Pork ponders path

Resolutions came fast and furious at the pork board's annual meeting last month, but unanimity was elusive. "It was heart-rending to see councillors struggling to make decisions when things are so bad at home," said board chairman Will Nap. "It's not easy to always see things clearly when you're losing, still, $30 to $40 a pig."

Producers made it clear they want explanations for high meat counter prices while farm gate prices were at an all-time low. An Essex county resolution calling for a Royal commission and a Peterborough resolution requesting a government-funded study of processing, wholesaling and retailing both passed easily.

And unity was also achieved on most pork board marketing initiatives, including New Beginnings, which continues the existing Pool and Pool Plus programs, and a new Platinum Program for tight-specification pigs.

But frustration began to show with the board's plan to continue allowing producers to sign direct contracts with packers. Larger contract producers have long argued they shouldn't have to bear the full cost of pigs marketed through the board. Ontario Pork will continue to charge $1.79 per hog this year.

Last year, proponents of direct producer contracting were supported by the Serecon report, which grew out of an industry task force report that called for an end to the board's monopoly selling powers. This year, councillors passed a Kent county resolution calling on the board to reject all Serecon recommendations.

Since pork prices crashed in November there has been a grassroots outcry against direct contracts. The pork board should be "sole deal maker," according to Christian Farmers Federation of Ontario (CFFO). At the annual meeting, CFFO, which has just over 50 pork-producing members, was instrumental in presenting several resolutions aimed at halting direct contracts.

However, things took a different turn when a key resolution, calling in part for Ontario Pork "to regain control as the sole seller of all hogs," was presented by Dave Linton, a newly elected pork board director from Huron county. At one point during the debate, Linton conceded things no longer seemed as clear as they had when he drafted the resolution. Still, the Huron resolution carried handily.

A Grey Bruce resolution bolstered the attack on direct contracts. It carried easily by a show of hands. The key stipulation was "that all current contracts be allowed to run out and only be renewed as block contracts through the OPPMB."

The next day, a hastily drafted resolution in support of direct contracts carried by a vote of 120 to 53. "We'll have to sit down as a board and do some rationalization out of what producers were telling us and how we can make some sense out of what they were telling us," Nap concluded after the meeting.

The meeting opened with motivational speaker Gordon Colledge encouraging delegates to avoid "being uptight about change" in a presentation entitled "Building the Organization of Tomorrow."

This prompted CFFO vice-president Jasper Vanderbas to accuse the board of using Colledge to influence voting. "I ask that the board refrain from that kind of influence peddling in the future," chided Vanderbas.

Following the vote supporting contracts, Vanderbas was critical of what he termed lobbying by the board in hospitality suites during the previous evening. In an interview with Farm & Country following the meeting, Vanderbas said events suggest "a very divided industry." - Robert Irwin

© copyright 1999 Agricultural Publishing Company Limited.


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Queen's Park gets spending blueprint

The Farmers of Ontario have asked the provincial government to spend about $350 million over the next five years to ensure a healthy future for agriculture.

In what is being hailed as a blueprint for agriculture, the 41-member farm organization lobby group wants government to strengthen farm safety nets and marketing structures, allowing farmers to focus on global competition, rather than financial uncertainties, says Ed Segsworth, Ontario Federation of Agriculture president and co-chairman of Farmers of Ontario.

Farm leaders hope to see evidence of their initiative in the provincial budget expected later this month.

"We're looking at the longer term," Segsworth says. "That appears to be what government is looking for, and this will give agriculture what it needs to plan for the future. Hopefully this fits into their business plan."

Segsworth says lobby groups have worked with "OMAFRA and drawn up some areas...and some figures we're both comfortable with. In that sense, we have OMAFRA there as a partner."

Recommendations cover five specific areas:

* Risk management. Maintaining and enhancing existing safety net programs; providing funding for a whole farm disaster relief program; and establishing a $15 million R&D fund to analyze economic development opportunities.

* Research and technology transfer. Enhanced research activity should concentrate on reducing food hazards and pesticide use, improving environmental integrity, and developing products based on consumer demand. A $100 million, five-year Competitive Innovation Fund would develop new agri-food technologies.

* Food Safety. $80 million is needed to enhance the provincial inspection system.

* Environment. A five-year, $117 million program is needed to help farmers maintain and protect soil, water and air resources.

* Market development. A $40.5 million Ontario Agri-food Market Development program will identify and develop new market opportunities.

"All five areas are equally important," says Wayne Newman, chairman of the Ontario Agriculture Commodity Council and co-chair of the united lobby effort.

"Agriculture is the second-largest industry in Ontario, and we have an impressive track record. We can maintain this momentum and surpass it with further government investment." - Bernard Tobin

© copyright 1999 Agricultural Publishing Company Limited.


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DuPont picks up Pioneer

Ontario farmers headed into the hectic 1999 input buying season mid-March amid news that two more of their suppliers had tied the corporate knot: Wilmington, Del., chemical giant DuPont and Des Moines, Iowa-based Pioneer Hi-Bred International, the world's largest seed company.

A fiercely independent holdout in an industry rife with multinational corporate mergers and alliances, Pioneer finally succumbed to the advances of the US$25-billion DuPont, which had been courting Pioneer since buying 20 per cent of the company in September 1997 for US$1.7 billion. The remaining 80 per cent is valued at US$7.7 billion, or US$40 a share. The deal, which creates an agricultural enterprise with sales of US$5 billion, is expected to be completed mid-summer.

In a conference call with the financial media to announce the US$7.7-billion deal, Pioneer CEO Chuck Johnson didn't elaborate whether farmers would soon see new traits such as herbicide resistance in their corn seed. Repeating the company preference for an entire genetic package versus a single genetic trait, Johnson said farmer customers could expect a "whole stream of opportunities" to enhance Pioneer's "genetic platform."

At Pioneer's Canadian subsidiary in Chatham, communications manager Art Stirling says he expects business as usual, with the Pioneer name and head office unchanged. Combined annual research budget will be US$600 million. The chemical-seed merger "is a really nice fit," Stirling says. "It's an extremely exciting announcement."

DuPont CEO Charles Holliday called it "one of the most important mergers in U.S. history," creating "an ag biotech world leader," integrating DuPont's genetic research with Pioneer's marketing network.

With the merger, farmers can look for more special-trait genetics targetted for the feed and food markets, along the lines of high-oil corn marketed by Optimum Quality Grains, the DuPont-Pioneer joint venture.

Pioneer seed today is sown on more than four of every 10 corn acres in the U.S. The company was a long-time holdout in an industry where all the big chemical players have allied with seed companies, but CEO Johnson says Pioneer no longer had "the critical mass required to compete effectively" on its own.

In the days leading up to the deal the financial pages had been rife with rumours of a Monsanto-DuPont merger. Last year, Pioneer declined Monsanto's offer to put the Roundup Ready gene in corn. Monsanto eventually purchased DeKalb, which will market Roundup Ready corn this year. Pioneer already markets Roundup Ready soybeans. DuPont has its own line of herbicide-resistant soybeans, STS.

Clear winners in the deal announced March 15 were Pioneer shareholders, who will be offered US$40 per share, up more than 60 per cent from US$24.50 four days earlier. - John Muggeridge

© copyright 1999 Agricultural Publishing Company Limited.


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Higher tech, lower prices?

Technology use fees for crops such as soybeans and corn may be here to stay, but competition among rival seed and chemical companies could push fees lower in the future.

Roger Wyse, managing director of Burrill & Co., a California-based merchant bank that runs a number of agricultural biotechnology venture capital funds, believes farmers will see lower fees as more companies bring competing products to the farm marketplace.

Ontario farmers had their first taste of technology fees last year when Monsanto launched its Roundup Ready technology in soybeans, which carried an $8 per bag premium or between $12 to $16 per acre.

That fee will likely be pressured by the 1999 launch of DuPont's STS-Reliance system. It promises to match or beat the price of the Roundup Ready system.

The soybean crop protection market will be even more crowded in 2000 when AgrEvo, which launched its Liberty Link system for corn in 1998, brings a similar program to the soybean market. Liberty and Reliance won't carry a technology use fee, but both herbicides must compete with the cheaper Roundup.

With the three technologies looking for market share, "you are going to start seeing competition in that market," says Wyse, who was in Guelph last month to address the Ontario Agrifood Technologies annual meeting.

Wyse expects the same scenario in the corn market. "If you see a Roundup Ready corn and then a Liberty Link corn and somebody else comes up with a glyphosate resistant corn, you now have three companies competing for that same dollar."

He says every company is going to have to get a return on their investment "or they're not going to bring the product to the market."

But with soybean prices floundering and corn down around US$2 per bushel, "it makes a big different in what you can extract" from a farmer, Wyse says. - Bernard Tobin

© copyright 1999 Agricultural Publishing Company Limited.


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Cluster pools resources for profit

When Tony Morris enthuses about clusters, he doesn't mean the flies that gather in the calf barn.

The former Ontario Federation of Agriculture president dropped by the Western Fair farm show in London last month to talk about his latest project: business clusters, or groupings of companies to open up new business opportunities.

Morris, director of marketing for the six-month-old Guelph-based Agri-Food Quality Cluster, said the cluster's buzzword is "connectivity." In layman's terms, that simply means industry networking to generate growth.

"We're about win-win. We're a corporation with attitude," says Morris, who was OFA president for two years. "It's unique knowledge coming together with money to create jobs."

Morris cited some 380 clusters in the U.S., ranging from grapes in California to beef in Texas to insurance in Connecticut. Combined, they account for 68 per cent of U.S. exports.

The Guelph cluster is the world's first based on food quality, safety and integrity, said Morris. Its not-so-modest three-year goal: 3,000 jobs and $3 billion in economic activity. Morris said that new companies already spun out of the cluster's activities exceed $350 million in capitalization.

On the farm end, the cluster might link an exporter, a company with unique knowledge, and a grower-supplier. A group of beef producers might form a contract co-op to target a market demanding unique rations and genetics. "It's critical that the industry realize that it has to be one [supply] chain," says Morris.

With no government funding, and a $1,000 membership fee in the works, the agri-food cluster has three staff: Morris, president Jim Stewart and research analyst Anita Stephenson. Morris said the cluster, based at AgriCorp offices at One Stone Rd., Guelph, is supported by ongoing contract work.

The cluster's 12 projects include third-party ISO certification for countries wanting proof of certification. The cluster is also working on diagnostic technology for applications such as a probe that can detect GMOs or E. coli. It is exploring commercial channels for functional foods, an "enterprise incubator centre," a trade and technology showcase, and a $50-million equity venture fund geared to the value-added industry.

The cluster's 500 members include major food processors, government and chemical companies. - John Muggeridge

© copyright 1999 Agricultural Publishing Company Limited.


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