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

OMAF U. ofGuelph

OSG AAFC

Soy 20/20

Refine vision Walk towards it

How did we get here?

Drivers for Ontario production

0

5

10

15

1942 1952 1962 1972 1982 1992 2002

Val

ue ($

/bu)

05001000150020002500

Vol

ume

(1,0

00

acre

s)

$/bu Acres harvested

Supply/Demand = Price

How about value share?

• Demand has kept pace with supply

• Has farm value stayed the same?

Example of value sharing

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

1996 1998 2000 2002 2004

Pri

ce/l

b (

U.S

. $)

Retail

Wholesale

Farm

Swine value chain (US)

Farm soybean profit versus export margin.

-$2.00

-$1.00

$0.00

$1.00

$2.00

$3.00

$4.00

1988 1993 1998 2003

Val

ue/

bu

Farm profit

Export margin

Farm profit versus crushing margin.

-$20.00

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

1990 1995 2000 2005

Farm profit

Crush margin

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.

We need to diversify markets for what we produce.

Producers need to diversify thecrops they produce

Food is not the best growth opportunity for agriculture.

$0$5

$10$15$20$25

GDP ($B)

Industrial sector value in Ontario.

What are the most promising new market opportunities for Canada?

Bio-diesel in Canada

Tallow

Feedstockcost

$0.09/lb

Yellow grease $0.18/lb

Soybean oil $0.38/lb

0

100,000

200,000

300,000

400,000

2002 2005 2008 2011 2014 2017 2020

Ac

res

of

so

yb

ea

nPotential bio-diesel demand for Canadian soybeans.

NPV = $21,655,050

Soybeanperoxidase

Soybean peroxidase

Phenolic resins

Phenol + Formaldehyde

Soy wax candles

Waxproducer

6,000 acres of soybean

Candle company

Candlecompany

Candlecompany

CandleCompany

Polyurethane

Polyurethane

Polyols

PetroleumSoybean

oil

Solvent in cleaning supplies

Limonene

Cleaningsolutions

Soy basedethyl esters

How can we change the future?

Moving up the value chain.

Soybeans

Protein

Oil

Carbohydrates

Soy meal

Soy food

Salad oil

Plastics

Ethanol

Plastics

Two ways to move up the chain.

Varieties grown for industry

Farmers involvedin 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.