How do you capture the heart of an industry that is footloose and fancy-free?
That’s something prairie people should be pondering, says the University of Manitoba’s Barry Prentice, because Western Canada has the chance to grab hold of the present boom in plant processing.
But it could as easily end up elsewhere, he warned.
“Where the plants get built, that’s where the industry tends to stay,” said Prentice, a supply chain expert, during the Transport Institute’s Fields on Wheels conference.
The unique opportunity today comes from the increasing value being broken out of crop components with modern processing techniques.
Traditionally, there is a big divide between “weight-losing” products like beef or french fries, which are more efficient to process close to their source and then ship the finished products, and “weight (or volume) gaining” products, like potato chips, which are better to make near their consumers.
Today, much more value is being found in products formerly considered “byproducts,” which are discounted and hard to clear, but now are often seen as “co-products,” which are valuable products by themselves.
The sophisticated markets developing for various plant proteins, oils, meals and fractionated components means that a processing plant might be shipping products to multiple markets.
That means it is often as efficient to be based close to crop supplies as it is to be close to the consumers of the main product, especially when the consumers of other co-products are spread between different regions, Prentice said.
A longstanding example of that is canola crushing, which often has oil consumers in different markets than the meal consumers. It can make sense to crush canola and ship the oil one direction and the meal in another.
These “footloose” industries and plants have the choice of where to locate, so places that would like to host them, including the Prairies, need to think about what will make their region attractive. That can include tax and regulatory situations.
Each nation, industry and plant will have its own economic considerations, and that’s why each situation is unique.
Canada’s canola processing industry received an early boost from slow U.S. approval of canola as a safe food, and the hemp industry may have the same opportunity.
“We have a chance to get the industry started here and by the time they wake up it may be too late,” said Prentice.
“Let’s hope that’s maybe the case.”
