We ushered in the New Year with a brief article outlining our priorities for 2022. We hope you had a chance to read it, and moreover, noted the new phase of our initiative – where we are going to need more engagement and participation on your part. We are now setting the stage for our upcoming virtual-meetings (invitations will be forthcoming) and farm-profiles (subject of our next article) -- two critical items of our action-plan moving forward before the new crop-year gets going.
In the meantime we thought we would share our thoughts on another key part of our mission – recasting our global-image with a new focus, a rich source of not just bulk-grains but specialty-crops that can be bought directly from producers in container. We spent a lot of effort last year trying to convey why it is so vital for producers to pursue direct-sales, the only way to break loose from the bulk-cage they are trapped in. But we must not forget that as vital as they may be, direct-export-opportunities are not low-hanging-fruit; it will take effort to cultivate them.
In earlier articles we talked about the challenges we face in reaching out to end-markets. We know little about buyer-needs while buyers know even less about us -- our production-capacity, crop-variety or institutional-strengths. You may find the latter rather puzzling as we are the world’s 5th largest grain-exporter, known for the quality of our bulk-exports. Regrettably, this is indeed the case; we learned this reality from living abroad for so many years, looking back at Canada from the eyes of foreigners, now potential buyers we are targeting through direct-sales channels.
In fact, when we look in the mirror, this should not come as a surprise. Our exports are more diversified than the US, but two crops (wheat and canola) still account for 75% of our grain-exports. Also, we remain highly bulk-oriented, 85% of our grain-exports from the west-coast. Recently, we have become a primary source of pulses, high-value crops we mostly export in containers, but in small volumes. We also use some empty containers returning to Asia as over-flow-channels from bulk-streams but we are not known for our bona fide containerized exports -- door-to-door shipments from production-sources to final destinations with crop-integrity intact.
Looking at it from another perspective, our grain companies consolidate what producers grow and export in bulk; those at the receiving end are also bulk-traders. Thus, we have little contact with end-buyers, who in most instances may not even know they are buying Grown-in-Canada grains. What we export goes into bulk-grain-stocks at the other end and is sold domestically by intermediaries. End-users, like flour-millers or food-processors, are not even aware of the fact that a huge variety of crops are available directly from producer-sources to meet their specific needs and requirements, crops that can be grown, sold, and shipped in containers.
Most importantly, importers have little idea of how advanced our farms are. They utilize the latest farm-equipment and management-systems to achieve the highest crop-yields and quality-standards you can find anywhere in the world. Moreover, we are also the largest source of quality fertilizers and chemicals in use in agriculture. Behind our farms are leading research institutes at the cutting edge of agronomy, particularly crop-genomics. A few advanced farms working together can meet most purchase-orders to buyer needs-and-requirements with the highest quality crops.
If end users are often not even aware that grains they are milling or processing are Grown-in-Canada, it is unrealistic to even expect them to relate to the realities of our grain-economy. Even if they were curious enough to do a web-search, all they would see are rail-side grain terminals, even larger coastal ones with bulk-ships berthed at their docks -- these are the realities of the bulk-trades our producers are captive to.
If we are going to achieve the paradigm-shift to direct-sales and container-logistics channels, we first have to make a concerted effort to recast our global-image. The feedback we get from potential importers suggests that we have to do a much better job promoting ourselves to do justice to the advanced state of the Prairie grain-economy. To this end, we developed a five-pronged framework:
Advanced farms: Getting increasingly larger, sectionalized for multiple-crops, using latest machinery-equipment, GPS-guided variable-spreading-monitoring devices, backed up by management-systems and big-data applications.
Research capacity: Leading universities and research-labs working behind the scenes but actively engaged in the fields, putting science-and-technology in action, with latest seed-varieties, farming-methods, and sustainable-practices.
Crop variety: While our export-profile may be highly skewed towards staple-crops, you can find different types and grades of coarse-grains, oil-seeds, lentils-pulses and many other crop varieties, including organic of most things.
Institutional capacity: Though the grain-industry is now privatized, its regulatory heritage (including classification systems) is there for quality-assurance along the entire supply-chain, from production to handling to processing to exporting.
Logistics services: The service capacity is there in all corners of the region to handle, process, grade and test every export load, and ship in container-lots, with our own special efforts to pull empty-containers in-land for grain-trades.
We will be integrating all these elements into a Prairie Profile tab on our portal -- much expanded version of what you see now. The Farm Profiles you will be hearing from us on next (subject of our next article) will also be incorporated into this framework. We look forward to your comments and suggestions in presenting the Prairies at their best -- by email or through the new comment-box on our portal.
Technology: In recent years the Prairie grain economy has undergone a remarkable technology-transformation, in display with latest farm-equipment with positioning, guidance, spreading and sensing devices -- AI-driven functionality and drone-usage paving the way for precision-farming. Also, management-systems backed by big-data, are in use for integrated activity-planning -- seeding to growth to harvesting. The results are evident from notable yield-increases and crop-quality improvements.
Scale: At the same time, the farm-economy has undergone massive consolidation. Now mega-farms, 20,000 acres or larger, are becoming the norm. This trend played a major role in not just technology-advancement but also diversification, giving rise to sectionalized-farms growing multiple-crops, with on-farm storage-capacity to fulfill contract-orders. These trends also had the effect of enticing smaller farms to pool resources to advance, the only way to compete with much larger neighbours.
Traditions: Consolidation helped keep corporate-farming at bay, allowing family-farming traditions not only to survive but strengthen with a renewed sense of entrepreneurship in a highly market-driven environment. Now younger gene
rations are incentivized to stay behind, running or participating in family businesses in various capacities, not just traditional farming-chores but challenging professional roles, be it technology-adaptation, system-management or business-development.
Diversification: Preserving these traditions greatly helped the Prairie farm-economy advance, diversify and prosper. Over the years we saw this spirit at play in the shift from wheat to canola, and recently to much more lucrative pulses. Now all the conditions are in place for our entrepreneurial, forward-looking farmers to
embrace the next wave of value-driven specialization -- shifts to specific grades of staple-crops or new crop varieties, driven by direct-sales opportunities in export markets.
Buyers can confirm all aspects of this advancement from the Farm-Profiles we post and be assured that producers, alone or in cooperation with others, are ready to meet all the challenges buyers throw at them -- they have the capacity to fulfill purchase orders no matter how large or difficult, and we are there to support them.
Institutions: There are a dozen or more universities and colleges in the region, all with active agricultural research programs and labs at the service of the grain-economy. They have top-notch resources and are well funded through endowments and government agencies, provincial and federal. They are not only renowned academically but also actively engaged in hands-on applied research efforts in the fields -- they have been instrumental in driving the advances in Prairie-farming.
Seed varieties: There were numerous contributions from the R&D sphere to Prairie agriculture, but probably the most significant were from the crop-genomics domain. Advances in seed-strains, and their adaptation t
o local soil conditions, contributed greatly to yield and quality improvements. Also, we saw huge benefits from drought-resistant seeds in the last crop-year; though it still turned out to be a poor harvest, it was no where near as bad as the last drought-year a decade earlier.
Growth conditions: Agronomists are also involved in field-operations, providing guidance to farmers with respect to crop-choices most suitable to varying soil conditions across the region, as well as best-practices in seeding, fertilizer-chemical applications, and harvesting-methods. The hugely successful effort in turning the region into a prime-source of pulses on the world stage was the result of close collaboration between agronomists, producers, and governments working together.
Sustainability: The scientific community is also active in furthering the cause of sustainable-agriculture, now with evidence that Prairie agriculture has turned into a carbon-sink, obviously a great feat in combating global-warming. The region is blessed with irrigation-free-farming, but with the help of the scientific community both resource-requirements and carbon-emissions are closely monitored to ensure that the sustainability-record is not just maintained but continuously improved.
These resources are available to not only local farmers but also buyers of Prairie grains from all around the world in advisory capacities, where to source specific types or grades of crops they need. If you engage with any accredited research-institution, we will work with you to ensure that your needs and requirements are looked after.
Staple crops: Wheat and barley used to be our board-crops exported through the Canadian Wheat Board. Since the dismantling of this single-desk monopoly, wheat still remained our principal export-crop, now down to 50% of our grain-exports but all in bulk. We intend to focus our efforts to specific grades of wheat, especially durum that we are well known for, but we also believe that our somewhat neglected barley varieties deserve more attention, mainly aimed at brewing and distilling.
Coarse-grains: We also have a much greater variety of coarse-grains in the offering, particularly oats and rye but also others -- already grown but mostly for domestic and US markets. We see significant potential for these crops in global feed and food chains -- specific crops or special purpose mixes exported in container-lots. We will try to bring more attention to these domains, particularly high-value types or grades, by targeting food-processing, breakfast-cereal, animal-feed as well as other markets.
Oil-seeds: Among oil-seeds by far the most significant volume we grow and export is canola; we are the largest grower and exporter of this crop in the world. There is little growth potential in canola, and now the industry is looking for alternative uses like bio-fuels. But recently soybeans have been getting a lot of interest, with grade and quality differentiation as a value-proposition. We will pay a lot of attention to soybeans, together with flax and other oil-seed varieties that are in high demand.
Pulses-lentils: The discovery of our potential in this ancient-crop domain has been the greatest value-proposition to our producers -- dry beans, dry peas, lentils and chickpeas . This has become a well served segment of the grain-economy, with containerized-exports by industry leaders with global reach. It may not need us as much as other grain-segments, but we will pay as much attention to this domain as it deserves, to facilitate new export channels to geographical markets that we target.
In addition to the major categories noted above, there are many other crop grades and varieties available from our region, including niche-products like wild-rice and organic-of-anything. The crop-range we grow for local markets is much broader but anything that can be grown would be available for export through direct-channels.
Regulatory heritage: Over the last two decades we have been actively privatizing and liberalizing our grain-industry, thus there is a perception that the government is out of the way. But deregulation pertains to markets, not health-and-safety; the grain-chain is tightly regulated from all angles to uphold quality-assurance standards along the entire chain, from production to handling to exporting. Importers can take comfort in the fact what they buy in containers is as secure as our bulk-channels.
Health-and-Safety: Grain is part of the food-chain, thus subject to the same health-and-safety regulations as anything we eat. The entire production process, from seeding to harvesting to storage, are subject to regulations; inspectors may not reside on farms but farmers have long internalized rules, standards, and practices, and are often inspected to ensure full compliance. Also, regulations extend to grain-handlers, with every piece of equipment subject to health-and-safety rules.
Trade Licensing: Grain traders or exporters are also included in the regulatory-net, licensed through the Canadian Grain Commission. Producers are incentivized to sell through licensed exporters as that is the only way they get insurance-coverage. Any grain-trade we facilitate or get involved in will be through licensed-parties. Also, there are government-certified labs involved in testing and issuing reports on all grain-exports, as well as a variety of channels engaged in routine inspections.
Grain Classification: Our systems have long been in place, and served as templates for most parts of the world. The original emphasis was on wheat and barley (board-grains) but with the shift to other crops they have been expanded with even more detail with crop-attributes -- our soybean standards truly stand out in differentiating our grades. Most importantly, our identity-preservation rules and procedures are also outstanding, and of course are of crucial importance in containerized trades.
You would be hard pressed to find a single other jurisdiction in the world where you can be more confident of the rules-and-regulations governing the grain-industry. Quality assurance along the entire grain-chain, growth to handling to exporting, is not something you need to worry about, as long as you rely on credible channels.
One-stop-service: Once producer-buyer contracts are finalized, among themselves or through our channels, we can get into the act in a logistics capacity. Though we can play an advisory role in this capacity, we prefer to take on the full responsibility of door-to-door shipments, one-stop-service, whether for one-time or steady-contract orders. We look after the entire logistics chain, from farm-pickup to final-delivery, including grain-handling and intermodal-transport services in between.
Container-supply: In the Prairies you cannot avoid hearing about the perennial problem of container shortages, while vast volumes of containers return empty from the coast that could otherwise be carrying grain (under today’s market conditions more than 2 MT/yr). We would urge not to take these concerns seriously; problems can be solved by working with container-lines to manage and balance container-flows. If we did not have practical solutions we would not be in this business.
Grain-handling: The supply of grain-handling services may look limited across the Prairies for the simple reason that most traffic moves in bulk. As containerized exports develop, suppliers will rise to the occasion, but we are not sitting idle for these services to emerge organically. We have a plan in place to facilitate this process, through our own initiatives as well as third-parties. As others did in the pulse-domain, we will overcome these challenges to meet all your needs.
Intermodal-services: We already have a logistics-partner with extensive trucking and rail-reload operations across the region, with established working relationships with both the railways and port-authorities. Neither producers nor buyers will be captive to any one logistics service-provider; in time there will be competitors to choose from but in the meantime we have a ready-made solution for clients, producers or buyers, whoever takes on the logistics responsibilities on a given trade-contract.
We not only offer fully-integrated logistics services to move crops to export positions, but beyond to your doorsteps, which could be much further inland from the landing port. Quite familiar with the problems at that end, we have lined up reliable service partners throughout Asia Pacific to ensure timely delivery of your container-loads.