CLAVET, Sask. – More prairie acres could be sporting yellow flowers next year thanks to the growing North American demand for healthier cooking oil.
Gary Galbraith, Canadian production manager for Cargill Specialty Canola Oils, said his company expects to sign 2008 canola production contracts with 500 to 700 additional producers this fall, most of them in Saskatchewan and Manitoba.
The new contracts will enable Cargill to meet supply obligations with a growing list of food manufacturers looking for oil low in saturated fat and free of trans fatty acids.
Read Also
Bond market seen as crop price threat
A grain market analyst believes the bond market is about to collapse and that could drive down commodity values.
“We expect there will be between 500 and 700 new growers involved (in Cargill’s contract canola program) next year and there will also be a significant number of our current growers who will want to expand their acreage,” Galbraith said during a recent unveiling of Cargill’s new high-oleic canola varieties near Clavet.
“We will certainly want to do a good part of our contracting with farmers that are close to our delivery points, but because of the growing demand, there will also be a significant amount of production further out.”
Cargill’s new high-oleic Victory hybrid canola varieties – V1035 and V2018 – are designed to produce oil that satisfies large users including international food manufacturers and restaurant chains.
Recently, the McDonald’s restaurant chain announced its intention to switch to a new canola-based cooking oil blend to be used at its North American restaurants.
The new oil, consisting primarily of high oleic canola oil, will be blended and supplied primarily by Cargill, which began signing canola production contracts with western Canadian farmers more than a decade ago.
Galbraith would not divulge how many acres Cargill contracted last year nor would he say how many additional tonnes of oil would be needed to facilitate the McDonald’s conversion.
However, he said demand for oil from high oleic canola varieties was expected to expand as more North American jurisdictions ban the use of trans fats.
Trans fatty acids have been linked to heart disease and other health problems.
Last year, New York authorities banned the use of trans fats in restaurants in that city.
And last month, the Canadian government said it would adopt new standards to restrict trans fat content in most processed food to less than five percent.
Federal authorities established a two-year window for food companies to devise new production systems in compliance with the new standard.
In light of such measures, the Canadian canola industry has suggested that Canadian canola production could expand to roughly 15 million tonnes a year by 2015, an increase of nearly 65 percent over current production levels.
McDonald’s decision to eliminate trans fats represents a major victory for the North American canola industry, which has carved out a lucrative niche in the global edible oil market.
Vickie Spiller, director of U.S. supply chain management for McDonald’s, said the company has been searching for a healthier oil blend for years.
Over the past five years, nearly 50 oil blends were tested.
The blend that won out – a combination of canola, corn and soybean oil – performed well in deep fryers and had no noticeable impact on the taste of McDonald’s french fries, the company’s flagship menu item, Spiller said.
Last year, the oil blend was used on a trial basis in 3,500 of McDonald’s 15,000 North American outlets.
The remaining outlets are expected to convert next year.
“We saw no significant difference in any of the consumer responses nor in any of our customer satisfaction scores,” she said.
Spiller would not say how much canola oil the company would need but unofficial estimates suggest it would use between 75 and 100 million pounds of blended oil per year.
Acquiring oil from an established company such as Cargill was a key consideration for the chain, she added.
“Assured supply is very important because of our size,” Spiller said.
“Once we start a new program, we need to continue with it so it’s really critical to understand the supply risks involved, particularly at the farm level because that’s where it all starts.”
Galbraith said producers can learn more about Cargill’s 2008 production contracts by contacting a Cargill AgHorizons representative or by calling a Victory brand canola retailer.
Production premiums for the new varieties will vary depending on the contract terms selected, Galbraith said.
In the event of a crop failure, producers are not required to deliver canola that is not produced, he added.
