Richardson International sent out invitations to the grand opening of its new $170 million Yorkton, Sask., crushing facility the same week estimates emerged about how many canola acres had been lost on the Prairies.It’s not the ideal time to open an 840,000 tonne per year canola processing plant, said Agriculture Canada oilseed analyst Chris Beckman.“It’s looking like they will be facing tight supplies in the year that they open up,” he said. “It will be a challenge for not only Richardson but all crushers in Saskatchewan.”The recently opened, similar-sized LDM Foods plant, also in Yorkton, will be in competition for this year’s smaller crop in the region.Beckman forecasts a 15 percent or 2.5 million acre drop in the 16.9 million acres of canola farmers planned to seed this spring.He recently attended a Canola Council of Canada meeting where industry participants figured two million acres have been lost in Saskatchewan due to excess moisture.Richardson spokesperson Jean-Marc Ruest said the unexpected downsizing of the canola crop will not force the company to make major operational changes for the plant scheduled to open June 22.“It might require us to draw canola in from further distances than we originally would have planned but we have the ability to do that with our network of elevators that are spread throughout the Prairies,” he said.The goal remains to have the facility functioning at full capacity this year or early in 2011.Beckman said another challenge for crushers is the rapidly escalating cost of canola seed. The cash price for canola landed in Vancouver has shot up $65 per tonne or nearly 15 percent in the past two weeks.“If canola prices rise too much, they may have to restrain their crush volume based on lack of profitability,” he said.Ruest said there is no doubt that rising feedstock costs will negatively impact operating margins, forcing crushers to tighten their belts to generate sustainable returns.“In the case of our Yorkton plant, we think it is very efficient at present and don’t see a problem in that respect.”Beckman isn’t worried about a rocky start for Richardson’s plant. The company has been in the grain industry for a long time and can easily weather this storm.“They realize there is a lot of volatility in the business and they are operating for the long term,” he said.“I would imagine they are well positioned to survive this year and wait out for next year. And who knows, they might do OK this year too.”
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