Seed Potato Opportunities. Agenda. Western Canadian Process Capacity. Potato Processing Facilities Potato Processing Facilities 2002

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1 Seed Potato Opportunities Dieter Schwarz P.Ag. Field Representative MIDWEST FOOD PRODUCTS INC. P.O. BOX 70 CARBERRY, MANITOBA R0K OHO TEL (204) EXT 280 FAX (204) A CORPORATION CONTROLLED BY NESTLE CANADA INC. & SIMPLOT CANADA LTD. Agenda Seed Demand Growing Areas Quality Transportation Marketing Varieties GMO limitations Seed Generations and Requirements Options and Opportunities Questions Potato Processing Facilities 1994 McCain Foods (Portage) Carnation Foods (Carberry) York Farms (Lethbridge) Simplot (Grand Forks) York arnation C Potato Processing Facilities 2002 McCain Foods (Portage) Simplot (Portage) Midwest Foods (Carberry) Maple Leaf Foods (Lethbridge) McCain Foods (Taber) LambWeston (Taber) Simplot (Grand Forks) Cavendish (Jamestown) Western Canadian Process Capacity Million (CWT) Year

2 Western Canadian Seed Requirements Million Cwt Year 11,606 Acres of seed potatoes Seed is mainly grown in the North Process acres in the South Some seed growers in the South have quit or are planning to quit growing seed and convert acres to process production Main markets are internal and US Pacific Northwest Alberta 5,255 acres of seed Potatoes Area has tried to lure processors Have found their niche as a clean seed producing area No process acres All seed destined for processing acres is exported Main Markets - Alberta, Manitoba, US Pacific Northwest Manitoba 9,641 acres of seed potatoes 60,000 acres of process potatoes expanding to ,000 over the next 5 years Main source of seed for process acres is Manitoba itself, however shifting to Expanding acres in Southern Manitoba has and will continue to put pressure on seed quality Seed Supply? Heat Units and P-days Heat is an important variable to the growth of any crop, and each crop has specific heat requirements. Temperature is measured in heat units i.e.. CHU measures the heat units for corn, and helps to determine areas suitable for corn production. Heat units for potatoes would help to determine areas suitable for potato production.

3 P-days for Potatoes Calculated using : -Minimum temperature for growth = 7 C -Optimal temperature for growth = 21 C -Maximum heat threshold = 30 C -Historical Climate Data Useful for estimating daily and seasonal water requirements of the crop The analysis portion of this project used data sets for the period 1961 to 1990 from 65 weather stations in Manitoba. The following maps were generated by calculating P-days for each historical station, then interpolating these results in the GIS to produce the average, 10, and 25 percent risk maps. Process growers are demanding high Quality Seed Proof of quality is now Standard Lab test results are needed for virus levels Poor Quality means Poor Sales Seed Quality Transportation Remote area (Good for Seed) but expensive outbound freight. Limited specialized equipment a major issue. Outlook - Carberry: $2.30 Dauphin - Carberry: $.97 $1.33 Freight advantage Marketing Opportunities New Processing Facilities will increase demand. Growers very concerned about quality of seed grown in process areas Remote areas with a freight rate price advantage of $1.33 over the major seed producing area in

4 Major French fry customers have asked processors not to contract GMO potatoes Seed must be lab tested for proof that it is GMO free GMO Processing Varieties Main Processing varieties grown in Manitoba: Russet Burbank Shepody Ranger Russet Fresh Market varieties should also be looked at as well Process Seed Price Russet Burbank seed contract price: $ $11.25 / Cwt. Shepody Seed contract price: $ $12.25 / Cwt. (The price is dependant on the process potato price negotiated) Seed Generations/Contract Requirements Year in Field PE E1 E2 E3 E4 F C Midwest Food Products Inc. contracts E4 or better seed Growers must also supply a lab report indicating that virus levels are below 2 % PLRV and 10 % PVY Seed must be free of GMO potatoes Seed Potato Contracts At present, only Midwest Food Products Inc. has contracts with the Seed Growers. McCains has an Open Market System. A new processing plant will have? The Midwest Foods Contracting System Seed Growers are awarded contract volumes based on process grower requests. Seed Growers are required to post harvest lab test their seed for virus levels and provide those results to Midwest and the process growers on request. Winter grow outs are optional. Seed Growers receive a Cash Advance on their crop once lab results come back clean.

5 Seed Potatoes The Crop Seed Potatoes are a very labour intensive crop. -the crop should be inspected and rogued weekly Initial investment can be very high. - Land can be 1500/acre -Machinery and $154,000 -Building/Storage $112,000 Seed Potatoes are an expensive crop to grow. -Sask. Ag. And Food estimates $1734/acre Harsh Realities and Challenges We have only had one new Seed Grower Contract in the last 6 Years. Existing Seed Growers may be awarded much of the proposed expansion. Manitoba Seed Growers have really stepped up to the challenge of producing better quality seed. Therefore there may be less need than before to go to Remote regions such as the Parkland and. Can Manitoba Seed Growers keep up this quality, when they are growing Seed in a predominantly processing potato region? Will the need for more processing potato acres (~25,000 ac) cause us to go to remote regions for our seed potato production? Options For Farmers To Get Involved in the Seed Potato Industry Become an elite seed grower supplying E1 or E2 seed to supply other seed growers. Form an alliance with an existing seed grower in Southern Manitoba..grow his early generation E2 or E3 seed. Get a seed contract with a process grower or processor in Southern Manitoba.supply E3 or E4 seed. Rent land to an existing seed grower in Southern Manitoba. Opportunities for New Growers Even with a new processing plant in Portage, there will only be a need for an additional acres of Seed Potatoes. This volume can be handled by about new growers, or even by some of the existing seed growers. Opportunities for Agronomists Questions? Consulting work with new Seed Producers. High Input crop that will need good fertility and crop protection programs. Labs will be processing an increased number of tissue,soil, virus, and GMO tests. Increased need for Custom Operators to apply crop protection products.