Opening Doors to International Markets1 year ago -
Canada’s highly-regarded certified seed is creating all kinds of international opportunities for seed producers and sellers in this country. Industry experts say the Canadian brand gives buyers a sense of added confidence.
It’s no secret that Canadian certified seed is highly regarded by many buyers around the globe. In 2017-18, Canada exported just over $645 million worth of seed to international buyers, with a good chunk of those sales being certified varieties.
Dave Carey, executive director of the Canadian Seed Trade Association (CSTA), says what makes Canadian certified seed appealing to buyers in other parts of the world is that it provides increased predictability and risk mitigation in an increasingly volatile world of international trade.
“I think certified seed and that blue tag holds a lot of weight as a brand. When it comes to importing seed through Canada’s certified seed system … it gives people a sense of confidence that what they’re bringing in is of the highest quality and has that traceability,” he says.
“It definitely opens up doors for Canadian seed exports when we have a robust certified seed system, we have seed crop inspections, we have CFIA oversight and auditing of the seed crop inspection services. It’s all pieces of the puzzle … and lets people know that that seed is of the highest quality and it’s met all the rigours that go into producing certified seed.”
That $645 million in Canadian seed exports represents a harmonized sales count, which includes both certified seed and common seed. While it’s difficult to determine an exact breakdown between the two, Carey says a “significant” portion of those sales is certified seed.
Leading the way in 2017-18 was pea seeds used for sowing, with total exports valued at about $91.8 million. They were followed by yellow dent corn seed ($78.2 million), lentil seeds ($76.7 million), bean seeds ($47.5 million) and soya beans ($46.9 million). Meanwhile, certified alfalfa seed sales totaled $44.8 million.
Not surprisingly, the United States is Canada’s biggest trading partner when it comes to international seed sales. Canada exported $403.2 million worth of seed to the United States in 2017-18, which represents slightly more than 62 per cent of the country’s total international seed sales. The United States was followed by China ($46.7 million), Ireland ($30.8 million), Japan ($19.1 million), Turkey ($12.7 million), the Netherlands ($12.2 million) and Nepal ($11.2 million).
Carey says another major factor in the appeal of Canadian certified seed to international buyers is the millions of dollars that go into testing each year. For example, many seed companies, including those producing forages and grasses, employ their own in-house seed analysts to check for germination and vigour and to ensure there is not genetically enhanced or contains any modified content.
“Certified Canadian seed really provides that level of confidence for an importer to know that when they import seed from Canada that they’re getting the best quality,” he adds.
“What people want and what seed companies really strive to do, and put their reputations on the line for, is you want to have uniformity. You don’t want to have one bag that’s great and the next has poor germination and you don’t get a good stand.”
The Canadian certification system is also far easier to navigate for international buyers than it is in some other countries, according to Carey. For example, Canada has one set of rules and regulations that apply to each and every province. Compare that to the United States which has a patchwork system with more than three dozen state certification systems.
“I think keeping it at that one level [in Canada] allows for greater uniformity and predictability,” Carey adds.
As robust as international seed sales have been of late, the CSTA recently began work on a market development study for its members to help identify emerging markets that may currently be underserved. Those markets include Turkey, Eastern Europe including Ukraine and Kazakhstan, and Japan. Carey says Japan is a particularly important market, not just because of the number of consumers there, but because the country is also a trendsetter in Asia and the decisions it makes can have a profound impact on a number of other countries in the region.
Ukraine is another priority market for Canada because its growing conditions are very similar to those on the Canadian Prairies. Two Canadian seed companies are already specializing in exports to that country.
“As they get their system in place, the Ukrainian government is really looking at intellectual property and plant breeders’ rights as a way to get new and better varieties into the hands of their farmers as they move towards more modern agriculture,” Carey says.
Ryan Furtas, a market analyst with the economics and competitiveness branch of Alberta’s Agriculture and Forestry Department, says one of the most lucrative opportunities for the Canadian seed sector is working with growers who supply product to end users, such as food processors and the premium foods market, both here and overseas. That can be for anything from the wheat used in higher quality breads to the malts used to brew your favourite craft beer or gluten-free oats for people suffering from celiac disease.
Gaining a Market Edge
“Several of these end users, such as food processors, are demanding products made from certified seed,” Furtas says. “This gives them an edge in their market over their competitors. It also gives them an advantage with a quality assurance system that’s creating some confidence in their ingredients. That helps them with marketing quality assurance and perhaps capturing the premium market that’s out there.”
So, what can seed growers and sellers do to get a foot in the door of these international markets?
Furtas says it all comes down to relationship building, whether that’s with the end user, grain buyers, commodity brokers or whoever has demand.
“Not everybody can participate in these markets, but then again not everybody wants to,” he adds. “It if fits your operation and you can manage it, I think there are opportunities out there. But it takes time on the phone and building these types of relationships. You have to make those relationships.”
Greg Stamp has first-hand experience with how important it is to build those kinds of international relationships.
Stamp is the seed sales manager for Stamp Seed in Enchant, Alta. The family-owned business recently began producing and marketing Daniello, a new type of hybrid rye, as part of an agreement with KWS, the German-based plant breeding company that developed the variety. The deal was facilitated through the Southern Alberta SeedNet group of independent seed growers.
“We’re getting genetics we never had access to before with the certified seed model,” Stamp says. “We’re able to access more and provide more value to our customers with these hybrid ryes. As far as adding value, these hybrids have 20 to 40 per cent yield advantage over traditional rye varieties, so it’s a huge bump in what farmers are seeing on their returns.”
Stamp Seed is also one of a handful of companies collaborating with multinational brewing company Molson Coors to develop a new variety of malting barley. Bill Coors 100 is a two-rowed, spring variety bred by Molson Coors in Burley, Idaho. A number of farms in southern Alberta have been contracted to grow it as part of a certified seed program with Stamp Seeds doing the higher pedigree and certified production for this value chain.
Stamp says he sees there being plenty of further opportunities down the road, both for his company and others, as food processors and consumers alike demand to know more about where the ingredients they use come from and how they are produced.
“I definitely think those premium markets like Japan, where people want greater quality and predictability and reliability, they’re going to want to know the exact value chain and where it came from,” he says.
“I think the more predictable we can be, and certified seed certainly helps to maintain that predictability in products for end users, I think that’s going to become more and more important as end users demand specific qualities. They want to be able to trace it back to the start and I think there’s going to be more and more of that.”
Ron Wirsta agrees. Wirsta is the general manager of St. Paul Seed Processors and Exports in east-central Alberta, a co-op comprised of more than 500 member companies. It exports certified seed, including a number of pulses, as far away as India, Indonesia and the Philippines.
Canadian certified pulses are eagerly sought out by foreign markets, Wirsta says, because of their high quality and the fact there is a steady supply available. His group also has the advantage of being located close to the West Coast and is able to get its producers’ product to port in Vancouver in as few as four or five days, which is much faster than provinces located further east.
Wirsta says there are a number of foreign markets where there is an opportunity for the Canadian seed sector to grow its footprint. Egypt and South Africa, in particular, are both growing markets.
“We’ve just touched base with them about shipping them some of our high-protein products. Just because of the population base, they really need the food (in those two markets),” he adds.
Despite the growing global opportunities for the Canadian seed sector, Wirsta cautions it’s not without risk. He says companies need to do their homework on who they are dealing with or risk being left high and dry when it comes time to be paid.
“It’s just doing the right business checks to make sure you’re going to get paid for your product at the end of the day. People sometimes don’t look at the processing or shipping side of it and then they get caught with no payment,” he says.
As promising as these global opportunities may be, Carey says the Canadian seed sector can’t afford to become complacent.
He says seed companies and the federal government must continue to invest in research and development so that the doors to these global markets remain open. While private sector investment in R&D rose by $171 million between 2012 and 2017, nearly 89 per cent of that amount was invested in research on just three crops — corn, canola and soybeans.
“While that’s great, we also know that we represent 50 crop kinds. That leaves 47 other crop kinds that are fighting over that other 11 per cent,” he says.
“We have to make sure that Canada has an intellectual property environment that encourages companies to make investments in pulses and peas and other crops. We need to have an environment that allows companies to make those investments.”
Of more immediate concern is the protectionist sentiment that is sweeping across many nations and prompting a number of retaliatory measures such as tariffs and other penalties. While seed hasn’t been seriously impacted by tariffs, Carey says other non-tariff trade barriers are a concern to the industry.
“Tariffs are certainly a concern, but more on the grain side and the commodity side. But we are subject to a lot of non-tariff trade barriers, whether it’s countries looking at crop protection products … or phytosanitary conditions,” he adds.