Viterra has increased its growing stake in the canola crushing business.
The company has acquired full ownership of Pacific Coast Canola, a processing facility located in Warden, Washington.
The plant was originally built by the now defunct Canadian pulse processing firm Legumex Walker.
It opened for business in 2013, but by 2015 Legumex Walker was in financial trouble and by early 2016 the plant was sold to Viterra and McKinstry Holdings, the contractor that built the plant.
Viterra has now bought out McKinstry and is sole owner of the facility.
“We really saw it as a very good opportunity for us to expand our processing capabilities,” said Viterra president Kyle Jeworski.
The plant is the largest expeller press canola facility in North America., which is the same manufacturing process used at Viterra’s plant in Ste. Agathe, Man.
“We had a lot of synergy between customers and product. We felt it was a natural fit for us,” he said.
Jeworski said the oil produced at the Warden plant is a good fit for the growing healthy oils market.
“They’re looking for products that aren’t coming from chemical extraction,” he said.
Having two expeller press plants will better service that segment and reduce the risk of falling short of supply.
The Ste. Agathe plant services eastern North America, while the Warden facility ships oil to the western and central parts of the continent. The plants supply both conventional and non-genetically modified oil.
The meal is sold to dairy operations in the U.S. Pacific Northwest.
One of the knocks on the Warden facility was it was too reliant on receiving canola by train from Western Canada and the United States.
Jeworski said Viterra has been working hard with farmers in the Pacific Northwest to help them understand the agronomics and the opportunities of growing canola.
“We have expanded canola acreage and overall canola production quite considerably in the area,” he said.
Growers in Washington, Oregon and Idaho planted 107,500 acres of canola in 2018, a 30 percent increase over what was grown in 2013, the year the Warden facility began operations.
The plant has the capacity to process 360,000 tonnes of canola a year, so it will still need to ship in some product by rail from outside the Pacific Northwest.
“We feel we’re in a much, much better position than the plant has ever been in terms of the supply balance,” said Jeworski.
Viterra was once a big player in the canola crushing business in its previous incarnation as Saskatchewan Wheat Pool, but it had to jettison those assets in the early 2000s as part of a financial restructuring.
The rebuild started with the 2009 acquisition of the plant in Ste. Agathe.
Since then the company has added another 1.5 million tonnes of capacity with the purchase of the Warden facility and the 2015 acquisition of a swing plant in Becancour, Que., the largest oilseed processor in Eastern Canada that processes canola and soybeans.
“We’ve dramatically increased our canola crush capacity,” said Jeworski.
There could be further opportunity for expansion with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which comes into force Dec. 30.
The Canola Council of Canada believes the deal will eventually create a new market for 700,000 tonnes of Canadian canola oil in Japan once the import tariffs are fully eliminated in five years.
Jeworski doesn’t anticipate Viterra building any new plants to meet that demand if it indeed materializes.
“There is tremendous opportunity within the Canadian system for ourselves and others to expand existing plants where you already have a footprint, you already have a base,” he said.
“We could add capacity onto those plants at much more attractive values than looking at full green-field builds.”
Jeworski said Viterra will continue to look at opportunities to expand its presence in the crush sector as long as they make economic sense.