Back to crop marketing basics

Sep 03, 2024

“As the growing season progresses into September and crops approach maturity or are being harvested, crop conditions across the Canadian Prairies are highly variable but may result in near average yields,” says Neil Blue, provincial crops market analyst with the Alberta government.

Crops in the major growing areas of the U.S. are generally good, with average or above average yields expected. Prices have fallen from the seasonally stronger levels of April/May. What are some strategies to consider now that prices are off the highs?

As crop growth advances during the growing season, and depending on crop yield potential, one’s estimated costs per unit of production, level of forward pricing completed and approach to risk-taking, producers forward price crops using individual target prices and by choosing from various pricing alternatives available.

“Crop buyers offer several types of contracts from which to choose,” says Blue. “Most contracts with a crop buyer lock in a delivery commitment. That can be a good plan if there is need to deliver some crop during the harvest period, either for storage or cash flow reasons.”

Futures and options are also pricing considerations and offer the possible advantage of locking in a futures price, or minimum futures prices, without the commitment of physical delivery. A limitation is that the only remaining Canadian dollar denominated futures is for canola. U.S. dollar denominated futures are available for the wheats, oats, corn, soybeans, and the soybean products.

An alternative to meet at least some cash flow needs is to use the federal Advance Payments Program. Under this program, a producer can access up to $1,000,000 in total advances based on the value of eligible agricultural products to be produced or put in storage. For the 2024 program year, the first $250,000 of the advance is interest-free. Repayments of an advance are made as agricultural products are sold.

“The general recommendation is that no more than 50% of expected crop should be priced prior to harvest, after which volume and quality are better known. There are times when the 50% level could be exceeded, especially if prices offer income opportunities far exceeding one’s costs of production, and either a deferred delivery contract includes an 'escape clause' to protect against harmful effects of a crop production shortfall, or options on futures are used, which avoids a delivery commitment.”

Producers should either follow the markets and be able to recognize market opportunities as they arise or subscribe to a service that does so, explains Blue. Following harvest, consider using the Canadian Grain Commission’s Harvest Sample Program to obtain an unbiased estimate of base crop grades. Those grades can be a useful reference in dealing with buyers.

“Then, continue to shop the market for the best available farm gate prices, again considering profit levels, market outlook and cash flow needs. Finally, as time passes through the crop year, ensure safe storage of remaining crop to maintain grade characteristics,” says Blue.

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Video: The 15-Year Bet Behind Every New Variety!

Canada is trying to decide how much agricultural research capacity it can afford to lose. Brian Rossnagel believes the better question is whether the country can afford to rebuild it.

The longtime barley and oat breeder makes the case with a simple fact about his profession: the consequences of today’s decisions may not become visible for 10 or 15 years.

“Pick the right parents. That’s the biggest thing,” Rossnagel says. “If you pick the wrong parents, you’re not going to get anywhere—and you don’t know that until 10 years, 15 years later.”

That warning carries particular weight as Agriculture and Agri-Food Canada moves to reduce spending and streamline parts of its science operations. The department’s 2026–27 plan anticipates the loss of approximately 665 positions by 2028–29 and says some research will be reduced where capacity exists in academia or industry. AAFC says the changes will make its science operations more cost-effective over the long term.

For Canada’s seed industry, Rossnagel’s career illustrates what is at stake.

This fall, the retired University of Saskatchewan breeder will be inducted into the Canadian Agricultural Hall of Fame. During his 35-year career at the Crop Development Centre, he helped develop more than 100 barley and oat varieties, including CDC Austenson—one of Western Canada’s most widely grown feed barleys. His induction recognizes not only those varieties, but the collaboration and research system that made them possible.

Rossnagel is quick to emphasize that none of it was the work of one person.

“The first thing I thought about was all the other people who contributed to whatever success I and my program had over the years,” he says. “We know that it’s not an individual who does this. It’s a group—a team.”

That team extends well beyond the breeder whose name appears beside a variety. It includes technicians, pathologists, quality specialists, statisticians, regional testing sites, seed growers and industry partners. It also includes the breeders who came before and those who will carry the germplasm forward.

CDC Fraser barley, for example, moved through three breeding careers. Its parents came from Brian Harvey’s program. Rossnagel advanced the material after Harvey retired, and Aaron Beattie later guided it through registration and release.

That kind of handoff is normal in plant breeding. The person who makes the original cross may never see the resulting variety reach farmers.

It also explains why lost research capacity cannot simply be switched back on when budgets improve.

“If you shut it off, it’s very, very difficult—and particularly costly—to start it up again,” Rossnagel says. “If you have to start from scratch, it’s going to be at least 10 years before anybody notices whether you’re getting anything done or not.”

The concern is not simply how many experimental lines Canada can process. Modern equipment, statistical tools and genetic technologies allow today’s breeding programs to evaluate tens of thousands of lines—far more than Rossnagel could handle when he entered the field in the early 1970s.

But efficiency and automation do not generate every idea.

“If you pare back down, and instead of having six or seven individual scientists concentrating on wheat breeding, you go down and say three people could handle all this, well, that’s half the ideas gone,” he says. “Particularly if you happen to lose the three people who had the really neat and innovative ideas, boy, that’s a problem.”

It is a timely distinction for Canadian agriculture. Consolidating programs may preserve the volume of material moving through a system, at least initially. It may not preserve the diversity of thinking, regional knowledge or willingness to pursue unconventional crosses.

That regional knowledge matters because Canadian agriculture is not one uniform production environment. A variety suited to southern Alberta may face different disease, moisture and maturity pressures than one grown in Manitoba, Ontario or Atlantic Canada.

“Agriculture is applied biology,” Rossnagel says. “Biology, all around the Earth, moves from the poles to the equator. It does not move from Newfoundland to B.C. like politics do.”