March 2008

Index

Farm Income Forecast for 2007 and 2008

Agriculture and Agri-Food Canada (AAFC) has released a publication, “Farm Income Forecast Highlights.” The publication was a collaborative effort between AAFC, the provincial governments and Statistics Canada.

These are some highlights from the publication:

For Canada:
Net farm income for 2007 in Canada is forecast at $35,314 which is a 20% increase over 2006. This is due mainly to an improvement in prices for grains and oilseeds. The average nonfarm income is estimated to be $53,338 per farm. At $88,652, average farm family income is expected to be 10% higher than 2006.

Net farm income for 2008 in Canada is forecast at $41,012 which is another 16% increase. The average non-farm income is estimated to be $55,386 per farm. At $96,407, total farm family income is expected to be substantially higher than 2007.

For Ontario:
Net farm income for 2007 in Canada is forecast at $35,535. The average non-farm income is estimated to be $61,885 per farm for a total farm family income in 2008 estimated to be $96,420.

Net farm income for 2008 in Canada is forecast at $40,337. The average non-farm income is estimated to be $64,578 per farm for a total farm family income in 2008 estimated at $104,915.

Crop sector receipts are expected to rise 25% in 2007 due to improved prices for grains and oilseeds in Canada, particularly wheat and canola. With estimated price increases in the crops sector for 2008, net cash income in the crops sector is expected to increase by 23% in 2008.


Program Payments are Expected to Decrease by 7% in 2007 and 6% in 2008

Operating expenses are expected to increase by 8% in 2007 due mainly to higher energy costs and fertilizer costs. Fertilizer prices are expected to
increase by 20% to reach a record in 2007. Operating expenses are expected to continue increasing in 2008. Growth in overall expenses is expected to outpace any gains in farm cash receipts in most Eastern Canadian provinces.


 Government of Canada Seeking Ambitious Outcome to WTO

Crawford Falconer, Chair of the World Trade Organization (WTO) agriculture negotiations released a revised draft modalities text on agriculture which the Honourable Gerry Ritz, Minister of Agriculture and Agri-Food commented on in a news release February 8, 2008.

According to Minister Ritz, the Chair has set out his ideas and proposals in the text on where the middle ground is regarding commitments on agriculture. It does not represent consensus among WTO members but it gives the members something to react to in their efforts to advance
the talks in Geneva.

Minister Ritz reported that some progress is being made in reductions in trade-distorting domestic support, improvements to market access and the
elimination of all forms of export subsidies.

Canada is seeking an ambitious outcome to WTO that benefits Canada’s entire agriculture sector, including supply-managed and exportoriented industries.


 U.S. Seeks to Retaliate Against EU in GMO Case

Reuters reported from Geneva on January 30th, that the U.S. has underlined its right to retaliate against the European Union in a row over an EU ban on biotech crops. This dispute, according to the story, has the EU pitted against the U.S., Argentine and Canada, the world’s three biggest growers of genetically modified (GMO) food. The World Trade Organization (WTO) has ordered the EU to end the ban.


New Resources for Farm Families

The Ontario government announced in late January that more resources will be made available to help them manage their way through financial
pressures and changing market conditions.

The province is providing $500,000 to boost business training resources and enhance services offered by a phone-in help line for farmers.

The Centre for Rural Leadership will receive $300,000 to identify and deliver the greatest immediate business training needs for the hog, beef
and horticulture sectors.

The Farm Line, a not-forprofit organization that provides front-line peer support and referral services, will receive $200,000 to enhance its
telephone support services and to provide additional training for peer volunteers and regional services. For more information on The Farm Line, visit their website at www.thefarmline.ca or call them at 1-888-451-2903.


Excellent Yield Potential for Ontario Wheat

In a Farm Business Communications article, Peter Johnson, Provincial Cereal Specialist with the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA), noted that with ideal weather conditions during the fall planting season and winter so far, that this year’s Ontario winter wheat crop has excellent yield potential.

Statistics Canada Reports Higher Corn Stocks

In the February 5, 2008 release of the Daily Report, Statistics Canada reported that farm stocks for corn in Ontario and Quebec at the end of
December easily passed the previous records. This was due to a record corn harvest in 2007. In Ontario, stocks were up by 13.6% while in Quebec, stocks surged 42%.

Soybean stocks fell to below the five-year average.

Total wheat stocks, including on-farm and commercial stocks, were down 29.8% as a result of a 20.6% drop in wheat production in 2007.

Canadian Government Working on New International Trade Opportunities

The Honourable Gerry Ritz, Minister of Agriculture and Agri-Food stated in his Minister’s Column in late January, that Prime Minister Stephen Harper
had met with the Secretary of Agriculture, Livestock, Rural Development, Fisheries and Food, Alberto Cardenas Jimenez in Mexico. Resuming trade
between Canada and Mexico was discussed in the meeting.

Although this pertains primarily to livestock at this point, other commodities may be included in the future. Both agreed that technical officials would review final details of the trade protocols to enable trade to resume as quickly as possible.

U.S. Farm Bill Falls Short

On February 8, 2008, the Iowa, Illinois, Indiana, Ohio Corn Grower Associations and Virginia and Maryland Grain Producers Associations issued a news release expressing concern about the U.S. Farm Bill not including an optional “revenuebased” safety net.

Corn growers are targeting the following key elements in a “revenue-based” product:
• It should be based on market price, not target price
• No double-dipping. Utilizing the revenue-based option should be exclusive of other programs or program approaches such as nonrecourse
x marketing loans
• To get a viable revenue-based safety net, there should be a willingness to negotiate direct payments
• It should be targeted and designed to activate based on need

The revenue based program should not be based on a national trigger but rather a state or county trigger.

U.S. corn grower groups conducted extensive focus groups and grower surveying at the beginning of the farm bill debate and found growers clearly believe farm programs should be designed to support the vital agriculture industry when income is low rather than when prices are low. They said the current farm bill focus on low prices rather than revenue should be reformed rather than extended because of the increased exposure for individual growers of all sizes.

Maizex Releases Plot Trial Results

Maizex announced on February 6, 2008 that the Genetic Environment Tape Trial (GETT) results from their 2007 plot trials are available on their
website at www.maizex.com.

According to their news release, the results provide a statistically significant data comparison to the traditional replicated yield trials and express
the importance of the interaction between genetics and the environment. Using this data, producers are able to make an educated decision on which hybrid performs best under his/her unique management practices. The results of 36 different locations across Ontario and Quebec can be found online at www.maizex.com.

With the successful launch of GETT from Quebec to Alberta, producers planted over 100 trials in 2007. Producers appreciated the many benefits of viewing a large number of hybrids on their farm. Real hybrid differences were evident at tasseling and again at harvest, giving producers the confidence to make planning decisions for 2008.

“Grower uptake has been very positive with this system and many have expressed interest in planting locations for the 2008 season. We have an estimated 350 locations across Canada lined up for 2008,” noted Shawn Winter, Research Agronomist at Maizex Seeds.

Maizex launched its new in field testing system -GETT- in the spring of 2007. A water soluble tape that holds up to 50 different hybrids is planted with a conventional planter in only minutes to give the producer a look at yield and performance on his/her own farm. The GETT system has been tested over multiple years and has proven to produce statistically valid data when compared to conventional replicated yield trial systems.

“With rapid advancements in modern genetics and a multitude of trait options, never before has the understanding of genetic by environment interaction been so critical,” stated Winter.

For more information or to plant a Genetic Environment Tape Trial, contact your local Maizex dealer or log onto www.maizex.com.

Monsanto's Roundup Ready 2 Yield Soybeans Receive Key Approvals in Asian Countries

Monsanto Company announced on February 5, 2008 that it has received final regulatory approval in Japan, the Philippines and Taiwan for its second-generation soybean technology, Roundup Ready 2 Yield™. These approvals represent significant progress toward the commercialization of
this new higher-yielding soybean technology.

Robert T. Fraley, Ph.D., chief technology officer and executive vice president of Monsanto Company stated in the news release that “Roundup Ready 2 Yield soybeans are poised to deliver a new yield advantage to farmers and pave the way for the development of stacked-trait offerings in this oilseed crop. Importantly, this new soybean product is expected to offer farmers a novel way to get more yield out of a single acre of land, a critical step as farmers work to meet the growing food and fuel demands of our world.”

Last July, Roundup Ready 2 Yield soybeans completed the regulatory process in both the United States and Canada. The product is currently under
scientific review by the European Food Safety Authority as well as regulatory authorities in China and other key export markets.

Roundup Ready 2 Yield soybeans represent the secondgeneration of the company’s popular Roundup Ready technology. Four years of field comparisons have demonstrated that Roundup Ready 2 Yield soybeans deliver a yield advantage of 7 percent to 11 percent over the first-generation Roundup Ready offering.

Monsanto is planning a controlled commercial release of Roundup Ready 2 Yield soybeans in Canada and the U.S. in 2009. The company is planning a fullscale launch of the product in 2010.

Roundup Ready 2 Yield soybeans will serve as the primary platform for Monsanto’s introduction of new soybean trait technologies, including higher
yield, expanded herbicide tolerance and enhanced oil products. Monsanto expects Roundup Ready 2 Yield soybeans could serve as the platform for
up to five new stacked trait offerings in soybeans by 2012.

Touchdown Total Now Ready for Use in Glyphosate-Tolerant Corn

Syngenta Crop Protection Canada, Inc. announced in a news release on February 8, 2008 that Touchdown Total®, a nonselective Group 9 herbicide that provides control for a broad spectrum of annual and perennial grasses and broadleaf weeds, is registered for use in Canada in
glyphosate-tolerant corn.

“Syngenta has announced that the new Touchdown Total formulation will be available in 2008,” says Kristine Savage, Corn and Bean Crop Manager at Syngenta Crop Protection Canada, Inc. “We’re delighted that this new higherconcentration formulation is registered for use in glyphosatetolerant
corn, enabling Canadian growers to use this highlyeffective herbicide for all glyphosate uses across their key crops. We’re confident that Touchdown Total will exceed growers’ expectations for weed control and rainfastness, along with crop safety for glyphosatetolerant crops including
glyphosate-tolerant corn.”

Touchdown Total features new Low Foam Technology, which minimizes foaming during mixing and tankfill. The optimized formulation also provides superior tank mix compatibility characteristics over all other glyphosates. As a result, handling and use of the new formulation brings ease and
efficiency to growers.

Touchdown Total contains all the same label registrations as Touchdown® iQ®, along with use on glyphosate tolerant corn. It includes the innovative cornbased dual adjuvant technology that provides more delivery to the leaf surface, maximizing leaf retention and promoting faster
absorption and translocation into the plant. In addition, Touchdown Total contains a higher concentration formulation than Touchdown iQ, with 500
g/L acid equivalent of glyphosate present as a potassium salt. This means that less product handling is required to achieve the same consistent results (0.72 litres of Touchdown Total is equivalent to one litre of the previous 360g/L formulation of Touchdown iQ).

Touchdown Total is fully serviced by Syngenta and its retail network. It includes the Touchdown Assurance Program and will be included in the
Syngenta Partner Program.

Monsanto's Focus is Shifting from Corn to New Biotech Soybeans

Monsanto Co. has been focused on corn for years. Now, according to a story in the St. Louis Post, Monsanto is developing new biotech soybeans. Monsanto’s leaders are thinking about feeding biofuel facilities but they are also thinking about demand from China’s growing middle class and from health-conscious Americans.

Farmers need new technology to help them squeeze greater yield out of every acre, Scott Rozelle, an agriculture economist and China expert who teaches at Stanford University and the University of California-Davis was quoted as saying. The factors they are looking at are fueling unprecedented global demand for soybeans, corn and other grain.

Ethanol Production to Double in Brazil Within 5 Years

In a February 6, 2008, Dow Jones news release, it is reported that Brazil, the world’s largest sugarcane producer, is planning on doubling its ethanol
production within five years to meet rapidly rising biofuel requirements.

Brazil will boost ethanol output from 18 million cubic meters this year to 35 million cubic meters a year in the next five years, said Carlos Murilo Barros de Mello, commercial director at Sao Paolo-based Cosan SA Industria e Comercio, the world’s biggest sugarcane processor.

Demand for environmentally friendlier biofuels such as ethanol is increasing as conventional fuel prices have gone up due to record crude oil prices and amid stricter environmental regulations, in particular in the U.S. and Europe.

Brazil, the world’s largest ethanol exporter, will achieve doubling its ethanol output by utilizing 2.5 million hectares of land for sugarcane production, de Mello told Zawya Dow Jones on the sidelines of a Dubai conference Tuesday.

“To meet potential new ethanol demand, Brazil will need to increase its sugarcane production by an annual compounded growth rate of 8.5%,” de Mello said, adding that the country’s raw sugar production for ethanol will be reduced.

Sugarcane area for ethanol still amounts to less than 1% of Brazilian territory and 3% of its farm land.

Demand for ethanol is largely driven by domestic requirements as Brazil’s so-called flex fuel car fleet, which runs on both traditional gasoline and ethanol, keeps growing. All gasoline in Brazil contains close to 25% ethanol.

The U.S. is the world’s biggest ethanol producer, making its fuel primarily from corn, and President George W. Bush has made the fuel a central part of his plan to cut gasoline use by 20% by 2017.

International Biofuels Effort Seeks Less Barriers, More Trade

The National Institute of Standards and Technology stated in a February 5, 2008 news release that an analysis of current biofuel specifications with the goal of facilitating expanded trade of these renewable energy sources was released by the governments of the U.S., Brazil and the EU, the world’s major producers of biofuels. With increased market demands, the three governments had an international group of fuel standards experts develop the report.

Biofuels - which are derived from biological materials such as plants, plant oils, animal fat and microbial byproducts – are gaining popularity worldwide as both energy producers and users seek ways to reduce greenhouse gas emissions, move away from dependence on fossil fuels and
invigorate economies through increased use of agricultural products. As a result, biofuels are becoming an increasingly important commodity in the
global marketplace.

An obstacle to achieving greater efficiency in the global biofuels market is confusion over differing – and sometimes conflicting – standards for characterizing the make-up and properties of biofuels. A task force of experts from standards developing organizations compared critical specifications in existing standards used globally for pure bioethanol and biodiesel.

The White Paper that has been published identifies where key specifications in the standards are:

• Similar (and can be considered compatible);
• Different, but could be reconciled in a short period; or
• Irreconcilably different as they stand.

The standards that have been developed are currently being used in support of biofuels commodity trading between nations.

The experts found that these three sets of bioethanol and biodiesel standards and the specifications they contain, share much common ground and
impose few impediments to biofuel trade.

Canadian Agricultural Safety Week, March 12-18

Sprains and strains are Canada’s leading type of farmrelated injuries. Overexertion was the leading cause of injury followed by injuries from livestock handling then machinery-related overexertion common to field crop farms and market gardens, and falls. In a study by the Canadian Agricultural Injury Surveillance Program, it identifies these four causes which account for 84% of all strains and sprain injuries sustained in agricultural work.

Farming doesn’t have to be a pain in the neck, back or arms. No pain is a gain for worker health and safety. Take a moment to think through your work for ways to reduce the risk of sprains and strains before they happen.

Canadian farmers are encouraged to “Manage more than just your back!” during Canadian Agricultural Safety Week, March 12-18. More information on this and other farm safety initiatives are available from the Canadian Federation of Agriculture, the Canadian Agricultural Safety Association, Farm Credit Canada and Agriculture and Agri-Food Canada.

Wheat Eager to Get Back Into the Biotech Game

In a Capital Press release by Scott A. Yates on February 7, 2008, it was reported that the Joint Biotech Committee of U.S. Wheat Associates and the National Association of Wheat Growers on Tuesday revealed an industry eager to get back in the biotech game.

Committee members from the two wheat organizations, in Washington, D.C., said they would even support the release of a genetically modified wheat trait in the U.S. before it is introduced in Australia or Canada.

In the past, a unilateral release was viewed as a major hurdle because of the perceived marketing advantage a nongenetically modified wheat
supplier might have in a market like Japan, where the technology is viewed with suspicion.

The current mood is a far cry from the conflicted attitude that existed when Monsanto was trying to get the industry behind the release of Roundup Ready wheat at the turn of the century. Back then, U.S. Wheat Associates warned of markets being lost and backed up its claim with surveys of buyers who said they would cease buying all U.S. wheat if a genetically modified wheat trait were commercialized.

Monsanto ultimately shelved its Roundup Ready wheat technology and shut down its wheat research four years ago. Since then, wheat acreage has continued to lose ground against soybeans and corn, crops that saw single-gene genetically modified traits introduced in 1996. Stacked traits involving multiple genes are now being planted.

Syngenta has put a fusarium-resistant biotech trait through field trials, but it has not started the commercialization process.

The North American Millers’ Association, which has expressed concern over genetically modified organisms in the past, feels comfortable with the direction growers are taking.

Canada's GM Crop Acres Up

Farm Business Communications cited the results from a February 14th international biotech agency report on Canadian acreage devoted to genetically modified (GM) crops which were reported to be 13 per cent higher in 2007 over 2006.

The biotech acres in Canada for 2007 were reported at 17 million acres, up from 15 million acres in 2006. According to a count by the International
Service for the Acquisition of Agri-Biotech Applications, this was a little above the 12 per cent increase that was seen worldwide.

Dale Petrie, general manager for the Ontario Soybean Growers, was quoted in a CropLife news release, “In 2007, farmers seeded over 1.35 million acres of glyphosate-tolerant soybeans representing approximately 65 per cent of the market share. The main reason behind this rate of adoption is the ease of production in weed control, no-till farming and reduced fuel costs.”

GM corn varieties are also up to over 65 per cent of corn seed market share. Dale Mountjoy, president of the Ontario Corn Producers’ Association, said in the CropLife release that the rise is due mainly to improved insect control offered by Bt corn varieties which are resistant to corn borers.

GM canola continues to enjoy a strong Canadian market share and farmers are also turning to new biotech crops such as sugar beets for biofuel production, as was noted by CropLife.

Bt Corn and Mycotoxin Reduction

Felicia Wu, Department of Environmental & Occupational Health, Graduate School of Public Health of the University of Pittsburgh, released a report in the February issue of the Information Systems for Biotechnology entitled, “Field Evidence: Bt Corn and Mycotoxin Reduction.”

There are four common mycotoxins in corn; fumonisin, alfatoxin, deoxynivalenol (DON) and zeralenone. The report, which can be found at www.isbwww.isb.vt.edu/news/2008/news08.Feb.htm, contains more details about each of the mycotoxins and how corn becomes infected.

As we read in the previous news clip, Bt corn is being planted at an ever-growing rate around the world. The primary benefit of Bt corn is for insect
pest protection. The secondary benefit of Bt corn is the reduction of mycotoxin concentrations, because of the relationship between insect pest damage and fungal colonization. The varieties of Bt corn that are currently available have shown strong evidence in field conditions worldwide of having significantly lower fumonisin levels than non-Bt isolines. There is also limited evidence for lower levels of DON and zearalenone in Bt corn,
although there are fewer field studies on these relationships. The more extensive work on aflatoxin reduction in Bt corn has yielded mixed results, but new varieties of Bt corn that may be commercialized soon are likely to have a more significant impact on aflatoxin levels. The conclusion of the report is that Bt corn is an important potential tool for mycotoxin control.

Volatile Markets Expected to Continue in 2008

Chris Lyddon, a writer for World Grain, wrote in January that the international grain markets were bracing for another wild ride in 2008.

Experts who addressed the Global Grain 2007 Conference in Geneva in November suggested that 2008 is likely to be even more uncertain.

Dan Basse, president of Chicago-based AgResource, identified the growth in population and the economy, particularly in Southeast Asia, as the main driving forces behind rising prices, rather than the increase in alternative uses for grain.

For the first time since 2004, he predicted relative stability in supplies, with an all-grains crop, including soybeans, of around 1.65 billion tonnes, compared with 1.64 billion tonnes of demand. There are grain stocks left that are only marginally higher. He contrasted the current situation with what the world was used to prior to 1999, when stocks only decreased because of adverse weather.

Basse also identified a series of bullish factors affecting the market, including biofuels, rising mineral oil prices, growth in world livestsock herds, the
expansion of China’s economy and supply dislocation to name a few factors.

He indicated that weather patterns could be affected next summer with the formation of La Nina. Some weather forecasters are already calling for a major drought across the U.S. next summer.

These are a few of the highlights from the report. The complete report is available from World Grain.

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