The New Agriculture: Sunshine

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The New AgricultureSunshine Storm

• Presentation to the Prairie Oat Growers
  AssociationWinnipeg, Nov 29, 2007
• John Dean

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Major issues impacting the industry on all sides.

• High grain prices
• Low livestock prices
• Input costs and the Canadian dollar
• Biofuels
• To buy, to sell, to be an ostrich
• To invest in new opportunities
• Trade restrictions
• Increasing demand for agricultural products
• Contract opportunities
• Environmental farm plans
• GMOs
• Traceability issues CIPRS, HACCP, ISO
• CWB and marketing choice

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Our track for today

• What are the most critical drivers?
• What are the implications for Western Canada?
• Is there a winning formula?

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The most critical drivers?

• Consumer Power Voting with the shopping cart!
• Nutrition Health
• Environment
• Biofuels ethanol biodiesel

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Consumer Power 1 Nutrition Health

• Trans fats
• Bad fats Good fats
• Simple Complex carbohydrates
• Obesity the big problem!

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The nutritional nasties!

• Trans fats
• Clogged arteries

HEART ATTACK!
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What are TRANS fats?

• Fatty acids formed when liquid oils are
  hydrogenated
• Like saturated fats, give superior texture
  mouth feel, longer shelf-life
• Stable and ideal for high temperature frying
• Butthey help clog arteries! LDL up, HDL down
• So, they are BAD fats!

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Consumer Power nutrition health
Sunflower oil NuSun?
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USA New York health dept asks restaurants to
eliminate trans fat 12 Aug 2005 Source
just-food.com
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The big boys are changing!
Posted Jan 31st 2007 302PM McDonalds switching
to trans-fat-free oil
Innovation January 3, 2007, 1201AM EST How KFC
Went Trans-Fat Free
Friday, January 12, 2007 Dunkin' doin' trans
fats transition
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What are the major healthy oils the good
fats?

• Omega 9 oils (C181 oleic, monounsaturated)
• Canola (with omega 3) HOLL canola
• Olive
• NuSun HO sunflower
• HO safflower
• Omega 6 oils (C182 linoleic, polyunsaturated)
• Sunflower
• Safflower
• Linola
• Soybean (with omega 3)
• Omega 3 oils (C183 linolenic, polyunsaturated)
• Flax and NuLin

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Fatty acid profile of the major oils fats
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Unilever combines health messages zero trans
omega 3

• Put healthy fats on your menu.

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.and goes further with co-branding three types
of omega 3
Becel Omega 3plus margarine ALA, DHA, EPA
NaturEgg Omega 3 eggs
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Omega 3 from fish DHA, EPA
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Omega 3 from flax ALA

• Regular flax 55 omega 3
• NuLinTM flax 70 omega 3

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The nutritional nasties!

• Trans fats
• HEART ATTACKS
• Simple carbohydrates
• OBESITY

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Obesity Trends Among U.S. AdultsBRFSS, 1990,
1998, 2006

• (BMI ?30, or about 30 lbs. overweight for 54
  person)

1990
1998
2006
No Data lt10 1014
1519 2024 2529
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Source Centre for Disease Control
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Rising health care costs huge concern of
governments

• Health spending
  growing faster than economy Report Nov
  13, 2007
• Health spending in 2006 150.3 billion
• Health spending in 2007 160.1 billion
• Increase of 6.6
• Faster growth than the economy
• 10.6 of GDP
• Hospitals 28.4 of total (44.7 in 1975)
• Drugs 16.8 of total (8.8 in 1975) call for
  Phamacare?

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Changing demographics
2007
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Glycemic Index white bread 100
HIGH GLYCEMIC INDEX FOODS GI
Instant rice 124 Corn Flakes 119 Rice
Krispies 117 Jellybeans 114 French
fries 107 Soda crackers 106 Potato
(boiled) 104 White bread 100 Melba
toast 100 Couscous 93 Ice cream
87 Oatmeal (1 min. oats) 87 Digestive
cookies 84 Table sugar (sucrose) 83
LOW GLYCEMIC INDEX FOODS (choose these foods more
often) GI Popcorn 58 Oat bran bread 68
Oatmeal (slow cook) 70 Parboiled rice 68
Pumpernickel bread 66 All-Bran 60 Sweet
potato 54 Skim milk 46 Pasta 40 to 70
Lentils/beans 40 to 69 Apple/banana/plum 34 to
69 Barley 52
Source St. Michaels Hospital, Toronto
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High GI foods are dangerous!

• Eat foods with High GI, blood sugar levels shoot
  through the roof
• Pancreas secretes insulin, to get your blood
  sugar level back to normal
• causing our bodies to store excess sugar as fat
• inhibits the burning of previously stored fat
• signals our liver to make cholesterol!

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Australian-developed logo
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Whole grain, higher fibre foods

• Best fibre sources soluble and insoluble
• Oats and barley grains (beta glucan)
• Whole seed ground flax (mucilage)
• Pulses beans, lentils, peas, chickpeas
• Fruits Vegetables

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US Whole Grains Council stamps

• Whole grains must contain all three layers of
  the grain
• the endosperm, the bran and the germ. US FDA

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Kelloggs, General Mills Quaker all get the
message!

• Get the power of oats working for you!

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BUT does Health Canada?

• January 17, 2007
• A CALL TO ACTION
• From THE CANADIAN BARLEY FOOD
  COALITION (CBFC) ISSUE
• Harmonizing Canadian Barley Health Claims with
  the USA.
• In response to a petition by the American
  National Barley
• Food Council, in Dec 2005, the US Food and Drug
• Administration (FDA) amended its regulation
  authorizing a
• health claim on the relationship between oat
  beta-glucan
• soluble fiber and reduced risk of coronary heart
  disease
• (CHD). The amendment added barley as an
  additional
• eligible source of beta-glucan soluble fiber.

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BUT does Health Canada?

• Canadians deserve the right to make healthy
• decisions and Health Canada has an obligation to
• assist them in making these choicesallowing
• proven health claims to be made on the label of
• foods and beverages that include barley

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Will Canada follow?
WFP Nov 17, 2007
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GI
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Food barley to Japan

• USGC Ships Food Barley to Japan
• U.S. Grains Council (USGC)
• WASHINGTON, D.C., July 30, 2007
• A shipment of U.S. barley arrived in Japan July
  17, due to efforts of the U.S. Grains Council.
• The barley will be used for food, according to
  Cary Sifferath, USGC director in Japan. Sifferath
  said this is the beginning of a very valuable
  trade relationship that will benefit U.S. barley
  producers
• This is a momentous occasion that will benefit
  Japanese consumers and U.S. producers.
• This is the first year for food barley to have a
  SBS tender program as well.
• The barley is a special high beta-glucan variety
  called Salute grown in Idaho.

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Genuine whole wheat (grain)
2.7 g
6.9 g
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Consumer Power 2 Environment

• Its the Economy, stupid!
• James Carvill, campaign strategist for Bill
  Clinton, 1992 Presidential campaign
• Its the Environment, stupid!!
• Reality in the 21st Century

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Its the environment.!
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The Chinese of all people!

• CWB malt barley sale of 600,000 mt per year
  accredited by
• Chinas Green Food Development Centre.
• The Green Food label assures consumers that a
  food
• product is produced according to safe
  agricultural practices
• in an environmentally sustainable way, free from
  air and
• soil pollutants.
• Haiguang Shi, General Manager, CWG Beijing Office

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The hog industry of all people!
www.hytekmb.com

• The Hytek Ltd. Environmental Management System
• Hytek is uncompromising in its approach to
  environmental
• protection, as the interests of our ecosystem and
  the people,
• plants and animals that it sustains take
  precedence over all else. 
• As such, Hytek Ltd. is committed to being a
  responsible steward
• of the environment, as well as safeguarding the
  health of our
• employees and neighbors who live within the
  communities in
• which we operate.
• Our objective is to produce the highest quality
  agricultural
• commodity possible while maintaining and
  improving the
• environment within and around our facilities.

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Leveraging the environmental advantage

• Western Canada has
• Superior soil management practices
• Low input of crop protection chemicals
• Optimized use of chemical fertilizers
• Prudent management of organic manures
• Action on water issues
• Clean air
• Therefore we must
• Be committed participants
• Develop a united voice within the industry
• Maintain a consistent message to our customers

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BIOFUELS

• Ethanol

Biodiesel
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Biofuel plants USA

• But profitability issues
• cost of feedstock
• value of bi-products
• cheaper imports
• price at the pump

Biodiesel
Ethanol
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• Total biodiesel
• 100 million litres
• Total ethanol end 2007
• 1.019 billion litres
• Additional 2008
• 550 billion litres

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Corn CBOT
Soybeans CBOT
Canola WCE
Wheat CBOT
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Brent crude oil IPE
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Some big questions

• Will high prices hold up?
• Longer term, consultants Clean Edge Research
  project global value of biofuels
• 2016 at US81 billion
• 2006 was US20.5 billion
• What about food vs fuel?
• FOOD expected to be the major driver in demand
• Affluence and population growth
• Petroleum prices must be at least 60-90/barrel
• Will biofuels save the planet?
• Concerns over impact on rainforests, marginal
  land
• Asian clearance for palm with huge fires (CO2)!
• USA targets for biofuel 7.5 bn gal by 2012
  (total gasoline 140 bn gal) only 5.36

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Hummer 3 vs Prius
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ROBBIN S. JOHNSON C. FORD RUNGE Ethanol Train
Wreck Ahead? Government policy is stoking
unsustainable growth of the corn-based fuel. A
more sober, diversified approach is needed.
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If ethanol not good for the USA, how bad is it
for Canada?

• Report from the George Morris Centre, November
  2007, states
• Needs massive subsidies and border protection
• Does little to reduce CO2 emissions
• Only marginally energy efficient
• Consumes large quantities of fresh water
• Growth will drive inflation in food and the
  general economy
• Plant margins have collapsed relative to historic
  levels
• Profit outlook very tight both short and longer
  term
• Government is sacrificing a successful export
  value added business meat!

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The Implications for Western Canada challenges
opportunities

• Challenges
• The enterprise challenge livestock vs grain
• The margin squeeze CDN inputs, US sales
• Negative publicity e.g. red meat
• Consolidate, expand, sell?
• Integrate, cooperate for value how?
• Country Of Origin Labeling (COOL), market access
  restrictions
• Access to credit

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Composition of Canadas Agri-Food Exports to the
United States
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Red meat consumption

• Limit consumption of red meats
• (such as beef, pork and lamb) and
• avoid processed meats
• There is strong evidence that red and
• processed meats are causes of bowel
• cancer, and that there is no amount
• of processed meat that can be confidently
• shown not to increase risk.
• Aim to limit intake of red meat to less
• than 500g cooked weight (about 700
• 750g raw weight) a week. Try to avoid
• processed meats such as bacon, ham,
• salami, corned beef and some sausages.

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The Implications for Western Canada challenges
opportunities

• Opportunities
• Global demand (population, disposable income)
• Buoyant agricultural industry (AU final price)
• Branding Canada (and specific regions)
• Top quality grains (CWRS, CWAD, malt barley,
  oats)
• General Purpose wheat (ethanol, feed)
• Oilseeds Special crops (three canola types,
  mustardseed, pulses, etc)
• Functional foods (the Manitoba Cluster)
• Contract production (livestock grain)
• Added Value (Hytek Ltd, Pizzey Milling, etc)

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A buoyant industry
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An integrated industry
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A Winning Formula?

• Diversified
• Differentiated for competitive advantage
• Responsive
• Technology adopters, demand driven
• Integrated
• Not independent but interdependent
• Sustainable
• Environmentally responsible, economically sound

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Thank you
A new agriculture and a new opportunity?