"We are very pleased with this pro-competitive outcome, which puts an end to a long-running concern," said Commissioner of Competition, Sheridan Scott. "We believe these steps will promote competitive prices for farmers and grain handling companies in the Prairies and the ports," she said.

These transactions resolve competition concerns that arose from a series of mergers in the grain industry. The Bureau concluded that divestitures were required to address those concerns.

Agricore United (the merged entity of UGG and Agricore Cooperative) has completed the divestiture of its AUV grain handling terminal (http://www.competitionbureau.gc.ca/internet/index.cfm?itemID=2302&lg=e) in the Port of Vancouver to Alliance Grain Terminal Ltd., formerly Terminal West Ltd. The divestiture is in accordance with the October 2002 consent agreement (http://www.competitionbureau.gc.ca/internet/index.cfm?itemID=459&lg=e) between the Commissioner and United Grain Growers Ltd. (UGG), and was required in order to eliminate the substantial lessening of competition resulting from UGG's acquisition of Agricore Cooperative. Grant Thornton Limited was appointed as divestiture trustee to conduct the sale process. Alliance Grain Terminal Ltd. is a consortium composed of Paterson Globalfoods Inc., Parrish & Heimbecker Ltd., Prairie West Terminal Ltd., Weyburn Inland Terminal Ltd., Great Sandhills Terminal Marketing Centre Ltd., and North West Terminal Ltd.

As required by the March 2007 consent agreement

(http://www.ct-tc.gc.ca/CMFiles/CT-2007-005_0002_45LSZ-3292007-6212.pdf?windowSize=popup) with the Commissioner of Competition, Saskatchewan Wheat Pool (SaskPool) has completed the sale of nine inland grain elevators and a port terminal elevator in the Port of Vancouver to Cargill Ltd. Cargill Ltd. now owns what was formerly the SaskPool Terminal and SaskPool owns the Cascadia Terminal in its entirety. In addition, SaskPool has terminated the Pacific Gateway Terminal Ltd. joint venture with James Richardson International (JRI) on the North shore of Burrard Inlet in Vancouver. As the joint venture is now dissolved, the Commissioner will be withdrawing her application to the Tribunal challenging this joint venture. These remedies were required to eliminate the substantial lessening of competition resulting from SaskPool's acquisition of Agricore United in June 2007.

The Commissioner and James Richardson International (JRI) have also entered into a new consent agreement, whereby JRI will divest two inland grain elevators in Glossop and Swan River, Manitoba. The Commissioner requires the divestitures in order to eliminate the substantial lessening of competition in local markets resulting from JRI's acquisition of certain Agricore United inland grain elevators from SaskPool.

"With the cooperation of the parties, we were able to reach a favourable resolution in the case of the SaskPool and JRI consent agreements in a very short time frame," said Commissioner Scott.

The Competition Bureau is an independent law enforcement agency that promotes and maintains fair competition so that all Canadians can benefit from competitive prices, product choice and quality services. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

Cash income for Canadian farm businesses decreased 9.4% in 2006. Although stronger crop revenue helped to offset declines in livestock receipts and program payments, producers faced higher interest charges, labour costs and fuel prices, which drove farm operating expenses higher.

Cash income for the year amounted to $7.3 billion, the second consecutive annual decline.

The level of cash income was 13.1% below the previous five-year average (2001 to 2005).

The amount of cash available for investment or withdrawal decreased 2.0% to $9.0 billion in 2006. It remained 11.7% below the previous five-year average, which was weighted down by difficult years in 2002 and 2003.

Cash available to producers increased through borrowing, resulting in a $1.7 billion net change in loans outstanding in 2006.

All provinces recorded decreases in cash income, except Newfoundland and Labrador, New Brunswick and Saskatchewan. For these three provinces, the increase in the sales of primary agricultural products explained the rise recorded between 2005 and 2006.

As a result of the release of data from the 2006 Census of Agriculture on May 16, 2007, estimates of the farm business cash flows and other data contained in the Agriculture Economic Statistics series will be revised, where necessary. These revisions will be announced in a future release of the series in The Daily.

Farm liabilities at the end of 2006 reached $48.0 billion, up 4.4% from 2005, the 13th consecutive annual rise. Current liabilities advanced 1.5%, while long-term liabilities recorded an annual increase of 5.3%.

The debt-to-asset ratio progressed for the 11th consecutive year, rising to 19.7% in 2006. This ratio, which measures the dependence of farm businesses on debt, reached a new record for the 1981 to 2006 period, slightly above the 19.5% reached in 2005. The lowest ratio occurred in 1981 at 12.4%.

After reaching its lowest level in 2005 since 1981, the current assets to current liabilities ratio edged up in 2006 to 1.991, compared to 1.962 in 2005. The lower levels recorded in the past four years meant that operators within the agriculture sector had a lower ability to pay short-term debts, compared to the 1981 to 2002 period.

The interest coverage ratio, which indicates the ability to pay interest charges and to protect creditors from interest payment default, decreased to 1.725 in 2006, the second consecutive decline after the eight-year high of 3.434 in 2004. The 2006 level remained below the 10-year average of 2.735 (1996 to 2005).

Return on equity fell to 1.0% in 2006. This was likewise a second consecutive decrease following an eight-year high in 2004 (3.0%). The 2006 level remained below the 10-year average of 2.2%.

As a result of the release of data from the 2006 Census of Agriculture on May 16, 2007, estimates of the balance sheet of the agricultural sector at December 31 and other data contained in the Agriculture Economic Statistics series will be revised, where necessary. These revisions will be announced in a future release of the series in The Daily.

The value of agricultural production fell 4.3% in 2006 to $44.9 billion, as the value of inventory change continued to decline along with a slight drop in sales of agricultural products and lower program payments.

Sales of agricultural products edged down 1.2% to $38.3 billion. This was also 1.2% below the previous five-year average (2001 to 2005).

The average was dragged down by back-to-back droughts in 2001 and 2002, as well as by the closure of the US border to live cattle exports.

The slight increase in sales of agricultural products to sectors other than the agriculture sector between 2005 and 2006 was influenced by higher revenues from crop sales.

Total revenues from the sale of crops and livestock increased 1.8% to $32.4 billion in 2006. Crop receipts jumped 7.4% to $14.5 billion as prices recovered from recent lows. Stronger crop revenue helped offset declines in livestock receipts. Hog prices continued to languish, pushing livestock receipts down 2.4% in 2006.

After three consecutive years of increases, program payments declined 7.1% from the record level of 2005 to $4.6 billion. Despite the drop, the amount in 2006 was 4.7% above the previous five-year average.

Certain programs linked to cash flow problems and difficulties in the cattle sector were terminated in 2006, including the Farm Income Payment Program and bovine spongiform encephalopathy-related programs. However, new programs helped to prevent a precipitous fall in payments. These included the Grains and Oilseeds Payment Program and the Canadian Agricultural Income Stabilization (CAIS) Inventory Transition Initiatives, as well as other CAIS enhancements.

Crop insurance payments also played a role in the decline, falling 21.1% as a result of better growing conditions in 2006.

The value of inventory change decreased $616 million in 2006, the first decrease since 2002. Declining on-farm stocks of livestock were a major contributor to the negative value of inventory change in 2006. Cattle inventories fell 3.5% in the wake of renewed live cattle exports to the United States, while hog inventories declined 2.7%.

As well, the conversion of on-farm stocks of canola into market deliveries and lower stocks of feed grains were not fully offset by increased stocks of wheat (excluding durum), potatoes and soybeans.

As a result, the total value of agricultural production edged down to $44.9 billion. Nova Scotia, Ontario, Saskatchewan, Alberta and British Columbia recorded decreases in the total value of production.

Net value added, which is the value of production minus expenses on input, business taxes and depreciation, fell 14.3% to $8.7 billion in 2006.

Interest charges accounted for 31% of net value added, while non-family wages accounted for 29%.

As a result of the release of data from the 2006 Census of Agriculture on May 16, 2007, estimates of the agriculture value added account and other data contained in the Agriculture Economic Statistics series will be revised, where necessary. These revisions will be announced in a future release of the series in The Daily.

Prices of farm inputs advanced 3.3% in both Western Canada and Eastern Canada. Although the price movement by major groups is comparable between the East and West, the rise in prices for machinery and motor vehicles was much stronger in the West (+4.0%) than in the East (+2.5%). As well, property taxes decreased in the West (-3.0%) while they rose in the East (+4.5%).

On a monthly basis, prices farmers received for their commodities rose 1.6% in March over February.

The FPPI stood at 104.0 (1997=100) in March, an increase over the revised February index of 102.4.

Prices for livestock and animal products advanced 1.9% in March from the revised February index, as cattle and calves and poultry recorded increases. Hogs and dairy were down while eggs were unchanged.

Cattle and calf prices increased (+6.8%) for a third consecutive month in March, after dropping to a recent low in December 2006, when they had been at their lowest level since the border re-opened to partial trade of live cattle and calves in July 2005.

After rising for three consecutive months, hog prices dipped 4.7% in March. However, they remained above the recent low recorded in November 2006. The United States Department of Agriculture reported that hog inventories in Canada and the US were, at the beginning of March, slightly above the level posted the same time last year.

Prices farmers received for crops were up 0.4% from February, as all commodities recorded an increase, except fruits and vegetables. Gains ranged from 0.1% for specialty crops to 6.0% for potatoes.

Grain and oilseed prices continued their upward trend, driven by the growing demand from the biofuel sector. However, it should be noted that at this time of the year, markets begin to react to climate conditions and their effects on the upcoming growing season.

Even though specialty crop production in Canada is well below that of wheat, it has grown significantly. Canada is among the world's largest producers and is the largest exporter of these crops (dry peas, lentils, mustard seed and canary seed). Specialty crop prices have trended up since the fall of 2006, supported by strong demand, production difficulties in some producing and importing countries and competition for acres in the upcoming crop year.

Farm Product Price Index
	March 2006r	February 2007r	March 2007p	March 2006 to March 2007	February to March 2007
	(1997=100)			% change
Farm Product Price Index	95.1	102.4	104.0	9.4	1.6
Crops	87.1	102.3	102.7	17.9	0.4
Grains	74.9	91.5	93.5	24.8	2.2
Oilseeds	68.1	91.4	92.5	35.8	1.2
Specialty crops	73.2	107.4	107.5	46.9	0.1
Fruit	106.8	123.6	116.8	9.4	-5.5
Vegetables	119.2	122.8	122.3	2.6	-0.4
Potatoes	150.1	124.3	131.8	-12.2	6.0
Livestock and animal products	102.0	104.2	106.2	4.1	1.9
Cattle and calves	107.0	102.3	109.3	2.1	6.8
Hogs	70.2	78.5	74.8	6.6	-4.7
Poultry	93.7	97.6	99.9	6.6	2.4
Eggs	97.5	95.7	95.7	-1.8	0.0
Dairy	129.3	136.7	135.7	4.9	-0.7
r revised p preliminary

Farmers received $8.5 billion in market receipts, a record for a first quarter. (Market receipts are revenues from the sale of crops and livestock.) This total was 9.8% above the previous five-year average between 2002 and 2006. On a year-over-year basis, market receipts have increased for the fourth consecutive quarter after being relatively flat in 2005.

Crop receipts reached $3.8 billion between January and March, 28.8% above the same period last year and 17.1% above the previous five-year average. In 2006, first-quarter crop receipts had fallen to their lowest level in a decade.

Livestock receipts increased 2.7% from the first quarter of 2006 to $4.7 billion. This total was 4.4% higher than the previous five-year average. An improvement in hog prices from their recent lows was the main factor behind the rise in livestock receipts.

Farmers received $1.4 billion in program payments during the first quarter, down 12.8% from the first quarter of 2006, as crop conditions improved and several programs wound down. Despite this decrease, program payments remained 3.9% above the previous five-year average.

Total farm cash receipts, which comprise crop and livestock revenues plus program payments, increased 8.6% to $9.9 billion and were 8.9% above the previous five-year average for a first quarter.

Provincially, total farm cash receipts rose in eight provinces. Increases ranged from 0.9% in Manitoba to 15.1% in Alberta. Receipts decreased 13.1% in Prince Edward Island and 8.2% in New Brunswick, as potato receipts dropped in both provinces.

Farm cash receipts provide a measure of gross revenue for farm businesses. They do not account for expenses such as wages, fuel and feed costs incurred by farmers. Cash receipts can vary widely from farm to farm because of several factors, including commodities, price and weather. For the most recent information about net farm income in 2006, consult today's "Net farm income" release.

Crop receipts leap forward as grain and oilseed prices regain ground

Production issues faced by some of the major grain exporting countries in 2006, coupled with an increase in global biofuel production, contributed to reduce the abundance of world grain supplies and improve grain and oilseed prices. This advance follows a period of very low prices received by farmers at a time when input costs were rising.

Corn receipts increased to $271 million, fuelled by a 38.4% rise in price and a 14.8% gain in marketings. Higher demand for corn for biofuel production in the United States had a positive impact on prices, which spilled over to other crops.

Revenues from wheat (excluding durum) rose 73.9% to $633 million, as a result of three factors: a 34.3% rise in prices, increased deliveries and higher Canadian Wheat Board (CWB) payments.

Barley receipts rose 65.6% to $154 million, due to a combination of increased prices and CWB payments. Prices and CWB payments also pushed durum receipts up 53.8% to $123 million. However, deliveries of both these grain crops were down, largely due to lower production in 2006 as producers chose to seed other crops and yields declined.

Canola receipts hit a record first-quarter high of $697 million. In contrast to the same period last year, this increase was driven by a 43.6% price gain, as deliveries fell 15.0% from the first-quarter record of 2.4 million tonnes in 2006. Canola production in 2006 was down slightly from the 2005 record, but remained well above the previous five-year average.

Soybean revenues also reached a first-quarter record of $248 million, mainly as a result of record deliveries. Soybean prices increased 11.8% over 2006, which had been a 14-year low for a first quarter.

As prices for grains and oilseeds improved, producers deferred more receipts from crops sold in 2006 for liquidation in 2007. Liquidations of grain and oilseed receipts were up 28.5% to $473 million in the first quarter of 2007.

Improving hog prices support livestock receipts

Cash receipts for hog producers increased 8.0% in the first quarter of 2007 to $909 million. Prices rose 9.3% above the first-quarter 2006 level, although they remained below their five-year average. Marketings fell slightly as a drop in hogs sold domestically was not offset by higher exports.

Domestic processing remains the largest market for Canadian hogs, accounting for nearly 80% of hog receipts. However, exports of weanlings into the US continue to be a growing market. Prices for hogs sold were up for both domestic processing and exports.

Despite lower prices, cash receipts for cattle and calves edged up 0.7% to $1.7 billion as a result of higher marketings. First-quarter receipts in 2007 were still lower than in the three years prior to the bovine spongiform encephalopathy (BSE) situation, when they ranged from $1.8 to $1.9 billion.

Revenues from international exports of cattle rose 9.8% to $429 million, as the number of animals exported continued to increase after the border was reopened to live cattle under the age of 30 months.

Receipts from slaughter cattle were also up 2.3%, mainly because of higher marketings. From January to March 2007, 2.1% more cattle were shipped for slaughter.

Decreases in the cattle sector were attributable to interprovincial export markets, where receipts fell 19.2% from the first quarter of 2006. Average feeder cattle and calf prices were down 10.2% and 16.4% respectively, as feed prices soared. The number of animals marketed was also down.

Receipts from supply-managed commodities increased 2.2% in the first quarter after a slight decline in 2006. Despite a reduction in marketings, receipts were up for poultry and dairy products as prices improved. Revenues from egg sales decreased slightly, as a result of lower prices for eggs for consumption.

Program payments are down but remain above the previous five-year average

Farmers received $1.4 billion in program payments during the first quarter, down from the same period in 2006, but still nearly double the amount distributed in the years prior to the BSE situation.

Crop insurance payments, to which producers contribute via premiums, declined 53.2% to $117 million, due to improved growing conditions in 2006.

The Grains and Oilseeds Payment Program, a one-time program for producers of grains, oilseeds, or special crops, delivered over $4 million in payments in the first quarter of 2007. This was down significantly from $400 million in the corresponding quarter of 2006, when the majority of payments were made under this program.

The Canadian Agricultural Income Stabilization (CAIS) program and CAIS-related payments of $718 million increased 43.3% and helped cushion the overall decline in program payments.

Note to readers

Statistics Canada does not forecast farm cash receipts. These data are based on survey and administrative data from a wide variety of sources.

Farm cash receipts measure the gross revenue of farm businesses in current dollars. They include sales of crops and livestock products (except sales between farms in the same province) and program payments. Receipts are recorded when the money is paid to farmers before any expenses are paid.

Program payments include payments tied to current agricultural production and paid directly to farmers. However, the series does not attempt to cover all payments made to farmers, nor does it represent total government expenditure under all assistance programs. For example, the Canadian Farm Families Options Program announced in July 2006 is not included because it has been determined not to be business income for statistical purposes.

As a result of the release of data from the 2006 Census of Agriculture on May 16, 2007, estimates of farm cash receipts, operating expenses, net income, capital value and other data contained in the Agriculture Economic Statistics series will be revised, where necessary. These revisions will be announced in a future release of the series in The Daily. For details on the Census of Agriculture, see the "2006 Census of Agriculture: Farm operations and operators" release published in The Daily on May 16.

Realized net income (the difference between a farmer's cash receipts and operating expenses minus depreciation, plus income in kind) declined from 2005 to $1.1 billion. This figure was also below the previous five-year average between 2001 and 2005. Provincially, only Saskatchewan and New Brunswick recorded a gain in realized net income last year.

Total farm cash revenue from livestock and crop receipts as well as program payments edged up 0.6% to $37.0 billion, the third consecutive annual increase. Meanwhile, higher interest rates as well as higher energy and labour costs drove farm operating expenses up 3.3% to $31.5 billion.

Realized net income can vary widely from one farm to another because of factors such as commodities produced, prices, weather, economies of scale and management. This and other aggregate measures of farm income are calculated on a provincial basis employing the same concepts used in measuring the performance of the overall Canadian economy. They are a measure of farm business income, not farm household income. For details on farm cash receipts in the first quarter of 2007, see today's "Farm cash receipts" release.

Financial data collected from surveys and other sources at the individual farm business level, which help to explain differences in performance of various types and sizes of farms, are not yet available for 2006. In recent years, for example, data from Statistics Canada's Whole Farm Database have shown that net operating income of farms with revenues of $250,000 and over have been trending upwards while those of smaller farms have not, even though many of these smaller operations still have positive net farm incomes.

Higher crop revenues boost market cash receipts

Market cash receipts, the revenues from the sale of crops and livestock, increased 1.8% to $32.4 billion in 2006. Crop receipts jumped 7.4% to $14.5 billion as prices recovered from recent lows. Stronger crop revenue helped offset declines in livestock receipts and program payments. Hog prices continued to languish, pushing livestock receipts down 2.4% in 2006.

The recovery in crop revenues was helped by increases in both deliveries and prices. Deliveries of canola and wheat soared in 2006, as farmers made use of the record or near-record stocks gleaned from the harvests of 2005 and 2006.

Prices gained strength during 2006 as the biofuel industry expanded and adverse growing conditions were experienced by some of the major grain-exporting countries. Late in the year, prices also benefited from the improved harvest conditions in 2006 that resulted in higher quality crops to market.

Canola revenues surged 34.8% to $2.5 billion in the wake of a 28.7% jump in marketings. Producers of wheat (excluding durum) also saw their receipts climb by 16.2%. Both stronger prices and marketings supported this growth.

Potato receipts also contributed to the gain in crop revenues. They rose 15.3% to $899 million as prices jumped 20.0%.

In the livestock sector, hog producers saw their receipts plunge 13.0% to $3.4 billion. The decline left revenues 8.7% below the previous five-year average. Prices were the main factor, averaging 12.7% below those of 2005.

Increased cattle and calf receipts moderated the drop in livestock revenues, climbing 2.1% to $6.5 billion. Cattle exports regained their strength following the reopening of the American border to live cattle under 30 months of age on July 18, 2005. The 1.0 million cattle and calves exported in 2006, while almost doubling the figure from 2005, remained 40.7% below the pre-bovine spongiform encephalopathy (BSE) peak in 2002. Reduced US demand for Canadian cattle, partly due to drought-stricken US ranchers shipping cattle early to feedlots, together with a strong Canadian dollar, discouraged Canadian exports.

The supply-managed sector saw its receipts fall a marginal 0.9%, the first decline since 2002. A 4.3% drop in chicken receipts was more than enough to counteract small increases in egg and turkey receipts. Dairy receipts were essentially unchanged from 2005.

Program payments fall from record levels

After three consecutive years of increases, program payments declined 7.1% from the record level of 2005 to $4.6 billion. Despite the drop, the amount in 2006 was 4.7% above the previous five-year average.

Certain programs linked to cash flow problems and difficulties in the cattle sector were terminated in 2006, including the Farm Income Payment Program and BSE-related programs. However, new programs helped to prevent a precipitous fall in payments. These included the Grains and Oilseeds Payment Program and the Canadian Agricultural Income Stabilization (CAIS) Inventory Transition Initiatives, as well as other CAIS enhancements.

Crop insurance payments also played a role, declining 21.1% as a result of better growing conditions in 2006.

Operating expenses: Producers hit by increased interest charges, labour costs and fuel prices

Farm operating expenses reached $31.5 billion, up 3.3% from 2005, the highest annual gain since 2001. Increases in interest rates, fuel prices and labour costs contributed to the increase. However, the 2006 increase was marginally below the average gain in expenses during the previous 10-year period (1996 to 2005).

Interest expenses shot up 16.3%, the largest increase since 1981. Prime business rates jumped by over 30%, while one-year mortgage rates rose by more than 20% from their recent lows of the past couple of years. Farm debt continued to rise, increasing 4.6% in 2006, slightly below the average increase of 5.1% over the previous five-year period.

Although fuel price increases did moderate in 2006, price rises in diesel and gasoline were the major contributors to a 5.8% climb in machinery fuel costs. Labour costs continued their ascent, rising 3.1% in 2006. Farm operators struggled to find workers in an increasingly tight labour market.

Manitoba producers experienced a 7.0% rise in operating expenses, the largest percentage increase in Canada. Added to factors already mentioned was an increase in crop expenses linked to a return to more normal levels of seeded acres. In 2005, seeded acres of field crops had declined by 10.1% as a result of excessive moisture that prevented planting in much of southeastern Manitoba.

Total net income falls as farm inventories decline

Total net income fell 80.7% in 2006 to $479 million. This was 82.4% below the previous five-year average. Total net income adjusts realized net income for changes in farmer-owned inventories of crops and livestock.

Declining on-farm stocks of livestock were a major contributor to the negative value of inventory change in 2006. Cattle inventories fell 3.5% in the wake of renewed live cattle exports to the United States, while hog inventories declined 2.7%.

As well, the conversion of on-farm stocks of canola into market deliveries and lower stocks of feed grains were not fully offset by increased stocks of wheat (excluding durum), potatoes and soybeans.

Note to readers

Net cash income measures farm business cash flow (farm cash receipts minus operating expenses) generated from the production of agricultural goods. Net cash income represents the amount of money available for debt repayment, investment or withdrawal by the owner.

Realized net income measures the financial flows, both cash and non-cash, attributable to the farm businesses, similar to an income statement (net cash income minus depreciation plus income in kind). Realized net income represents the net income from transactions in a given year in that it includes the sale of commodities regardless of the year they were produced.

Total net income measures the financial flows and stock changes of farm businesses (net cash income minus depreciation plus income in kind and value of inventory change). Total net income values agriculture economic production during the year that the agricultural goods were produced. It represents the return to owner's equity, unpaid labour, management and risk.

Farm cash receipts measures the gross revenue of farm businesses in current dollars. They include sales of crops and livestock products (except sales between farms in the same province) and program payments. Receipts are recorded when the money is paid to farmers before any expenses are paid.

Farm operating expenses represent business costs incurred by farm businesses for goods and services used in the production of agricultural commodities. Expenses are recorded when the money is disbursed by the farmer.

As a result of the release of data from the 2006 Census of Agriculture on May 16, 2007, estimates of farm cash receipts, operating expenses, net income, capital value and other data contained in the Agriculture Economic Statistics series will be revised, where necessary. These revisions will be announced in a future release of the series in The Daily. For details on the Census of Agriculture, see the "2006 Census of Agriculture: Farm operations and operators" release published in The Daily on May 16.

Legislation introduced in the U.S. Senate this week would entice farmers located near ethanol biorefineries to grow dedicated energy crops.

Sen. John Thune, R-S.D., said his bill would offer incentives to farmers who plant switchgrass, fast-growing trees and other cellulosic feedstocks and deliver them to the nation's next generation of ethanol plants. Cellulose is the woody material in branches and stems that makes plants hard.

"For cellulosic to achieve its potential, Congress needs to help this industry overcome some of the initial market barriers," Thune said Wednesday during a conference call. "And if we are serious in the country about reducing our dependence upon foreign oil, we have to be serious about giving the necessary jump start to America's budding alternative fuels industry and the farmers who supply it."

Thune said he hopes the legislation will be included in the energy section of the farm bill, which is up for review by Congress this year.

Breaking cellulose into sugar to spin straw into ethanol has been studied for at least 50 years. But the technological hurdles and costs have been so daunting that most ethanol producers instead relied on heavy government subsidies to squeeze fuel from corn.

In February, the U.S. Department of Energy awarded $385 million in grants over four years to six companies hoping to build the nation's first large-scale cellulosic ethanol plants. Earlier this month, Energy Secretary Samuel Bodman announced plans to invest an additional $200 million over five years to help companies develop smaller biorefineries.

Under the bill introduced Wednesday, the U.S. Department of Agriculture would determine the likelihood of construction of a future biorefinery, the local potential for feedstock production, the number of interested farmers and a biorefinery's economic impact.

The bill would likely fund 10 to 12 feasibility studies, each costing about $50,000, Thune said.

Once a project is approved, farmers could enroll eligible land in the program.

During a contract's first five years - as the ethanol plant is built and the crop is getting established - farmers would receive a cost share and a per-acre rental payment. Once the biorefinery starts up, the rental payment would end and the farmer would get a matching payment of up to $45 for each ton of delivered biomass for up to two years, said Thune, a ranking member of the energy subcommittee.

The bill would also authorize matching payments, capped at $45 per ton, to farmers anywhere in the U.S. who sell crop byproducts and residues such as corn stover and wheat straw to ethanol plants.

Such residues are the focus of Sioux Falls-based Poet, one of the recipients of the Energy Department's initial grants.

The company, which has been making ethanol from corn for more than 20 years, will use the $80 million grant to adapt its Emmetsburg, Iowa, plant to make additional fuel out of corn stalks and fiber. It will buy stalks normally left behind in fields from the same farmers that deliver corn.

Jeff Fox, Poet's vice president of legal and governmental affairs, said the legislation stimulates research, development and production of cellulosic ethanol.

"By directing funding to the producers who will grow all biomass crops or provide the corn stover and other crop residues directly to biofuels facilities, this bill will support the cellulosic ethanol industry while it is still in its infancy," Fox said in a statement.

The bill includes provisions that energy crops can't be cut lower than 10 inches and can only be harvested at a time of the year that doesn't interfere with nesting or wildlife habitat.

Wildlife groups have insisted that any new energy crop program not take acres from the USDA's Conservation Reserve Program, which pays farmers to idle some 35 million acres of marginal cropland for wildlife habitat.

Sen. Ben Nelson, D-Neb., co-sponsor of the legislation, said cellulosic ethanol has always faced a chicken-or-the-egg problem, but the new bill should help resolve that.

"It's difficult to start commercial production without a guaranteed supply of biomass, but it's hard to encourage farmers to grow the biomass unless they know they'll have a market," Nelson said in a statement.

Copyright 2007 Associated Press

Here's the latest snapshot of Canada's agriculture industry, using new data from the 2006 Census of Agriculture. Comprehensive information about agricultural operations across Canada and the people managing those farms is available in three reports: Snapshot of Canadian Agriculture, The Financial Picture of Farms in Canada and Farming in Canada's CMAs.

Between 2001 and 2006, both the number of census farms in Canada and the number of farm operators continued their long-term decline.

The census counted 229,373 census farms as of May 16, 2006, down 7.1% or 17,550 from 2001. At the same time, it counted 327,060 farm operators, a 5.5% decline, the equivalent of 19,140 people.

Just over one-quarter (27.8%) of farm operators were women in 2006, up slightly from 26.3% five years earlier.

The number of farms fell in every province, and the rate of decline was fastest in Newfoundland and Labrador and Saskatchewan.

Farm numbers have been declining steadily in Canada since 1941. The decrease during the past five years was slower than the 10.7% drop between 1996 and 2001. However, the lower numbers do not tell the whole story about the capability of today's agriculture industry to adapt.

For instance, Canada's agricultural land base (the total amount of land on farms) remained virtually unchanged at just over 67.6 million hectares (167 million acres). The size of the average farm rose from 273 hectares to 295 hectares (676 acres to 728 acres).

In 2005, gross farm receipts amounted to an estimated $42.2 billion, up 8.8% from 2000 (at 2005 constant prices). This includes government program payments of $4.8 billion in 2005 (representing 11.4% of gross farm receipts), up from 6.9% of receipts in 2000, largely as an impact of bovine spongiform encephalopathy (BSE). Total operating expenses rose 0.7% at 2005 constant prices to an estimated $36.4 billion.

Over this period, the prices farmers had to pay for the inputs they purchased rose more quickly than the prices they received for the products they sold. Improved efficiency, increased program payments and higher production helped to keep the ratios between expenses and receipts stable, despite this inflationary imbalance. Operators were spending an average of 86 cents in expenses (excluding depreciation) for every dollar of receipts in 2005, about half-a-cent less then they had been in 2000.

Although Canada is becoming an increasingly urban nation, one out of every seven Canadian farms had their headquarters in one of the 33 census metropolitan areas (CMAs). This proportion remained constant during the past five years.

More "million-dollar" farms

Census data showed that Canada had 5,902 "million-dollar" farms in 2006, those with gross farm receipts of $1 million or more. This compares to 4,453 five years earlier (at 2005 constant prices).

These farms comprised a relatively small proportion of the total, but their numbers are increasing. In 2001, they accounted for only 1.8% of all farms, and 34.6% of total receipts. By 2006, they accounted for 2.6% of all farms and 39.7% of total receipts.

In 2006, hog farms accounted for only 2.6% of all farm operations in Canada, but nearly 18% of them reported gross receipts of $1 million or more, the highest proportion of any farm type. Similarly, poultry and egg operations represented 2.0% of all farm operations, but about 15% of them had receipts of $1 million or more.

On the other hand, field crops are the most common type of farm across Canada. They accounted for just under 40% of all farms in 2006, but less than 2% of them reported gross receipts of $1 million or more.

Only 14.4% of all farms had gross receipts of between $250,000 and $1 million. The majority (65.6%) of Canada's 229,373 farm operations reported gross farm receipts under $100,000, while the remaining 17.4% were in the $100,000 to $249,999 receipts category.

Many small farm operations are financially viable

Nationally, 55.8% of all farms reported gross farm receipts greater than their total operating expenses, while 44.2% did not.

While the million-dollar farms are most likely to cover their operating expenses with their receipts, some farms among the smaller classes are also able to do so.

For instance, 28.6% of farms with gross receipts of less than $25,000 reported enough farm income to cover their expenses in 2005. These were most likely to be fruit and vegetable farms, and greenhouse, nursery and floriculture operations.

In contrast, 86.0% of farms with receipts of $1 million or more reported enough farm receipts to cover their expenses.

Farms in census metropolitan areas mostly smaller operations

Census of Population data released on March 13, 2007 showed Canada is an increasingly urban nation. Just over two-thirds of Canada's population in 2006 lived in the nation's 33 CMAs.

However, the Census of Agriculture showed that agriculture is no stranger to these areas. More than 15% (35,467) of the 229,373 farms counted by the census had their headquarters in one of these metropolitan areas. This has remained constant since 2001.

Most of these farms were small operations. In fact, almost half (47.5%) of them had gross receipts of less than $25,000. However, 3.4% had receipts of $1 million or more, higher than the national level (2.6%).

Field crop farms accounted for the highest proportion of farm operations in CMAs, nearly one-third (31.2%). They were followed by the category "other animal production," which includes horse farms. They accounted for 18.8% of CMA farms. Beef farms accounted for 16.7%, fruit and vegetable farms 12.9%, and greenhouses, nurseries and floriculture (including sod), 9.4%.

Greenhouses, nurseries and floriculture rely on an urban market for sales. In 2005, they accounted for 24.4% of all gross farm receipts among farms in CMAs, compared with only 7.5% on a national level.

Organic farms are also a good fit close to consumers. In 2006, 6.8% of farms in Canada reported that they were producing uncertified, transitional or certified organic products. In CMAs, the proportion was 8.3%.

British Columbia had the largest concentration of organic farms in metropolitan areas: 30.9% of farms in the Victoria CMA report organic production, Vancouver 15.7%, and Kelowna 12.3%.

More farmers working off the farm

More farmers are working off the farm than five years ago. Nearly half (48.4%) of all farm operators reported an off-farm job or business on the 2006 Census, compared with 44.5% in 2001.

Both men and women work off the farm in significant numbers. However, in 2006, for the first time, the proportion of female operators who reported off-farm work reached one-half (50.4%). In comparison, 47.6% of men had off-farm work.

Fewer farmers were working full time on the farm. In 2006, about 46.7% of farmers reported working more than 40 hours a week on their farm operations, down from 47.7% five years earlier.

In contrast, more than one-fifth (20.2%) of farmers reported working more than 40 hours a week off the farm. This was an increase from 17.6% in 2001.

From Quebec and westward the proportion of farm operators working off the farm increased in every province. The biggest increases by far were in Alberta and Saskatchewan, probably due to work opportunities in the oil industry and Alberta's booming economy in recent years.

This is the first of a number of data releases from the 2006 Census of Agriculture. All farm and operator data are available for free at (www.statcan.ca) to the census consolidated subdivision (CCS) level. Data at the province, census agriculture region (CAR) and census division (CD) levels include comparisons with 2001.

The Agriculture-Population linkage will be released in the fall of 2008. This versatile database matches farm operators with the information they provided on the Census of Population long-form questionnaires. It allows the farm population to be compared with the general population for characteristics such as marital status, level of schooling, unpaid work and total household income.

Beginning this fall, Statistics Canada will be taking a new direction with one of its flagship publications — Canadian Agriculture at a Glance. Articles will appear on Statistics Canada's website at regular intervals starting in the fall of 2007. In the spring of 2009, they and additional analytical articles will be published in one book. This new approach will mean more timely analytical and educational material.

However, corn for grain, oilseeds and wheat excluding durum remained above the five-year average.

Stocks of wheat tumble

Total stocks of wheat excluding durum amounted to an estimated 12.7 million tonnes, down from 13.5 million tonnes in March 2006. On-farm stocks alone were down 9.2% to 9.1 million tonnes, because of a strong export program and higher domestic milling demand, even though 2006/2007 wheat supplies were ample.

On-farm stocks were down in Saskatchewan and Alberta, but in Manitoba they rebounded from the very low level reported in 2006. In all three provinces, stock levels were above the five-year average.

Total stocks of durum wheat tumbled 40.1% from the record set March 31, 2006. The decline was the result of a drop in production in 2006 and increases in grain exported that occurred despite logistical difficulties. The five-year average is 3.7 million tonnes.

On-farm durum stock amounts in the Prairie provinces tumbled to levels not seen since 2003. Over 80% of durum farm stocks are held in Saskatchewan, where an estimated 1.7 million tonnes of stocks were reported, a drop of 1.6 million tonnes.

Stocks of canola, barley, oats all on the decline

Total stocks of canola eased back from last year's record to 4.3 million tonnes, which was a 16.4% decline from the March 2006 level, the equivalent of 839,000 tonnes. Commercial stocks fell by 10.6% to 922,000 tonnes, and farm stocks were down 17.9% to 3.4 million tonnes. The five-year average for farm stocks is 2.5 million tonnes.


Production fell in 2006 from the record 2005 crop but still remained robust. Strong exports and crushings were responsible for the decline in March 31 stocks over the same period in 2006. Despite the decline, all on-farm stock levels for the three Prairie provinces remained well above the five-year average.

Total stocks of barley dropped 29.8% from 6.5 million tonnes to 4.6 million tonnes as of March 31. The five-year average is 5.7 million tonnes.

In the three Prairie provinces, total on-farm stocks of barley fell by 2.0 million tonnes. Stocks of barley were below the five-year average for each province. The largest percentage decline was in Saskatchewan, where stocks fell 46.4% to 1.3 million tonnes.

Total stocks of oats fell 21.3% to the five-year average of 1.5 million tonnes, the result of stable supply and increased exports. All three Prairie provinces reported decreases, ranging from 22.7% in Manitoba to 28.3% in Alberta.

Record stocks of grain corn in Ontario

In Ontario, on-farm stocks of corn for grain edged up 50,000 tonnes to a record 2.5 million tonnes, surpassing the record set in March 2006.

On the other hand, Quebec farmers reported that they had less stocks of corn for grain at 1.4 million tonnes, a 25.3% decline from 2006.

Commercial stocks were up 4.8% to an estimated 1.4 million tonnes, well above the five-year average of 1.2 million tonnes.

Total stocks of soybeans a record

Total stocks of soybeans were a record 1.9 million tonnes, 15.0% above the 1.7 million tonnes in storage on March 31, 2006 and the third consecutive record. The five-year average is 1.2 million tonnes.

The record March 31 stocks were a direct result of record 2006/2007 supplies, as export demand has been strong and domestic crushings have been stable compared to last year.

On-farm stock levels in Ontario and Quebec edged downward. Soybean stocks were down 5.0% in Quebec to 190,000 tonnes and in Ontario, they were down 7.7% to 720,000 tonnes. These declines were offset by commercial stocks that hit a record 870,000 tonnes, up 33.8% from March 2006. The previous record was set in 1998 at 735,000 tonnes.

Flaxseed stocks highest in more than a decade

Total stocks of flaxseed were estimated at 736,000 tonnes, up 95,000 tonnes from March 2006. This is the largest volume of flaxseed reported in over 10 years. The five-year average is 407,000 tonnes, and the record of 881,000 tonnes was set in 1980. Commercial stocks were estimated at 186,000 tonnes, up 90,000 tonnes from the same period a year earlier.

A build-up of stocks that occurred in 2005/2006 continues to weigh on the market despite higher exports so far this crop year.

Farm stocks in Saskatchewan, where most flaxseed is grown, reached 390,000 tonnes, a decline of 11.4% or 50,000 tonnes from March 2006.

Dry field pea stocks drop

Total stocks of peas tumbled 34.4% to 1.0 million tonnes, down 530,000 tonnes from the 1.5 million tonnes reported in March 2006. Commercial stocks were also down, off 23.5% to 260,000 tonnes.

A decline in 2006 production, combined with an increase in domestic feeding, allowed stocks to decline despite slow export movement.

In Saskatchewan, where the majority of dry field peas are grown, on-farm stocks declined 41.2% to 520,000 tonnes. The five-year average is 683,000 tonnes.

Note to readers

The March Farm Survey of 16,800 farm operators was conducted by telephone interviews during the last two weeks of March. Farmers were asked to report the amounts of grain, oilseeds and specialty crops in on-farm storage.

Commercial stocks of western major crops originate from the Canadian Grain Commission. Commercial stocks of corn and soybeans are estimated by a Statistics Canada sample survey of grain elevators in Eastern Canada. Commercial stocks of specialty crops originate from a survey of handlers and agents of specialty crops.

SASKATOON – Potash Corporation of Saskatchewan Inc. saw first-quarter profit jump 58 per cent as world crop production surged for food and biofuels, boosting demand for fertilizer.

The world's top fertilizer producer by market value said it earned $198 million (U.S.), or a record $1.85 per share for the quarter ended March 31, up from $125.5 million, or $1.19 a share, a year earlier.

That beat the average analyst expectation of $1.75.

Chief executive Bill Doyle noted that farmers around the world are increasing plantings and using more fertilizer in an effort to capture favourable prices for many major crops.

Many experts predict rising output of grains, corn and other crops for food, biofuel and other uses, which will underpin the strong fundamentals of the global fertilizer industry.

"We believe we are at the front end of a period of significant consumption growth and strong prices for all our products," Doyle told analysts on a conference call.

"With our plan to increase our potash capacity to 15.7 million tonnes by 2015, we have significant gross margin potential."

He added that strong demand has pushed up potash prices dramatically.

The fertilizer giant said sales during the first quarter jumped to $1.15 billion from $861.6 million, reflecting increased volumes and prices for fertilizers and industrial chemicals.

This year's first-quarter profit surpassed the record of $186 million or $1.74 a share for the fourth quarter of 2006.

Saskatoon-based Potash Corp. said it is raising its estimate for full-year net income.

The forecast has been increased to $7.50 to $8.50 per share, up $1.25 at both ends of the range from the previous estimate. Second-quarter net income is expected to be in the range of $2 to $2.50, Doyle told analysts.

© Copyright Toronto Star

The University of Guelph announced that it is increasing outreach efforts dedicated to promoting the importance of Ontario’s agri-food sector. As part of that activity, Rob McLaughlin, current associate vice-president (research) agri-food and partnerships, will devote full-time attention to the Royal Agricultural Winter Fair. McLaughlin has served as chair and president of the Royal for the past year in addition to his U of G duties.

“This recognizes and builds on the remarkable job that Rob McLaughlin, CEO Bill Duron and the Royal’s staff have done with this annual event, both in terms of making it a financial success and in showing all of Canada the importance of agriculture in an increasingly urbanized world,” said U of G president Alastair Summerlee.

Added Duron: “The Royal continues to evolve, moving from being a 10-day affair into a year-round promotion of agricultural and educational outreach that requires increased energy and efforts.”

Summerlee noted that the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) has increased its support for the annual event, opening new avenues for highlighting the importance of investing in agriculture, which is Ontario’s second-largest industry.

McLaughlin, who served as dean of Guelph’s Ontario Agricultural College from 1990 to 2000, said this new focus will allow him to look for new opportunities to increase understanding of the power of the bioeconomy in Canada, particularly in downtown Toronto and with centres of innovation such as MaRS.

“The Royal continues to grow in size, scope and popularity, attracting new visitors from across Canada and the world," he said. "It is the perfect venue for us to promote innovative research and ideas.”

Vice-president (research) Alan Wildeman said he looks forward to working with McLaughlin on developing additional ways to enhance U of G’s outreach efforts. The University will continue to work closely with OMAFRA on renegotiating its partnership agreement, he said.

Prices for crops were 14.9% higher in February than they were a year earlier, according to the Farm Product Price Index (FPPI). This was the sixth consecutive month of year-over-year increases and the fourth consecutive double-digit increase. After slumping to very low levels during the 2005/2006 crop year (August to July), crop prices surged to their highest level since the fall of 2004.

Prices rose 1.0% in February for the overall livestock and animal product index, as gains in hogs, poultry and dairy outweighed decreases recorded in cattle and calves and eggs.

On a monthly basis, prices farmers received for their commodities rose 2.7% in February over January.

The FPPI (1997=100) stood at 100.7 in February, up over the revised January index of 98.1.

Prices for livestock and animal products rose 3.8% in February from the revised January index, as all livestock categories were up. Increases ranged from 1.0% for poultry to 8.3% for hogs.

Hog prices rose in February for the third consecutive month after declining for five months, however, they are still not back to the level reached last summer. Prices found support from continued strong demand, while severe winter weather in some parts of the country slowed hog deliveries to the processors.

Cattle and calf prices were up 3.6% in February, the second monthly increase, after dropping to a recent low in December 2006. Supply concerns stemmed from a United States Department of Agriculture Cattle on Feed report, which put January placements 23% below last year's level and severe winter weather.

Prices farmers received for crops were up 1.5% from January, as an increase in grain, oilseed and specialty crop prices offset the slip in fruit, vegetable and potato prices.

Grain and oilseed prices continued their upward trend, which is driven by the growing demand from the biofuel sector. However, at this time of the year, markets also begin to react to weather reports and their affects on the upcoming growing season. Prices have gained support from reports of drought conditions in Australia and concerns of the effects of cold weather and snow cover on the US winter wheat crop.

Even though specialty crop production in Canada is well below that of wheat, it has grown significantly. Canada is among the world's largest producers and we are the largest exporter of dry peas, lentils, mustard seed and canary seed. Special crop prices have also trended up since the fall of 2006, supported by strong demand, production issues in some producing and importing countries and competition for acres in the upcoming crop year.