Canada’s position as the world leader in the canola industry is on shaky ground, industry officials were told this week.
“We cannot rest on our laurels,” University of Saskatchewan economist Peter Phillips told the opening session of the Canola Council of Canada’s annual convention.
He warned that fundamental changes in the way the industry works, especially in research and development of new varieties, could see this country left behind in the race to develop new canola products and grab lucrative new markets.
“Canada’s position, while strong, is not unassailable,” he told nearly 300 canola industry officials gathered for the two-day meeting in Saskatoon.
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“The U.S., the European Union and Australia all have the capacity to capture maybe not the lion’s share of the total market, but a significant position of the product markets that we do well in now.”
Phillips drew a distinction between what he called the commodity market and the product market for canola.
A commodity market involves producing a homogenous, low quality, low value raw material that is traded in bulk and is subject to volatile prices and fluctuating demand.
A product market involves producing high quality, high value goods designed for a specific market. The product market, he said, is “the road to riches.
“If we cannot maintain our competitive position in the product market, we cannot be competitive even in the commodity business for much longer,” he said. “The option may be to leave the industry entirely.”
In an interview later, Phillips said the canola industry must do everything it can to remain at the leading edge of innovation. But he said that won’t be easy given dramatic changes in the world of agricultural research.
Back in 1982, there were six canola cultivars, all developed in Canada through public breeding programs. There was one new variety being released a year and each new variety had a lifespan in the marketplace of about 10 years.
In 1996, more than 130 varieties were on the market, with 30 new ones released each year. Three-quarters of the research is now done by privately funded breeding programs, and new varieties now have a lifespan of about three years before they are displaced by something better.
The short lifespan of new varieties, along with high costs of state-of-the-art agricultural research, will lead to further consolidation of the crop breeding industry, he said.
“You’re seeing less and less of companies doing everything by themselves,” he said in an interview. “Even the largest companies that theoretically can do everything in-house are partnering with others who can help speed up the process or reduce the costs.”
He said Canada is being hurt by a weakness in basic research. While this country still leads the way in applied research and field testing of new varieties, the gap is closing there too.
