitoba was hit by spring floods, a late frost hurt Ontario grape crops and low prices and bad weather forced
vegetable growers to reduce their farmed acreage.

Crop prices were down because of high production and high world inventories, as well as the strong dollar, which reduced export prices.

However, cattle producers bounced back as the American border was reopened to young animals after a 26-month ban because of BSE, or mad cow disease.

The report said exports of live animals increased nearly 77 per cent from 2004 levels as a result of the reopening of
the U.S. border and wheat exports dropped 23 per cent mainly due to lower demands by China.

The agency said the food processing sector had a relatively strong year and exports of farm and fish products were strong.

The report said the price index for crops in 2005 was at its lowest level since the early 1990s.

At the same time, canola production jumped more than a quarter to 9.5 million tonnes, the flaxseed harvest nearly doubled and corn and soybean production hit records.

Meanwhile, exports of live cattle neared pre-BSE levels by October 2005.

There was a drop in beef exports in the second half of the year, which was partly attributed to a three-week strike at a packing plant in Alberta.

By the end of the year, though, cattle markets began to recover and prices for livestock and animal products were up five per cent from a year earlier.

Appeal of the CITT 'no injury' Finding

On June 8, 2006, the Canadian Corn Producers'(CCP) filed a notice of application with the Federal Court, for the judicial review of the Canadian International Trade Tribunal's (CITT) 'no injury' decision announced back on April
18th, 2006. The grounds for this appeal will become public as the case continues to develop. CCP strongly feels that CITT has reached conclusions that are 'patently unreasonable' in at least 2 respects; 1) the CITT failed to consider the impact of the magnitude of the margin of dumping and the amount of subsidy, and 2) the CITT has confused the concepts of price depression and price suppression.

EU may compromise on farm subsidies in trade talks

European Union (EU) Trade Commissioner, Peter Mandelson, reiterated in an interview with German Weekly, Welt am Sonntag, that the EU is prepared to make concessions over farm subsidies in WTO talks to work out a deal over world
trade.

The EU could make greater cuts in agricultural subsidies than previously proposed if its negotiating partners are prepared to make concessions too, he is quoted as saying by the newspaper.

Brazilian Government Announces Price Support Program

The Government of Brazil announced in May a price support program for Brazilian soybean growers. Soybean growers in Brazil have seen their profitability disappear over the last two years, generating one of the most severe crises with which the sector ever coped. The process of decapitalization of growers involves a combination of variables; high production costs, severe yield losses in the last three crops, weakened international prices, widespread indebtedness, and decline in the dollar rate.

The Brazilian government has implemented a Risk Premium for Contracts of Private Option program. This program will supplement the prices received by growers to a level closer to production cost, thus insuring the flow of the product.

Canada and Brazil Establish Consultative Committee on Agriculture

The Federal Minister of Agriculture, Chuck Strahl, signed a Memorandum of Understanding with the Brazilian Minister of
Agriculture, Roberto Rodrigues, on June 7, 2006, creating a bilateral Consultative Committee on Agriculture.

According to Minister Strahl, Brazil is a growing agricultural power and an influential player in international policy dialogues. The Ministers of both countries are taking these steps towards finding solutions to common challenges that benefit farm families in both countries.

Minister Strahl stated that Canada has similar bilateral committees with the United States and Mexico which have proven successful by helping to identify and manage trade irritants before they become formal disputes that impact
on trade.

The Government of Canada recognizes that Canadian farmers and processors operate in a rapidly changing global marketplace and that decisions being made in foreign countries increasingly impact Canada. In this context, Canada needs to work with other countries to collaborate on agricultural issues such as falling commodity prices, harmful
trading practices and the effects of emerging economies on trade.


 Ethanol Growth Fund

The McGuinty government is supporting the renewable fuels industry by investing $32 million in the construction of three new ethanol plants, Minister of Agriculture, Food and Rural Affairs Leona Dombrowsky announced on June 15, 2006.

The government investment will support the construction of three new ethanol plants in Aylmer, Hensall and Cornwall. The funding is part of the $520 million Ontario Ethanol Growth Fund, which will also provide annual operating grants worth up to $60 million annually for the three new plants, as well as facilities in Chatham and Collingwood.

Ontario's Renewable Fuels Standard requires that all gasoline sold in the province contain an average of five per cent ethanol by 2007. When added to gasoline, ethanol helps to mitigate climate change by reducing greenhouse gas emissions, results in cleaner vehicle exhaust and reduces our dependency on nonrenewable fossil fuels.


 Minister Strahl Meets Farmers to Discuss Biofuels

Minister Strahl held a roundtable discussion with several industry stakeholders on June 19, 2006 to discuss the development of a strategy to meet the Government of Canada's goal of five percent average renewable content
requirement in Canadian transportation fuel by 2010. It was stated by Agriculture and Agri-Food Canada that their approach to the biofuels strategy is focused on ensuring the maximum possible benefits for farmers, the environment and Canadians in general.

The roundtable participants discussed ways to ensure the biofuels mandate translates into significant benefits to agricultural producers through international competitiveness, research and development and ensuring opportunities for producer ownership. The participants encouraged Minister Strahl to consider tax incentives to encourage investment and adequate support programs to ensure sufficient supplies of domestic feedstock. Participants agreed that the federal biofuels strategy needs to focus on making the right choices for farmers.

This issue will be further discussed at the June 25 to 27 federal, provincial, territorial meeting in St John's, Newfoundland and Labrador.

CropLife Canada Helps Develop Future Agri-Scientists

CropLife Canada is helping to nurture the next generation of agri-scientists by sponsoring 50 children to attend science camps across Canada this summer. CropLife Canada President, Lorne Hepworth, suggests that today's children are tomorrow's scientists, and advancements in agricultural sciences including biotechnology and crop protection technologies will be key to the future of farming in Canada.

For a second consecutive year, CropLife Canada is sponsoring the Actua bursary program, which helps kids who might otherwise be unable to attend camp to learn about the role that science plays in all aspects of their lives, including helping to provide them with the food they eat.

In addition to the financial support, CropLife Canada's Denise Dewar and Patty Vandierendonck from BASF Canada have volunteered to serve as science mentors in the Girls Mentorship Program promoting careers and dispelling stereotypes in the science, engineering and technology fields.

Supporting these youth programs is one of the many ways CropLife Canada's Food For Thought initiative is working to educate Canadians of all ages about the important role that crop protection technologies play in helping to provide the abundant, affordable supply of food upon which we all depend for healthy living.

For more information, contact Debra Conlon, 416- 622-9771 extension 233.


Canadian Seed Trade Association Statement on GURTs

Recently, the Canadian Seed Trade Association came forward with a statement that they have not yet developed a
position on genetic techniques to restrict the reproduction of plants. This science is still in its infancy and it is impossible to comment on specific applications.

It must also be noted that this technology does have the potential to create useful tools for agriculture. For instance,
GURTs may facilitate the development of new highvalue products for the industry. Examples of this would be the inclusion of traits useful in the production of pharmaceuticals and industrial polymers that could create valuable new markets for crops. These new products would need to be kept completely out of the conventional food stream and GURTs could be a way this could be facilitated. GURTs hold the promise of solving issues of gene flow and volunteer management in mainstream crop production as well.

As a result, the CSTA believes any calls for moratoriums on this research are inappropriate and premature. The CSTA feels research should proceed and debate occur on implementing any such technologies based on the specifics of how they will operate and the context for their use.

UN Upholds Moratorium on Terminator (GURT) Seed

It is now official. According to this story, governments at the United Nations Convention on Biological Diversity (CBD)
unanimously upheld the international de facto moratorium on Terminator technology - plants that are genetically re-engineered to produce sterile seeds at harvest. The eighth meeting of the CBD ended March 31, 2006 in Curitiba, Brazil.

The CBD's moratorium on Terminator, adopted six years ago, was under attack by three governments - Australia,
Canada and New Zealand - that insisted on a 'case-bycase risk assessment' of the technology. A broad coalition
of farmers, social movements, indigenous peoples and civil society organizations pressed governments meeting in Brazil to reject the controversial text because it threatened to open the door to national-level field testing of Terminator.

On March 23, Malaysia, speaking on behalf of the G77 and China (together a group of 130 developing nations), stated that the reference to case-by-case risk assessment was 'clearly unacceptable' because it would potentially allow field tests. The CBD reaffirmed the moratorium on Terminator and even strengthened it by making it clear that any future research would only be conducted within the bounds of the moratorium - meaning no field trials.

"The international moratorium on Terminator has been upheld - but the battle isn't over yet," stated Lucy Sharratt of the international Ban Terminator Campaign. "Terminator will be commercialized unless national governments take
action to ban it, as Brazil and India have done," she added.

Canada Won't Allow Testing of Suicide Seeds Yet

A senior policy analyst at Agriculture Canada named Giuliano Tolusso, was cited as saying that Canada will respect a moratorium on field testing of Genetic Use Restriction Technology (GURT or terminator), which was reaffirmed at a conference in Curitiba, Brazil in late March. However, testing under a laboratory setting is allowed and Tolusso further
added that they won't go to field testing until they have gathered the scientific and socio-economic information necessary to make an informed decision.

Canada's policy places it within the consensus of countries which are parties to the UN Convention on Biodiversity, but on a different track from the United States which has not signed the convention.

Suicide seeds are probably the hottest topic in biotechnology now. They would give seed companies a sure method to protect patent rights on genetically engineered seed. Critics suggest that GURT would place farmers at the mercy of
seed companies and endanger the ancient tradition of saving seeds from year to year.

Tolusso was further cited as saying no GURT research is being conducted in Canada right now. The technology does have potentially significant applications which could help isolate genetically modified plants from organic crops. This situation would insure that the engineered traits, such as the ability to withstand pesticides, wouldn't spread into weeds or neighbouring crops.

Pat Mooney, a member of an Ottawa-based group which follows international development issues, said there is strong interest in using GURT for genetically modified trees. Tree pollen can travel 2,000 kilometers, which makes contamination a greater concern than with field plants, whose pollen will travel only a few kilometers.

Agri-Food Technologies Sold to AgriTrace International

Dale and Karon Cowan are pleased to announce that they have sold their shares in Agri-Food Laboratories in Guelph,
Ontario to AgriTrace International, a division of BIO. Dale Cowan was cited as saying the primary objective of this transaction was to provide a growth opportunity for their customers and employees, by strengthening the business environment through quality products and services. Cowan will stay on with the company as General Manager of lab services. Cowan further commented, stating the current employee structure that customers have known all these years will stay intact. They are vital to providing the quality of service that is their trademark and one that customers have
come to expect.

AgriTrace International is a division of Beef Improvement Ontario.

Enzyme-Enhanced Corn Seed May Lower Cost of Ethanol

According to this story, Syngenta AG, the world's biggest maker of crop chemicals will introduce the first enzyme-enhanced corn seed designed to cut the cost of ethanol. The seeds, which contain an enzyme that turns the corn's starch into sugar for ethanol, will debut next year in the United States. Syngenta's head of development, David Jones,
suggested the new product may bring in 'significant' sales.

Jones went on to further explain that the seeds contain a thermal-tolerant digestive enzyme called amylase, which will reduce costs by eliminating the need for mills to add liquid enzymes.

Syngenta declined to give an estimate on how much the new seeds would cut production costs. The seeds don't increase yields; they just make it easier to manufacture.

Ontario Releases Plan to Contain Urban Sprawl, Save Farmland

The Government of Ontario released its Growth Plan for the Greater Golden Horseshoe which went into effect on June 16, 2006. The Plan was created under the Places to Grow Act, 2005 as part of the Places to Grow initiative.

The key elements of the Growth Plan are:
o Establishes co-ordinated population and job growth forecasts for municipalities as the basis for planning
o Encourages revitalization of downtowns and city centres, making them more vibrant, people-oriented and attractive
o Reduces development pressures on agricultural lands and natural areas by directing more growth to existing urban
xxareas.
o Ensures that new development is planned to create complete communities that offer more choices in housing, better
xxtransit and a range of amenities like shops, schools, entertainment and services that are closer to where people live
o Identifies 25 downtown locations in the GGH that will be focal points for accommodating people and jobs, through
xxinitiatives that offer attractive new living options within easy access to shops and services. These centres will also
xxsupport transit and the economy of the surrounding area
o Complements the province's Greenbelt Plan that protects 1.8 million acres of valuable farmland and natural areas
xxat the heart of the Greater Golden Horseshoe o Establishes an integrated transportation network that will offer
xxmore transportation choices for getting from place to place, reducing congestion on our roads
o Links planning for growth with planning for infrastructure, so that the roads, sewers, schools and other infrastructure
xxis in place to meet the needs of growing communities.

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