ELIE, Man. – Each acre of wheat that Domain, Man., farmer Mike Bartmanovich grows will add as much as $7 to his bottom line.
It has nothing to do with expected higher grain prices.
It has everything to do with getting more revenue out of the product he is growing already.
Bartmanovich and 110 other farmers in his area southwest of Winnipeg have formed a co-operative to provide their surplus wheat straw to a proposed particle board plant in the area. They need only pick up the phone after harvest and a contractor will bale and haul away the residue, provided they can encourage enough of their neighbors to get involved.
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“We are developing something from nothing,” said Bartmanovich. “It was just going to waste.”
The Straw Producers’ Co-op of Manitoba signed a deal with Isoboard of Toronto to supply the company’s proposed new $115-million particle board plant at Elie, west of Winnipeg, with 185,000 tonnes of wheat straw needed annually.
Farmers receive $7 a tonne for their straw. The delivered factory price is $35 a tonne. Costs of baling, hauling and storage account for the difference between farmgate and factory price.
Once converted to 18 sheets of three-quarter-inch particle board, each tonne of straw will be worth approximately $250 to the factory.
The Isoboard operation will provide 110 full-time jobs and 200 or more seasonal and contract positions in baling and hauling.
It is but one example of a value-added crop that could provide a new multimillion-dollar source of income for prairie grain farmers.
Based on crop production averages for the past decade, just 10 percent of the annual residue from Western Canadian cereal crops could supply the raw product needed for the expected increase in demand for particle board in North America, according to estimates made by Resource Information Systems Inc., a research group.
By the end of 2010, it projects there will be a market for more than six million tonnes of cereal straw for particle board production – 20 percent of Western Canada’s current production.
In part, it will fill what is expected to be a growing gap in wood supplies as pressure from environmentalists slows down wood production. While no one suggests that straw will replace wood entirely, a stable and annually renewable resource should help fuel the movement away from wood, say the analysts.
However, before Bartmanovich and his southern Manitoba neighbors can take advantage of this new market, the co-op will have to find more farmers willing to part with their straw.
The financing of the Elie plant, scheduled for a construction start this summer, hinges on a secure straw supply. To date, the co-op has commitments for less than half the necessary 125,000 tonnes for the company’s first year of operation.
Still, observers of the scheme remain optimistic.
“With grain prices being what they are and the Crow Rate’s demise, it has gotten a lot of farmers thinking of the value-added sector,” said Mark Stumborg of the Agriculture Canada research station in Swift Current, Sask., the department’s specialist in prairie crop residue. “It’s a mind-set. … Being the primary producer is not enough any more.”
Meanwhile, another group of farmers and local business people have joined in the southwestern Manitoba town of Killarney to raise money for a smaller but similar straw-based particle board plant. And there are others in the planning stage.
“Projects of scale work in this industry. Smaller projects can work and work well,” said Wes Anderson of AgriFibre Industries. The Dawson Creek, B.C. company is planning a particleboard plant based on fescue straw at Wanham, Alta. AgriFibre is planning to build in other regions as well, including Kansas and Manitoba.
Brian Moore, spokesperson for the Killarney plant’s board of directors, said this type of industry is not only good for farmer suppliers, but also for their communities.
“Thirty-six jobs for a small town makes a big difference,” he said. “We need to do more to use all the resources we have in the Prairies.”
The group’s plans are smaller than those of Isoboard but already 126 investors, mainly farmers, have come forward offering money and straw. The plant will cost an estimated $20 million with $3 million from the primary investors – farmers within 100 kilometres of the proposed site. The balance is to be raised through Grow Bonds, a provincially-run program that encourages local investment.
In April, a similar operation to the proposed Killarney plant opened in Wapelton, North Dakota.
“These operations have to be small enough that they can remain flexible to the needs of the markets, investors and the communities they serve,” said Stumborg.
