Saskatoon, July 1--There is plenty of talk about the agriculture bioproducts industry but little action.
Only a few firms are converting crops and crop residue into industrial products in Canada. One of the biggest is Dow BioProducts Ltd., a subsidiary of Dow Chemical Canada Inc.
The company was formed in June 2001 following Dow's acquisition of the Isoboard Enterprises Inc. strawboard plant in Elie, Man. The plant is capable of producing 144 million sq. feet of strawboard a year.
It manufactures products for do-it-yourself and industrial flooring and construction markets under the Woodstalk brand name.
Dow BioProducts vice-president Wayne Karolat said the company pays farmers for their straw but bales and transports the material itself.
"What we're paying to the farmer is pure profit that goes right on top of the top line and there is nothing coming off the bottom line."
Karolat, who spoke at the recent Bio-Logical Futures Conference in Saskatoon June 14-16, wouldn't divulge what the company pays farmers for straw but said the numbers offered by an earlier speaker were accurate.
That speaker was Mark Stumborg, head of Agriculture Canada's Swift Current Research Centre. He said producers need $12 to $15 per tonne "in their jeans" to ensure their participation in the bioproducts industry.
"You're not going to get producers to do it for anything less," he said.
When collection, loading and transportation costs are taken into account, bioproducts firms need to count on paying $50 per tonne f.o.b. the plant for the raw material, based on a 50 kilometre haul.
"A lot of those guys have been modelling $35 per tonne and feeling that that is stretching them," said Stumborg.
He said that won't cut it.
"They obviously have to improve their process a significant amount yet before it would become interesting economically."
Karolat said Dow plans to buy between 250,000 and 300,000 large square bales from a 75 km radius of its plant this year. The company works with about 450 farmers, who represent 200,000 acres of land, and is keen on expanding that number.
The Dow plant in Elie is a real world example of what a successful bioproducts venture would look like. But Karolat points out that like any other industry, it has its challenges.
Prices for particleboard, medium density fibreboard and strawboard are at 12-year lows and last year's straw crop left a lot to be desired.
On the bright side there is a growing concern about the use of formaldehyde in competitive building materials. Karolat said that could provide a huge opportunity for the strawboard industry.
