Canola oil in demand | Richardson Oilseed Ltd.’s plans to increase capacity by 1.7 million tonnes
North American canola growers will soon have access to another 1.7 million tonnes of crush capacity, which is the equivalent of adding two new Yorkton-sized plants to the landscape.
Richardson Oilseed Ltd. is the latest industry player to announce a construction project. It is expanding its facility in Yorkton, Sask., to an annual capacity of a little more than one million tonnes from 840,000 tonnes.
Construction will begin this fall with completion expected by late 2013.
“We certainly are seeing strong demand both domestically and internationally for canola oil,” said company vice-president Pat Van Osch.
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The mounting demand for healthful oil has prompted a rash of projects across Western Canada and the U.S. northwest.
Bunge is boosting the capacity of its facility in Altona, Man., to 875,000 tonnes from 385,000 tonnes. The project is expected to be ready to process canola in time for this harvest. The company is also more than doubling the 297,500 tonne capacity at its plant in Fort Saskatchewan, Alta., an expansion that is expected to be completed in 2014.
Bunge did not respond to an interview request to provide an update on those two projects.
Northstar Agri Industries’ new plant in Hallock, Minnesota, reached its 350,000 tonne operating capacity June 6.
Legumex Walker Inc.’s similar-sized plant under construction in Warden, Washington, is on target for completion by early 2013.
The new projects are providing plenty of new capacity for an industry where crushers are already in a fierce tug-of-war with exporters over seed supply.
Van Osch said Canadian growers have shown they’re up to the challenge of keeping pace with increased demand for their product.
“This year we’ll be north of 20 (million acres) and whether we hit 21, time will tell,” he said.
Simple math shows the crop may be approaching its acreage limit. Western Canada has 60 to 66 million acres of land in production any given year. The recommended once-every-three-years rotation would cap canola at a maximum of 20 to 22 million acres.
However, growers are pushing rotations and breeders are improving yields, so there is still room for growth in production.
Van Osch said there is a risk that U.S. biodiesel demand may be negatively affected by growing anti-biofuel sentiment in that country, but he doesn’t believe the federal mandates will be reduced because the government has expressed strong support for the industry.
There is also a risk of waning de-mand for agriculture commodities because of the slumping global economy, but he doubts demand for healthful oil will “fall off a cliff” anytime soon.
Bunge will be the largest canola crusher in Western Canada when all the expansion and new construction is complete, followed by Cargill in second place and Richardson in third.
Richardson will reclaim the title of the biggest canola crushing plant in Yorkton.
That honour was snatched away from the company on Sept. 7, 2006, shortly after Richardson’s morning announcement that it was building a $170 million, 840,000 tonne facility in the east-central Saskatchewan city.
That afternoon, Louis Dreyfus Canada issued a news release saying it was constructing a slightly larger 850,000 tonne crush plant in the same city.
Van Osch kept one eye on the news wires when Richardson announced its expansion plans on the morning of June 20.
“I was expecting (a Louis Dreyfus) announcement to come out Wednesday afternoon,” he joked.
