Canada prepares to enter global corn market
Canada’s Climate Warms to Corn as Grain Belt Shifts North
Bloomberg.com, April 15, 2014
The snow is piled waist-deep outside the Southern Manitoba Convention Centre as more than 400 farmers gather to consider the once-unthinkable: growing corn on the Canadian prairie.
At one end of the packed auditorium last month in Morris, home of the Red River Wild hockey club, an Ohio farmer brought in by DuPont Co. is making a presentation with a slide that reads “Ear Count 101.” At the other end, Deere & Co. is showing off tractors and other equipment from a booth while Daryl Gross explains planters and corn-dryers to curious men wearing seed caps.
“This is here to stay,” said Gross, who sells CNH Global NV tractors for Southeastern Farm Equipment Ltd. in nearby Steinbach. His customers are increasingly devoting acreage to corn. “There are a lot of guys who are experimenting with it and looking at it,” he said.
Corn is the most common grain in the U.S., with its production historically concentrated in a Midwestern region stretching from the Ohio River valley to Nebraska and trailing off in northern Minnesota. It had been ungrowable in the fertile farmland of Canada’s breadbasket. That is changing as a warming climate, along with the development of faster-maturing seed varieties, turns the table on food cultivation. The Corn Belt is being pushed north of what was imaginable a generation ago.
Growing seasons on the Canadian prairie have lengthened about two weeks in the past half-century. The mean annual temperature is likely to climb by as much as 3 degrees Celsius (5 degrees Fahrenheit) in the region by 2050, according to Canadian researchers.
In Canada, that means amber waves of wheat are giving way to green fields of corn. Farmers sowed a record 405,000 acres of corn in Manitoba, Saskatchewan and Alberta last year, double the amount two years earlier and almost eight times what it was 20 years ago. That compares with an estimated 95.4 million acres sown in the U.S. last year.
The prospect of a Canadian Corn Belt has helped push farmland nationwide up 36 percent from 2007 to 2012, to C$1,926 ($1,757) an acre. U.S. farmland prices rose 22 percent in the same period, to $2,650 an acre.
It has also drawn the attention of agribusinesses. Monsanto Co. and DuPont have boosted staff and invested more than $100 million in the region, hosting corn clinics like the one in Morris, a town of 1,800 about 40 kilometers (25 miles) north of the U.S. line, as well as research and development of seed varieties that can thrive in a shorter growing season.
“This is one of the few areas of the world where we are not growing corn and soybeans and have the opportunity to do that,” said Greg Stokke, western Canada business director for DuPont Pioneer, the company’s seed division. “We can adapt to the region, and after that the economics become attractive for the farmers.”
West Des Moines, Iowa-based Pioneer has more than doubled its staff in western Canada since 2008, and Pioneer and Monsanto have increased technical support for farmers trying new products.
Higher prices for the grain make it attractive to grow, even with the lower yields associated with shorter seasons, said Dennis Todey, an agricultural engineering professor at South Dakota State University in Brookings and the state’s climatologist.
“We’re getting more moisture out west, our seasons are getting longer, and that makes corn a more viable planting option,” he said. While the companies say they can increase acreage even under current conditions, warming “boosts what they’re doing.”
The shift in climate, and crops, comes with risk. In 2012, the worst drought in the U.S. Corn Belt since at least the 1950s seared the crops of southern farmers, some of whom are shifting to more drought-resistant plants on the assumption that drier days were here to stay.
“We’ve just had a brutal winter, which leads some people to say, ‘Warmer summers, bring it on,’” Danny Blair, a professor of geography at the University of Winnipeg, said in an interview. “But there’s give-and-take in climate change, and in the end it may be more take than what it gives us.”
Global warming will increase the frequency of drought and erratic rainfall, he said. Insects and pests that don’t survive Canadian winters will have a better chance in the future, giving northern farmers some of the same problems their U.S. counterparts face, with less production to soften their losses.
“The less you do to mitigate climate change, the more unpredictable it will be,” Blair said. “We need to be talking more about mitigation, along with adaptation.”
Even with the shift in growing areas, climate change will cut global corn yields by about 1 percent a decade compared with what they otherwise would be, according to study released March 31 by the United Nations Intergovernmental Panel on Climate Change. Improved technology and farming practices can mitigate those losses, the panel said.
When Andrew Knowles began growing corn near St. Andres, Manitoba, about 20 miles north of Winnipeg, in 2008, everyone thought he was stupid, he said. “Now they come for advice,” he said.
Standing in snow that by mid-March had drifted more than a meter (slightly more than 3 feet) deep, Knowles said he has until the end of May to get his crop in. Some years, he’s had to harvest corn on snow-covered ground, putting the wet grain through driers to make it sellable.
Still, short-season varieties, a little more heat, and lower land costs give him enough profit to compete with farmers further south in the U.S., where crops are larger and farming is more expensive.
“In Illinois, what’s your cash rent for an acre? $300? Mine is $25,” said Knowles, who said he can still make money with yields one-third the U.S. average and prices less than half what they are now. Know-how learned from his experiments and visits with farmers from the Dakotas help, he said. So does Mother Nature.
“The climate is changing in ways that benefit me, I think, because we’re having hotter summers,” he said. “For the corn, it’s just perfect. Heat and humidity. I like the hot summers.”
Monsanto estimates that acreage devoted to corn in western provinces could increase 20-fold by 2025.
That would help Canada become self-sufficient in corn, said Dan Wright, Monsanto’s chief for corn expansion. Corn purchases from the U.S. fell to $113.7 million in 2013, less than one-quarter the level of five years ago, according to U.S. data.
Once the nation supplies its own dairy farms, pig barns, feedlots and ethanol plants, it can export, with production expanding from its beachhead in Manitoba’s Red River valley into Saskatchewan and Alberta, where corn-growing remains largely nonexistent, he said.
Along with the crop comes a need for tractors, planters and grain bins.
The Morris roadshow is one of five that DuPont Pioneer held across Canada’s prairie provinces this year, the second year it’s offered the seminars. Monsanto is also traversing the region, and both companies have boosted research into shorter-season varieties.
Still, the bet holds risk: Bumper crops in in the U.S., the world’s biggest grower, have throttled prices, and Canadian emergence only creates more competition. World production in 2013 outpaced demand for the third straight year, and prices have tumbled 40 percent from its all-time high in 2012. Another record harvest is expected this year.
Should Canada's would-be corn growers or cold seasons not cooperate, investors will be left with empty silos and farmers with vanished profits.
“Climate change is tricky, because you can have unpredictability from year to year,” he said. “You have to sustain adoption rates through bad years.”
Meanwhile, the tendency toward weather extremes can work against the idea of climate change, making farmers skeptical, he said. This past winter was Winnipeg’s coldest since 1979.
“You hear about climate change and you wonder, but you also hear that maybe we’re in a 70-year cycle, and it could get colder,” said Lorne Loeppky. “I’m not a believer in it.”
Loeppky, who is nicknamed “King Corn,” has been growing the crop in the region for almost 20 years
Corn remains riskier than traditional crops because even shorter-season varieties still take longer to grow than the standbys of oats and barley, said Herm Martens, who has farmed in the Morris area for almost 50 years. After trying corn in the late 1990s, he abandoned it about a half-decade ago. “It was a beautiful crop to grow, but the yield just wasn’t there,” he said. “It may get there, but it’s still going to take awhile.”
And simple resistance to new crops in a well-established region may also slow adoption, said Susan Barmanovich, a fifth-generation farmer in La Salle, Manitoba, who grows wheat to feed her free-range chickens.
“I’ve never raised corn, and really don’t see any advantage to it,” she said. Feeding corn to their animals “would make our chickens like American chickens” with yellowish fat instead of white, she said.
The government of Saskatchewan, Manitoba’s western neighbor, this year added corn as an insurable crop for farmers, prodding its growth. From there through Alberta and British Columbia, the trend toward waves of corn fields along the nation’s Trans-Canada Highway is heating up, Stokke said.
“Corn has been moving north and west for a long time because of the economics,” he said. “You look at world needs, and you’ve seen acreage expand for decades.”
“Farmers have a lot of choices,” he said. “In the end, this almost will sell itself.”