Marketing freedom across Western Canada may mean new cropping options for farmers, but no immediate shifts in planted varieties are expected. Part two of a three-part series on the new marketing era.
Future cropping decisions will be more market responsive than in the past, and agricultural companies will play a larger role in acting as a conduit for information to flow between growers and end users, says Peter Entz, assistant vice-president of seed and traits at Richardson Pioneer Ltd. “Because we are working more directly in the market, we will be able to listen to end-use customers, and get stronger feedback in terms of what specific traits they are interested in,” he says. “Our role is then to work with plant breeders or seed companies to see if that trait can be bred into existing varieties and commercialized in Western Canada for farmers.”
Many in the industry believe that interest in wheat and barley will grow and the development of new varieties that serve specific end uses or markets will proliferate.
“I think there will be more interest in cereals now that there are more marketing options for the crop, which in time will mean that the varietal development will be more focused on the market,” says Mark Lepp, co-owner and business manager of FarmLink Marketing Solutions.
Many in the seed industry believe interest in wheat and barley will grow.
However, a shift in cropping trends is not expected in the immediate future. “At this point I don’t think there have been too many plans changing from normal rotations,” says Lepp.
As farmers in the West think about their crop plans for the year ahead, wheat is likely to remain an important part of the rotation.
“Growers will grow wheat if it fits their rotation and agronomic needs and if it fits their financial needs,” says Norm Dreger, head of cereals for North America at Syngenta. “Farmers are very disciplined when it comes to their rotations—they have some room to take advantage of opportunities when they arise on the marketing and price side, but they are not going to upset their rotations because of that.”
Whether farmers grow more or less wheat will largely be a question of economics, although it is possible they may choose to switch to lower-quality, higher-yielding wheat varieties, but only if strong market demand exists.
The problem, says Corie Cowlthorpe, part-owner and general manager of Double Diamond Farm Supply, is many global markets don’t want high-quality wheat and aren’t prepared to pay for it. “There’s probably a more relaxed system now to allow wheat breeders to look at yield, which is what the grower, at the end of the day, is still paid on,” he says. “I’m not sure that our growers are rewarded for the quality of grain they are growing.”
Canada’s global reputation as a high-quality wheat producer doesn’t necessarily have to change for them to do that. “We can continue to be a supplier of CWRS high-quality wheat to the rest of the world, while growers also pursue opportunities to grow high-yielding but lower-quality wheats of other types,” says David Hansen, president and CEO of Canterra Seeds. “There is great potential for growers to add new wheats to their cropping plans.”
Investment and interest in cereals is picking up in the global seed community. |
Investment Injection
Already investment and interest in cereals seems to be picking up among the global community. “There has already been a ton of investment by companies interested in new cereal varieties and agronomy,” says Cowlthorpe. “Canada has been at a disadvantage in terms of the investment that companies were willing to put into the cereal side of the business, and that seems to have changed about 180 degrees.”
At the same time, meeting the needs of growers is still as important as it ever was, and seed companies, in a more open market environment, are trying to devise ways to add value for farmers. Some companies are likely to offer bundled programs to attract growers to their varieties or products, but not everyone is convinced that this is the right strategy.
“These bundles don’t add much value,” says Dreger. “They may be providing an incentive or discount, but they are not adding value to the grower in the true sense, in terms of agronomics.”
How seed companies and retailers will position themselves to take advantage of the opportunities a changing market environment shakes out will depend on their strategies and philosophies, and in some cases their size.
“I think this could really impact seed retailers as there could be a shift in the seed business quite like the shift we saw in canola over the last 20 years,” says Lepp. “The line companies probably see this as a huge opportunity to start tying in seed to contracting opportunities. If seed retailers are not careful they will turn into a bulk producer of seed for the line companies rather than the retailers they are today. I suppose it depends on the model they are looking to be or become.”
Dreger says that Syngenta, as a technology company, favours a more integrated strategy to create opportunities for everyone along the value chain. “The main drivers of what we are doing—whether it’s in the areas of chemistry or genetics—are the needs and requirements of our customers, and that is the grower when it comes to agronomics, and the end user when it comes to quality.”
Smaller scale, local seed growers and retailers can position themselves to take advantage of new value-added opportunities, says Lepp, but they need to be on their toes.
“I see a really good opportunity for local seed growers to add more value to their clients and their communities by expanding the focus of what they are doing on the seed side,” he says. “By helping to develop end-user relationships with buyers for their farmers to sell to, they can create a competitive advantage in their space rather than become lost in the crowd.”
Most seed companies are viewing the upcoming changes through an optimistic lens. “We are excited about the partnerships being developed between private and public plant breeders and producers,” says Hansen. “Producers will be part of the discussion as all levels of the value chain evaluate new genetics coming forward.”
Working groups, round-table discussions and a recent wheat summit in Saskatchewan have brought together cereal industry stakeholders. Communication efforts and partnerships will be central to the discussions that will determine how marketing freedom for wheat and barley will shape the agricultural landscape of Western Canada.
Angela Lovell
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Click here to read part three of the three-part series exploring the impact of the new marketing environment on seed. |
