Crusher offers oil premium on Manitoba canola

While provincial canola groups debate the merits of paying for oil content, at least one company is forging ahead.

Northstar Agri Industries, a crush facility in Hallock, Minnesota, has a new contract that pays Manitoba growers a five percent premium over its spot pricing for select high oil content hybrids.

Derek MacLean, Manitoba grain buyer for Northstar, believes the program will expand the sourcing radius for the plant to 250 kilometres from 185 km.

The three varieties that will form the backbone of the program are Bayer’s Invigor L252, DeKalb’s 73-75RR and Pioneer’s 45H29, which are already popular varieties with Manitoba growers. The other four are Canterra’s 1980, Pioneer’s 46H75 and 46S53 and Crop Production Service’s VT 530 G.

The average oil content of those varieties is 48 percent.

Jack Froese, director of the Manitoba Canola Growers Association, said it is highly unusual to be paid a premium for oil content.

He worries about going down that path because he fears it will lead to discounts for other factors such as moisture content.

“We’ve got not a bad system the way it is,” said Froese.

The association is studying the merits of moving to a system that pays growers a premium for producing canola with high oil content. One consideration is that canola produced in Manitoba tends to have less oil than canola grown in Saskatchewan.

The Saskatchewan Canola Development Commission passed a resolution at its annual general meeting in January to investigate the pluses and minuses of component pricing.

The group is commissioning a consultant to help determine whether farmers should be pushing for oil premiums.

“We’re working on something that will hopefully give answers by next AGM (annual general meeting),” said chair Franck Groeneweg.

He has no problems with companies such as Northstar forging ahead with their own programs in the meantime.

“They’re looking at an opportunity to attract some product, and they’ve found a way that will appeal to some producers,” said Groeneweg.

“Ideally, to me, that’s where I’d like to see it, where we have something that works for some companies and others that want to stay within the current system.”

He doesn’t want to see a mandatory, industry-wide program because oil content is largely a function of weather, which growers can’t control. He worries that producers will be taking on additional risk by contracting to deliver canola with a specific oil content.

Groeneweg said crushers have traditionally been reluctant to pay a premium for oil content, so it will be interesting to see what happens with the Northstar program.

“If one company sees an advantage into offering premiums to farmers for higher oil content, I think that’s great and it’s up to the farmer to decide if that’s good for his operation,” he said. “If that’s the way farmers want to go, more companies are going to come along with it.”

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