Features Agronomy Identity Preserved
IP in the land where volume is king

In the late 1990s, questions began to surface regarding US forays into identity
preservation (IP) soybean production and their markets. Some scoffed at the
notion that any shift from commodity soybeans to higher quality products could
occur across the mid-west. Others warned of a worst case scenario where the
'sleeping giant' awakens, realizes it is being left out of a market opportunity,
and begins to correct the situation in short order.

Nearly a decade later, several revelations have modified that thinking. First,
that low cost, high volume soybean production can be covered on a global basis
by Brazil, Argentina and China, with support from the US. Second, that in order
to avoid treading the path of least-cost production and compete with their new
competitors, more North American growers need to embrace the concept of higher
value crop production: like IP soybeans.

Yet, fears of American growers and processors taking over the IP sector in
soybeans are unfounded, says Martin Vanderloo, general manager of Huron Commodities
in Clinton, Ontario. Vanderloo travelled extensively through the US mid-west
in October 2006 and saw no reason at that time to fear the rise of the American
IP soybean sector. From his perspective, there is plenty of room for both countries
to expand their IP opportunities.

"We need to be aware of them and understand what they're doing, how they're
doing it, why they're doing it and at what price they're doing it," says
Vanderloo, adding that fear of the unknown is what stops many growers from moving
forward. However, the US IP sector can be treated like any other competitor,
and not knowing what the competition is doing can be detrimental. "The
more information I have, the more comfortable I feel about doing what we're
doing."

Use it or lose it
One of the largest barriers for US growers venturing into IP soybeans is the
current availability of suitable varieties. During his tour from Ohio to Nebraska,
Vanderloo heard numerous complaints about the widespread acceptance of Roundup
Ready technology. Its impact has created a void in the breeding and production
of non-GMO varieties, stunting the growth of the IP sector throughout the mid-west.
"The statement I heard time after time was, 'We have no varieties to work
with', followed by 'Do you guys have anything that would work down here?',"
explains Vanderloo, adding that his answer was always 'No', given the differences
in soil type, climate and maturity rates. "But I found it interesting that
many of these guys are actively looking for a niche market, and there's a sector
of them that are 'getting it', they know how to do it, they do a good job of
it and they're looking to expand it."

The good news is there is enough market to go around for everyone in North
America. According to Vanderloo, Japanese buyers are looking for different traits
and characteristics, including protein or hilum colour. "One variety that's
been extremely popular is OAC Kent, a large seeded type, not high protein, but
it has a very nice colour to it and good sugar content, so there's a different
sector and different companies looking for that variety," he says. "Then
you have companies looking for the high sugar varieties, so there are all kinds
of opportunities, we just have to try to figure them out."

Market building already
For the most part, the notion that there is a wealth of opportunity is shared
by many in the US IP trade. To take it a step farther, there could be greater
opportunities still if North Americans could be convinced to incorporate more
soy food products into their diets.

As director of grain and oil sales for SunOpta, based in Snover, Michigan,
northwest of Port Huron, Rhonda Roggenbuck understands the potential for selling
to North Americans seeking new taste sensations and health benefits. "One
of the nice things about our company is that we are a grain elevator and an
IP ingredient company. We further manufacture soybeans from our elevator into
soy powders and soy milk. SunOpta is one of the major soy milk manufacturers
in the US," she says.

Despite that position, and the opportunities for growth, Roggenbuck concedes
the IP market has not grown as well as hoped on the domestic side. "Both
Canada and the US are subject to export markets and whatever the export whim
is at the moment makes that market," she says.

Roggenbuck agrees with Vanderloo's assessment of the seed trade and the availability
of non-GMO varieties for American IP growers. She notes that Canadian growers
benefit greatly from public sector breeding programs. "You have concentrated
at your university level for genetic matches to growing areas within Canada
for food grade soybean varieties. But trying to find a Group 5 food grade soybean
for our needs can be troublesome: it's very difficult to source IP soybeans
in Missouri and find a match for us."

Energy sector diverting optimism
One representative of the US IP system that is not so optimistic is Jeff Pricco,
president of JB Global of Burnsville, Minnesota. Pricco notes there are certain
areas of the US where IP could expand, but the impact of continued reliance
on Roundup Ready technology and an expected increase in demand for crop production
for the energy sector will make any gains in the market difficult.

"It's the result of the consolidation of farms, the Roundup Ready situation
and the coming development of biofuels here that will be even more heavily subsidized
by state and federal governments," says Pricco. Where IP in the US may
increase is for natto varieties, yet not in the traditional mid-west soybean
growing regions. "So, IP tends to be more popular in North Dakota, northern
Minnesota, western Wisconsin, Michigan, and Virginia, Tennessee and Arkansas."

The Min-Dak region is also the prime area for the edible bean trade in the
US, which Pricco maintains is another reason it could succeed in that part of
the country. "The special handling and ability of producers to accept agronomic
risk allows more acceptance of IP programs that would be seen in Iowa and Illinois,"
says Pricco, who is quick to compliment the Canadian IP grower and its sector.

"I think the US will continue to struggle to grow its IP programs. I'm
convinced that the next 10 years will see a significant amount of government
subsidized support for alternative fuels in the US, and this will create even
more pressure on farmers to turn away from IP here." -30-