The Market for Canola BioProducts

MCN seeks to introduce canola-based bioproducts initially to the animal feed industry and, once the technology is proven at commercial scale, to human cosmetic and food markets. MCN’s strategy is to validate its technology on a commercial scale in the lower risk animal nutrition markets and then expand into the higher value, higher return and higher risk human markets. This strategy is based on the following perceptions:

• Animal feed markets have lower regulatory, commercial and technical risk than human markets.
• It is easier to place large volumes in the animal feed markets, thereby more efficiently consuming the capacity of the initial production plant.
• Animal nutrition is a primary area of expertise of the founders of the Company.

Recent events have created a market ripe for new plant based protein sources. The Mad Cow disease problem in Europe has resulted in bans on meat and bone meal as protein sources in animal feeds. Import bans on meat and bone meal have also been imposed in Japan. In addition, there is increased scrutiny on feed additives such as antibiotics and their impact on animal and human health. All of this has producers seeking safe, natural, high quality food sources to sustain and safeguard their assets and their markets. Of particular note is the aquaculture market, which through its explosive growth, is expected to outstrip its ability to generate sufficient feed from current sources, such as fish meal. Market forces are driving demand for plant proteins.

Pricing and volume of selected human food and animal feed ingredients are presented in the following table along with MCN’s expected positioning of its primary products:

(values are approximate based on data 1997-2001, source: Frost & Sullivan, USDA, Feedstuffs, Industry)

Next: Market Conditions Driving Demand for Canola BioProducts