Industry says producers selling canola into new market will require only declaration that the crop was grown in Canada
SASKATOON — Selling canola into the market created by Canada’s new Clean Fuel Regulations will not be onerous, according to a crush industry executive.
“A lot of work has been done by the industry and the grower associations to try and make it as streamlined as possible,” Brian Conn, vice-chair of the Canadian Oilseed Processors Association (COPA), said during a recent webinar.
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That work ensured that Canada’s crop feedstocks comply with Environment Canada’s Land Use and Biodiversity (LUB) criteria through exemptions and provisions “baked into” the regulation.
It was a years-long, complicated process, but compliance with all four LUB criteria has already been confirmed by Environment Canada.
As a result, the only thing a grower needs to worry about when delivering an eligible feedstock to a grain elevator or crush plant is providing an attestation and proof that the crop was grown in Canada.
“It could have been a bunch more cumbersome,” said COPA executive director Chris Vervaet.
The attestation or declaration will be required one time per year and can be in the form of language incorporated into a standard contract, added to existing attestations or in a stand-alone document.
The grower also needs to provide a single set of GPS co-ordinates for traceability purposes. The co-ordinates must be representative of the harvested area, such as a farmyard or where the bins are located.
Vervaet said the grain industry is working on ways to simplify the attestation language as well.
They want the process to be streamlined to get as many farmers subscribed to the program as possible.
“The more eligible feedstock, the more flexibility everybody has in the value chain,” he said.
Conn said the regulation is a big deal for the canola industry.
“The CFR and other programs that incentivize biofuels have spurred a once-in-a-generation boom in new crush capacity,” he said.
Five new crush projects have been announced, and three are already under construction.
Those five projects will push Canada’s annual canola crush capacity to 18 million tonnes, a 60 percent increase from today’s 11.2 million tonnes.
“Combined, these investments exceed over $2.5 billion,” he said.
Michelle Belisle, regulatory affairs and planning adviser with Imperial Oil, said Canada’s renewable diesel capacity could exceed four billion litres by the end of the decade.
Imperial is building a one-billion-litre facility at its Strathcona refinery near Edmonton that will be using 20,000 barrels of feedstock oil per day.
If the plant relied solely on canola oil as its feedstock, it would require one million litres of the product annually, which is the equivalent of 2.5 million tonnes of seed.
Dean Roberts, vice-chair of the Saskatchewan Canola Development Commission, said that is the same size as the Japanese market for Canadian canola.
He said Canada’s growing crush sector provides stiff competition to export markets, and that is good for prices.
“I witnessed that on my farm this year,” said the grower from Coleville, Sask.
Good crush margins led to strong demand from the crush sector.
“That pulled a lot of my crop directly into the crush market and not much into the export market,” said Roberts.
He noted that crush plants buy canola differently than grain elevators. They can be a good outlet for off-grade and off-spec crop.
“The crushers just have a little more flexibility to deal with some of those grains than the exporters do,” he said.
Roberts is concerned that five markets account for 90 percent of Canada’s exports. It makes him nervous given that there was a significant market access issue with China just a few years ago.
“There’s a precedent out there for market disruption to happen,” he said.
“The environment we operate in now is more unpredictable than ever.”
The panelists were asked about how the CFR might spark the old fuel versus food debate.
Roberts noted that canola yields were substandard last year, yet Agriculture Canada is still forecasting two million tonnes of carryout.
“I think an extra market won’t hurt,” he said.
Conn said it’s not a matter of supplying one market and ignoring the other.
“We don’t see this as a robbing Peter to pay Paul exercise,” he said.
However, he did acknowledge that the export market is going to account for a shrinking percentage of total sales going forward.
Belisle mentioned that Imperial’s renewable diesel plant won’t be relying solely on canola oil. It can use other feedstocks as well, such as used cooking oil.
She said Ottawa still needs to create incentives to offset those incorporated into the U.S. Inflation Reduction Act.
There needs to be a level playing field with the United States to get these renewable diesel plants built in Canada because they will be producing fuel for decades, if not longer.
“Our Sarnia refinery has been producing fuel for over 125 years and we’re excited for our renewable diesel facility to do the same,” said Belisle.
