High protein wheat gets a premium so why not high oil canola? say growers
Some canola growers think it is time they were rewarded for producing canola with high oil content.
They wonder why crushers refuse to provide a premium for oil when many of those same companies pay for high protein wheat.
“I think that’s a question that is worthwhile asking. That’s what we’re selling. We’re selling oil,” said Todd Hames, a director with the Alberta Canola Producers Commission.
Richardson International was contacted to provide a crusher point of view for this story but did not respond.
Hames said it’s probably time for another industry discussion on the issue, but it could be a tough nut to crack because there isn’t even grower consensus.
“Oil content varies by region, so there is a little bit of a regional push-pull on that,” said Hames, who is also president of the Canadian Canola Growers Association.
“Some regions that consistently grow higher oil content are more in favour of the premium than some areas that are not as consistently high oil content.”
Oil content is largely dictated by cool conditions during the filling stage of development, which is why canola produced in northern Saskatchewan and the Peace region of Alberta typically contains more oil than that what is grown in southern Saskatchewan and Manitoba.
Brett Halstead, chair of the Saskatchewan Canola Development Commission, said the issue comes up every year but the group has never drafted a policy on it, partly because it is such a divisive issue.
“It won’t be just premiums. It will be discounts if you’re below,” he said.
He worries that a discount for low oil content would discourage producers from expanding into non-traditional canola growing areas, which is needed for production ex-pansion.
Hames agreed that processors and exporters won’t pay more for a tonne of oil, which means some growers will receive more and others less than they’re getting today. However, he doesn’t see anything wrong with that.
“If you’re producing more oil, then you should get paid more,” he said.
“Just like the guys down south — they’re getting, generally speaking, a higher protein wheat so they’re going to get a premium for that wheat over someone in the north.”
He doesn’t understand the industry reluctance to pay growers for high oil content.
“Really, we’re growing oil. That’s what we’re growing. We should be looking at oil per acre, not bushels per acre.”
He said a shift toward paying growers for the oil in their seeds would have a valuable trickle-down effect for the canola industry.
“The breeders would breed for oil content more if the producer was getting paid for it,” he said.
Hames said many of the Alberta growers he represents are just as keen about being rewarded for delivering canola with low moisture content.
That’s why the commission supports a move to component pricing, which would take into account oil and moisture content as well as other quality factors.
Growers are penalized for delivering canola with more than 10 percent moisture, but there is no benefit for providing drier product, such as six percent moisture.
“That’s four percent less water that (buyers) are purchasing,” Hames said. “It’s a good deal for them.”
Halstead said SaskCanola has never discussed a low moisture premium, but he’s not real keen on the idea.
He thinks that would result in crushers lowering the bar from the current 10 percent level because there are years where they would have to pay a premium on almost the entire crop.
“Oil would be the first step,” he said.
Halstead added that there is nothing stopping a crusher from implementing an oil premium, although he doesn’t know if there is an efficient and affordable driveway test available to facilitate such a program.