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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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2 weeks ago

From orchard manager to government specialist and now executive director of the BC Fruit Growers Association, Adrian Arts brings a rare blend of hands-on farming experience and organizational leadership to an industry poised for renewal. His appointment comes at a pivotal moment for BC fruit growers, with Arts expressing enthusiasm about continuing the momentum built by his predecessor and working alongside a board that signals a generational shift in agricultural advocacy.

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Arts leads BCFGA forward

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A combination of organizational management and practical farming experience has primed the new executive director of the BC Fruit Growers Association to lead the industry forward.
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3 weeks ago

A public consultation is now underway on the powers and duties of the BC Milk Marketing Board. Key issues for dairy producers include transportation costs, rules governing shipments and limitations on supporting processing initiatives. Stakeholders have until May 31 to comment.

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Milk board undertakes review

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A public consultation on the powers and duties of the BC Milk Marketing Board is underway as part of a triennial review required by the British Columbia Milk Marketing Board Regulation.
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3 weeks ago

BC wool shipments drop sharply in 2023, according to StatsCan data released in mid-April. Local producers shipped just 5,200kg at 37¢/kg, down from 18,600kg at $1.08/kg in 2022. While many farmers now use wool on-farm or dispose of it due to low market value, innovative producers like Emily McIvor point to untapped opportunities. Read more in our Farm News Update from Country Life in BC.

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BC wool value, volume drop

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BC sheep producers shipped less wool for less in 2023, reversing strong growth a year earlier. BC producers shipped 5,200 kilograms of raw wool in 2023, according to Statistics Canada data released on...
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3 weeks ago

Eric Feehely and Miho Shinbo are growing 30+ crops on 2.5 acres in Vernon. Writer Myrna Stark Leader takes a look at how Silverstar Veggies is balancing CSA programs, farmers markets and restaurant sales while planning smart expansions in challenging economic times in Market farm works smarter, not harder.

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Market farm works smarter, not harder

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VERNON – Silverstar Veggies, a five-year-old mixed vegetable and herb farm in Vernon, thrives on passion and innovative ideas. A former watersport and adventure sport instructor…
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1 month ago

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Dairy farmers on the brink

Tight margins, high financing costs fuel talk of sales

The price of fluid milk leaving will decline by 0.02% on February 1, thanks to declines in input costs that marginally outpaced increases in consumer prices. File photo

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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