Cargill and Viterra announce new plants in Regina, following Richardson’s plans to double capacity at Yorkton facility
Canada is increasing its canola crush capacity by 41 percent over the next three years.
Three of the largest grain companies in the country announced new projects in the span of just over one month. All of the new plants are expected to be up and running by 2024.
Viterra was the latest company to issue a news release saying it intends to build the world’s largest canola crush facility in Regina, capable of processing 2.5 million tonnes of seed annually.
Cargill announced last week that it is also building a plant in Regina that will consume one million tonnes of canola seed per year.
Richardson unveiled its plans in March to double the capacity of its plant in Yorkton, Sask., to 2.2 million tonnes.
Together, the three plants will add 4.5 million tonnes of processing capacity to the existing 11 million tonnes at the 14 plants currently operating in Canada. To put that in context, China was Canada’s largest export market in 2020, buying 2.58 million tonnes of seed.
In one fell swoop, the industry has announced plans that, if completed, would exceed what was considered an ambitious goal set by the Canola Council of Canada back in 2014 to have 14 million tonnes of crush capacity by 2025.
Jeff Vassart, president of Cargill Canada, said there is not one specific factor that triggered the current wave of construction announcements other than the pull from buyers around the world.
“We continue to see strong demand from all of our food customers, both domestically and internationally, for the safe, sustainable and healthy product that canola is,” he said.
There is also a new source of demand bubbling up from the emerging renewable diesel sector.
That industry was launched in response to California’s Low Carbon Fuel Standard and similar legislation in other states and regions, including Canada.
As well, there is growing demand for canola meal.
If he had to pick one factor that pushed Cargill’s decision to the finish line it might be the emergence of the renewable diesel industry.
“That’s definitely an accelerator to the demand for canola products,” said Vassart.
According to Biodiesel Magazine, there were four operating renewable diesel plants in the United States at the end of 2020 with a combined production capacity of 2.09 billion litres.
Six more plants are under construction, which will bring the total to over 7.5 billion litres.
An additional five proposed plants would add another 12.5 billion litres of capacity, bringing the U.S. total to more than 20 billion litres.
There is no renewable diesel production in Canada but there are several proposed projects.
One of those projects is the recently announced one billion litre plant by Federated Co-operatives Limited, which may include its own canola crush facility depending on available supplies of the oil.
Chris Vervaet, executive director of the Canadian Oilseed Processors Association, said the burgeoning renewable diesel sector represents a huge opportunity for the canola industry.
Canola-based biofuels have very desirable carbon intensity levels due to the longstanding farm production practices of zero or minimal tillage.
“Those are significant factors that make canola a more desirable feedstock for biofuels,” he said.
“There is definitely an opportunity for canola utilization in the renewable diesel boom that we see taking place here in North America.”
Not all of the proposed new plants will be servicing the biofuel market. Richardson made it clear that is not its intended market.
“We would like to emphasize that this does not have to do with the Clean Fuel Standard but is to fill a food production need for both canola oil and canola meal,” company spokesperson Kelcey Vossen said in a recent email.
“The outlook on canola has been good and will continue to be positive and our expansion project is to meet this increased global demand.”
Vervaet confirmed that there has been consistently strong demand from the food sector.
“Our crush over the last 24 months is indicative of that,” he said.
Crush capacity utilization has been running at or over 90 percent over that time, up from 80 to 85 percent in years prior to that.
“We’ve really seen a pronounced bump in utilization over the past couple of years,” he said.
Jim Everson, president of the Canola Council of Canada, said the plethora of crushing plant announcements sends a signal to buyers of oil and meal products around the world.
“Nothing demonstrates confidence in the Canadian industry more than these significant long-term investments,” he said.
He believes Canada’s trade agreements with various countries helped pave the way for these three projects.
“The (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) reduces tariffs on oils and meals in some of the key markets,” said Everson.
“That drives these kinds of decisions.”
The Canada-United States-Mexico Agreement is another one that gave companies the confidence to proceed with their projects.
“That re-secures that predictable access to the U.S. market where a great deal of our meal is marketed,” he said.
The current wave of announcements is reminiscent of the last big building spree 15 years ago.
Richardson announced on the morning of Sept. 7, 2006, that it would be constructing a plant in Yorkton capable of crushing 840,000 tonnes of canola.
That same afternoon, Louis Dreyfus Canada unveiled its plans to build a similar-sized plant in the same community.
Grain industry analysts at that time thought there wouldn’t be enough demand and canola supply, but both plants were built and now Richardson is doubling the size of its Yorkton facility.