Slow start last fall | Growers are annoyed with low prices being offered, saying crusher profits are excessive
Canola farmers are disappointed with the prices they are receiving for their seed at crush plants and the volumes running through those facilities.
Members of the Canadian Oilseed Processors Association (COPA) had processed 3.36 million tonnes of canola as of Jan. 29, down from the previous year’s pace of 3.58 million tonnes.
Although processing is profitable, crush capacity use is 80 percent year-to-date compared to 89 percent at the same time in 2012-13.
Producers wonder how that can be the case in a year when there is more than ample seed supply.
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Farmers grew four million tonnes more canola than the previous year and exports are running 561,000 tonnes below last year’s pace.
COPA executive director Jim Everson said it is because the year got off to a slow start.
Crush volumes in August and Sept-ember were down considerably compared to a year ago.
“Seed was in pretty tight supply from the (previous) crop year earlier on. Mostly that was the issue,” he said.
Crush volumes picked up in Nov-ember and December and were on pace with the previous year for those two months.
However, a look at January’s weekly crush reports shows that crush capacity use has been about 75 to 80 percent for most of the month.
“The current transportation issues are likely a factor. I wouldn’t want to say much more than that,” said Everson.
The oil and meal produced by Western Canada’s crush facilities travels to export markets primarily by rail. He said crushers are facing the same difficulties and frustrations as grain shippers trying to get their product moved down clogged rail lines.
“The industry is crushing what it can under the circumstances, and I think transportation is part of those circumstances,” said Everson.
Crush volumes aren’t the only thing that growers are angry about. Doug Chorney, president of Keystone Agricultural Producers, spoke to a number of farmers at Manitoba Ag Days who felt they are being exploited by crushers.
“(Crushers) have lowered the price of canola that they’re buying at the facilities within Western Canada to reflect the export price, and we know that the oil and meal prices are still high, so the crush margins are excessive right now,” he said.
Canola crush margins are the highest in years.
Norm Hall, president of the Agricultural Producers Association of Saskatchewan, agreed that crusher profits are excessive.
“I’ve heard the crush margin is in that $160 to $180 per tonne (range). I guess the more normal level is closer to $50 to $60,” he said.
“What it’s reflecting is the crushers being able to increase their margin at will because there’s so much canola out there, producers are willing to move it at lower prices because there’s such slow cash flow on other products.”
Everson didn’t want to talk about crusher margins.
“It’s best we just stay out of that,” he said.
“I can’t comment on the pricing.”
Chorney said crushers are playing a dangerous game with growers that could come back to haunt them.
“I would send out a warning to processors that this is not a good way to forge relationships with farmers,” he said.
“People will be reluctant to work with them in the future if they feel they take advantage of them in times when they can be opportunistic.”
