Wednesday, July 23, 2014
   
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nov2011_gvCanada’s Forage Industry: An Evolution of Change

The forage industry landscape in Western Canada has been a story of constant change and challenge over the last number of years. That change and challenge has been shaped by at least three major forces: the evolution of the volume and nature of forage demand, innovation and supply.

While dairy industry demand has not changed appreciably in recent years, the size of the beef herd has contracted from an average herd size of 13.1 million in 2006 to 11.0 million in 2011. The hangover from BSE, low beef prices relative to feed costs, COOL and an appreciating Canadian dollar have all squeezed the profitability of the western Canadian beef industry.

This has, predictably, resulted in a contraction of the number of acres seeded to perennial forage crops in Western Canada. At the same time, the emergence of new early maturing, high-energy silage and grazing Roundup Ready corn hybrids has converted some of this shrinking forage demand from perennial forage sources to annually planted sources.

Furthermore, the scale of investment in research and development for crops such as canola, soybeans, pulses and even cereals, most notably in breeding and related technology development, dwarfs that which is being made in perennial forage crops. This has changed the competitive balance, making it comparatively less and less profitable to grow perennial forage crops.

One of the conclusions one might draw from the above contraction and shift in demand might reasonably be lower prices for forage seed products. The opposite has been the case. Seed supply has contracted faster than demand. This is largely a global reality and it has put upward pressure on prices. It will continue to do so for the foreseeable future.

However, one offshoot of consolidation in the beef industry is the continued emergence of a more productivity-conscious cattle industry that is increasingly focused on uncovering more productivity from each and every acre. The focus is shifting from low-cost, low-input perennial forage production to more intensively-managed feed production. While some of this demand has shifted to high-yielding, early maturing silage and grazing corn hybrids, more productive and intensively managed perennial forage is the growing segment of the western forage industry.

It’s true—forages must compete with other crops. That has always been the case. Fortunately, investments in breeding and new technology development in some forage species are in fact being made. Alfalfa is one such crop, and it has attracted continued interest on the part of breeders and technology developers. As a result, beef and dairy producers can look forward to increasing productivity as a wave of new and more productive alfalfa hybrids and synthetic varieties reaches the market this year.

While producers can expect to pay more for forage seed, they need not expect anything other than better and better performance—a message they need to hear from forage companies and the industry as a whole.

Calvin Sonntag, Co-Chief Executive Officer, BrettYoung

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