Redefining success
Soy 20/20
January 21st, 2004
Overview
•
•
•
•
Where are we at now?
How did we get here?
What opportunities exist to change this?
How can we make the future look
different?
Soy 20/20 vision
OSG
AAFC
Soy 20/20
OMAF
U. of
Guelph
Refine vision
Walk towards it
How did we get here?
Drivers for Ontario production
15
Acres harvested
2500
2000
10
1500
1000
5
500
0
0
1942 1952 1962 1972 1982 1992 2002
Volume (1,000
acres)
Value ($/bu)
$/bu
Supply/Demand = Price
How about value share?
• Demand has kept pace with supply
• Has farm value stayed the same?
Example of value sharing
Swine value chain (US)
Price/lb (U.S. $)
$3.00
$2.50
$2.00
Retail
$1.50
Wholesale
$1.00
Farm
$0.50
$0.00
1996 1998 2000 2002 2004
Farm soybean profit versus
export margin.
$4.00
Value/bu
$3.00
$2.00
Farm profit
$1.00
$0.00
-$1.001988
-$2.00
Export margin
1993
1998
2003
Farm profit versus crushing
margin.
$100.00
$80.00
$60.00
Farm profit
$40.00
Crush margin
$20.00
$0.00
-$20.001990
1995
2000
2005
The closer you are to the
consumer the higher the profit.
The best farm value does is
maintain share.
Future projections
• Price will stay stable to improve
– Argentina close to maxed out
– Brazil poised for additional growth
– U.S. reduced production
– China is the one to watch
Industrial markets for soybeans
Why are industrial markets
exciting?
1. Increased demand for soybeans
2. A new opportunity for value chain
management.
3. Greater market diversity leads to
greater market stability for
producers.
Producers
to diversify
the
We
need need
to diversify
markets
crops
they we
produce
for
what
produce.
Food is not the best growth
opportunity for agriculture.
Industrial sector value in Ontario.
C
Ve
hi
cl
es
ics
Pl
as
t
al
s
he
m
ic
Fo
o
d
$25
$20
$15
GDP ($B)
$10
$5
$0
What are the most promising
new market opportunities for
Canada?
Bio-diesel in Canada
Feedstock
cost
Tallow
$0.09/lb
Yellow grease
$0.18/lb
Soybean oil
$0.38/lb
Acres of soybean
Potential bio-diesel demand for
Canadian soybeans.
400,000
300,000
200,000
NPV = $21,655,050
100,000
0
2002
2005
2008
2011
2014
2017
2020
Soybean peroxidase
Phenol
+
Soybean
Formaldehyde
peroxidase
Phenolic resins
Soy wax candles
Candle
company
Wax
producer
Candle
company
Candle
company
6,000 acres of soybean
Candle
Company
Polyurethane
Soybean
Petroleum
oil
Polyols
Polyurethane
Solvent in cleaning supplies
Soy based
Limonene
ethyl esters
Cleaning
solutions
How can we change
the future?
Moving up the value chain.
Soy meal
Protein
Soy food
Salad oil
Soybeans
Oil
Plastics
Carbohydrates
Ethanol
Plastics
Two ways to move up the chain.
Varieties grown
for industry
Farmers involved
in processing
-Varieties with altered profiles
-Less protein/higher oil/higher yield
-Lower price/bu, Higher value/acre
Farmers need to sell
up the value chain;
- Sell protein
- Sell oil
- Sell carbohydrates
Summary
• New market opportunities are
coming.
• These will create more value by
increasing demand.
• To gain greater value requires
movement up the value chain.
We need to imagine success
beyond alleviating current
constraints.
We need to imagine beautiful.