Trends January 2020
For 2019, weather was once again a major determinant impacting local crop production potential. Often, the effects of adverse weather must be tolerated as opposed to managed. Fortunately, the negative impact on cereals was limited but for PEI soybean and in particular corn growers, it was a different story. This past year may now be described as the “growing and harvest season from hell” not only here in PEI, but right across the country. A cold damp spring delayed planting, site specific drought, a once in a lifetime hurricane event, early snow and rains caused havoc in terms of both crop quality & yield, as well as harvest management issues. The situation for corn growers has been severe enough that an application is being developed, for submission to Government agri recovery funding, as a means to help both growers & livestock feeders gain partial financial relief against extraordinarily high production costs.
GEC cereal & soybean purchases declined in 2019. Intensified buyer competition, increased on farm storage, lower yield, alternative cropping choices for both rotational & plant health purposes, such as corn, pulse, and, cover crops have all had an impact on the cereal & soybean acreage and related GEC purchase volumes.
Winter wheat remains a popular crop choice with growers for both feed and milling purposes despite agronomic challenges such as winter kill. While regional demand for feed wheat from the livestock and aquaculture sector is strong, the local price spread between milling and feed wheat has not been high enough to warrant a substantive increase in the milling wheat acreage meeting specifications for parameters such as protein and falling number.
GEC has not traditionally handled large volumes of corn at harvest. For the immediate future, Soybeans remain a priority.
The business has expanded its domestic storage capacity this past year at its Elmsdale and Roseneath locations. Plans for the Kensington facility continue to be under development. As a result the delivered storage volumes to Halifax are also down along with lower related freight and handling costs.
Lower soybean acreage and yield along with difficulties in sourcing a vessel, also meant that GEC could not operate a Summerside harbor export program. But sufficient tonnage of soybeans was delivered by truck to the Halifax Elevator. These will top load shipments from Quebec destined for the European market place this year.
Some growers are having success growing Malting barley. But, it remains a niche crop requiring sophisticated management and good weather as varieties have not been well adopted for the Maritime climate. Notwithstanding, opportunities for the local malting and craft brewing sector remain positive. In addition, there is robust local demand for feed barley.
Oats had an average year with decent quality as feed. GEC purchase volumes approached its historical average. Sales potential for the local feed market remain strong as additional freight charges for export to the more lucrative out of province food and value added markets act as a disincentive for local growers.
P.E.I. remains a price taker in a world of growing trade protectionism. Additional challenges include seasonal transportation limitations, higher freight charges and, infrastructure weakness.
While a number of trade agreements such as CUSMA, CETA, and CPTPP have been negotiated or ratified, tensions & challenges remain. Government payments, Geopolitical, phyto-sanitary and technical barriers to trade, along with rail transportation labor issues, and carbon taxes, combine to distort markets and, have negative impacts on price and production costs including right here in Atlantic Canada. It is to be hoped that these issues will be resolved soon. For the fish and aqua culture sectors, feed demand remains strong.
In the mean time GEC will continue efforts at maximizing grower returns and optimizing sales volumes. Firmer price prospects are also influenced by cropping intentions and yield projections worldwide and should not be overlooked. The GEC management team audits these trends daily.
In 2019-20, GEC is focused on becoming a more efficient grain handler given its additional infrastructure investments and is committed to maintaining and building strong relationships with both buyers & sellers. GEC has more than doubled its handling capacity in the last decade. Increased storage volumes under its control are now a reality as the corporation spent over one third of available capital to increase fall harvest storage capacity at two of the three elevator locations. More access to local storage is part of the key to lower cost & competitiveness.
GEC continues to support the policy efforts of the Atlantic Grains Council (AGC) and, by collecting a research levy as well as helping to recommend new cereal varieties and program design aspects for eligible CAP funding. GEC General Manager Neil Campbell is the current AGC Vice President.
The business continues to search for new export opportunities, audits food safety and sustain ability standards which are gaining in prominence as a means to ensure continued market access. The business is well positioned to comply with more stringent standards in these areas, should the need arise.
Growers are reminded that emerging export sales opportunities for corn, soybeans, wheat, barley or oats may depend on meeting these stringent standards facilitated by advances in Block Chain technology. GEC staff is available to answer your marketing questions and can also provide information on risk management and, future price prospects. The reader should contact the General Manager Neil Campbell or facilities supervisors Wade Waddell, Donald Stewart or Joe Vandenberghe for further information by accessing the “Contacts” section of this website.