2013 Northwestern Ontario Specialty Crop Market Report 3/31/2013 Acknowledgements Funded By: NRC-IRAP Prepared By: The Northwestern Ontario Innovation Centre Inc With assistance from: Dr. Tarlok Singh Satoka, Thunder Bay Agriculture Research Station Wayne Vanderwees, Freight Managers Inc. Paul Tulonen, IRAP Allan Mitchell, AgraTactics Agronomy Marlene Boersch, Merchantile Consulting Venture Inc. iii Table of Contents Executive Summary ........................................................................................................ 1 Agriculture Market Research Report ............................................................................... 3 Project Overview.......................................................................................................... 3 Section 1: Crop Analysis and Profile of Economically Viable Crops ................................ 5 Chickpeas .................................................................................................................... 5 Lentils .......................................................................................................................... 5 Field Peas .................................................................................................................... 6 Hard White Spring Wheat ............................................................................................ 6 Millhouse Barley .......................................................................................................... 6 Durum Wheat .............................................................................................................. 7 Soft Red Winter Wheat ................................................................................................ 7 Flax Seed .................................................................................................................... 7 Canola ......................................................................................................................... 8 Mustard ........................................................................................................................ 8 Section 2: Market Potential and Industry Trends ............................................................. 9 Pulse Overview ............................................................................................................ 9 Consumer Trends .................................................................................................. 10 Chickpeas .............................................................................................................. 10 Lentils ..................................................................................................................... 11 Field Peas .............................................................................................................. 12 Overview - Wheat ...................................................................................................... 13 Hard White Spring Wheat ...................................................................................... 14 Durum Wheat ......................................................................................................... 15 Soft Red Winter Wheat .......................................................................................... 16 Overview - Oilseeds ................................................................................................... 17 Flax Seed ............................................................................................................... 17 Canola .................................................................................................................... 18 Mustard Seed ......................................................................................................... 20 Overview - Millhouse Barley ...................................................................................... 21 Section 3: Market Opportunity Analysis ......................................................................... 22 Paths to Market and Supply Chain ............................................................................ 22 Figure 1 - Supply Chain ..................................................................................... 23 iv Marketing Commodities ......................................................................................... 24 Procedure for Marketing Commodities ............................................................... 25 Grain Moisture Chart .......................................................................................... 28 Wheat/ Red Winter Wheat .................................................................................. 28 Canola & Mustard ............................................................................................... 29 Barley ................................................................................................................. 29 Flax ..................................................................................................................... 29 Peas/Lentils ........................................................................................................ 29 Bushel Equivalents Per Tonne ........................................................................... 30 Organic Crops ........................................................................................................ 31 Primary Research – Customers for NWO Specialty Crops .................................... 31 Methodology ....................................................................................................... 31 Primary Research Findings .................................................................................... 31 Analysis .................................................................................................................. 40 Estimating Revenue ............................................................................................... 40 Price ................................................................................................................... 40 Figure 2 Specialty Crops - Historical Pricing Data .............................................. 41 Yields .................................................................................................................. 42 Cost of Production .............................................................................................. 42 Timing ................................................................................................................. 43 Financial Analysis Worksheet - Based on 2/3 of TBARS Yields ........................ 45 Financial Analysis Worksheet - Based on Provincial Average Yields ................. 46 Transportation Cost Assumptions ....................................................................... 47 Direct to Consumer ................................................................................................ 48 Cooperative Option ................................................................................................ 49 Section 4: Transportation and Infrastructure Analysis ................................................... 51 Definition of the Transportation Opportunity Being Investigated ................................ 51 Constraints and Consequences ................................................................................. 51 Geographical Issues .............................................................................................. 51 Sizes of Shipments ................................................................................................ 51 Seasonality ............................................................................................................ 51 Specialized Equipment Requirements ................................................................... 52 Loading Facilities ................................................................................................... 52 Commodity Cannot be Mixed ................................................................................. 52 v Market Locations and Pricing Differential ............................................................... 52 Cost of Selling Out of Town vs. Using Locally ........................................................ 52 Examination of Different Modes - Overview ............................................................... 53 Rail ......................................................................................................................... 53 Road ...................................................................................................................... 53 Comparison of Modes vs. Constraints. ...................................................................... 54 Geographical issues ............................................................................................... 54 Sizes of Shipments ................................................................................................ 54 Seasonality ............................................................................................................ 54 Specialized Equipment Requirements ................................................................... 54 Loading Facilities ................................................................................................... 54 Commodity Cannot be Mixed ................................................................................. 55 Market locations