Under the Agridome
From Field to Future: Adding Value to Every Corn Acre
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It's been a bit of an uneven year in Ontario fields. I've had the unfortunate problem of too much rain all spring, making it considerably difficult to get soybeans above ground. That was not the case in much of the rest of the province as crops got off to a pretty good start.
However, a bigger problem in Ontario outside of my area has been drought. If you have read this column during the last 38 years, you know what I say: The drought will end when it rains.
There's been a bit of rain during the weekend in some areas and maybe that alleviated the pain. However, I get it. It is no fun when you have a crop burning up in the fields. All I can say is I hope for better things to mitigate some of this risk. Corn might pollinate in July, but it needs rain all through the growing season to make a good crop. We still have a ways to go before the crop is made.
In Ontario and Quebec this year, we expect 2.2 million acres and 854,600 acres of corn to get to the harvest finish line. In other words, there might be a little bit less than that, but that's what we planted. This should result in an Ontario corn crop of 433 million bushels (mb) and a Quebec crop of 161 mb. I would have to do a crop tour from Windsor, Ontario, to Drummondville, Quebec, to know the true state of the eastern Canadian corn crop but generally we do well with corn. Our yields on a provincial basis usually challenge that of the I states in the United States (Iowa, Indiana, Illinois).
When you group Ontario and Quebec together as corn provinces, most of that production would go to into the feed market. For instance, Statistics Canada said that 58 to 62% of corn goes into feed for the dairy, poultry, hog and beef industries in Ontario and Quebec. Ethanol has a big component of the utilization with about 24 to 26% of corn going to ethanol. This percentage is bigger in Ontario, usually thought of as around 33% or one cob out of three. There is a certain percentage going to food processing as well as seed and on-farm use, but at the end of the day we always have to export corn. In other words, we produce more than we use.
The export part of the equation for Ontario corn is an important one as we need to get value for it somewhere. However, keep in mind what I always say: When you do ship any agricultural commodity out on the open seas, you are suddenly in a race to the bottom for the cheapest price. In other words, corn from the Ukraine, Brazil, the United States and who knows where will be competing with that Ontario corn and that criteria will be price. Cheap wins every time and that ultimately ends up in the Ontario farmer's pocket.
It would be nice to do better, and we have an example of this in our own backyard with ethanol, which currently chews up about 33% of Ontario corn. That took a lot of partnership between government and private industry at the time then and any new initiative for value-added in corn will take the same.
For instance, think of an Ontario corn economy where exports are not needed. There are opportunities to increase Ontario corn demand by expanding our ethanol capacity. There are also future opportunities in bioplastics, renewable natural gas, high fructose corn syrup and starch, corn protein for aquaculture and pet food and a few other minor uses. It would all take some investment from government and private industry to get started, but it would be well worth it. The potential is there to eliminate Ontario's corn exports and increase income to Ontario corn farmers.
There are people working on this, including those at the Grain Farmers of Ontario. However, the key is to change our production mindset. As farmers, we are constantly thinking about how to grow more and more corn. That's particularly understandable based on the rules of our agricultural economics. What is more important is to produce more and more corn and to utilize it in value-added opportunities right here in Ontario. Think value-added and price discrimination.
The focus now for Ontario and Quebec corn farmers is do what we do best. Dec corn finished at $4.13/bushel Thursday. Cash values this fall are approximately $5.24/bushel. It is what it is.
The challenge ahead is to rethink how we add value to every acre we plant. We've proven we can grow the corn -- now the job is to build out the demand to match it here at home. Ethanol showed us what's possible when industry and government pull in the same direction. The next frontier lies in bioplastics, corn-based protein, sweeteners, and renewable fuels -- ideas that may seem out there today but could be the ethanol of tomorrow. We don't need to chase the lowest price on the ocean if we can grind, ferment and refine that value right here in Ontario. The corn is in the field -- it's the next chapter of demand that's waiting to be planted.
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Philip Shaw can be reached at philip@philipshaw.ca
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