WINNIPEG – The Canadian economy will be the big loser if there aren’t 13 to 16 million acres of yellow blooms in prairie fields by 2000.
The president of the Canadian Oilseed Processors Association says there’s strong demand for canola, but the industry needs to improve yields and solve agronomic problems so farmers will grow enough of the crop.
Robert Broeska told a Canada Grains Council conference here last week that uncertain production is a threat to canola crushers’ ability to operate efficiently.
In 1996, farmers planted only nine million acres of canola, with expected production of five million tonnes of seed. Crushers have capacity for more than four million tonnes of canola, equivalent to 7.7 million acres of the crop.
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“Despite strong prices, an expanding domestic crush market and continuing export opportunities, the area devoted to canola production declined by 31 percent” from last year, Broeska told the meeting.
He said the main reason for the decline was that financial returns from the crop weren’t as attractive as those from cereals during last spring’s rise in wheat prices.
“Competition for acres by other crops dictates that yields be improved and agronomic problems be resolved,” he said.
By 2000, Broeska said demand for canola oil is projected to be in the range of 1.4 to two million tonnes, depending on international trade barriers. Demand for meal could be 2.2 to 3.03 million tonnes, he said.
Amount required
This would require a crush between 3.6 and five million tonnes, or seven to 9.6 million acres of canola at current yield levels.
To keep a “healthy export level” of three million tonnes, Broeska said farmers would have to plant 13 to 16 million acres of canola every year.
The president of the Canola Council of Canada told the meeting farmers have produced more than four million tonnes of canola only six times in the crop’s history.
Dale Adolphe noted five of those times have been since 1990. He said it’s clear the industry has to plant more canola or increase yields.
“Demand continues to strain what appears to be our production capability,” Adolphe said. “That’s a market opportunity that the canola industry and canola producers have faced before in the past, and they’ve shown they’ve been up to the challenge.”
Adolphe said most of the council’s money is spent on research and agronomy.
Broeska told the meeting crushers are experiencing “some of the worst returns in canola processing history.”
He explained the North American soybean crush has been high to meet strong demand for the protein in soybean meal. Vegetable oil prices have been depressed by the large crush.
Meanwhile, canola supplies are tight, leaving plants with margins too poor to keep operating. In October, most plants announced they would shut down temporarily.
Broeska told reporters he expects poor margins to continue until the 1997 canola crop is harvested.
