There are good reasons for the state’s producers to grow the crop, but they are frustrated with the US$7.25 per bushel price
Canola acres should be booming in North Dakota.
Last fall the state posted a record yield of 1,960 pounds per acre, which works out to 39 bushels per acre.
As well, soybeans are less appealing because of the ongoing U.S.-China trade war and Chinese tariffs on American beans. And there are major marketing issues in Western Canada because China is refusing to buy canola seed from Canada for political reasons.
In spite of those positive factors, the U.S. Department of Agriculture’s Prospective Plantings report, published in late March, pegged North Dakota canola acres at 1.57 million.
That’s down slightly from 1.59 million in 2018.
“We originally thought acres would jump significantly and they (the USDA) showed steady to down a little bit,” Barry Coleman, executive director of the Northern Canola Growers Association, said from his office in Bismarck.
“(But) we think the numbers the USDA have in their March (estimates) are fairly accurate.”
Canola acres should be higher but the story in North Dakota is all about price.
The Northern Canola Growers website shows that daily cash prices at delivery points in the state are around US$14.50 per hundredweight, which converts to $7.25 per bu.
“This whole trade situation is just killing us. It’s providing some real negative forward price outlook for canola,” Coleman said.
China hasn’t applied tariffs to U.S. canola seed or canola products, but the price is closely tied to soybeans. Prices of that crop have been weak and dragged canola lower.
“(And) China blocking Canadian imports of canola — we’re directly tied to the ICE Exchange (canola futures) and those prices, so that’s really hurt us,” Coleman added.
On April 30 the Northern Canola Growers Association posted a message on its website regarding a recent meeting with U.S. Agriculture Secretary Sonny Perdue.
Last summer the USDA created a $12 billion financial aid package for American farmers, directed at producers who are suffering because of the China-U.S. trade war. The Market Facilitation Program applies to crops and commodities that China has targeted with tariffs.
Canola growers are not eligible because there are no Chinese tariffs on U.S. canola.
“The NCGA also pointed out (to Perdue) a letter from a frustrated member that represents a lot of frustration from canola growers,” the NCGA said on its website.
“Canola prices have dropped along with soybeans since the summer of 2018 and yet no Market Facilitation Payments were provided for canola growers.”
The NCGA is lobbying the federal government for any form of compensation because it’s difficult to make money when canola is at $7.25 per bu.
Canola producers in North Dakota and operators of the five crushing plants in the state are also worried about the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trade deal between 11 nations.
They’re concerned Canada will soon have a huge advantage in the Japanese market because Japan’s 12 to 15 percent tariffs on Canadian canola oil will progressively drop to zero by 2023.
The U.S. is not part of the CPTPP.
The Office of the U.S. Trade Representative is working on a bilateral, free-trade deal with Japan.