Old Globe

Global Market Trends

The efforts behind our trade-facilitation mission are based on diligent market research.  We track trade-volumes and crop-prices but dig much deeper into market-dynamics through the research we conduct into demand-drivers, both consumption and supply-chain trends.  

 

The research themes we focus on, and case-studies we conduct, reflect the export potential we see in identifying specialty-crop varieties our producers should consider growing.  What you see here reflects the work we have been doing, but you can shape our future agenda.

Green Orchard

Crop Varieties

The crop varieties we focus on are not selected based on just high-prices they fetch in global markets, nor on exotic attributes or scarcity. Our efforts are driven by research into consumption and processing trends in search of crops with strong and sustainable demand that can add value to our agricultural economy. In fact, we make a special effort to warn producers against latest “fads”, markets that can easily get saturated with a sudden supply-shock -- our region’s production capacity is large enough to flood "niche" markets with oversupply, thereby suppress prices.

Initially we will place a great deal of emphasis on specialty-grades of our staple crops -- wheat, durum, barley in particular, as well as canola in search of alternative paths to the contemplated shift from bulk-exports to oil-crushing and bio-fuels. We will follow up on the findings of our earlier flour-milling study to pursue opportunities in China through indirect or re-exporting channels, and also look into other markets in Asia. We are also embarking on a barley initiative, to learn from why our producers missed out on brewing or distilling trends, and how best to invigorate these efforts.

There are plenty of lessons to learn from pulses, how producers struggled initially but found salvation in companies like AGT and Scoular that are hooked into supply-chains and add value to crops by processing, packaging and containerization. There are much larger export opportunities in not only North America and Middle East but also throughout Asia -- we have become the premier pulse-producer but by no means exhausted the growth potential. As in everything else, we will first and foremost pursue direct-sales channels to yield higher margins for producers.

It is difficult to do justice to such a vast array of specialty-crops that the region can turn to in a few paragraphs. Also, we should be upfront about the limitations of our own knowledge in identifying the best options, or how to prioritize them to serve producer-interests -- highest-returns with minimal market-risk exposure. We need suggestions or requests from the producer-community, thus would welcome any advice our followers can give. To this end, we will be establishing a discussion-forum to get ideas as to how we should ration our scarce resources most effectively.

 

 

Crop Market Research Priorities

As we stated earlier, our efforts to promote crop-diversification place as much attention to specialty-grades of our export-staples as new crop varieties.  Before we get into more in-depth market research into consumption-trends and supply-chains, we want to devote more attention to identifying specific crop types with greatest market potential.

As in all our efforts, however, we want to be guided by producer-interests.  Accordingly, we look forward to your ideas and suggestions to shape our research-agenda.  Our resources are limited, thus we want to ensure that our priorities are aligned with your needs.

Fruit and Leaves

Regional Market Studies

As a mature, high-cost agricultural economy, naturally we have to pay attention to emerging-producers, be it in Asia, South America or Africa, as they have a long way to go in increasing their yields as well as quality. Equally importantly, however, we have to pay attention to the US in our own backyard, world’s largest producer and exporter. Currently as misguided as us, they are even more dependent on low-value bulk-exports -- soybean, corn and wheat. But they can just as easily wake up to the specialization-imperative and follow suit at a much larger scale to dwarf our efforts.

We have some unfinished work from a few years ago on China, how a minor player on the world grain scene became a major producer (close 2nd to the US) and by far the largest importer (3-times more than our exports). We are updating this work and will soon make it available on this platform, titled The China-Factor. The reason we are placing importance on this report is not because we are at all optimistic that Canada-China relations will improve any time soon, but changes in China’s trade-patterns and import-sources will profoundly impact crop-prices and global-trades.

On the coattails of our China-project we plan to turn our attention to a related topic, production increases in a huge region to China’s west and north -- stretching from Mongolia and Kazakhstan, through Central Asia, to Georgia and Ukraine, with Russia across the north, we call the New Grain Belt. Yield increases across this region are evident, likely to have major impacts on global trades, putting downward pressure on most crop-prices. These trends will likely impact our bulk-export prospects most, thereby putting more pressure on producers to shift to specialty-crop niches.

 

We have another initiative on the horizon, digging into the EU grain industry -- 3rd largest producer and 4th largest trader, with balanced imports-exports. This is a highly regulated, at least policy-driven, market -- legacies of member-states as well as new agricultural policies. Thus, its relevance may be limited to highly liberalized US and Canada, but there are many lessons to learn in crop-specialization and containerization. Also, the EU has achieved a high degree of crop-food-alignment together with supply-chain-integration across agriculture and food-industry sectors.

 

Major Grain Producing Regions

We are one of the largest grain-producers in the world -- nowhere near the US or China but still 8th in the world.  Taking comfort in our rapid export-growth in recent years, however, we have not paid much attention to where we fit into the global trading scene -- among our traditional competitors, or in relation to emerging producers.

In trying to drive our diversification in the coming years, we plan to pay a great deal of attention to global markets through production and export trends.  In the coming months we have a report coming, The China Factor, followed by another, New Grain Belt.  These will be followed by two others on the EU and US.

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Stock Market Quotes

Consumption Trends

Demand for crops obviously originate from what people eat; dietary habits drive demand directly through food-chains and indirectly through feed-chains. Subtleties of crop-types that go into food-chains get lost in bulk-trades, but as direct-sales channels emerge for specific varieties, market research into what people eat and how they prepare their food becomes critically important. Accordingly, we devote considerable effort to dietary trends in identifying market opportunities for specialty-crops, not just as main ingredients but also condiments and cooking-oils.

You will see a lot of attention paid to these matters in our previous work on China -- shifts from rice to wheat based foods, and within wheat from buns-noodles to breads-cakes, to name a few. To give another example, China has given rise to a new pasta-and-pizza market already larger than Italy’s, still growing in double-digits annually. Though we remain a prime-source of durum, we have failed to keep up with latest trends in durum-varieties even in Europe, let alone attend to those emerging in China -- still exporting large volumes to Europe but regrettably none to China.

The relationship between crop-varieties and dietary-habits are further complicated by culinary-traditions. We tend to generalize over Chinese-food, but there are at least eight major cuisines (dozens more local ones), as varied as those across Europe. What we tend to lump into the same category have very different ingredients, but any one of them may cater to tens if not hundreds of millions of people. Search for specialty-crop market opportunities must reach down to this level of detail -- as we have discovered in demand for pulse-varieties in different markets around the world.

In a different vein, vegetarian or vegan diets are driving demand for many types of crops we did not even know or deemed too exotic to pursue. Similarly, organically grown of everything, together with their food-derivatives, have become widely popular, but their processing-and-distribution channels are still limited. As in direct-sales and containerization, we will facilitate the support-services these markets need to flourish. There are many producers engaged in this domain, hoping that the changes we are promoting would unleash a revival in organic agriculture.

Crop-demand driven by food-consumption

Food consumption trends drive demand for specific crops, directly through food and indirectly through feed chains.  We will come to supply-chains next, but here let us first draw attention to the importance of what people eat, how their dietary habits change over time, and in turn how these shifts change demand for crop varieties.

In one of our previous China-studies we looked at how demand for rice-base products shifted to wheat-base, and in turn changed what flour-mills required as wheat-input in the rapidly growing milling industry.  Similarly, increasing affluence and dietary shifts drove growth in the meat-industry, and in turn that industry's demand for animal-feed.

Again, China-centricity of our references reflect the focus of our past work, but we have plans to expand the scope of both studies we cite here to the rest of Southeast Asia.  We look forward to your suggestions for similar studies on consumption-trends.

 
Aerial View of Containers

Supply Chain Trends

Some crops find their way from farms to kitchens (domestic or commercial) with little processing involved along the way, as is the case for many pulses (lentils or peas). At source these types of crops require only limited handling (cleaning and grading) but before they reach final consumers or end-users, wholesalers and retailers get involved in the act. In our capacity in facilitating direct-sales, we need to understand these distribution-trails and target our efforts accordingly -- like AGT does so successfully with a local partner specializing in pulses in the Middle East.

Other non-bulk exports that lend themselves to direct-sales are feed-mixes that contain multiple crops (sometimes with additives and supplements) destined to feed-lots on local feed-company’s account -- sounds like a limited niche market but involves huge volumes. Similarly, there are opportunities to export breakfast-cereal mixes, typically raw crop-blends that may require some additives (nutritional or to cater to local-tastes) but can be made market-ready with grading and cleaning to edible-standards -- packaged prior to containerization or at final distribution-points.

 

Moving on to crops that require more processing along their supply-chains, we already mentioned our previous efforts in China’s vast flour-market. This industry is still consolidating in the hands of three major millers (one state-owned and two private, one local and another Singaporean). At their mega-mills (2000-5000 T/day, with more than 300 of them) they need high-grade wheat in small quantities (still multiple containers a week at each mill) to blend with wheat-varieties from local sources -- specific grades of wheat, sourced, graded, bagged and shipped identity-preserved.

As evident from these few examples, all crops one way or the other find their way from farm-gates to consumers; what varies are the handling, processing and final distribution requirements. Our trade-facilitation role is to find the best point to execute direct-sales, in the best possible terms for our producers. This in turn puts the burden on our platform to carry out the necessary market-research to understand the dynamics of the supply-chains we are targeting to sell Prairie crops -- a very different research focus than conducting high-level-analysis on trade-volumes or crop-prices.

 

Direct-sales driven by supply-chains

In grain-economies dominated by bulk systems, like ours to date (at least pre-pulse days), sales are in the hands of grain-companies -- they buy from producers and sell to end-users (or wholesalers).  As direct-sales and containerized-logistics channels develop, new horizons open up for producers to increase their margins.

But this comes with new burdens, mainly more in-depth market research and analysis.  In order to identify new opportunities and capitalize on them, more effort has to be made to understand not only buyer-needs but also the structure and dynamics of the supply-chains those buyers operate in -- thus our portal's focus on supply-chains.

Visit the Agora / Trade Forum to connect directly with end-buyers

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