t he r ace f or m arkets making canadian canola a winner! dave charne canola & sunflower...
TRANSCRIPT
THE RACE FOR
MARKETS
MAKING MAKING CANADIAN CANADIAN CANOLA A CANOLA A WINNER!WINNER!
Dave CharneCanola & Sunflower ResearchPioneer Hi-Bred International
GAME PLAN Outline
Assess the field of play
Understand the competition
Build on our strengths
Trust the market
Be innovative
Play to win!
THE FIELD THE FIELD OF PLAYOF PLAY
0
20
40
60
80
100
120
140
160
180
200
220
240
91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05
Soybeans Canola Sunflowerseed Palm Oil Cottonseed
Source: MREADS USDA
Millions MTGlobal Oilseed Production: 1991-2004Global Oilseed Production: 1991-2004
7.5% p.a. 3.5% p.a. 1.4% p.a. 12.2% p.a. 1.8% p.a.
OILSEEDS: The Past 15 Years
GLOBAL:
Increased population & income, esp. in Asia increased demand for oil & livestock products
Palm & soybean major beneficiaries
Palm = low cost oil, Soybean = high value meal
CANOLA:
Moderate growth mainly in China & EU
Consumption driven by popularity & oil properties
OILSEEDS: The Next Decade
Nutrition & health focus in developed economies Reduced sats, trans replacement, omega-3
Urbanization and income growth in China & India Increased oil use, with growing health concerns
Increased biodiesel production & use Initially EU, but also NA
ALL OF THESE TRENDS FAVOUR INCREASED CONSUMPTION OF CANOLA OIL!
2004-05 Worldwide Canola/Rapeseed
Production and Consumption
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
16,000
Australia Canada China EU-25 India Japan ROW
Production ConsumptionThousand Metric TonsSource: MREADS USDA
CANOLA: The Next Decade
CANADA IS IN A UNIQUE POSITION AS:
- A MAJOR CANOLA PRODUCER
- A MAJOR CANOLA CONSUMER
- THE LARGEST CANOLA EXPORTER
WE ARE WELL-POSITIONED TO BENEFIT FROM INCREASED USE OF CANOLA GLOBALLY AND DOMESTICALLY!
UNDERSTANDING UNDERSTANDING THE THE
COMPETITIONCOMPETITION
800 lbs
The Competition…
SOYBEANS!!SOYBEANS!!
CANOLA vs. SOYBEANS Value driver for canola is OIL, for soybean is MEAL
US soybean industry = 6-8x Canadian canola
Both driven by innovation soybean has much larger R&D investment & less regulation
Both depend on domestic consumption & exports
Canola & soybean oils can substitute for each other target many of same markets & end uses
TO GAIN, CANOLA MUST OFFER A BETTER VALUE PROPOSITION THAN SOYBEAN!
BUILDING ON BUILDING ON CANOLA’S CANOLA’S
STRENGTHSSTRENGTHS
CANOLA vs. SOYBEANSCanola oil is BETTER than soybean oil because…
Lower saturates (7% vs. 15%)
Higher 18:1 (60% vs. 24%)
High omega-3 (12% vs. 8%)
Other strengths of canola vs. soybean… Hybrid crop faster genetic gain possible
Oilseed more efficient producer of OIL
Broad adaptation, fits easily into many rotations worldwide
TRUSTING THE TRUSTING THE MARKETMARKET
Canadian Canola Value Chain
SEED FARMERGRAIN
HANDLER
EXPORT
CRUSHER OIL REFINEREND
USER
MEAL
USA, Japan, Mexico, China, Pakistan, etc.
Let Market Forces Work FOR US!
Pairs of “buyer-seller relationships” along value chain
MUST operate efficiently for canola to be competitive
Variety registration• Interferes with seed supplier-farmer interaction & slows
delivery of innovation hurts canola’s competitiveness!
• Focus on upstream-downstream “disconnects”, i.e. breeder vs. end user views on compositional priorities
Tariffs (in key export markets)• Favour soybean must level the playing field!
• Clear priority for CCC & all stakeholders
HARNESSING HARNESSING INNOVATION INNOVATION
Improving Canola’s Position
Continue Pushing Productivity YIELD gains blurred by heat/drought of 2001-
2003 but evident in high yield environments Need to extend yield gains to entire
geography Key = HYBRIDS – just scratching the surface!! Agronomics & disease greatly improved Next decade = improved harvestability,
stress tolerance, frost/cold tolerance
NEED TO MAINTAIN – EVEN INCREASE – R&D INVESTMENT!!
U.S. Average Corn Yields 1920–2003
Yie
ld i
n b
uac
r
Year
1947
0
20
40
60
80
100
120
140
160
180
1920 1930 1940 1950 1960 1970 1980 1990 2000
b=1.52
b = 2.85
Open Pollinated
Open Pollinated
b = -0.67b = 1.17
Double Cross Hybrids
Double Cross Hybrids
Single Cross Hybrids
Single Cross Hybrids
198819831970 197
4
1993
193619
2003142
Improving Canola’s Position
Increasing Oil Content Adds value for ALL users Variation (>2%) in elite Canadian germplasm Variety registration as a tool?
Make oil priority #1 – working in Germany
Bonification as a tool?Used in EU (esp. Germany) & AustraliaMore likely to get what we want if we pay for it!
US soybean oil% down in past decade great opportunity for canola to be MORE competitive!
Improving Canola’s Position
High Stability Oil LL & MOLL canola = best available solutions to TFA’s Superior to current soy options & available NOW! Need to eliminate yield penalty & reduce premium Harness “genetic horsepower” challenge = IP Solutions? Partnering along value chain, licensing IP Window of opportunity BUT soybean not standing still
have new profiles & true high oleic (85%)
Remember who the REAL competition is!
7%
15%
7%
16%
7%
7%
12%
61%
24%
67%
29%
75%
54%
83%
21%
53%
23%
52%
15%
11%
8%
3%
3%
3%
2%
36%
3%
3%
Canola
Soybean
LL Canola
LL Soybean
MOLL Canola
USDA Soybean
HOLL Soybean
Saturates Oleic Linoleic Linolenic
Canola & Soybean Specialty Oil Profiles
Improving Canola’s Position
BiodieselEconomic w/ high oil prices & GH gas
considerationsEU leading the way BUT makes sense in CanadaNeed strong lobbying effort for tax breaksCould petroleum industry be incented to invest??First NA plant in ND (German investors)Complements bonification & chlorophyll gradingCCC involvement?
Canola oil is superior to soybean oil as a biodiesel source!
Improving Canola’s Position
What About The Meal?? Opportunities will drive increased OIL use
what about the meal? Need to close value gap w/ SBM = protein &
energy, fiber Complements effort to increase oil contents Yellow seed? = one option already have that
in canola quality juncea – need to exploit this!
“Imitation is the best form of flattery” – and the most effective form of competition!
PLAYING TO WIN PLAYING TO WIN – POSSIBLE – POSSIBLE
STRATEGIESSTRATEGIES
Winning Strategies Implement “quality only” variety registration
a.s.a.p – make oil top priority Look at options for implementing oil
bonification & direct chlorophyll measurement
Continue efforts to reduce tariffs & achieve parity between canola & soybeans in key export mkts
Lobby for biodiesel tax breaks; identify potential investors (oil industry?)
Review options for meal improvement – stakeholder discussions?
Go forward with a Go forward with a passion to make passion to make
canola better and canola better and the Canadian canola the Canadian canola
industry more industry more competitive & competitive & successful!!successful!!