U.S. bans some Canadian dairy and alcohol, and bonds/Cdn dollar in focus

Welcome to this mid-week edition of RealAg Radio with your host Shaun Haney. Today on the show, Shaun is joined by Craig Johnson of Farm Credit Canada, Justin Miller of Black Earth Humics and Kenny Piecharka of KWS Seeds Canada. 00:00 - Coming up… 02:10 - Craig Johnson of FCC 14:34 - Craig Johnson of FCC 26:49 - Justin Miller, spotlight interview Black Earth Humics 36:45 - Kenny Piecharka of KWS Canada Thoughts on something we talked about on the show? Connect with host Shaun Haney at shaney@realagriculture.com, on X/Twitter by using the hashtag #RealAgRadio, or give us a shout on the response line, 1-855-776-6147. Trending The Government of Canada has announced a federal spend of just over $3 million it says will help safeguard animal health, strengthen sector resilience, and support future growth. Heath MacDonald, Minister of Agriculture and Agri-Food, announced the funding Sept. 4 for the Canadian Pork Council through the AgriAssurance Program – National Industry Association Component. The... Read more » I don't know about you, but I like to geek out a little bit on economic issues, right? We're getting a lot of economic news as of late, and all of it is centred around tariffs and trade and things like that. We're gonna put that aside a little bit today on RealAg Radio. We're gonna talk to Craig Johnston. He is Chief Economist with Farm Credit Canada. And we're going to focus on currency exchange, the Canada-US dollar, the US dollar index in general relative to global currencies. And we're also going to talk about why everybody right now is paying so much attention to the bond market and the spread right now that exists between, say, the, the 30-year US Treasury or the Canadian bond market relative to where the Bank of Canada or the Federal Reserve are on their rates. What does this mean for farmers? We know that there is lots of farm debt out there. So interest costs are absolutely paramount to your operation on the cost side. We're gonna dig into that today, all on RealAg Radio. This RealAg Radio podcast is brought to you by CropPlan. Put trusted genetics to work on your farm and take advantage of the CropPlan Seed 0% Interest Financing Programme. Purchase CropPlan Seed and receive 0% interest until September 30th, 2027 through FCC financing. With the CropPlan Seed 0% Interest programme, it can help you maintain cash flow flexibility throughout the growing season. Ask your local independent ag retailer for details. It's time for RealAg Radio on Rural Radio, channel 143 on SiriusXM. RealAg Radio and RealAgriculture.com are your home for insight and analysis of the issues that are impacting your farm business. Let's get real and get connected with RealAg Radio. Welcome to RealAg Radio here on Rural Radio 143. Shaun Haney, your host here on this Wednesday midweek edition of the show. Thanks so much everybody for making Rural Radio 143 and SiriusXM a big part of your workday. It is great to have you here. Also, a huge shout out to everybody listening out there on the RealAg Radio podcast, whether it's on Apple or Spotify, wherever you get your podcasts, or watching on YouTube. Today we got a great show for you here. Today we're gonna be talking to Justin Miller with Black Earth in a product spotlight. We've got Kenny Picharka from KWS, and we're also gonna be— we're gonna talk a little bit about the Canadian dollar and the bond market and what's going on there. And of course, we'll get into the trade tit for tat that is happening this week as well with Craig Johnston from FCC. He is their chief economist. If you have any Any feedback on today's show, send me an email, shaney@realagriculture.com. You can also call or text the RealAg feedback line, 855-776-6147. Okay, let's bring in our first guest. Let's talk economics. Yes, I want to start off the show with a topic that I love chatting about because it is the inner workings of the economy. And we are joined by Craig Johnston, who is the Chief Economist with Farm Credit Canada. Craig, how are we doing? Hey, good, Shaun. How are you? I'm doing pretty good. I'm doing pretty good. I keep on saying to people on some media appearances, are we having fun yet? Is maybe the way to put it. I guess we got to keep smiling. I guess we'll get into the Canadian dollar and what's going on in the bond market. I think we should just start off by the economic impact here. Agriculture has, for the most part, stayed out of the prop wash, so to speak, when it comes to The trade battle, some would call it a trade war. Based on what we heard yesterday, is that changing with the outright ban potentially on Canadian dairy products and alcohol, for example? Yeah, I mean, like, so last night we got 5 proclamations or executive orders from the US administration outlining the movement of several products that were exposed to the 50% tariffs under the 338 section. 2 outright bans come September 29th. And so, you know, largely these are, if you think about it this way, look, this is a subset of products. In terms of the macro impact, most economists, most estimates that I see out there suggest, you know, this isn't going to push Canada into a recession necessarily. But for those products, those sectors that are identified, this could have significant impacts. And for many of those products, I mean, as we're seeing, you know, even with the 50% tariffs, this can make trade with the United States uneconomical and essentially close off the market. And effectively, now that we're seeing with the ban on some of these products come the 29th, that's exactly the case. So it's really going to be kind of a sector-by-sector, business-by-business impact, but for those exposed, it could be very significant. Yeah, the US market, obviously very important for Canadian wine and distillers, and there's a history, you know, alcohol has been in the centre of this for a while with the provincial bans in Canada on US alcohol. So I don't think we should be surprised that alcohol made its way to this stage at all. Canadian dollar, let's keep in the trade at this time. The Canadian dollar has been kind of in that band between 70 to 73, maybe even getting a little bit north of that in the last while. What impact does all this have on the Canadian dollar? Yeah, definitely. So, I mean, we continue to expect the dollar to trade somewhere, there's going to be volatility for sure with this, but somewhere in the range of 70 to 74 over the foreseeable future. I think today I was looking, it's, you know, around 70.73 to the US dollar. Look, this could have an impact. It's going to impact inflation expectations in the United States. I think we're already seeing inflation in the US continue to remain above their 2% target, around 3.4%, the latest prints on US inflation. So it's certainly at a point which is what would be referred to as an elevated level for most folks looking at that. This is just going to continue to put that increased pressure on the inflation rate in the United States. And as that happens, this can create pressures for the Federal Reserve to adjust interest rates. And so what we're seeing right now is market pricing for the Federal Reserve expecting a rate hike in its next move with, you know, greater probability of, you know, each day it seems. These latest announcements will certainly increase that probability. Now, the greater the spread between the federal funds rate and the Bank of Canada overnight rate, the greater downward pressure there can be on the Canadian dollar. So we could see, if there is a movement by the Fed in their next meeting, we could see slight downward pressure, but we still would expect it to be in that kind of 70 to 74 range. I've heard a number of economists talk about the weakness going forward of the US dollar index and concern about that. Now, for US exporters, that potentially is something that, you know, That would make US exports a lot cheaper. So, from an agriculture standpoint, there's a lot of farmers and ranchers that actually are on side with that. If we do see weakness in the US dollar, that doesn't necessarily mean the Canadian dollar is inversely related. The US could weaken as a currency versus other currencies around the world, but the Canadian dollar could stay pegged at that 70 to 74. Right. It doesn't necessarily mean US dollar down, Sure, no, absolutely. So I mean, these currencies do move relatively independently, especially the United States dollar and the Canadian dollar. I mean, there are independent factors that drive those, and again, when we talk about exchange rates, we have to keep in mind it's one currency relative to the other. So any move in individual currencies can change that ratio. And so the Canadian dollar, all of the support behind the Canadian dollar can remain there, but if there are changes in the US dollar, we can see movements in the exchange rate. If we think about a move higher, when we think about what is the exchange rate, how does it affect the Canadian ag sector? Really, if we think about the range that it's in right now, this is in a range that does provide some support for competitiveness of Canadian exports by lowering the US dollar prices for grains, oilseeds, livestock, everything that we're sending abroad, specifically to the United States. But at the same time, this could raise the cost for for imported inputs, especially if we see changes in the CAD. So it's something to keep in mind. The sale price can be affected, the competitiveness can be affected, but also some of your input costs as well could be affected. Yeah, and I think a lot of times when we think about the Canadian dollar, we think about exports. Canada is an exporting nation, right? So our economy is very export reliant, but we're also purchasing a lot of goods in agriculture, farm machinery, fertilisers like phosphorus, for example, out of the US, that makes those inputs more expensive as well. Absolutely. So, you know, if we think about a CAD moving higher, if we're starting to push into that 74 or even break through that 74 to 75 or 76 range, which is not our expectation, but if that's the case, that's exactly what happens. So while on the one hand it does affect our competitiveness in the United States, for example, It does make the cost of inputs relatively more cheaper. And so you can think about the offset this could have on rising fertiliser prices, machinery parts, fuel to some extent as well will be exposed to this, as obviously we do a lot of trade with the United States for not just our primary products, the oil products, but also our refined products like diesel. Other feed ingredients. So, I mean, you really got to keep in mind, you really have to— it really is going to be a business-by-business case to think about where you are situated in the supply chain, how dependent you are on the US for imports of some inputs, for example. But— Yeah. This could certainly have an impact on the bottom line. Across the economist community, is there a level for the Canadian dollar relative to the US dollar that is like a sweet spot? Is there a— where it's like, okay, this is like kind of a neutral position. It can't be par. Is there a number that people talk about? Yeah, exactly. I mean, we saw par probably a decade ago or so, and that created its own challenges. Right now, I think the consensus is that the level that we're in, kind of that just north of 70, that 70 to 75 range, is a comfortable range for most sectors. Again, it kind of creates that competitiveness advantage in other countries, including the United States, for example, where, you know, again, it lowers the US dollar prices for a lot of the products that we're shipping to the United States. At the same time, that does affect again the cost of inputs, but it does seem to be at this point there's kind of that equilibrium made right now with with the interest rates around that 70 to 75 range. Again, today's probably a really nice sweet spot where we are in terms of 73 cents. But again, we're going to see we're going to see what happens with the conflict in the Middle East, the impact this has on oil prices, inflation expectations, and ultimately the next decisions by the the Federal Reserve. If they if the move as is priced in in markets, if they move ahead of the Canadian dollar, that could create an additional. additional spread between the rates in the 2 countries, and that could put a little bit of downward pressure on the CAD through the year end. Okay. Now, from a US dollar index perspective, what— are you bearish like others? Do you expect that the US dollar is going to depreciate in value? There has been— you do see some of those headwinds, and this is actually something you've been seeing for some time. You know, if we look back all the way to post-COVID in 2022 when the Ukraine-Russia war began and the United States and many other advanced economies targeted US dollar-held assets by foreign banks, specifically some of its competitors or adversaries in the world, like China, for example, then that initiated a movement away from the USD as a reserve demand— demand for reserves from those countries. And that really initiated what a lot of folks have talked about, like this de-dollarization concept. But in general, what we're seeing is the continued de-dollarization effort from China, from India, from some of these other countries in fear many believe, and fear from continued pressure on some of these assets by the United States administration or others from a geopolitical perspective. So it's really this diversification strategy. But what this means is that the demand for the US dollar is falling over time as China tries to ramp up its holdings of gold, among other holdings. And this is going to continue to put downward pressure on the US dollar, not only as a global reserve asset, but also just in terms of its We're talking to Craig Johnston. He is Chief Economist with Farm Credit Canada. When we come back, we're going to continue our conversation. We're going to talk about if you want to really know who rules the world, it's the bond market. We'll talk about that when we come back. You're listening to RealAg Radio, Rural Radio 143. Plan for success in 2027 with help from the Co-op Grow Team. With the latest on-farm technology, our agronomists will work with you to gather and interpret soil samples, analyse data, and gain more insight into your fields. We offer local expertise and trusted advice to help you plan your inputs and prepare for the unexpected. Get ready to make data-driven decisions with Co-op AgZone Field. Make a successful 2027 crop plan to meet your field's potential. Talk to your Co-op Grow team today. It's summertime and you've got a lot of important decisions to make when it comes to your corn crop. Let The Corn School on RealAgriculture.com help guide you through those big decisions with input from leading experts in the field. If it's spray timing, disease identification, or any other field issue, The Corn School's got you covered. The Corn School on RealAgriculture.com, brought to you by BASF and Pride Seeds. Peter Johnson @WheatPete, RealAgriculture.com. I'm the host of The Word, and I love doing The Word. I love the questions. I love the challenges. I love having to apply agronomics to all over the globe and areas outside of my normal jurisdiction. Also, I love the feedback the most where growers challenge me, tell me about their plot results, help me to learn. The word, absolutely the best part of my day. We're talking economics here today on RealAg Radio. Thanks a lot for joining us. There's a lot going on in the financial markets, and it definitely has an impact on agriculture. We're talking to Farm Credit Canada's Chief Economist, that is Craig Johnston. Hey, Craig, I said leading into the break that if you want to know who really rules the world, it's the bond market. Why is the bond market currently getting so much attention, not just in the financial news, if you turn on to like Fox Business or Bloomberg or CNBC? But also in the mainstream news. What's going on? Look, I mean, it really comes down at the end of the day to the size of the debt in the United States and the impact that the change in bond yields has on the cost of this debt load to the American public and the US administration. So the US debt right now is about $40 trillion. They spend more per day, about $3.8 billion per day, on just debt than they do on Medicare and than they do on defence spending. So this is a significant line item for them, and it's something they watch closely. In fact, I've heard a great anecdote and something that I think is actually really true is that there's really 3 players at the negotiating table right now between Canada and the United States. You've got Canada, the US, and the bond market. And I think what we're seeing is the US administration actually really watching that closely, and there's a lot of evidence for that. I mean, if you think about the 338 tariffs that were supposed to come in place Wednesday a few weeks ago, then they were delayed until Friday. One reason that many believe is that bond yields ticked up significantly on that day. And actually, the US Treasury did intervene. Bessent did intervene in the US Treasury market to calm that. And in fact, that's still the expectation as we move forward. There's a lot of expectation that the US Treasury will continue to intervene in the bond market to try to keep the bond yields low. The higher the bond yield, the more it costs the US government to service its debt. And it's at this level, which is pretty critical for the US administration. Yeah, last— sorry, go ahead. No, go ahead, John. No, go ahead. Well, I was going to say, last Friday, we heard the president talk about how threatening to stop trading with countries the US had trade deficits with if the Fed didn't start to lower rates. But I continue to hear from a lot of people that lowering rates right now is not a high probability. And in fact, it's probably raising rates in the US because of those increasing bond market yields. Is there Any sort of historical context to how big of a spread can exist between the Fed's rate and maybe some of those longer-term bonds? Yeah, so I mean, historically, usually we see movement in, say, the 5-year bond or 10-year bond moving pretty closely with interest rate levels. And it's usually something that the central banks look at closely as an indication for expectations and the underlying fundamentals in the economy. In fact, this is one of the reasons the new Fed Chairman Warsh is really trying to take a backseat in terms of forward guidance, is to let the markets really reveal that information for, for the central bank. And what we're seeing right now is a big disconnect. And honestly, this is one of the bigger disconnects we've seen outside of significant economic crises in the last few decades. This is really driven by several factors. And when I think about this, I think of kind of 3 reasons that's really pushing bond yields up right now. It's inflation expectations. This is contributed by the conflict in the Middle East. If you think about the war with Iran, the impact on oil prices most clearly as an example there. You can also think about the tariff impacts too. Of course, when there's these disputes between Canada and the United States, significant trading partners, that's going to create inflationary concerns. That's number one. Number 2 is uncertainty. And I think one of the best examples there again is the lack of forward guidance. And so markets are pricing in kind of this increased risk premium in the market because of that uncertainty. And the other one is demand. And one of those is really driven by demand for bond issuance as driven by the increased investment from AI, among other reasons. So there's kind of like 3 fundamental reasons right now, which I think are really supporting bond yields. And of course, Canada and the US are so highly correlated that we're also seeing bond yields in Canada rise. I was just going to ask that question. What are we seeing from a Canadian bond perspective? Yeah, so similar storey. The fundamentals are some similar, some are different. I mean, we don't have that uncertainty. Bank of Canada continues to provide strong forward guidance, but nonetheless, the markets are so integrated between Canada and the United States, the bond markets, that they move in very similar patterns. And so what we're seeing is some of those pressures that might be originating in the United States or caused by some of the actions of the US administration filter through to global bond markets, not just Canada. But of course, the spread, the difference between 5-year bonds, for example, and the overnight lending rate of the Bank of Canada continues to widen. Right now, it's at a fairly elevated level. Yeah. And my understanding of your second point, the forward guidance, this is something that Fed Chair Warsh believes in strongly. This is turning the clock back. This is how the Fed provided commentary, I think, pre-Bernanke is my understanding, where we shifted more to where there was more of an explanation and more talking points. And here's what we see. Here's what we're watching. And going back to how maybe it was a couple decades ago, this isn't a— this is what's old is new again. This isn't something that they've just created. Do I have that correct? No, I think you've got that correct. But if you look at the evidence behind forward guidance, in my opinion, is pretty strong in terms of its support for anchoring inflation expectations. So, that's a real key driver of inflation. Future inflation is driven strongly by several factors, supply chains, wars, et cetera, but also inflation expectations. And what that means is that, you know, employees are demanding fewer raises if they don't expect inflation to be rising as significant into the future. And then that materialises in terms of more moderate wage growth, and that materialises into more moderate inflation growth. And that's been really successful over the last few decades by central banks around the world. In fact, there's continued increased movement of forward guidance, not just by the Bank of Canada, but others. But I'll give you an example. The Bank of Canada just within the last year or two has started publishing the minutes of the deliberations of Governing Council. In an effort to be as transparent as possible and to have markets price in the expectations as clearly as possible to reduce that uncertainty, to anchor inflation expectations, especially during periods of elevated inflation, which we have, of course, seen post-COVID. And that was the exact reason for it, is because there's just so much mounting evidence in the literature, in academia, behind the usefulness of forward guidance. I fear what we're seeing right now within the United States is that movement away for certain reasons. But unfortunately, one of the consequences is this kind of bond market, which is really having a difficult time pricing in Federal Reserve movements. And difficult to control. So no matter what the administration thinks, or Treasury Secretary thinks, the bond market has its own opinion, and its own set of realities, I guess, is the way to— the Bank of Canada held rates, I believe it was last week. What do you see going forward between now and the end of the year from the Bank of Canada decision-making? You used to work at the Bank of Canada before Farm Credit Canada, so maybe you've got some inside track for us. Yeah, I'll give you a little glimpse behind the curtain, but no, that's true. So I spent 7 years at the Bank of Canada and having these exact conversations several times a year about, you know, where we think rates should go and reasons why. Look, it was no surprise that the bank held during its last round. For a few reasons. Number one, we just have so much evidence of still an economy that I would say is just not strong. We have a fairly weak labour market. If you look at employment gains since the start of the year, if you compare that first 7 months to any year previous, you got to go back to COVID to find a year like we've had where we've had very little job growth. Wage pressures remain low. So the labour market is kind of giving its signs that it's not the strongest labour market that we've, we've had to start the year in some time. At the same time, you have core inflation at 2%. So we have the inflation at target. We have volatile GDP, but generally speaking, slowing GDP or moderate GDP, slowing wage growth. All those signs would suggest at least a hold, if not a cut, to try to support the economy. Now, at the same time, we do have these concerns about inflationary pressures. But at the time, for, you know, for the foreseeable future, I think the Bank of Canada is in a comfortable position to say, hey, let's let bond markets do the heavy lifting here. They're already rising and acting as if there is already a Bank of Canada interest rate increase. So they don't even need to increase interest rates for the credit conditions to tighten. So it's already doing that heavy lifting for them. So they're in a really comfortable, like, let's wait and see what happens. If you look at market pricing, they're pricing in a hold from the Bank of Canada for sure through to the end of the year. If you look at consensus of chief economists and other economists in Canada, generally, again, the consensus is a hold through the end of the year as well. Okay. And so from a From a, I guess, taking it back to the farm, what does that mean for farmers and ranchers? They're no strangers to debt and having some of those carrying costs. So what does it mean for the farm gate? So we get so excited to talk about the next Bank of Canada decision, whether it's an increase or a hold, and we feel very comfortable. Oh, thankfully, it's a hold. But again, I'll come back to that point that the cost of credit is already increasing, and this is a consequence from the integration of bond markets with the United States. And all those reasons for the bond yields to be rising in the United States, again, the inflation expectations, uncertainty, demand for bond issuance, that's all providing that upward pressure on yields. And that unfortunately is already tightening credit conditions for businesses, consumers here in Canada and abroad. And so the bank doesn't even need to change its rate. Those credit conditions are tightening. And unfortunately what that means is when you go forward for a mortgage renewal, the rate could be higher than what the one you had previous was. Craig, really appreciate you joining us here today. Thanks so much for trying to shed some light on some of these more complex economic topics related to currency and interest rates and the bond market, everything that's going on at a time where there's a lot of uncertainty about the North American economy and where we go from here. So thanks so much for joining us here today. Really appreciate it. Yeah, thanks, Shaun. Thanks for having me. Okay, we're gonna take a break. We'll be back with more of RealAg Radio here on Rural Radio 143, back We'll be right back right after this. As a second-generation farmer, it's always been Proven Seed. It performs on our land and our conditions and to our standards. Every year brings high yields and new innovations, and it's tested in fields like ours. It keeps pace with every goal, stands up to every challenge. On our farm, trust isn't given, it's earned. It's proven. Proven seed earns its place. See why at raisedtoadapt.ca. Get all the information you need to keep your pulse crop healthy and profitable with the Pulse School on RealAgriculture.com. The Pulse School is a free YouTube video series covering agronomy, research, and more across a host of different pulse crops. It's also available as an audio podcast wherever you download or stream your favourite podcast. Cheque us out on YouTube or visit RealAgriculture.com/ThePulseSchool, brought to you by BASF Canada. I'm Lyndsey Smith, host of The Agronomist, and I want to thank you for tuning in for over 200 episodes of our beloved little programme. Join me Monday nights, 8 PM Eastern on YouTube for our live and interactive agronomy Q&A. Each week, our guest panel will handle some of your toughest agronomic questions Live streaming on YouTube, Facebook, X, and RealAgriculture.com. Tune in Monday nights or go to RealAgriculture.com/agronomist and sign up for our email notifications and don't miss an episode. And welcome back to RealAg Radio. It's now time for a product spotlight with Black Earth. And I'm talking right now to Justin Miller, who's the Director of Sales for North America with Black Earth. Justin, great to have you on the show. Glad to be here, Shaun, really enjoy the invite, so looking forward to this. Yeah, important topics here. As harvest is getting underway across Western Canada and the northern US, growers are really getting a clearer picture of what worked in this past year and what didn't given the conditions that we were faced with. What should they be looking at this fall when evaluating soil performance and deciding where humics can fit in their 2027 programme? Yeah, I think the really great part about this is the more we work towards using humics, you know, really in a year-round growing season situation, there's options for using humic in various forms in the fall, at planting, throughout the growing season. I think that's where the humics industry is really moving towards, right? It's not just applying a raw humic in the fall anymore. It's options for the whole season. And it's really options that fit along and ride along in the tank. And at the biggest, you know, end of the day, this whole thing is all about logistics, right? Logistics trump agronomy. So, we're really working towards making our products easy to use, number one, and deliver ROI. So, there's options out there for the fall for sure. And I guess probably the most, you know, one at the forefront right now is we've got retailers picking up loads of bulk humic at our mine down near Hanna, Alberta, and land applying those right now in preparation for next spring planting. Lots going on. We finished, we're not even done the '26 crop and we're thinking about '27. That's how it goes. Black Earth has been investing pretty significantly in its supply network, and like you said, logistics are a key here, including the new Calgary Operations Centre and expanding some of the warehouse capacity you have across North America, which again fits into that logistics thread. What does that investment mean for retailers and growers in terms of product availability and lead times and a topic that we are much more conscious of post-2020, supply security, as we head into the next season? 100%, and you know, as much planning as goes on and it starts now for planting next year and right before the first of the year as we look to spend funds as growers But, you know, it's about having that product in the backyard. As much planning as goes on, there's still always those few acres that do flip in the spring, and maybe, you know, as the humics space is expanding, new products are being used, and sometimes those adjustments and changes are being made last minute. Well, I can't sit there 3 to 4 days before planting, make a decision, and if that product is hundreds of km or thousands of km away, if I can't get it, I can't use it, right? So, as we've expanded and gotten on more acres, it became very evident that we just have to have products supplied across North America. And now we're at that point where we've got product positioned from Florida all the way to Saskatoon, right? So, we're in about 8 different warehouses across North America. And then with probably our biggest lift for us, as we grew and grew and grew, we really saw that there was a need to get more centralised into the Calgary area, which opens up transportation efficiencies for us globally and within North America. That's a huge step for us to really supply the entire global market out of a major metro area in Canada that's close to transportation in all different formats, but also to lift that burden off of production facilities. Our production facilities are going to concentrate on producing, and the shipping part of that is going to be solely on our Calgary operations centre, which is just a tick under 3 acres under a roof. So we're very excited for that to kick off. That'll start this fall. A big move for us, a very big move. Yeah, very big move. Really driven by customers. Yeah. Driven by customers. That's what we're trying to listen to, right? To your point, having this product in the backyard is so key. Humics are gaining ground quickly, changes are being made, more humics are being adopted. That means supply has to be in the backyard at the end of the day, so that's what we're doing. You allude to the increased interest in a product like a humic, but growers are also becoming more selective about where they spend their dollars, right, in times like these. How does a humic product have to demonstrate— what do they— what does it have to demonstrate today to move from something a grower trials on maybe a few acres or, you know, a field to something they confidently build into their overall grower programme? I think it's really fundamentally 2 things: ease of use. How does it fit into my operation? Can I use that soluble granular like Magna? Incorporated with fertiliser, put it down the tube through my air seeder, everything flows perfectly. It's not a big change to what I do. Ultimately, what trumps everything? ROI. These can't be products that cost $20, $30, $40 an acre. They're dollars per acre, and even though if they are easy to incorporate, I'm still expecting an ROI. That's really where we focus all of our attention. We kind of use internally that magic number, 3x ROI. For every extra dollar that a grower gives us for one of our products, we anticipate they're looking for a 3x ROI. And that's, that is what drives our whole company. And it's really for us spending lots of dollars across North America on proving that ROI out through third parties. That's a big push for us that we started. We're in the second year of that. Yeah, and one of the ways that we determine an ROI is through trial results, right, in smaller situations. Have you seen any interesting trial results this year? Yeah, we can see, we continue to see really good results with our MagnaSoluble granular. That is primarily an in-furrow one. It's been in Western Canada even prior to our acquisition of Black Earth. That product was a solid performer. We've escalated that, backed it by even more data. So that's been just a, when it comes to performance throughout the crops in Western Canada, It really doesn't choose one or the other, it just performs well in the canola, the wheat, pulses. That's been very solid for us and probably that's our in-furrow, every acre product that we think for when going through an air seeder for Western Canada. On the liquid side, it's really been our Alpha product. Our Alpha product is one that, again, ease of use, we can use it at planting with liquid starters and not have issues. And we've just done a big lift, I think, this year in figuring out, we know it performed well with herbicide at herbicide time in cereals and canola, pulses. Now we went through all the kind of screening with all the fungicides that are out there too. So we have this really high level of confidence with Alpha in playing well with herbicides and fungicides. And that, I think, for the whole industry, that's probably been the challenge, right? Compatibility with these humics and having those very detailed tables to say, yes, this product is fine with this, no with this, yes with that. And we've filtered through that this year now and have that very detailed information, right? We have to— again, it's logistics. We can't gel up a tank with liquid. We can't have plug an air seeder, right? These are things that have to be done, and we've gone through those now and have very strong messaging around Where, when, what. Yeah, nothing's gonna prevent a grower from using a product more than having some of those logistical issues like gelling up in the tank and stuff like that. So the product has to work, but it also has to be able to do, you know, prevent those kinds of things as well. I think you put that great. Justin, if somebody wants more information on the Black Earth humic lineup, where do they go? blackearth.com, and that is kind of our hub for everything. All of our trial results, all of our product information, all those very detailed information about compatibility, all that's there. We now have 7 folks working for us across North America on the sales side, so it's also good to point you to who works in your local area as well to get a hold of for more details. Great stuff. Hey, Justin, thanks for joining us here today for this product spotlight. Really appreciate it. Thank you, Shaun. Thanks for having me. Great stuff. Again, that website is blackearth.com. We'll be back here on RealAg Radio right after this. Get ahead for next season and get rewarded for planning early. Buy and take home Vantage Ag products by October 12th and save 10% off current suggested retail pricing. Then buy with confidence with our best price protection programme. If prices drop later, we'll rebate the difference, guaranteeing you this year's best price. With nutrients delivered directly to From seed to the plant, Vantage Ag helps you use less, pay less, and get better results. Lock in your savings by October 12th at vantage.ag. The Canola School on RealAgriculture.com is your one-stop shop for everything a canola grower needs. Cheque out our free video series on YouTube for all the latest in canola agronomy, research, marketing, and more. Don't have time to watch? Download the podcast version of the Canola School on RealAgriculture.com or Anywhere you download your podcasts. Stay on top of all things canola with The Canola School on RealAgriculture.com, brought to you by BASF and InVigor hybrid canola. As growers look for more and more different cropping options, one of the ones that keeps on coming up is hybrid fall rye. Here to chat with us about that is Kenny Picharka, who is the Head of North America with KWS. How are we doing today, Kenny? Hey, I'm excited to be here with you, Shaun. Lots to talk about, and thanks for having me on. Yeah, absolutely. It's great to chat with you as well. Hey, congratulations! This Head of North America is a relatively new role for you. That's pretty awesome. Yeah, it's an exciting time. Started the role July 1st. It's a pretty big opportunity and I feel honoured that the company looked to me to take on this role. It's a role that's traditionally been done out of Germany and now to have it right here in market just shows the trust and shows the opportunity KWS is really seeing in cereals in North America. When we say North America, do we mean Canada and the US or is there hybrid fall rye also in Mexico? It's not in Mexico at this time, so we are saying Canada and the US. Canada has a team of 10 staff primarily focused on hybrid rye, USA has the same thing. So 20 commercial staff. Meanwhile, we are doing breeding activities in the US as well in wheat, and we do commercialise barley varieties bred out of Europe. So it's the 2 countries. One of the things I like to always ask people who are in new roles like this is, what are some of the priorities that you have going forward for the company and Hybrid Fall Rye? Big priorities are to expand on the footprint we've created. Hybrid Rye has been commercialised since 2014, Then in 2022, we started with direct investments in staff in Canada, a couple years earlier in the US. Since then, we've went from a handful of staff up to 20. Boots on the ground have been a really big factor to expanding the value this crop brings because you need to be close. Anytime there's a niche crop, something new, if you don't have the service, the best management practises, the end-use market support, then it's hard to get producers to have a good first experience. for it to become a profitable part of the farm. So the priorities are expanding the team, expanding the information, and finding out honestly what questions we don't know how to answer yet because there's always more to dig into. That's what comes when you have a crop that has some flexibility in use, is it just creates more questions, and then making sure you have the answers is key. You've already mentioned some of the investment that KWS is making in North America, Like any crop, it has ups and downs that you kind of go through in terms of from a life cycle perspective. What gives you confidence that this market has a strong future? Well, it's turned out to be quite a profitable option. We do our crop budgets each year just as farmers do, and hybrid rye has been there whether it's a drought or a high yield year, it's been highly profitable, but I think we're only scratching the surface. So there are advantages that have come in breeding. When we look at yield, yields continue to go up, 15% increase in 10 years since the products have hit the market. We've got some quality solutions in breeding like our PollenPlus trait, which increases pollen and blocks ergot, so you end up with better quality. When you look at that, then the big holy grail and the question we always get is, what do I do with the product? At the end of the day. So now we're hiring people on the end-use market side, and we're actually just bringing our second nutritionist on board because there's some really nice growth in the feed sector. So just, there's so much more out there for local demand that this product is now suitable all across Canada, and so we're staffing across Canada. It's pretty exciting. You mentioned some of the market uses. How was the market use evolving over time? Well, just go back 5 years ago, distilling and milling were the primaries. Rye grain would find itself into the grain market when it made sense, but it wasn't perceived as being advantageous. Whereas now we know distilling and milling are going to be what they are, there'll be steady ups and downs, but there's big growth coming in feed because it does meet the price point It does have quality benefits in certain species, like in hogs, better carcass quality, better satiety, less infant mortality of the piglets, but there's also a cover crop market in the United States that a lot of Canadian rye and American rye goes into, and of course that has more fluctuations, but it's again a big market that's growing with the sustainability movement. You look at those and then you look at some markets that you don't necessarily think of first for rye, and there's a lot of rye going into ethanol right now in Canada. because of its price point versus wheat and barley. I think we're learning a lot and opening these doors is important because if we want to convince a producer and a retailer that hybrid rye is good for their area, there needs to be somewhere to sell it. Livestock producers, you mentioned that, they're very excited. We see a lot of hybrid fall rye in Feedlot Alley in southern Alberta. If it works there, I would have to think in similar sort of situations around feedyards, Nebraska, Kansas, Colorado, same kind of fit. Yeah, it is doing phenomenal, and that's really a North American creation. It wasn't used as livestock forage in Europe. It was going into biogas to a degree, but that really started here with the ingenuity of livestock producers. They saw this option, which was a winter cereal, it was hardy, and I'd say southern Alberta and then a few of the pockets in the Midwest and Utah were some of the first to come online. Using this as an early forage source. They get it in the bunk and they can go into the second crop. In the western prairies, it's going to be cereals, barley, oats. In those other geographies, like say Ontario or the I-states, you're going to follow with corn and soybeans. It's just ended up being more production per acre, more animals per acre, and when land value is what it is, you really got to squeeze everything out of that acre and hybrid rice found a fit Yeah, I think with some of the profitability challenges we've seen in the cropping sector, and the severity of that kind of depends on where you currently farm in your geography, but the timing kind of feels a little bit right in the fact that, like I said at the beginning of this, people are looking for some different cropping options to maybe diversify a little bit some of the things they've currently been doing, whether that's from a silage perspective or it could be on the grain side. I think that hybrid, because of the versatility of hybrid fall rye, it kind of fits into that discussion in all regions. Yeah, it does, and we like to say hybrid rye isn't the solution, but we do think it has a fit in a farm rotation. This year we had some really hard winter in places, take Eastern Canada for example, parts of the prairies, and rye is the most winter hardy. If you get a hard winter, some of the other winter cereals like triticale and winter wheat might have some challenges, At the same time, rye matures a little bit earlier, so many operators are actually growing hybrid rye, triticale, then spring cereals, then corn, and they actually can use their silage harvester for about 2 months straight instead of if they're just growing corn, it's at the end, or spring cereals in the middle. So you have that, but then you can take the same varieties and harvest them for grain, and I think there's a lot of cattle producers now who are taking advantage of that where if they have enough forage put up, then they can keep their rye of the same variety and take it for grain. So those are some of the flexibilities, but the other one is the workload. 80% of farmers aren't spraying any pesticides in crop, so when you look at the June workload after a late seeding like this year, if you don't have to spray your rye, that gives you a lot of advantage. So yeah, it's a hybrid seed, there's an upfront investment, and there are some really specific practises that we recommend for how to get it off to a great start. But there's some advantages in crop that you could take advantage of it, and at the same time, you're not only not spraying, but it has shown to be the most competitive crop with herbicide-resistant weeds, and that's probably the biggest piece of feedback we're getting right now from our farm users is that they're using it if they have resistant wild oats or resistant Kochia, and it's working well there. Remind me, from a grain perspective, the yield difference between Olbipollenae rye versus hybrid? Yeah, it's 35 to 40% higher versus the traditional non-hybrids, so it is a big, big— Legitimately, like you're not just— That is legitimate and that's across every region of Canada and the US, so there's pretty good public testing, so you don't have to take our word for it. There's good data out in the variety provincial guides, but it is truly yielding and again, in a drought, If anything, the hybrid is more resilient, it's more even and homogeneous, so you get a better pollen cloud, you get more rapid pollination. Those are some of the advantages against the non-hybrid, but you also have better lodging tolerance and actually disease tolerance. There's quite a bit that goes into that, not just the yield, into the whole economic equation. You mentioned some of the investments that KWS is making from a people and resource perspective, also the investment You said there's breeding activities also happening in the North American market. Can you talk about that a little bit, just so we get a handle on what that kind of looks like? Well, yeah, just to make sure I stay within the lines, the breeding we do in North America is on wheat, and that's in North Dakota for spring wheat and Illinois for winter wheat. We do have breeding activities that we are expanding constantly as we look to this market, and our rye, however, being such a— it has very few insect and disease pests that you don't need as much adaptation as you do in wheat. So we still breed our rye out of Germany, but we sell it across the whole world. So we'll sell the same variety on the same latitude across the Northern Hemisphere and Southern Hemisphere. That's amazing. It's incredible, but we are investing there too. And actually, because of the success in North America, we just added our first forage-focused breeder. All the forage lines we brought in previously were taken from our pool of existing hybrids. Now we're doing crosses purposely for this because we've identified we need to be earlier, we need a better digestibility curve, and if we can keep protein higher longer, there's significant value to producers there. So we were now going to bat right on that topic. Do you have acre targets, Kenny, in place, like longer term? Like, how much growth is there in this market in Canada and the United States? When you look at North America, we're single digits of the global share of field crop rye, so there is a lot of acreage in Europe, Russia, and there are other pockets of significance. So we do see growth continuing, not just for 5 years but 10 to 20 years of growth potential in this market. When we look at feed There are a lot of animals that can consume rye, and then again, I mentioned the COVID crop market, which isn't going anywhere. So I do see it being continued growth. The other thing is, with the climate, there's more land suitable for winter crops. Our winters just aren't as hard, don't last as long. So as you get into some of these high-yielding cereals, it really helps on the farm to have something planted in the fall. Hey, great stuff, Kenny. Really appreciate you joining us here today on the show. Appreciate it. Hey, thanks for having me, Shaun. Great stuff. That is Kenny Picharka. He is the head of North America for KWS Seeds. Back right after this. Built on over 100 years of seed innovation and unwavering commitment to farmers, Pioneer 100 Series canola hybrids deliver a step change in yield performance and agronomic traits. This isn't just better canola, it's different canola. Pioneer 100 Series. Contact your local Pioneer sales representative or visit pioneer.com/100series to learn more today. Hi, I'm Bernard Tobin, host of the Soybean School on RealAgriculture.com. Throughout the year on the Soybean School, we'll bring you timely agronomic video content From planting to harvest, from the latest agronomic research to the latest in production technology, cheque out our massive video library on YouTube, RealAgriculture.com, or download the audio podcast versions wherever you get your podcasts. The Soybean School is brought to you by Maizex Seeds and Lallemand Plant Care. Welcome back to RealAg Radio here on On Rural Radio 143. Listen, are you interested in making a difference in Saskatchewan agriculture? Saskatchewan Pulse Growers and SaskOilseeds are looking for producers to bring their voice to the table and serve on their boards. Nominations close September 11th. That's in 2 days, everybody. Director nomination forms are available at saskpulse.com or at saskoilseeds.com. Well, we started off today's show talking about some of the economics around the bond market, around currency exchange. And of course, right now we're in a— well, if I said these are interesting times, I'm probably underplaying it and not giving some of the issues the attention that they really deserve. I think to last spring and giving presentations across Canada and the US, and one of the things I had said at the time was that these negotiations, whatever they look like, whatever the issues that are focused on, it's going to be ugly. It's going to be a little bit nasty. It is going to be a real test of the Canada-US relationship. And you could throw Mexico into it as well as those, although Canada-US is getting all of the attention right now. I think really one of the challenges is, Okay, what's next? Yeah, sure, we can continue to escalate and, well, if you're gonna do that, we're gonna do this, back and forth. I am somewhat curious, although right now, for the most part, Prime Minister Carney has the support of Canadians on this trade battle. And when we're talking about it, if, if what broke up those talks a couple Fridays ago If the US ask really did put into question Canadian sovereignty, Carney's support is justified. We currently have a situation where he is very popular for the most part across Canada. We have a situation where President Trump has quite low popularity ratings. Now, I don't think we should cross-compare totally and say, well, because of that, this The reality is, from a Canadian perspective, is Carney gave an address earlier this week on Monday that I think a lot of Canadians said, hey, that's a really good message. What's unknown is the longevity of that support. There is a majority government for the Liberals. There's some pain. Some pain in front of the Canadian economy when it comes to something like a trade war. When 70% of your exports go to one country, you are a little bit one-dimensional in economic performance, which is why there are people that are arguing that this idea of retaliatory tariffs, no matter how Carney positions it in terms of like, these aren't retaliatory tariffs, these are protecting Canadian industry. They are being viewed as retaliatory. And so that's why we saw the US respond with potentially banning, as Craig and I were talking about earlier on the show, potentially banning some specific products like Canadian alcohol and dairy products, for example. We'll see what that implementation looks like and if there is follow-through on it. But up until this point, we should assume that there is. I found it interesting, Canadian trade lawyer from MAW, Mark Warner, he said the following on CBC News. He is one of the people that is against this retaliatory engagement that Canada is participating in. Mark, good morning to you. Good morning. We're 1/10 the size of the United States, and just the essence of that is when you get into a tit-for-tat war, It is going to be felt more on the Canadian side than the American side. And I know there are lots of politicians who say they'll feel it too. They won't feel it as much. And yes, I suppose you can target certain states for political purposes. But, you know, as I've said before in other places, I think that that's a complete misreading of where we are now. The view that you could affect congressional elections dates from a time when the source of protectionism in American politics was in Congress, not in the president. I think it's a fundamental misreading of how this works now. The problem we have is with Mr. Trump, who doesn't really care about Congress. So I just think this is all wrong. They get it wrong on the law, they get it wrong on the politics, they have it wrong on the man. So Warner's position is that Canada should not— maybe not sign that trade deal, but should Canada have just not retaliated and played the nice card to avoid this kind of tit-for-tat experience? I would like your thoughts on this. What did, did Canada make the right strategic move to apply those retaliatory tariffs that came into place on September 8th? I want your perspective. Send me an email, shaney@realagriculture.com. You can also call or text the RealAg feedback line, 855-776-6147. Thanks everybody for getting real and getting connected with RealAg Radio, and we'll chat again tomorrow. Cheers everybody. Thank you for downloading You're listening to the RealAg Radio podcast brought to you by CropPlan. Trusted genetics, high yield potential, added financial flexibility. With the CropPlan Seed 0% Interest Programme, receive 0% interest until September 30th, 2027 on CropPlan seed purchases through FCC financing. Contact your local independent ag retailer to learn more.