Canadian Farmers Will Earn More This Year

Flood-soaked crops in the Midwest are a boon to prices for farmers farther north

FLOOD damage to crops in the United States Midwest means 1993 will be an exceptional year for Canadian farmers like Larry Miehls, who grows soybeans, corn, and wheat in southwest Ontario.

Along with many Canadian farmers, Mr. Miehls was watching closely last week when the United States Department of Agriculture (USDA) released its estimate of US crop damage. The report did not surprise him, he says, mostly confirming what he and two fellow Canadian soybean farmers had seen on their first-hand tour of five flood-damaged midwestern states last month.

"It wasn't a nice sight," Miehls says, "but the trip gave us a much better idea of what has been happening down there."

The USDA damage report estimated US farm output at 7.42 billion bushels of corn, sharply down from last year's 9.5 billion bushel bumper harvest. About 1.9 billion bushels of soybeans are expected, the report said, a drop from last year's 2.2 billion bushel level.

But while the report may not have surprised Miehls, it did surprise some soybean traders in Chicago. The report on soybeans indicated a better crop than some analysts had estimated, causing a sell off in soybeans.

Prices dropped about 27 cents a bushel Thursday, stabilizing Friday around $6.56 per bushel. Prices for soybeans have fallen about a $1 a bushel since a July peak.

DESPITE that cooling in the price, Ontario farmers and analysts say the flood damage is still keeping soybean prices up to $1 per bushel higher than they might otherwise be - about 15 percent higher than in recent years.

George McCaw, grains analyst for Ontario's Ministry of Agriculture and Food, says grain production is a $1 billion a year business in Ontario. The higher prices he still expects for this year's bumper crop of soybeans and corn should mean at least an additional $150 million for provincial farmers, he says.

"Our crops here in Ontario are looking very good," Mr. McCaw says. "We've had both warmth and moisture," compared with last year's cool, wet weather.

Western Canada includes the grain-rich provinces of Saskatchewan, Alberta, and Manitoba, Canada's most prominent agricultural region with about $5 billion in grain sales annually.

But McCaw and others do not expect western Canada to benefit much from the Midwest flood. Unlike Ontario, which exports mostly to the US, the western provinces' main markets are overseas: Japan, Russia, China, and the independent nations of the former Soviet Union, he says.

CANOLA, an oil grain that competes with soybeans, as well as wheat, barley, oats, and rye are the main crops in the West. And those crops were mostly unaffected by the Midwest flood, confirms Fred Oleson, chief of market analysis with Canada's National Grains Bureau.

Still, canola prices are stronger than they might otherwise have been because of the soybean shortfall, Mr. Oleson says.

Canadian farmers will also see higher prices for their wheat than they would have if rain had not soaked much of the US wheat crop, lowering its quality, he says.

One region profiting because of another region's bad weather is fairly typical when it comes to agriculture. But farmers in Durham, Ontario, were so moved by televised scenes of submerged farmland and stranded hungry cattle that they spent last week gathering enough hay to fill six tractor trailers. The trucks were sent on their way to Jefferson City, Mo., to help feed some of the cattle stranded by the flood waters.

"A lot of these people have lost it all and don't have a thing to give their livestock," Robert Heron, a retired farm implement salesman who helped organize the drive told the Toronto Star.

"This is probably a drop in the bucket compared to the problems they're having," he said, "but it's going to help somebody. The United States is always the first to help other countries in need ... Well, now it's our turn to help them."

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