Beyond Agronomy News: January 13th, 2009

Agronomy

Running the numbers on Canada thistle control strategies

I was looking at cost effective strategies to control Canada thistle next year in a field I'm planting to wheat. I have a few fields across my territory slated for Canada thistle control in 2009 and the product I recommend most often is Prestige. I've had great success in the past with this product but you certainly pay a premium for it. I was curious to see what other options provide the most economical control.

The way I see it, we have three choices: 1) apply an in-crop herbicide treatment that suppresses Canada thistle and follow up with a pre-harvest glyphosate treatment at 1 L/ac equivalent, 2) apply an in-crop herbicide containing Lontrel, or 3) purchase Eclipse II, a RR canola herbicide containing glyphosate and Lontrel in a pre-pack.

The least cost scenario is Option 2 at $53.00 an acre. I thought I could be clever with Option 3 by purchasing Eclipse II and pulling the Lontrel out of it and adding it to the Frontline XL. To my surprise, it costs $2.80 acre more than Option 2. I suspect if Prestige is in a shortage next year, you could use this trick but I could never recommend it because it's not a registered tank mix. (Coincidently, the exact same active ingredients are used in a product called Spectrum, but I digress). The reason I like Option 2 is because it controls thistles immediately and prevents them from robbing nutrients and moisture throughout the growing season. Research from Ag Canada suggests you could gain a 12% yield advantage in year two using Lontrel over a pre-harvest glyphosate.

Theoretically, the cost difference between Option 2 using Prestige and Option 1 using a pre-harvest glyphosate is $19.50 per acre. A Canada thistle control program is typically two to three years long. You could apply Prestige in year two and still be ahead by $3.50 over the pre-harvest glyphosate treatment. Food for thought. SL

Source

An Innovative Land Rental Agreement

I was visiting with a client recently, Doug Miller, and he came up with an interesting twist to the usual one third/ two thirds crop share agreement. Aside from wanting to reduce the amount of paperwork that comes along with crop shares, Doug wanted to create a simple cash payment system, different from straight out cash rent. His landlord is getting older and if he passes away suddenly, his offspring, who have nothing to do with the farm, could suddenly receive a bill for $100,000 to pay for crop inputs. How do you think the new landowners would receive this lovely gesture? I suspect they'd sell the land to the highest bidder as soon as possible. However, if they were to receive a cheque each year without doing a thing, they would probably think twice about selling and hold on to the cash-generating asset they now own.

So here is how it works. The average gross return in this example is around $300 to $350 an acre. Doug suggests a straight out 80/20 split where the landlord no longer pays for one third of the crop inputs and instead receives a cheque for 20% of the gross revenue generated per acre. I'll go through two examples of each agreement type to show you what the upside and downside the 80/20 agreement has to offer.

Option 1. Crop share of one third/ two thirds where landlord pays one third of crop inputs and receives one third of the revenue.

Option 2. Using an 80/20 share, the landlord receives 20% of gross income from grain sales with no expenses.

The benefit to the landlord under the 80/20 system is the elimination of a negative return. In a drought year where the gross revenue could be $100 an acre, the landlord could potentially lose between $2 and $31 dollars an acre. Average rent in the area is between $60 and $70 an acre. If the average gross return is $300 to $350 an acre, the 80/20 system would pay out between $60 and $70 an acre, so nothing lost to either party. Although the 80/20 system limits the landlord's revenue potential by $45 an acre ($165 - $120) on a $600 year, he has eliminated his downside risk. The landlord will never receive a negative return on his investment.

The benefit to the renter is that you have eliminated a potential payout to the landlord of $200 an acre. On average, you will pay the landlord $60 to $70 acre in rent, which is what you would have paid for rent in this area anyways. You can claim another $35 to $64 an acre in expenses plus the 20% you pay the landlord. Worst case scenario or in drought: you only generate $100 an acre in gross revenue and pay $20 acre rent and collect crop insurance.

Doug and I discussed that perhaps an 85/15 split would be more in line. Not everybody pays $60 to $70 rent and not everybody generates $350 an acre on average. I suggest you do the math on your farm to see what split may work for you. I think Doug's idea is a great fit for his farm. SL

Reader Comments

In response to last week's article on the use of sugar to improve microbial populations

"Liked your bit on sugar and biochar, careful mate next you'll be telling us you're going organic... We had been using molasses with our glyphosate for years for the reason you quoted. We also used to add citric acid to lower the pH of the water to 3-ish which improved effectiveness of glyphosate and allowed us to half the rate we used it at, compared to the recommended rate. We applied molasses at a rate of 2 L/ha (809ml/ac).

"It's the bacteria that like these simple compounds and also, nitrogen, green leafy material, vitamins and yeast. You're creating a honey pot effect and the bacteria come in and clean up the herbicide residues. Glyphosate generally has a half life of 47 days but you can speed up the breakdown by doing this. You realize that the glyphosate is killing off the algae in the top soil which is an important food source for bacteria and fungi, so you're kind of smacking the microbes over the back of the head while offering them a free lunch... Are you combining humates with all your fertilizers? If not this would be the best place to start. Cut your fertilizer rates back by say a quarter and replace the volume with humates. Humates are natural chelators and will stabilize (ie. keep the nitrogen, phosphorous, boron available for longer) and help buffer against the burning effects of your acid fertilizers." Jason Jarvis, Twin Apple Packhouse, Western Australia

Alberta Carbon Market Outlook - Jan 9, 2009

The Alberta marketplace for compliance grade GHG offsets is starting to show some life as the second compliance periods ends and we enter the true-up period. This means that Large Final Emitters (LFEs) now have a firm idea of their compliance requirements under the Alberta Act and have until March 31, 2009 to meet compliance though internal reductions, Tech Fund contributions, or offset purchases. A review of the market shows potentially less offsets on offer this year than last. In addition, LFEs are making inquiries and are on the hunt for high quality offsets to gain some experience with a carbon trading system. This has shown up in quoted values, but liquidity is low and transactions are infrequent.

Offset quality has a major impact on value, with low quality offsets currently fetching around $8.00/tonne and high quality offsets approaching the $15/tonne price cap. Quality is defined by data accuracy and project type. The market is clearly very short quality offsets and this is obvious in the discount to low quality offsets. No one likes risk when it comes to compliance! However, demand is pushing prices generally higher; with $13/tonne a trade-able level for high quality tillage based offsets. There is also a strong case to be made that we could move even higher as the opportunity to apply offsets to the second compliance period comes to a close.

Source: Bruce Love, Preferred Carbon Land Management Systems

Market News

Fundamental Analysis

Technical Indicators

I have set up these weekly updates to include market entry indicators to help you improve the timing of your grain marketing. Also, I added market trend indicators to give you a sense of the short and long term market trends.

International Crop Weather News

United States: On the Plains, snow is spreading across northern areas in association with an Arctic cold front. Farther south, breezy, unfavorably dry conditions are maintaining stress on the southern Plains' winter grains. In the Corn Belt, dry weather temporarily prevails between storm systems, except for snowy, windy conditions overspreading western portions of the region. This winter's cold, often snowy or icy conditions have stressed livestock, especially across the northern Corn Belt.

Europe: Periods of rain along the Mediterranean Coast slow late winter grain planting. Overwintering conditions remain favorable for dormant winter crops across central and northern Europe although most crop areas have minimal protective snow cover.

Former Soviet Union: Bitterly cold weather overspreads winter grains in Ukraine and Russia. An adequate snow cover in areas of extreme cold protects winter grains from widespread winterkill.

Southeast Asia: Heavy monsoon showers cause harvest delays for oil palm in Indonesia.

South Asia: Dry weather across India promotes rice and cotton harvesting.

Middle East: Rain covers key winter grain areas of central and western Turkey. Above-normal temperatures in northwestern Iran leave winter wheat exposed to potential bitter cold.

Northwest Africa: Rain returns, slowing winter grain planting in Morocco and Algeria. Dry weather in Tunisiadecreases moisture supplies for emerging winter grains.

Australia: In eastern Australia, seasonably warm, showery weather favors cotton and sorghum development. Elsewhere in Australia, mostly dry weather allows winter grain harvesting to progress uninterrupted.

South America: Showers ease dryness in southern Brazil, bringing some relief to corn and soybeans. Dry pockets persist in key summer grain and oilseed areas of central Argentina, although conditions have improved in Cordoba, an important producer of corn, soybeans, and peanuts.

South Africa: Much-needed rain falls in western sections of the corn belt. Conditions remain generally favorable for summer crops in eastern farming areas.

Upcoming Conferences and Training Schools

FarmTech
Edmonton, AB
January 28-30, 2009
farmtechconference.com

Agronomy Update
Lethbridge, AB
January 20-21, 2009
Details

CCA Applied Agronomy Conference
Olds, AB
February 17, 2009
Details