Canola crushers have long faced discriminatory tariffs in key overseas markets but they are beginning to suspect they’ve also got some issues to iron out at home.
“We’re concerned that we’re slipping back to higher (freight) rates for oil and meal than for seed,” said Bob Broeska, president of the Canadian Oilseed Processors Association.
A preliminary analysis shows that over the last 10 years Canadian crushers have processed anywhere between 50 and 35 percent of the crop, but the trend line has generally been sloping downward.
“The numbers are telling us so far that the farmers are doing a better job than the crushers,” said Broeska.
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His suspicion is that higher rail freight rates for oil and meal compared to seed is causing that declining crush percentage, but a more in-depth analysis is required.
“Are we encouraging the export of the crushing industry? I think what we’re going to find is that we’re continuing to export unprocessed seed at a greater rate than we export processed oil and meal.”
Broeska believes that is part of the reason why there is such an over reliance on North American markets, which accounted for 72 percent of Canada’s 2007-08 canola oil export program as of the end of June.
His members wonder whether they are dealing with a freight rate disparity that is keeping them from realizing their potential in China, Japan and South Korea.
In addition to looking at what’s happening on the home front, the study will explore whether Canada is keeping pace with its competitors in the global trade of seed versus oil and meal.
“I suspect we’re not,” said Broeska.
He said while there is a revenue cap attached to seed exported out of the Port of Vancouver, there is no such system keeping rates in check for oil and meal shipped to the U.S. and Mexico.
The issue is something the industry needs to look at considering a number of companies have plans for increasing crush capacity.
Broeska expects to have spreadsheets, graphs, charts and tables ready in time for his Nov. 18 presentation to the Field on Wheels conference in Winnipeg put on by the University of Manitoba’s Transport Institute.
