1. T HE R ACE F OR M ARKETS MAKING CANADIAN CANOLA A WINNER! Dave Charne Canola & Sunflower Research Pioneer Hi-Bred International

2. GAME PLAN Outline Assess the field of play Understand the competition Build on our strengths Trust the market Be innovative Play to win!

3. THE FIELD OF PLAY

4. Source: MREADS USDA Millions MT Global Oilseed Production: 1991-2004 7.5% p.a. 3.5% p.a. 1.4% p.a. 12.2% p.a. 1.8% p.a.

5. OILSEEDS: The Past 15 Years GLOBAL: Increased population & income, esp. in Asia  increased demand for oil & livestock products Palm & soybean major beneficiaries Palm = low cost oil, Soybean = high value meal CANOLA: Moderate growth  mainly in China & EU Consumption driven by popularity & oil properties

6. OILSEEDS: The Next Decade Nutrition & health focus in developed economies  Reduced sats, trans replacement, omega-3 Urbanization and income growth in China & India  Increased oil use, with growing health concerns Increased biodiesel production & use  Initially EU, but also NA ALL OF THESE TRENDS FAVOUR INCREASED CONSUMPTION OF CANOLA OIL!

7. 2004-05 Worldwide Canola/Rapeseed Production and Consumption Thousand Metric Tons Source: MREADS USDA

8. CANOLA: The Next Decade CANADA IS IN A UNIQUE POSITION AS: -A MAJOR CANOLA PRODUCER -A MAJOR CANOLA CONSUMER -THE LARGEST CANOLA EXPORTER WE ARE WELL-POSITIONED TO BENEFIT FROM INCREASED USE OF CANOLA GLOBALLY AND DOMESTICALLY!

9. UNDERSTANDING THE COMPETITION

10. 800 lbs The Competition… SOYBEANS!! SOYBEANS!!

11. CANOLA vs. SOYBEANS Value driver for canola is OIL, for soybean is MEAL US soybean industry = 6-8x Canadian canola Both driven by innovation  soybean has much larger R&D investment & less regulation Both depend on domestic consumption & exports Canola & soybean oils can substitute for each other  target many of same markets & end uses TO GAIN, CANOLA MUST OFFER A BETTER VALUE PROPOSITION THAN SOYBEAN!

12. BUILDING ON CANOLA’S STRENGTHS

13. CANOLA vs. SOYBEANS Canola oil is BETTER than soybean oil because… Lower saturates (7% vs. 15%) Higher 18:1 (60% vs. 24%) High omega-3 (12% vs. 8%) Other strengths of canola vs. soybean… Hybrid crop  faster genetic gain possible Oilseed  more efficient producer of OIL Broad adaptation, fits easily into many rotations worldwide

14. TRUSTING THE MARKET

15. Canadian Canola Value Chain SEEDFARMER GRAIN HANDLER EXPORT CRUSHER OILREFINER END USER MEAL USA, Japan, Mexico, China, Pakistan, etc.

16. Let Market Forces Work FOR US! Pairs of “buyer-seller relationships” along value chain MUST operate efficiently for canola to be competitive Variety registration Interferes with seed supplier-farmer interaction & slows delivery of innovation  hurts canola’s competitiveness! Focus on upstream-downstream “disconnects”, i.e. breeder vs. end user views on compositional priorities Tariffs (in key export markets) Favour soybean  must level the playing field! Clear priority for CCC & all stakeholders

17. HARNESSING INNOVATION

18. Improving Canola’s Position Continue Pushing Productivity YIELD gains blurred by heat/drought of 2001-2003 but evident in high yield environments Need to extend yield gains to entire geography Key = HYBRIDS – just scratching the surface!! Agronomics & disease greatly improved Next decade = improved harvestability, stress tolerance, frost/cold tolerance NEED TO MAINTAIN – EVEN INCREASE – R&D INVESTMENT!!

19. U.S. Average Corn Yields 1920–2003 Yield in buacr Year 1947 b=1.52 b = 2.85 Open Pollinated b = -0.67 b = 1.17 Double Cross Hybrids Single Cross Hybrids 1988 1983 1970 1974 1993 1936 19 2003 142

20. Improving Canola’s Position Increasing Oil Content Adds value for ALL users Variation (>2%) in elite Canadian germplasm Variety registration as a tool? Make oil priority #1 – working in Germany Bonification as a tool? Used in EU (esp. Germany) & Australia More likely to get what we want if we pay for it! US soybean oil% down in past decade  great opportunity for canola to be MORE competitive!

21. Improving Canola’s Position High Stability Oil LL & MOLL canola = best available solutions to TFA’s Superior to current soy options & available NOW! Need to eliminate yield penalty & reduce premium Harness “genetic horsepower”  challenge = IP Solutions? Partnering along value chain, licensing IP Window of opportunity BUT soybean not standing still  have new profiles & true high oleic (85%) Remember who the REAL competition is!

22. Canola & Soybean Specialty Oil Profiles

23. Improving Canola’s Position Biodiesel Economic w/ high oil prices & GH gas considerations EU leading the way BUT makes sense in Canada Need strong lobbying effort for tax breaks Could petroleum industry be incented to invest?? First NA plant in ND (German investors) Complements bonification & chlorophyll grading CCC involvement? Canola oil is superior to soybean oil as a biodiesel source!

24. Improving Canola’s Position What About The Meal?? Opportunities will drive increased OIL use  what about the meal? Need to close value gap w/ SBM =  protein & energy,  fiber Complements effort to increase oil contents Yellow seed? = one option  already have that in canola quality juncea – need to exploit this! “Imitation is the best form of flattery” – and the most effective form of competition!

25. PLAYING TO WIN – POSSIBLE STRATEGIES

26. Winning Strategies Implement “quality only” variety registration a.s.a.p – make oil top priority Look at options for implementing oil bonification & direct chlorophyll measurement Continue efforts to reduce tariffs & achieve parity between canola & soybeans in key export mkts Lobby for biodiesel tax breaks; identify potential investors (oil industry?) Review options for meal improvement – stakeholder discussions?

27. Go forward with a passion to make canola better and the Canadian canola industry more competitive & successful!!