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There’s cash in that grass

With shrinking inventories pushing prices skyward, forage seed contractors say crops such as perennial ryegrass are a lucrative alternative for farmers wishing to diversify their rotation.

“Potentially, it’s the most profitable crop out there,” said Harley Bell, Winnipeg-based product marketing manager with Brett Young.

This year’s contract prices are the highest they’ve ever offered amid “critical” shortages of supply.

“If you look at average yields and costs across all different commodities, it pencils out ahead of grain corn, soybeans, canola, wheat, oats. It could be a really positive margin contributor for farmers.”

Perennial ryegrass for turf uses is a leading product for the company, and has traditionally had a base of contractors growing it year after year.

But since 2006, when there were 50,000 acres contracted in Manitoba’s prime growing areas, mainly the Parkland, eastern Manitoba, and the Red River Valley, the total has slumped to around 19,000 acres last year.

Bell said the recession in 2008 hit demand for turf grass from institutions, cities and especially golf courses, just as the commodity super cycle pulled crop prices out of a long slumber. In places like Oregon, formerly a huge turf grass production area, many farmers jumped on the bandwagon and abandoned forage and turf grass in favour of wheat.

“Europe has seen a similar trend, so it’s a worldwide phenomenon,” said Bell.

The latest Statistics Canada numbers show that forage seed acres across the country have fallen from 800,000 acres in 2001 to 325,000 in 2011. Manitoba saw 64,000 acres taken out of forage seed production between 2006 and 2011.

Dwight Nahuliak, general manager of Interlake Forage Seeds, recently returned from a conference hosted by the Western Alfalfa Seed Growers Association in Reno, Nevada.

“The alfalfa industry continues to decline. It’s been declining across North America for the last 10-15 years,” said Nahuliak, whose Fisher Branch-based company mainly sells seed wholesale on international markets. With alfalfa acres down by almost two-thirds over that period, prices are naturally rising and stand at around $3 per pound retail due to reduced supply. Keeping a lid on prices is a slump in demand as the dairy industry turns to more corn silage in rations.

Higher commodity prices, and the expansion of corn production on both sides of the border due to improved technology is having the biggest impact on alfalfa, and he credits that trend to the fact that corn, which self-pollinates, is much less work to grow.

But Kurt Shmon, a forage contractor with Imperial Seed in Winnipeg, said he’s optimistic that the forage seed industry will see a strong rebound.

“Overall, I wouldn’t say the picture is too bad,” said Shmon, who fills contracts for global buyers.

He believes that the dip in forage acres represents mainly a decline in common seed production, which for alfalfa is related to the demise of the pelleting and dehydration exporting industry in northern Saskatchewan. That sector accounted for as much as 100,000 acres. The common timothy and creeping red fescue industry in Alberta’s Peace River country has also declined.

Statistics Canada numbers often can’t be trusted, he said. Looking at the Canadian Seed Growers Association figures for inspected pedigreed seed acres 2012, he sees an increase in alfalfa, trefoil, clover, fescues, and timothy, but a dip in brome grass and wheat grass.

“There is a rebound. We’re seeing increased acres for a lot of these crops because they are offering very competitive pricing,” said Shmon.

Although alfalfa seed acres have fallen by around half in North America, there hasn’t been a corresponding reduction in demand, and inventories that had built up over the years are dwindling.

The adoption of corn and soybeans in traditionally strong forage seed areas such as the Parkland may actually lead to a resurgence for forages as a good rotation alternative, said Shmon.

As well, disease issues in canola may lure more growers back into forage seed production in order to give their land a break from tight rotations, Bell said.

“This is something where they don’t have to take a year off from making good money,” he said.

Perennial ryegrass is typically underseeded with a nurse crop, then swathed and combined with regular equipment in July the following year. Yields in Manitoba average 800 pounds per acre with a nitrogen application that is slightly higher than for spring wheat.

Only one harvest is recommended with perennial ryegrass, but tall fescue typically gives three harvests before it’s played out, he said.

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