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Ontario’s seed corn crop on the move

Issues create uncertainty on where it may go.


November 12, 2007
By Ralph Pearce


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10aA disturbing trend is taking shape in Ontario and it seems to run contrary
to some of the more recent developments in the agri-food industry in the province.
Namely, seed corn production is moving out of Ontario and into the US midwest,
and it is unknown whether the average grower in the province is aware of it.

The reasons are varied and largely dependent on the source. But such influences
as access to irrigated land and less expensive costs in the US are the oft-cited
explanations. Increased specialization that tailors seed production through
greater efficiencies and consolidation within a company that eliminates wasting
of resources and space are two others.

This movement runs contrary to the image soybean and cereal sectors are attempting
to build for Ontario. Although wheat seed companies are few, the sector is attempting
to drive production in the direction of specialized uses for a diversified blend
of types and varieties. On the soybean side, the sector continues to push east
and north, with both private and public breeding programs trying to keep pace
with the changing heat unit, disease and weed profiles.

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The view from the south
John Larimer, president of Lord's Seeds in Howe, Indiana, tries to walk the
fine line between criticizing the current political structure for seed production
in Ontario, and the negative impact a return of seed acres into the southwestern
corner of the province might have on his business. His success has come from
offering seed companies lower cost efficiencies, simply because producing seed
corn is what he does best. "You have good production up there, it can compete,"
says Larimer, citing the lack of irrigation as the significant issue. "The
companies want consistency in production, they don't want a big wide variation,
so that definitely hurts up there."

Larimer adds he has a problem with the Seed Corn Growers of Ontario (SCGO)
and its impact on seed production. In his view, the agency's current fees of
$8 per acre add to the overall per acre cost, part of a cumulative total of
up to $150 more in Ontario than in Michigan, by his estimates. That makes it
cost-prohibitive to maintain seed corn acres in the province. "We've got
three seed companies that have already figured it out," says Larimer, adding
that without the fees, market forces would have a better chance of driving production
in Ontario.

From his perspective as chair of the SCGO, Walt Charbonneau echoes Larimer's
contention that irrigation is the larger issue. In 2004, 2003 and 2000, lack
of moisture was not an impediment, but drought-like conditions in 1999, 2001
and 2002 convinced several companies to move south. "They want to ensure
that seed crop is there, it costs them a lot of money to grow it, and they were
moving to irrigated ground," explains Charbonneau. "Surprisingly enough,
it didn't take a lot of rain for us to get back in the game, and this is the
second year now that we're putting out a really good crop of seed, after two
or three bad ones."

Charbonneau is somewhat skeptical, however, when it comes to cost- prohibitive
claims against production in Ontario. He says when things such as land values,
the cost of electricity to irrigate land and, differences in chemicals and inputs
are factored in, the discrepancies become less relevant. "Once it gets
built into the system, people stop thinking about it," he cautions.

Charbonneau also makes reference to the scale of production in Canada versus
the US. Here in Canada, he says, seed corn production is limited to fields of
50 to 60 acres, but in the US, fields can run from 200 to 500 acres under irrigation.
"They may come to Ontario to spread their risk but the companies are calling
the shots," says Charbonneau, adding that most growers in Ontario would
like to grow larger acreages.

10bPlant half empty, the other half full
Another consideration which cannot be ignored, especially in the current economic
climate, is consolidation. Irrespective of nationality, Cathy Soanes, technical
information and marketing manager with Syngenta Seeds Canada, says decisions
over the closure of one facility instead of another comes down to efficiency.
"There are corporate decisions that have nothing to do with whether we
have good producers here or good production plants," says Soanes. "If
a company has two production plants, both not operating at full capacity, from
a business perspective and production efficiencies you may move the total production
to one plant. Consistency of yield and yield potential, costs of production,
shipping, availability of irrigation, adaptability of in-breds to local climate
will also be factored into the decision."

Like Larimer and Charbonneau, Soanes points to consistency as being a key factor.
And weather conditions play into that consistency with temperatures that are
too hot or too cold at the wrong times in the growing season. "We're confident
in the quality of our seed corn producers in Ontario," says Soanes, adding
that consistently delivering on targets and keeping production costs competitive
go a long way to ensuring seed production in Ontario. "Our 10 year average
has been 104 percent of target, even with the drought years factored in."

On the plus side
In spite of differences between the US and Canadian production, representatives
of Pride Seeds of Chatham, Ontario, part of the AgReliant Genetics group, are
optimistic of, if not driven by, the results they see in Ontario seed crops.
Grant Craven, production manager for Pride, acknowledges the objective side
of business decisions. He likes what he sees year-to-year in Ontario fields.

"Even in our very driest years, years when we split production between
the US and here, under irrigation in Michigan, we still out-yielded their irrigated
seed corn," says Craven, adding that moving operations to the US would
leave a shipping cost to be incurred on the Canadian side of the border. The
cost of doing business is too complex to condense it down to only one or two
issues. "However, at this time, we want to produce seed corn here because
we can do it well, we can still provide a good product at a good yield."


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