Canola group presents information about component pricing, but says issue requires further study
A Saskatoon farmer said he thinks the Saskatchewan Canola Development Commission is dragging its feet on its study of component pricing.
A resolution was tabled at last year’s annual general meeting asking the SaskCanola board to explore the pluses and minuses of moving to a system that would feature rewards and penalties based on oil content.
SaskCanola presented information to growers at this year’s meeting, but said the issue required more study.
That didn’t sit well with Russell Novick, who farms near Saskatoon.
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“The bottom line is in one year nothing got accomplished. That’s unacceptable. Totally unacceptable,” he said.
Novick, who wants a shift to component pricing, said oil content has averaged higher than 44 percent during the last seven years for a crop that is marketed as having 40 percent oil content.
“We’re leaving a lot of cash on the table,” he said.
“We’ve been giving crushers and (importing) countries free canola. No one has ever sent me a thank you note.”
Novick feels the SaskCanola board is overly concerned about how a switch to component pricing would affect the trade.
“There doesn’t seem to be any concern for the farmer, which is frustrating,” he said.
The Alberta Canola Producers Commission is in favour of component pricing, while Manitoba Canola Growers says it depends where the cutoff percentage is spotted.
Terry Youzwa, chair of the Canola Council of Canada, said the issue has bubbled up many times around the council’s board table.
“To date, council has not supported component pricing and has not been able to prove there is additional value there,” he said.
Youzwa said growers are decreasing protein and meal as they strive to increase oil content.
“You don’t just get paid for the oil, you get paid for the whole package, so while you’re getting more on the one side you will get less on the other,” he said.
Tracy Jones, SaskCanola policy manager, told delegates attending the annual meeting held at CropSphere 2015 in Saskatoon last week that the goal of switching to component pricing would be increased pricing transparency. It is how the crop is sold in Australia and England.
However, growers need to understand there are drawbacks.
“Not only would there be premiums, there would be discounts, and more importantly, there would also be grading costs and costs to implement the system,” she said.
There would also be increased risk for exporters, who would be forced to find markets willing to pay for high oil content.
“For the most part, consumers are price sensitive and traders still have to sell this as a commodity oilseed,” said Jones.
She said exporters would compensate for the increased risk by paying growers less for their canola.
There would also be increased storage risks for storing canola with higher oil content.
“If a fundamental shift of this type is going to happen, we need to make sure it is going to result in a net benefit to farmers,” said Jones.
sean.pratt@producer.com
