OATS – Enhancing The Value

A European Breeding Perspective

Chris GreenFargo, July 2006

If we are to enhance value we need toknow where value is created.

- Who adds it?- Who benefits?

And here lies the problem....

Oats are perceived by the consumer as wholesome, healthy, natural and good for you

……… but upstream!

They are regarded as…

– low value cereal

– minor crop

– niche interest

– uncompetitive

– in agricultural recession

– few champions

As a breeder we are gravely

concerned about the migration of

value from field to food store.

To arrest this migration we have

to find a new approach.

Easily substituted on price

Unique properties

NitrogenManufactures

FertiliserCompounders

PesticideManufactures

Seed Breeders

Machinery &Equipment

Manufacturing

TractorManufacturing

Fertiliser/Pesticide/Seed

Distributors

SeedMerchants

MachineryDealerships

FSSFarmers

GrainMarketers

MillsAnimal Feed

ManufacturesOat Feed

Oat Starch

Flour

BreakfastManufacturer

Retailers

Food ProcessorsBakeries

IndustrialApplications

Pharmaceuticals

Fine Chemicals

Confectionary

Body care

Cosmetics

Oat Starches

AgricultureContractors

Oat Oil

Oat Supply Chain

“Where one or more partners identify the benefits of working in a more integrated manner to derive a sustained value and optimise their position."

Definition of Value Chain

NitrogenManufactures

FertiliserCompounders

PesticideManufactures

Seed Breeders

Machinery &Equipment

Manufacturing

TractorManufacturing

Fertiliser/Pesticide/Seed

Distributors

SeedMerchants

MachineryDealerships

FSSFarmers

GrainMarketers

MillsAnimal Feed

ManufacturesOat Feed

Oat Starch

Flour

BreakfastManufacturer

Retailers

Food ProcessorsBakeries

IndustrialApplications

Pharmaceuticals

Fine Chemicals

Confectionary

Body care

Cosmetics

Oat Starches

AgricultureContractors

Oat Oil

Oat Value Chain

biotechnology

seed &crop inputs grower

grainhandler

processor

animalproducer

foodmanufacturer

Depth of resources and expertise across the breadth of the value chain

Monsanto Cargill

Joint Venture

Plant Breeder and

Crop Developer -IP

Processors/Consumers

GGRROOWWEERRSS

Value integration

Bridging the Knowledge Gap

Competition as we have it today is

based on separate entities – in future

I believe competition will be in

strategic value chains …

..with assured quality, shared profits

and risks and responsive adaptation.

Yield Disease resistance

Market attributes

Agronomy

Plant breeding is about harnessing resources and knowledge to deliver improvements.

Improve growing cost efficiency – main benefit is with the grower

Quality & market attributes benefit the processor or end user

These can all be quantified in respect to adding value

In Europe royalty is collected on Farm Saved Seed at 50% ofthe Certified Rate…..

…yet the IP benefits/valueare the same

The Future?

Seed Hectares planted

We are looking at a new royalty system

IPRA -Intellectual Property Royalty Agreement Creates a new model which we hope will apportion valuemore appropriately and stimulate innovation

Breeders Growers

Mills, processors, bakeries, others

Benefits

In essence…Get Connected!

Engages the chain for collective benefits

Provides assurance

Develops partnership approaches

Dynamic allowing value added to be rewarded

Adopt new ways of thinking

Sustainable

Encourages contract production, improving logistics etc.

Fair and equitable and shares value

What Do We Need to Do?

Even with oats we are in the innovation business.

So the best way to predict the future……

Is to invent it!

“Through innovation, knowledge and

collaboration improve the value and

uptake of oats”.

Our Oat Goal