Strawtegic Case.doc.DOCVIP

Strawtegic Inc. Strawtegic Inc. is a newly formed Saskatchewan corporation with a plan to manufacture straw-based particleboard. Strawtegic intends to build a strawboard plant with an annual capacity of three million square meters, to mainly produce 19 mm (3/4 inch) thickness, R grade (high quality) particleboard, in the Melfort/Tisdale region (high straw production area) of the province. The main target market for the finished product will be furniture and cabinet manufacturing companies. Stawtegic was initiated by a small group of local farmers and business people from the Melfort/Tisdale region. The initiative is in response to low farm commodity prices and a need for Saskatchewan to become more involved in value-added processing and manufacturing. Agriculture in Saskatchewan accounts for a significant portion of its GDP. However, very little value-added processing is done to create additional value in the raw products. Grain producers are finding it increasingly difficult to remain viable as shippers of raw grain commodities for export. Commodity prices are low and transportation costs, along with other input costs, are high and constantly rising. This squeezes the margins of grain producers, who must either increase the size of their operations or add value in order to remain viable. Since Saskatchewan is the breadbasket of Canada and continues to produce between 12 and 15 million tonnes of spring wheat annually, there is a potential opportunity to add value by making economic use of one of the by-products of wheat production, the straw. Straw is normally baled for feed or bedding, burned, or worked back into the soil in preparation for next year’s crop. With the increasing trend to continuous cropping and the new technologies of direct seeding and zero-till, excess straw can be a problem in some areas. Excess straw raises concerns of uneven crop emergence, trash clearance of the seeding and tillage equipment, as well as low soil temperatures at seedin