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Originally published:

FEBRUARY 2023
Vol. 108 Issue 2

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Stories In This Edition

Ghosted

Dairy farmers on the brink

Groundwater showdown

Finding success in succession planning

Editorial: The great repricing

Back 40: Government priorities are asking a lot

Viewpoint: Does farming need to be a full-time job?

Frozen out

Sidebar: Pruning it right

Letters: Program delivery, advocacy have separate roles

Wild weather continues to hammer dairies

Ag Briefs: Province hires two new assistant deputy ministers

Ag Briefs: BC Milk opens organic stream

Ag Briefs: ALC eyes Heppell property for inclusion

Building not land value bumps farm assessments

Province scrambles to register farm employees

Growers contest compensation formula for AI

Funding available for Langley landowners

Potato crop takes a hit but set to rebound in 2023

Low snowpack worrisome for producers

Prescribed burns part of the three-year study in the Peace

Farmgate abattoirs shut out of insurance

Sidebar: Survey explores insurance coverage

Ranch used as part of treaty settlement

Climate-resilient cattle take shape at TRU

Japanese beetle continues to spread

Field trial shows alternative to traditional crops

On-farm storage helps boost profitability

Market garden powered by solar energy

Farmers need to prioritize mental wellness

Scholarship takes chefs on tours of BC farms

Farm Story: Of things we would be lost without

Sheep producer expands wool market

Sidebar: How M.ovi impacts wild sheep

Fernie grocer stocks only local products

Woodshed: Kenneth’s rescue is touch and go

New map app educates public about BC farms

Snacks for your sweeties

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1 week ago

The Great Spallumcheen Farm & Food Festival and North Okanagan Plowing Match is happening this Sunday, September 24 from 10-3 at Fieldstone Organics, 4851 Schubert Rd, Armstrong. The outdoor festival features tastings and a market brimming with local food and beverage vendors, a horse and tractor plowing competition and vintage farm equipment displays. ... See MoreSee Less

The Great Spallumcheen Farm & Food Festival and North Okanagan Plowing Match is happening this Sunday, September 24 from 10-3 at Fieldstone Organics, 4851 Schubert Rd, Armstrong. The outdoor festival features tastings and a market brimming with local food and beverage vendors, a horse and tractor plowing competition and vintage farm equipment displays.
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Patti 😊

2 weeks ago

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2 weeks ago

The top five issues the Canadian Centre for Food Integrity identified in a recent survey were the cost of food, inflation, the cost of energy, keeping healthy food affordable and the Canadian economy. “We are seeing that environmental concerns are not in the top 10,” says Amy Peck, manager of the Canadian Cattle Association’s public and stakeholder engagement program. “If you are concerned about being able to afford to feed your family, the environment becomes less important.” ... See MoreSee Less

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Ranchers get the backstory on public perception

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VERNON – Ranchers might be concerned about how the public sees their industry, but a producer-funded team at the Canadian Cattle Association has their back. Amy Peck, manager of the Canadian Cattle...
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2 weeks ago

BC Tree Fruit Co-op has sold its Lake Country packing house as part of its long-term plan to consolidate operations. The sale, to an undisclosed buyer, closed on August 31, 2023 for $15.8 million. ... See MoreSee Less

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Lake Country packing house sold

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BC Tree Fruit Co-op has sold its Lake Country packing house as part of its long-term plan to consolidate operations. The sale, to an undisclosed buyer, closed on August 31, 2023 for $15.8 million.
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Who bought it ffs ?

Ted Nedjelski Karen Turner

One of my first jobs was apple grading in a packing plant in Vernon

Vivian, is this where you worked?

I’d hear the company that owns the big Cannabis company that owns the green houses all around this packing plant was buying up everything around to expand. Wonder if it’s them that got it.

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2 weeks ago

The federal government has committed $1.81 million over the next three years to support the BC Poultry Association's preparation for direct participation in responses to future outbreaks of highly pathogenic avian influenza in the province. “The persistence of the virus in wildlife and recurrence of outbreaks globally, presents additional risks during the migratory bird season in North America later in 2023,” the National Collaborating Centre for Environmental Health in Vancouver advised in July. For more, visit www.countrylifeinbc.com/ai-risk-rises-with-fall/ ... See MoreSee Less

The federal government has committed $1.81 million over the next three years to support the BC Poultry Associations preparation  for direct participation in responses to future outbreaks of highly pathogenic avian influenza in the province. “The persistence of the virus in wildlife and recurrence of outbreaks globally, presents additional risks during the migratory bird season in North America later in 2023,” the National Collaborating Centre for Environmental Health in Vancouver advised in July. For more, visit https://www.countrylifeinbc.com/ai-risk-rises-with-fall/
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Dairy farmers on the brink

Tight margins, high financing costs fuel talk of sales

February 1, 2023 byPeter Mitham

ABBOTSFORD – A growing number of dairy farms in the Fraser Valley are considering selling as narrow margins get tighter and high financing costs complicate succession plans.

“The dairy [sector] is particularly challenged,” says Karen Taylor, director of corporate finance, agriculture and agribusiness with BMO Financial Group in Abbotsford, who addressed a workshop the Centre for Organizational Governance in Agriculture hosted, January 17. “Some of them are going to sell the farm because they can’t afford that debt level, or they minimize their farm size a little bit.”

According to industry sources, between 30 and 40 of the 600 dairy farms in BC are feeling significant financial pressure. While dairying is built on land and quota – two relatively solid assets – a dramatic rise in interest rates over the past year has made it more difficult to service the debt they’ve been able to take on.

“[We’re] happy to lend to dairy farmers because they have stable cash flow and high-quality collateral,” says Taylor, who works with some of the Fraser Valley’s larger dairies. “But in some cases the debt is significant, and if you amortize all of that debt at a 6% or 7% interest, there potentially could be a problem.”

Cash flow is key, she says.

Grain and oilseed crops have generated strong cash flows for Prairie growers, according to Farm Credit Canada, supporting the expansion of their operations and higher farmland values. But the higher cost of grain has boosted feed prices in BC, squeezing the margins of livestock producers.

Worse, the price of milk has not kept pace with the costs facing dairy farmers. This has made it harder to meet expenses, and service debt.

“We have to make sure the farm can cash-flow at higher interest rates,” says Taylor. “The dairy sector in particular over the next 12 months … we’re definitely figuring out what are we going to do, and what are we going to do going forward. How long is this increase going to last?”

The keynote presenter at the workshop was BMO senior economist Robert Kavcic, who describes the dramatic shift in interest rates over the past year as a generational event that will last until 2024.

“Rate cuts are going to start to be a 2024 story, simply because I think policymakers want to err on the side of leaving rates higher for longer and making sure they crack that inflation nut rather than backing off too soon,” he explains.

Kavcic expects interest rates to settle back into the 2% to 3% range once the current surge is over. The Bank of Canada policy rate at press time was 4.25%, up from 0.25% a year ago. A further hike was anticipated January 25, with commercial loans running about two percentage points higher.

Many farms have yet to feel the real pain from higher borrowing costs, however, as the rates primarily affect variable-rate financings as well as new debt. This sets up 2023 as a year of pain for highly leveraged operations.

“The high rates haven’t even funnelled through the system yet,” says Taylor. “This is just starting.”

Some older farmers are taking note, however, and changing up their succession plans. Rising capital costs are prompting some to consider selling rather than hand the farm onto a new generation, which would be saddled with higher costs in a low-margin environment.

“That is being discussed because now, if your facilities are old (and sometimes with succession planning that is the case, that facilities need to be rebuilt), now you’re talking about 6% money rather than 3% money,” Taylor says. “If someone takes over the farm, they’re also thinking about where can I grow, how do I buy the neighbour now that I have to pay 6% interest versus 3% interest? … The interest rate factor is definitely impacting succession planning conversations.”

But sales don’t necessarily need to lead to consolidation. While dairy farms in BC have doubled in size over the past 20 years and now average 131 head per farm, they haven’t necessarily become more efficient.

BMO recently surveyed 68 of its clients and found that smaller farms sometimes perform better

“It wasn’t all the big farms that were in the top,” says Taylor. “Sometimes you can get too big and have inefficiencies because of that.”

BC Dairy Association is surveying its members to better understand their operating environment.

“We have heard numerous anecdotal stories about dairy farmers struggling to make ends meet despite recent wholesale rate increases, which don’t match increasing costs,” the association said in a statement. “We are currently conducting a study on business costs to better understand the impacts at an industry level.”

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