Kevin Komarnisky is growing an identity preserved canola this year for
only one reason.
Money.
“It’s because of the premium,” said the Holden, Alta., farmer.
This spring Komarnisky locked in a $2 bushel premium for growing a
Nexera variety of canola booked through his local Agricore United sales
staff.
He originally planned to grow IP canola on 100 acres, but when the
premium was bumped from $1.30 a bu. to $2 a bu. during a one-day
special, he increased his contracted acres to 460.
Read Also
Alberta crop diversification centres receive funding
$5.2 million of provincial funding pumped into crop diversity research centres
Even if some of the fields aren’t as weed free as he would like,
Komarnisky said the premium will easily offset yield losses from weeds.
“Even if there is yield losses, it’s worth it.”
Jim Marsch, Agricore United’s IP contract co-ordinator, said it would
have been difficult for the company to fill its contracts this year
without attractive premiums.
New high-yielding herbicide-tolerant varieties now make up almost 80
percent of the 9.5 million acres of canola grown on the Prairies.
“Without high premiums, it would have been hard to get the acres this
year,” said Marsch of Winnipeg.
About 500,000 acres of IP canola were grown last year and industry
experts expect it will increase this year.
Identity-preserved canola varieties are specialty varieties with a
different fatty acid profile than conventional canola. High-erucic-acid
varieties have industrial uses, while high-oleic acid, low-linolenic
acid and a combination of high-oleic- and low-linolenic-acid varieties
are used for frying and food manufacturing.
Until recently, manufacturers put canola oil through a hydrogenation
process to stabilize it. With the hydrogenation process now being
linked to perceived health risks, food manufacturers are looking to IP
canola varieties that don’t require hydrogenation.
Not everyone is as enamoured with IP canola as Komarnisky.
Bill Leithead planted CanAmera Food’s high-erucic-acid variety on his
Daysland, Alta., farm last year, hoping for 32 to 35 bu. per acre.
Instead, he got 15 bu. per acre.
“My other canola yields were down as well, but not down like this
stuff. This was horrible.”
He also had to spend extra time cleaning stray seeds from his truck,
auger, air seeder and combine before moving to another field, and spent
part of a day answering Agriculture Canada officials’ questions about
how the seed would be stored and grown.
“The premium does not offset the extra work in growing the canola,” he
said.
“It was not a good experience. I’ve been bitten and I’m not going to
grow it again.”
Lee Scheibner of Daysland doesn’t know if IP canola fits his future
plans.
He grew Cargill’s Intermountain Canola varieties for two years with
mixed success.
In the first year, the extra premiums paid by the company compensated
for the extra work and increased weeds, but the second year was a “big
wreck” with more weeds and reduced yields.
Scheibner has become used to herbicide-tolerant varieties that ease
weed control.
The bigger problem was trying to sell the canola in a flat market,
Scheibner said.
He was offered a $10 basis premium when he signed, but Scheibner waited
most of the summer for canola prices to increase. When he finally
locked in a price, his premium translated into 20 cents per bu. instead
of the $1 a bushel he had hoped for.
Tony Zatylny, marketing manager of Nexera Canola Seeds in Calgary, said
not all farmers are able to grow and market IP canola.
“It’s a whole new skill set farmers have to learn.”
Because most IP canola contracts have a buyer call option that allows
the buyer to decide when to take delivery of the canola, farmers must
hedge on the futures market or use option contracts to have cash flow
when it’s needed, he said.
Farmers who are willing to manage their risk in the markets, lock in a
price and have increased storage risk from heated grain will continue
to grow IP canola, he said.
“Farmers that can’t manage one or more of those risks are saying, ‘no,
I don’t think the IP canola is for me.’ The management required for
marketing is sorting out farmers in two camps.”
Zatylny said while competition between companies drove premiums high
this year, he doesn’t know if they’ll continue to stay as high in
future years. On the flip side, high premiums are a sign customers want
the product and are concerned farmers weren’t going to grow it, he said.
