European biodiesel producers are helping Canada with its surplus of canola this year.
While Europe still does not import Canadian canola seed because it is genetically modified, European biodiesel makers have bought Canadian canola oil.
European crushers are running at full capacity, but are unable to keep up to demand from biodiesel makers, said vegetable oil newsletter Oil World.
“A first reaction of the market is indicated in the sharply rising EU import demand for rapeseed oil, mainly from Canada,” Oil World reported.
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It said European biodiesel production capacity is likely to rise to 4.2 million tonnes at the end of 2006, up from 3.72 million in 2004.
The United States is building a biodiesel industry that uses soybeans, but only tiny amounts of canola are used in Canada’s fledgling biodiesel industry.
It’s a frustrating situation for Canadian canola producers.
“We need to have a Canadian look at this,” said Judy Dyck, the executive director of the Saskatchewan Canola Growers Association. “We want to see more.”
The Saskatchewan canola growers and other groups have formed the Saskatchewan Biodiesel Development Task Force to push for government support for an industry and to promote Saskatchewan as a place for companies to set up operations.
The task force, which has already been talking to major processors since it formed in April, is holding its second full meeting Nov. 4.
The lack of biodiesel production in Canada is one of the factors leaving canola in a lurch this winter. The canola industry set a target of using 700,000 tonnes per year for biodiesel production by 2007, but that now seems unlikely, said Canola Council of Canada president Barb Isman.
With big subsidies and regulations encouraging investment in the U.S. and Europe, it should be no surprise that processors are not lining up to invest in Canada.
“The reason there isn’t an industry here is that if you had to pick between putting a plant up just south of the border where you could qualify for incentive programs, or put it up in Canada with nothing, would you put it here?” said Isman.
Europeans have long used vegetable oils for diesel feedstocks, but the worldwide industry has become popular recently because it creates new markets for farmers, can be seen as more environmentally friendly than petroleum fuels, and offers an alternative to Middle Eastern fuel sources.
Dyck said Canada has less interest in biodiesel than Europe or the U.S. because it is a big petroleum exporter, but today’s petroleum prices make biodiesel attractive.
Isman said building a biodiesel production industry might lead to segmentation of canola production, with some farmers producing high quality canola for human consumption and others growing lower quality but higher yielding varieties for fuel.
“We might move to yield, yield, yield, yield,” said Isman, noting biodiesel can be uneconomic with traditional yields.
“That could change the economics of (producing) the feedstocks.”
Dyck said some processors are interested in producing biodiesel in Saskatchewan “but we don’t have any signed cheques yet.”
Isman said Canada’s lack of progress is disappointing, but “we didn’t miss our opportunity (yet). But we need to get moving.”
