A flurry of recent processing plant announcements reflect new U.S. focus on the oilseed
Canadian canola growers face stiffer competition from south of the border as the U.S. industry ramps up production and processing of the crop.
In a one-week period straddling the end of 2010 and the beginning of 2011, there were significant canola processing plant announcements for two northern U.S. states.
PICO Holdings Inc. announced Dec. 30 it had secured a $100 million loan from ING Capital LLC to build a $160 million processing plant and integrated refinery near Hallock, Minn.
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Construction is scheduled to begin Jan. 10 with completion by the fourth quarter of 2012.
The plant will initially process up to 365,000 tonnes of canola seed annually to produce 127,000 tonnes of food grade oil and 195,000 tonnes of meal.
Processing capacity will eventually reach 570,000 tonnes of canola seed per year pending additional environmental permitting.
It will be the second major dedicated canola processing facility in the United States, the other one being the Archer Daniels Midland plant in Velva, North Dakota.
“Certainly it will be a boon to the industry,” said Angela Dansby, communications director for the U.S. Canola Association.
One week after the PICO announcement, BioExx Specialty Proteins Ltd., a Canadian firm that operates a commercial scale canola protein extraction facility in Saskatoon, announced it would be “aggressively pursuing” construction of a similar plant in Minot, N.D.
The proposed plant would produce 80,000 tonnes of canola protein isolates annually.
BioExx said it has received a positive feasibility report regarding the project, which was a requirement of a potential project lender. The plant could be in operation as early as 2012.
The two proposed plants are testament to the health of the U.S. canola industry, as is the big jump in last year’s plantings. Growers harvested a record 1.42 million acres of the crop in 2010, up 74 percent from the previous year.
Dansby said farmer interest is driven by voracious consumer demand for healthier cooking oil. Canola has rapidly become the number two cooking oil by volume in the U.S. after soybean oil.
Most of the acreage increase has occurred in North Dakota, which grew 89 percent of last year’s crop. But the industry has ambitious plans for winter canola in the Great Plains region of the country.
The association has established a goal of 4.1 million acres of canola by 2015, including 800,000 acres planted in Oklahoma and Kansas. It hopes half of the wheat growers in those Great Plains states will eventually recognize the rotational benefits of growing winter canola.
Dansby said the increased production should help the U.S. become more self-sufficient in meeting its rising canola needs.
“We’ll be closing that gap certainly a little bit as the acreage continues to grow in the U.S.”
But she added that the country will continue to import significant amounts of canola seed and oil from Canada for the foreseeable future while demand continues to outpace supply.
The U.S. market consumed 10 percent of Canada’s canola seed exports and 58 percent of its canola oil exports in 2009-10.
