t was like we’d come to another world.”
Doug Chorney was shaking his head in amazement after a quick plane trip around the province last week to observe first-hand the extent of overland flooding.
From the air, the president of Keystone Agricultural Producers could see vast expanses of flooded fields. An estimated three million acres – nearly a quarter of the province’s 11.6 million acres of improved cropland – may not be seeded this year. That’s more than double the previous record, set in 2005, of 1.4 million unseeded acres.
“It’s all over the place,” said Chorney, following his June 21 aerial tour.
The worst flooding began showing up east of Souris, where entire half sections were under water. Southward toward Melita and back up north to Russell, Chorney saw “water everywhere” with very little field activity.
CROP OF WEEDS
Even the occasional green cover was misleading because Chorney knew those were weeds, not crops.
In many places, farmers had tried to work around low spots containing water. But very few fields had been fully seeded, said Chorney.
“We’re going to need two months of good weather just to get to the point where guys can drive on those fields.”
Flying over Lake Manitoba, Chorney noticed trees sticking up out of the water where the shoreline used to be. Around Arborg, overland flooding wasn’t quite as bad but there was still no fieldwork underway because the ground was too wet to work.
The financial impact of unseeded crops this year could be staggering. Chorney’s “conservative” back-of-the-envelope estimate is nearly $1 billion lost because of unplanted crops and unharvested hay. That’s more than a third of the $2.7 billion Manitoba producers received from total crop sales in 2010, according to Statistics Canada.
Although the impact on the farm economy will be huge, the spin-off effect on the local and provincial economies could be even greater.
Ottawa and the province last week were scrambling to put together a financial assistance package for flood-ravaged farmers and ranchers. Stan Struthers, minister of Agriculture, Food and Rural Initiatives, said government is looking at a package similar to the Canada-Manitoba Excess Moisture Assistance Program delivered in 2010.
But Chorney said his organization wants payments of $50 an acre, compared to the $30 paid out by last year’s program. Struthers said he was open to that, although details are still being worked out.
The severe reduction in seeded acres raises the possibility that farmers with forward priced commodity contracts may not be able to deliver against them later this year.
The only solutions are for growers to find someone else to take over contracts or buy their way out of them, said Mike Jubinville, of Pro Farmer Canada, a Winnipeg-based market analysis and advisory service for farm commodities.
“Certainly that can be problematic in a rising market where prices would be higher than they’ve contracted for. Then the farmer would have to pay the difference,” Jubinville said.
“But with prices falling, there may be more flexibility on the user’s part to get out of the contract because now the user can access cheaper canola than he did contracting at a higher price before.”
The Canadian Canola Growers Association has a fact sheet with options for farmers who find themselves in a “short” position with their contracts. More information is available at www.ccga.ca.
The Canadian Wheat Board offers three options for farmers who cannot fill their producer pricing option contracts for wheat and durum, said Mavis Willson, CWB’s program service representative for Manitoba and eastern Saskatchewan.
Producers may buy out their contracts, assign them to another producer, or take a “force majeure” option in which they would not have to deliver against them, Willson said.
Similar measures are available for malt barley contract holders.
The wheat board is already getting calls from farmers about getting out of their contracts, said Willson.
“They’re certainly aware and they’re working out their options early, not just riding this out and letting it go.” [email protected]
– DOUG CHORNEY, KAP