Presentation to CSTA Corn Soybeans and Eastern Cereals

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Presentation to CSTA Corn Soybeans and Eastern Cereals Committee ERNIE SIRSKI CHAIR SOY CANADA

Presentation to CSTA Corn Soybeans and Eastern Cereals Committee ERNIE SIRSKI CHAIR SOY CANADA BOARD OF DIRECTORS WHISTLER, B. C. JULY 10, 2019

1. 0 SOY CANADA Value-Chain Organization Created in 2014 2

1. 0 SOY CANADA Value-Chain Organization Created in 2014 2

1. 1 Soy Canada Mandate • Soy Canada components encompass: • All segments of

1. 1 Soy Canada Mandate • Soy Canada components encompass: • All segments of the soy sector, including research, seed development, production, transport, processing, and export • Soy Canada scope includes: i) non genetically enhanced soybeans; ii) genetically enhanced soybeans; iii) soybeans for crushing for oil and meal; and iv) “food grade” soybeans for tofu, soy milk, miso, soy sauce 3

1. 2 Soy Canada Activities TRADE POLICY & MARKET ACCESS Maintain and expand market

1. 2 Soy Canada Activities TRADE POLICY & MARKET ACCESS Maintain and expand market access by working to remove barriers Seek improved trade policies and agreements GOVERNMENT RELATIONS & INDUSTRY PROFILE BUILDING Communicate and educate at all levels Build strong relationships COORDINATE RESEARCH & INNOVATION SUPPORT MARKET DEVELOPMENT Advocate for funding Promote Canadian soybeans Align efforts across Canada Develop new markets Support and collaborate with research organizations Promote new uses 4

2. 0 Soybean Sector Evolution Eight Decades of Achievement 5

2. 0 Soybean Sector Evolution Eight Decades of Achievement 5

2. 1 Extension of Soybean Production Across Canada • • • 1941: Ontario 1986:

2. 1 Extension of Soybean Production Across Canada • • • 1941: Ontario 1986: Quebec 1991: Prince Edward Island 2001: Manitoba 2010: New Brunswick 2010: Nova Scotia 2013: Saskatchewan 2018: Alberta 2018: British Columbia 6

2. 2 Soybean Production by Province (Tonnes) • • • Ontario: Manitoba: Quebec Saskatchewan:

2. 2 Soybean Production by Province (Tonnes) • • • Ontario: Manitoba: Quebec Saskatchewan: Prince Edward Island New Brunswick Nova Scotia Alberta Canada: 2017 3, 796, 600 2, 245, 300* 1, 115, 000 479, 000* 49, 000 16, 200* 15, 500 7, 716, 600* 2018 4, 200, 500* 1, 581, 600 1, 164, 000* 231, 800 43, 200 14, 900 18, 500* 11, 600* 7, 266, 500 * Record Provincial Production 7

2. 3 Soybean Value, Production and Exports 8

2. 3 Soybean Value, Production and Exports 8

3. 0 CROP YEARS 2017 -2018 and 2018 -2019 Characterized by Weather and Political

3. 0 CROP YEARS 2017 -2018 and 2018 -2019 Characterized by Weather and Political Disruptors 9

Disruptor # 1 Deficient or Excess Rainfall 10

Disruptor # 1 Deficient or Excess Rainfall 10

3. 1 Divergent East and West Experiences in 2018 • East: • Very dry

3. 1 Divergent East and West Experiences in 2018 • East: • Very dry first half of crop year • Increasing rainfall during second half of crop year • Adequate moisture during pod fill period results in record yield • West • Dry during both seeding and pod fill • Regina region lowest two-year average rainfall recorded in statistics dating back 115 years 11

3. 2 Regina Rainfall 1904 -2018 (115 Years) 12

3. 2 Regina Rainfall 1904 -2018 (115 Years) 12

Disruptor # 2 U. S. -China Trade War 13

Disruptor # 2 U. S. -China Trade War 13

3. 3 Impacts of U. S. -China Trade War Chicago futures fell by 25%

3. 3 Impacts of U. S. -China Trade War Chicago futures fell by 25% from May to July, 2018 Canadian exports to China increase/exports to EU decrease In 2018, U. S. soybean farmers receive $1. 65 per bushel in 2018 In 2019, U. S. farmers receive additional subsidy Depressed U. S. subsidy-supported prices in Canadian domestic and export markets • Canadian soybean sector advocacy to Government for offsetting Compensatory Payment • • • 14

3. 4 Top 4 of 72 Export Markets (Tonnes) 15

3. 4 Top 4 of 72 Export Markets (Tonnes) 15

Disruptor # 3 Canada-China Political Dispute 16

Disruptor # 3 Canada-China Political Dispute 16

3. 5 Impacts of Canada-China Political Dispute • Prominent Chinese business person detained on

3. 5 Impacts of Canada-China Political Dispute • Prominent Chinese business person detained on December 1, 2018 • Record Canadian soybean exports to China during September, October, November and December of 2018 • Dramatic reduction from traditional volume of Canadian soybean exports to China during January, February, March and April of 2019 • No Canadian bulk vessel soybean exports to China in January, February, March or April of 2019 17

3. 6 Canadian Exports to China (Tonnes) 18

3. 6 Canadian Exports to China (Tonnes) 18

Disruptor # 4 Protein 19

Disruptor # 4 Protein 19

3. 7 Protein Challenge (Export) • Similar to meat, soybeans provide a high quality

3. 7 Protein Challenge (Export) • Similar to meat, soybeans provide a high quality protein that contains all essential amino acids • Lower protein content reduces value of soybean meal • China requires 34% protein (13% moisture basis) • Value of a protein buffer became evident as a consequence of reduced protein during 2017 drought in Western Canada 20

3. 8 Protein Challenge (Domestic) • Canadian Oilseed Processors Association • “Lower protein soybeans

3. 8 Protein Challenge (Domestic) • Canadian Oilseed Processors Association • “Lower protein soybeans in Western Canada limit opportunities for increased domestic crush” • “Other quality parameters such as size of seed also create operational challenges” • “COPA is interested to work with value chain partners to improve the protein and quality of soybeans grown in W. Canada. ” 21

3. 9 Canadian Soybean Protein and Oil Content % Protein and Oil Content (13%

3. 9 Canadian Soybean Protein and Oil Content % Protein and Oil Content (13% Moisture Basis) (Soybean #1 Canada and Soybean #2 Canada) 22

3. 10 Soy Canada Research Symposium • Soy Canada is communicating with industry representatives

3. 10 Soy Canada Research Symposium • Soy Canada is communicating with industry representatives in the context of a proposed second Soy Canada soybean research symposium • Second soybean research symposium would take place in western Canada and include a session focused on protein 23

4. 0 OUTLOOK FOR WESTERN CANADA Given agricultural land base and crop rotation limits

4. 0 OUTLOOK FOR WESTERN CANADA Given agricultural land base and crop rotation limits in the east, Western Canada offers, by far, the best opportunity for increased soybean production 24

4. 1 WESTERN PERSPECTIVES BEYOND 2017 -2019 Average rainfall in 2017 and 2018 was

4. 1 WESTERN PERSPECTIVES BEYOND 2017 -2019 Average rainfall in 2017 and 2018 was a historic anomaly Research will continue to improve varieties for western conditions Recent and new producers will gain experience in growing soybeans Five-year average yields have increased over time in every province All provinces experienced lowest yields in early years and best yields during more recent years • Following acreage contraction in 2019, anticipate production recovery beginning in 2020 followed by further expansion • • • 25

4. 2 Five Year Average Yield (Bushels Per Acre) (Upward Trend In Every Province)

4. 2 Five Year Average Yield (Bushels Per Acre) (Upward Trend In Every Province) 26

4. 3 Yield Lows and Highs (Bushels per Acre) (Consistently Lower in Early Years/Higher

4. 3 Yield Lows and Highs (Bushels per Acre) (Consistently Lower in Early Years/Higher in Recent Years) 27

5. 0 OUTLOOK FOR CANADA’S SOYBEAN FUTURE 28

5. 0 OUTLOOK FOR CANADA’S SOYBEAN FUTURE 28

5. 1 Strong National Fundamentals • • • # 3 in crop farm cash

5. 1 Strong National Fundamentals • • • # 3 in crop farm cash receipts during six successive years Progressive expansion from one to nine provinces Projected acreage in 2019 greater than all years up to 2017 Strong investment in public and private sector research Proven benefits of three-crop rotation Anticipate: • stable production in east • increased production in west • doubling of production feasible 29

Thank You 30

Thank You 30