The wired farmer

Give yourself a pat on the back.  If you are reading this you are part of a fairly elite group.  Not because of the pearls of wisdom that I scatter here, although I wouldn’t mind if that was the reason.  No, you are elite because up to half of your peer group hasn’t embraced the internet yet. 

I find that hard to believe but that’s what a recent study commissioned by the National Association of Farm Broadcasting says. 

These are US numbers so they aren’t necessary exactly accurate for Canada but they probably aren’t too much different.  The number that leaps out at me is that roughly 1/3 of farmers with gross sales greater than $500,000 don’t personally access the internet.  Several years ago now I sat on the board of directors of the Canadian Association of Ag Retailers.  One of our board members runs a very large Canadian fertilizer company – we’re talking fertilizer manufacturer here, not a retailer – let’s call him George.  We had a big debate about the use of email to send information out to board members.  George stunned us all when he said that he didn’t see what the big deal was about using email versus using the fax machine.  “When an email comes in my girl has to print it off.  When a fax comes in it’s already printed.  So the fax is actually faster and easier to use.”

I’m relieved to see that farmers haven’t figured out why to use Twitter either.  I tried to figure it out and concluded that it was a colossal time waster with no visible benefit.  Apparently I’m not alone in that conclusion. 

Nitrogen head scratcher

Those of you who have been paying attention will recall that all you need to make nitrogen fertilizer is a supply of natural gas, some fresh air and a lot of capital.  When you get your plant up and running it will kick out anhydrous ammonia and likely urea because there are some natural synergies to the urea production process.  If you want to go one step further you will add an ammonium nitrate line and then you will bring the urea and nitrate together to make UAN or liquid nitrogen. 

That’s a gross over simplification of the process but the point is that UAN (28-0-0) is the final stage of nitrogen production.  Its arguably more convenient to use and it has the most processing cost per unit of N which explains why historically it is also the highest cost product per unit of N.

But not right now.  Since about this time last year the prices of urea and UAN have been inverted in NOLA. 

The boy who cried wolf

One of these years it will really be true.  Year after year fertilizer manufacturers sing the same tune and the retail chain carries the chorus – if you don’t buy it now we may not have it in the spring.  And year after year the pipeline fills up over the winter, spring comes and goes and nobody goes short.  And this year will likely be no different.

Nitrogen pricing is still weak in the gulf and buyers are gunshy after the volatility of the past few years.  Its an axiom of the commodity markets that nobody ever buys a weak market (just like nobody ever sells the highs).  That of course is why there are highs and lows – by definition there are no buyers at the bottoms and no sellers at the top.  The logistics however depend on buyers having inventory going into the spring and right now they don’t.

On another matter, Agrium is continuing their retail invasion in western Canada.  Currently the CPS flag flies over locations formerly owned by Parkland Agri Service (9 locations with head office in Didsbury), Ross Agri (10 former Esso locations around Camrose), ServAgro (3 southern Alberta Esso locations), RTL Agri Services (3 Esso stores in southern Alberta), Heartland Agro (former Esso multi-outlet business based in Moose Jaw) and Cheyne Agri Services (another Esso dealership in SE Sask.). 

In the case of the Esso dealerships Agrium already owned the real estate or at least the equipment located on the real estate as a carry over from their Sherritt/Veridian/Esso heritage.  Parkland was an Agrium joint venture so there has been a long term Agrium involvement there. 

There’s a couple of issues around this new competitor in western Canada retail.  The biggest question for farmers should be “how competitive will this competitor really be?”  There’s a good chance the reason the Esso dealerships failed can be traced directly to Agrium’s pricing policies during the 2008 run-up and 2009’s dramatic drop in nitrogen prices.   I’m sure the legal-beagles on Agrium’s 4th floor made sure everything was done legally but I doubt it was done morally. 

Right now about 21% of Agrium’s international sales comes directly from their retail organization but 29% of their profit comes out of the retail business.  So its not hard to figure out why they want to increase their retail outlets. 

Post Christmas bargain shopping

Those of you that have been in the malls lately may have noticed that there aren’t as many bargains as there used to be.  Retailers seem to have figured out that people will shop after Christmas and have adjusted their pricing accordingly.  Despite the orange tags screaming “marked down 60%”, the bargains are farther apart.

Similarly if you are shopping for nitrogen or phosphate you may have to look a little farther afield but the bargains are out there nevertheless. 

According to AgProfessional’s University of Nebraska correspondent, US retail pricing for urea is running around $450/ton.  When you translate that into Canadian bucks and metric tonnes you can likely do better north of the border.  It has been a while since that has been true.  That means that Agrium is more appreciative of its loyal western Canadian base.  Actually it doesn’t mean anything of the sort – they’ll take as much as they can get wherever they can get it but right now western Canada looks pretty damn good.

The sleeper is likely anhydrous ammonia.  You don’t have much flexibility, you can’t store it and you’re at the mercy of your dealer but you still might find a bargain.  The Americans had a late corn harvest and didn’t get much ammonia in the ground which means that inventories are high.  That doesn’t necessarily translate into better pricing in western Canada but it means your suppliers might be receptive to some pressure. Right now US retails for ammonia and urea are similar – that’s a big discount for ammonia, if you can find someone who wants to play the game.

Good luck with your yearend bargain hunt.

Haber-Bosch – most people have never heard of it but it drives life on earth

Back in October I mentioned the Haber-Bosch process that is the foundation for nitrogen fertilizer manufacture worldwide.  I’ve been meaning to come back to it but never got around to it until a recent online discussion got me thinking about it again. 

Most people have no clue what the Haber-Bosch process is or that it even exists for that matter.  They certainly don’t begin to understand how fundamental it is to our life.  We routinely hear people blathering on about how wonderful it would be if only we could live a totally natural life, by which they mean some utopia where nature coughed up enough to keep us alive without us having to put anything back in.  Most 8 year olds with a piggy bank understand the concept that you can’t keep taking out without ever putting back in.  So why is it so difficult for adults to understand the same concept when it applies to land? 

I just happen to have some US production figures handy for another project I’m working on so I’ll use them but the principle would apply equally to Canadian production.  The US produced roughly 12 billion bushels of corn in 2008.  That equates to about 4.8 million tons of actual nitrogen removed from the ground.  Just by way of reference, 4.8 million tons of actual N is equal to roughly 1/4 of the total annual US nitrogen fertilizer use.  

You could do similar calculations for all the cereal crops.  Vegetable crops are also high nitrogen users.  Soybeans are legumes so they can fix their own nitrogen but canola isn’t so it is a net miner of nitrogen.  Someday when I have nothing better to do I’m going to do a nutrient budget for western Canada just to see how far out of balance we are. 

Legumes return nitrogen to the soil but not as much as you might think.  There is still a significant nitrogen removal in the legume seed.  The only nitrogen that gets added to the system is whatever is left in the stubble or root system.  Anyone who has tried to grow a cereal on pea stubble with no added nitrogen will know how inadequate the nitrogen returned to the soil really is.

Haber-Bosch is so essential because, without it, our yields would drop off rapidly.  And the greenies can talk until they are blue in the face – the reality is that the whole system would be in a nitrogen deficit because of the nitrogen that is removed in the crops.  In fact the world is in a deficit because we are mining organic matter on a global scale.

In the early 1800’s Thomas Robert Malthus argued that any ecosystem has a natural limit on its ultimate growth.  He extended his argument to the world and argued that world population would ultimately be limited by mass starvation.  No doubt his dismal prediction would have been accurate if Haber-Bosch had never been invented.  Without the ability to artificially fix atmospheric nitrogen we would likely have long since outgrown our capacity to feed ourselves.  One of the surest ways to identify an undereducated greenie is when they trot out the human starvation argument.

There’s a really good graph about halfway down the page here.  Scroll down to the world population graph to see the invention of Haber-Bosch on a population timeline.  The graph doesn’t prove that Haber-Bosch enabled population growth but the relationship is pretty obvious on the chart.

………. and now for something completely different

In our culture there are some subjects that are deeply taboo. Different people find it hard to talk about different things but for most of us death is the ultimate taboo. Nobody wants to talk about it because that would involve admitting that death will eventually come to all of us. So our topic for the day is that awful subject, our own inevitable mortality.

When my mother died, a year ago now, I went to the safe and dug out an envelope that had been lying there for close to ten years. That’s how long ago mom & dad wrote down their final wishes and sent them to my sister and me. At the time I didn’t want to think about it, let alone talk about it, so I put the envelope in the safe and more or less forgot about it. Occasionally I would have to move it when I went to the safe for something else but it mostly just waited there until last November. Which is all it needed to do and fortunately I remembered where it was.

When I opened the envelope I found that it contained a simple little booklet that mother and father had each filled out. Inside that booklet was all the information that I needed to deal with the mechanics of their deaths. I don’t think they ever gave me a greater gift. Those of you who have dealt with this already will know what I am talking about but for those of you that haven’t, there are some bits of information that you will need and some decisions that you will have to make once your parents die. You won’t have all the information you need and some of it will be downright hard to find.

Think about your own death for a minute - do your kids know where their grandparents were born? If they don’t they are going to have to figure that out at a time in their lives when they have better things to be doing. More importantly do they know how you want your final celebration of life or memorial service to be handled?

Ideally we should sit down with our kids, have the conversation, make sure they take notes and then get on with living. I can’t do that and I haven’t done it. Of course I don’t plan to die anytime soon so it doesn’t matter but I’ve got friends who are already dead and doubtless you do too. That’s the problem. I don’t know when the “right” time will come, if it ever will.

Mom & dad were persuaded to write down their final wishes by a class they attended at their church. The material was so useful that I made a special point of seeking out the preacher at the funeral and telling him how helpful it had been. He got a sheepish look on his face and said “I guess I should do mine too.” He absolutely should because he has some serious health issues but that’s his problem.

We can all find a reason to delay doing this but if you want to do something yourself then I’ll make it easy for you. I have plagiarized the booklet that the aforementioned preacher put together and made it available online. All you need to do is download the file, open it in the Acrobat reader and print your own copy. It’s formatted so that it can be stapled into a small booklet. If you don’t do anything other than fill it out and mail it to your kids you will have done a wonderful thing. If you actually sit down with them and talk about the material you will have gone far beyond what 99% of parents ever do for their kids.

To download the "My Final Wishes" booklet click here and either save it to your hard drive or open it. Once you have it open you can print it and fill it out.

PSSSST …. Wanna buy some snake oil?

Over the years I have seen some memorable scams run against farmers. Often there is a germ of science buried in a blizzard of bullshit but sometimes you just have to shake your head.

For instance, this summer I was doing some crop inspections in southern Saskatchewan . In the course of a visit with what I thought were two very high end farmers, the father pointed across the road and started telling me about the neighbour’s new seeding system. I vaguely remember hearing about this “technology” but didn’t pay much attention to it at the time because it was so clearly crap. In a nutshell what it claims to do is capture the exhaust gasses from the tractor and inject them into the ground. Once in the ground the gasses presumably have miraculous properties to enhance nutrient availability.

As I was listening to the description of what the neighbour had done (and how many tens of thousands of dollars he had spent) I was trying hard to contain myself for fear I was talking to a true believer. Fairly quickly though I realized that the guy I was talking to was equally astonished that anyone could be gullible enough to fall for such a ridiculous sales pitch.

But ridiculous sales pitches combined with optimism and often a little desperation let the snake oil salesmen continue to succeed. “Black gold” (rock phosphate) is another one that comes around when times are tough. The claim is that you are buying “natural” phosphate. What they fail to mention is that on the calcareous soils of western Canada you would be at least as far ahead if you spread road gravel on your fields. In fairness to the Black Gold salesmen it is likely that they are too stupid to understand the chemistry involved. Several years ago now one of my distant cousins informed me in all seriousness that adding bleach to your wild oat spray would dramatically improve its performance. At those moments I’m torn between shouting “How could you be so freaking stupid as to believe that crap?” or trying to explain why what they are telling me is simply impossible.

It’s hard to understand why this stuff continues to make the rounds but in fairness, some of the so-called agronomy dispensed by ag retailers isn’t a lot better. Selling a farmer a concoction of (overpriced) micronutrients when he isn’t maximizing his returns from the macronutrients should be a criminal offense. Similarly, selling potash south of the Yellowhead highway is unlikely to improve anybody’s bottom line except of course the salesman’s. There may be some science behind the products that claim to release phosphate in the soil but there certainly isn’t any economics in them, yet they continue to be sold.

Life teaches us that we need to rely on experts. None of us would contemplate doing open heart surgery on ourselves and most of us trust mechanics to divine the intricacies of electronic engines. When it comes to crop nutrition however it is difficult to separate the morons from the master mechanics. Every farmer needs to have a basic understanding of soil chemistry and plant physiology in order to wade through the marketing bullshit.