The announcement last week that Archer Daniels Midland will build a 190-million-litre biodiesel plant in North Dakota offers Canadian canola growers another market.
The plant will require the canola from about 600,000 acres but total seeded acreage in the United States this year was just 1.1 million acres. Another plant proposed by North Dakota Biodiesel Inc. in Minot would use canola from about 350,000 acres.
Barry Coleman, executive director of the Northern Canola Growers Association in Bismarck, N.D., said he doesn’t see the seeded acreage number in his state changing much. Farmers are looking at high fertilizer costs to grow canola and seeking cheaper alternatives.
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“It’s tough to say that acreage would increase,” he said Oct. 7. “At this point I’d have to say stable.”
He said imports of Canadian canola will have to continue to fulfil crusher demand.
“The movement of canola doesn’t get hampered at the border,” he said. “There’s going to continue to be Canadian canola coming down here to supply the vibrant crush industry in the U.S.”
Judie Dyck, executive director of the Saskatchewan Canola Growers Association, said American biodiesel plants could be a good market, especially for off-grade canola.
“We’re looking at potentially a high surplus going into 2006,” she said, adding some have estimated there will be one million tonnes of off-grade canola.
“If that’s the case … we can get that sold and get the surplus down.”
But Dyck, who co-chairs the Saskatchewan task force on biodiesel, said it would be even better for growers if the province had its own industry. A two percent blend of biodiesel in regular diesel would use up a couple million acres of canola, she said.
The task force hopes to report to agriculture minister Mark Wartman before Christmas. Dyck said it was too early to say if the task force would recommend government mandates or incentives. She said there are pros and cons to having government drive an industry.
In North Dakota, ADM took advantage of incentives offered by the state, including a sales tax exemption on processing equipment and infrastructure, an income tax credit for fuel suppliers that blend biodiesel to five percent, and an interest buy-down worth $650,000 US.
Karla Miller, ADM spokesperson, said she didn’t know if the company had considered building its plant in Canada. The site it chose at Velva, N.D., is adjacent to its crush facility and not far from Minot, where North Dakota Biodiesel’s plant would be located, consuming a projected 250,000 tonnes of canola.
ADM did not disclose the construction cost or a projected completion date.
Dyck and Coleman said moving canola from the food market to industrial use is an exciting opportunity that could increase prices to producers.
Dyck said in 2004 the U.S. used 114 million litres of biodiesel. This year, the number could be higher than 250 million litres.
“You can see the growth potential that’s going on there,” she said.
