The flax industry is getting trampled by the “canola gold rush,” but severe planting cuts may not translate into higher prices for the crop, says the president of the Flax Council of Canada.
Growers plan to seed a record 14.8 million acres of canola in 2007, according to Statistics Canada’s March survey of 16,800 farmers.
Some of that acreage will come at the expense of flax plantings, projected to plummet 31 percent to 1.4 million acres.
“That won’t necessarily mean that flax prices are going to soar next year. There are alternatives in the marketplace,” said flax council president Barry Hall.
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He was part of a delegation that travelled to Belgium and Germany in February. The trip reaffirmed that Canada faced stiff competition from a new player.
Ukraine shipped about 50,000 tonnes of flax to the European Union last year, undercutting Canadian suppliers in a market that regularly takes 65 percent of Canada’s flax exports.
It is only one-tenth the volume Canada usually ships to the EU, but Ukraine’s flax was cheaper because of the lower transportation cost. It caught Canadian exporters by surprise, said Hall.
“Flax prices were firming nicely last fall and then the Ukrainian flax came into the marketplace and prices declined.”
Hall worries Canada could lose ground to Ukraine if Statistics Canada’s numbers are correct. European buyers want a consistent flax supply.
The buyers told Hall that Canadian suppliers might lose market share for more than one year if they can’t meet their needs in 2007.
“The crushers need a constant supply of flax. That’s what keeps their mills operating,” he said.
Planting intentions for Ukraine and Russia are unknown but both offer good growing conditions and are capable of producing a seed with similar oil content to Canadian flax.
“They could probably produce more flax relatively easily,” said Hall.
Production might be up in Ukraine, but not in the United States where acres are set to fall 52 percent to 390,000 acres from 813,000 in 2006.
But Hall said North American planting intentions could change dramatically come seeding time. If fertilizer costs continue to rise, he expects flax will win some production back from canola.
“At the end of the day I think the reduction won’t be nearly as significant as what Stats Can is predicting.”
