Why arent canola markets more diversified?

[wedino]

Here is a question for you - veg oils are used all over the world. Canola is a top quality veg oil - why don't we have a more diversified market than the 3 or 4 main countires we sell to?

I suspect part of the problem is that there is no incentive for private grain firms to engage in market development in commodity markets. If they spend money to develop a market, it is wholly at risk that some one else will come in and undercut their price to capture it. There is no assurance of return.

On products that cannot be readily differentiated, like commodities, this is an issue. There is CIGI, but who has the right to capture markets that they help create?

This is one advantage of the single desk that is more effective than the open market system - investments in market development for Cdn wheat can be captured and realized upon at their full value.

Comments?

Tom

[kslseed]

I believe one very important reason is the GMO problem. Europe is out and Japan is very sensetive. I am surprised that nobody posted any comment yet. Maybe they
are all halloining?

[TOM4CWB]

Thalpenny;

Our farm has plenty of opportunity to grow IP specialty Canola and Hear.

I cannot complain about how any of these Canola Marketers have treated us... we have been treated with respect and as people.

The Canola has extracted a BIG premium from the market place. Without a single desk... The dicipline of the multi-seller/buyer system has worked well in this respect.

No system is perfect... but the Canola and Oat marketing systems are paying many bills and keeping many farms in the black and profitable!

[charliep]

Actually not out halloweening but rather curling (another lesson in humility).

An interesting question as to how markets develop and how sales are allocated.

Canola is about 4 consistent customers and one price customer.

Domestic crusher - about 3 MMT historically (a lot less last/this year). I don't have list of customer base but it should be noted that we do export oil/meal to a broader customer base.

Japan - historically 1.8 to 1.9 MMT. Very stable market with consumer products based on canola oil quality characturistics. Can be a premium market.

Mexico - Growing (prior to last 2 years)towards 1 MMT - potential for more.

US - don't have the numbers in my head tonight but consistent demand. I will create controversy but their increasing production has been a good thing in terms of helping supply north american canola oil needs.

China - Mainly a price buyer but have taken up to 2 MMT.

Europe - Kslseed - you are right in that GMO seed has kept us out. They are also major suppliers of canola/products domestically as well as other regions. Potential to supply on a counter season base but again have to watch eastern europe/how the new members are brought on board.

Should the list of customers be bigger? Maybe but the issue to date in canola has not been having to find new markets but rather to supply the markets that have been developed.

A comment that always hits home as guy is the expression its not the size that counts but how you use it. Perhaps as we move ahead in marketing crops it won't be the number of customers that are sold to but rather the loyalty show/price these customers pay.