New & Emerging Technologies For Corn
by Ken Hough, OCPA Director of Research and Market Development

The application of new technologies opens a range of new markets for corn. The ‘pills’ shown above are made from polylactic acid (PLA) derived from corn. PLA can be converted into a variety of consumer products, including clothing and biodegradable plastics.

Biotechnology
• From a biotechnology developer/company perspective, the major challenges will continue to be differing philosophies for regulatory approaches (i.e., risk-based, such as in the U.S. and Canada, versus the precautionary principle approach followed in Europe, for example), and difficulty in coordinating global approvals as a result of factors such as increasing scope and complexity of regulatory procedures, differing timeframes in different jurisdictions, and lack of consistent policy on tolerances for inadvertent mixing of GM and ‘traditional’ products.

• GM technologies will present farmers with a broad range of opportunities:
- the current simple, high volume but comparatively low return agronomic traits
- multiple ‘stacks’ of such traits
- livestock feed traits such as reduced mycotoxin contamination
- pharmaceutical and nutraceutical production, industrial enzymes and chemicals at the low volume, high return end of the spectrum.

However, farmers will have to share in the value of such opportunities along with the companies and consumers, if there are going to be any real benefits.

• The perspective conveyed on behalf of food processors is consistent with what we have seen in Canada as well - most food companies are not getting any significant degree of negative feedback from average consumers regarding GM foods. In over 3 million calls/year received by one food company, for example, less than 100 concerned GM food issues. And their market information indicates that more than 60 per cent of consumers support GM crops to reduce pesticide use, while more than 50 per cent support GM if it can result in fresher, more nutritious food.

Supply Chain Management
• According to information presented by a speaker from Pioneer, seed companies have developed hybrids with higher extractable starch (HES) content, useful particularly in the wet-milling and ethanol industries. Although some commercial-scale processing has been conducted with these hybrids, the focus of this presentation was on the development of a reliable, small-scale, inexpensive laboratory process to correlate with the commercial results, as an aid in corn breeding and selection. While it was clear from the presentation that higher extractable starch yields are clearly possible, there was no mention of the potentially greater environmental interactions (from year to year and location to location within a given year) on grain starch content. Nor was there any analysis regarding whether processors would in fact pay more for HES corn, allowing growers to share in the benefits to the system.

• The U.S. grain production and handling system is geared to the ‘blend and send’ approach, i.e., mass movement of undifferentiated commodities. However, increasingly, markets are signalling greater demand for differentiated products, but the U.S. is lagging behind in its ability to service these markets. The speaker suggested that the industry (i.e., processors in conjunction with handlers and producers) must adopt a standardized traceability and process management system such as that embodied in the ISO 9000-type of quality assurance process. Foreseen changes include:
- better flow of information on product needs from processors back to growers and seed companies
- a substantive shift towards contracting of specification-based supplies of grains; process management requirements for producers
- premiums / discounts applied relative to the required product specifications.

Several initiatives to develop and implement identity-preserved marketing systems for grains are underway (Cargill’s InnovaSure IP system was featured by one speaker), each trying to corner the action in this developing area. From an Ontario corn grower perspective, we already have a jump-start on some aspects, but our relative advantage could be quickly lost unless we move forward on the types of opportunities envisioned under the Agricultural Policy Framework, and in fact, already being worked on by OCPA and others in Ontario.

• Another speaker highlighted the ‘four quadrants’ approach to supply chain management and the relative levels of communication between producers and users/consumers:
- The traditional commodity market is characterized by large volumes of homogenous products at the lowest cost, and little or no communication between end users and producers.
- The next level, Add Value – Spot

Market Coordination quadrant, represents small premiums on commodity grains, based on additional product attributes beyond the minimum quality standards. Examples in Ontario would include protein premiums in wheat, or corn for dry milling. Consumer markets and signals are often the basis for such markets, but again, there is limited communication between the ends of the spectrum.
- In the next quadrant, Relationship Management – Lower Cost, both the product and the production process are aligned with the end consumer’s needs as a result of closer communication of these needs, resulting in higher consistency, accountability, predictability and efficiency being provided, all at still relatively low cost.
- In the final quadrant, Relationship Management – Add Value, the “supply chain works as a unit to create value, each contributing to the benefits of the whole with expectation that the whole will benefit in some measurable way” (F. Beurskins, CUTC Proceedings, 2002). The system operates on excellent communication throughout the system, often based on a high level of trust and demonstrated performance to deliver what is promised.

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