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XXIV - An Action Plan To Achieve Our Paradigm Shift

Updated: Jan 16

In our last article we elaborated on the paradigm-shift we are calling for to further producer interests in overseas export markets, a shift away from bulk-trades to direct-sales, much like trade occurs across North America. By enticing overseas-buyers to procure what they need from production-sources, and get them shipped in containers, producers will be able to diversify to higher-value crops and earn higher margins, while buyers will also benefit by getting what they need in container-lots.

The paradigm-shift we are calling for in overseas markets is by no means “radical”, not even unconventional. The changes that will come with this shift, which will benefit producers, have long been standard practice in our domestic markets, and even in our exports to the US. But their extension to overseas is not going to come about without a concerted collective effort. To this end, we are putting forward a four-prong action-plan; we will expand on each prong in our next series of articles.

First, though we are known as a major grain exporter, there is little visibility into our grain-production capacity at the farm level, let alone the strengths of the ecosystem surrounding those farms. We may be known for our staple export crops, but not even for all the varieties and grades of those staples, let alone many other oil-seeds, coarse-grains, and pulses we grow. Also, there is much more we can brag about, including our research-capacity, quality-assurance, and environmental-sustainability.

Second, as important as promoting our own capacity, is understanding consumption and processing trends in end-markets. This has become a much-neglected domain even within the confines of bulk-trades, as we seem oblivious to the vulnerability of our traditional exports in global markets. The value-driven diversification strategy we are calling for requires an in-depth understanding of industry-structures and supply-chains that we are targeting with higher-value crop grades and varieties.

Third, direct-sales require connectivity, between sellers and buyers, which happens quite organically in the highly integrated and transparent grain markets across North America. Our mission is to nurture the same in overseas markets, an integral part of our trade-facilitation efforts. While extolling the virtues of Prairie production-sources, we will reach out to corporate buyers in targeted industry-segments and crop-markets, not only to establish connectivity, but also foster trading relations.

Fourth, in the coming months we will give priority to bringing transparency to our region’s grain-handling and logistics capacities and providing evidence of execution ability as direct-sales start materializing. In many respects, these capacities are in place, as direct grain sales are already prevalent across North America. Now we must demonstrate that what takes place in our backyard in trucks or rail-cars can be done in containers across the Pacific. We have already published a post on how we plan tackle this challenge, and we will elaborate on these plans in upcoming posts.

Promoting producers in export markets

Many wonder why we need to make a special effort to promote ourselves in global markets when we are the 5th largest grain-exporter in the world, known for the quality of the crops we export. This may be known by importers at the receiving end of our bulk-trades (grain-companies or wholesalers) but not by the end-users we are trying to reach through direct-sales channels. The latter (millers or processors) may not even know that the grains they buy from intermediaries are Grown-in-Canada.

Thus, we face a formidable challenge in raising awareness and confidence among overseas buyers, demonstrating that our region is not only a prime source of the grains they now buy, but also that even higher quality crop varieties can be bought directly from producers – processed, containerized, and shipped to final destinations with crop-integrity intact. The primary promotional tools we will use in this vein are:

Farm Profiles: These are the tools we use to portray the advanced state of our primary production sources, with latest science-and-technology in action growing a huge variety of crops that can be purchased at farm-gates, and cleaned, graded, tested, containerized, and shipped to final-destinations. We are hoping to post 100s of these individual farm-profiles in the next year or so, provided that their owners to agree to participate in this exercise, all in the cause of promoting their own interests.

Regional Profile: While farm-profiles are at the core of our agenda, we also see value in promoting our collective virtues, the entire grain-ecosystem that supports individual producers. Key elements of this ecosystem are the research-capacity producers draw on from agronomy, local suppliers of the best farm-inputs in the world, full range of equipment vendors and infotech solution providers, associations that represent producer interests, and authorities responsible for quality-assurance.

Virtual Grain Mall: Our end goal is to incorporate all these elements (individual-farms and regional-attributes) on a virtual-platform that will showcase all the virtues of the Prairie grain-economy. Prospective buyers will be able to visit farms at virtual-stores and learn more about the region’s broader attributes at virtual-pavilions. The main themes on display will be crop variety, advanced agronomy, cutting-edge technology applications, management systems, quality assurance, and sustainability.

Understanding end-market conditions

Our record in understanding global markets is even poorer than in promoting our own virtues. For example, as China was rising to become our largest grain-export destination, all we seem to know was that they were buying more from our bulk-stocks, never trying to understand what was driving that demand. Similarly, we have been paying little attention to the vulnerability of our staple-exports through bulk-channels to increasing competition from low-cost, emerging grain-producers.

We hope to pay attention to these issues, not to support or protect bulk-exports but to bring attention to the dangers our primary constituents, producers, face in their dependence on bulk-trades. But the focus of our market-research agenda will be on new opportunities that can be fulfilled through direct-sales channels, higher grades of crops we already export in bulk, or specialty-crop varieties with higher margins.

Country Profiles: Our trade-facilitation efforts, at least for the time being, are aimed at the Asia Pacific region, where we are targeting 8 countries – China, Japan, South Korea, Indonesia, Philippines, Thailand, Malaysia, and Vietnam. We will start these efforts by developing demand-supply profiles to determine current and projected import requirements, as we know they are all net grain importers. We will try to get as granular as possible by crop-type, but within the confines of readily available data.

Consumption Trends: We will then try to decipher consumption trends to identify main demand-drivers – meat consumption driving demand for feed, shifts from rice to wheat or coarse-grains driven by dietary trends, signs of emerging demand for high-value crops like pulses that present huge opportunities for us, as well as high-grade soybean varieties that we are paying more attention to. We will prioritize crop varieties that present us with the greatest export prospects (not volume but value).

Supply-Chain Analysis: Against the background of all this, comes the real challenge, targeting end-buyers, which requires further study into industry-structures and supply-chains. In our previous studies we cited in earlier posts and articles, we gave examples of how we targeted corporate buyers along wheat-flour, animal-feed, and breakfast-cereal industries by tracing technology and supply-chain trends. We must conduct many more studies like this, not just in China but across the entire region.

A platform to connect buyers and sellers

The end game is not just identifying end-buyers in export markets but attracting those buyers to our region with the intention of procuring the grains they need directly from our production sources. But at the same time, we must mobilize our producers to respond to these export opportunities. Trade facilitation efforts start from both ends, but grain-sales do not materialize instantly like on Amazon. There is an arduous path of trading-relations that are required before contracts are signed.

These are not one-click-sales, and the platforms that approach grain-trades in that vein do not have much success. We pay more attention to the nature of grain-trades and chart our course, accordingly, following a consultative process that requires dialogue and negotiations between parties on contract details. Thus, instead of a trading-platform, we take a fundamentally different approach, a trade-forum:

Trade Forum: Starting with a dialogue-box on our portal (soon to be activated), this will evolve into a layer build on top of our virtual trade-mall. Even at these early stages, we will give producers a chance to post the types of crops they have in the offering, with the option of incorporating them in farm-profiles or taking up their own dedicated pages on the trade-forum. Similarly, prospective buyers will be able to post their profiles detailing crop needs with specific attributes (type or grade).

Sales/Purchase Inquiries: Once we have both producers and prospective buyers engaging on the trade-forum, we will actively solicit them to post sale or purchase inquiries and encourage them to start interacting on the details. They can then enter an exclusive phase in negotiations or post their requests (purchase or sale) for competitive bidding. There will be structures built into the platform to support either path, but we will not get involved in the process unless asked to do so.

Contract Support: We see most of these buyer-seller interactions going down a contract-negotiation path, settled exclusively or competitively. Any negotiation can go off our platform into a private deal among parties at any stage; whether initiated or facilitated through us, we will not impose any compulsory commissions. Fees or levies we charge users will be service-based, transparent and voluntary; we are there to offer fee-based contract-support services, not to impose trade-commissions.

Containerized export-logistics capacity

Even at these early stages of trade-facilitation efforts, we are paying close attention to the development of supply-chain arrangements to handle grain shipments once they materialize. A lot of the details will naturally depend on crop-types being sold, as facilities cannot be built in advance waiting for sales to happen. Also, containers cannot be secured in advance, or final-delivery arrangements made, until actual volumes are committed to contractually, at least revealed by expressions of intent.

Still, in the coming months, we will be posting articles laying out conceptual plans on how we intend to handle different types of crops from sources in the Prairies to Asia Pacific destinations. We have a post coming out on container repositioning, which will be followed by three case-studies, albeit hypothetical ones, on selected crops (durum, barley, and cereals) shipped from Prairie origins to Asia Pacific destinations.

Grain Handling: Some direct sales with limited handling requirements can be handled at source, even containerized on farms. Many producers already have the means or can set them up easily, on their own or in partnership with neighboring producers. As an example of a commercial facility taking on these functions, we are working on a case-study of an actual facility with a range of equipment to handle a variety of crops – we will follow this up with a few other third-party service-models.

Container Supply: Since we published a pos