MORDEN, Man. – An enterprising feed plant could net $10 per tonne producing pea-canola meal, an energy- and lysine-rich hog feed once thought to be too dear for the cheap Manitoba feed market.
The new analysis is found in a study funded by Manitoba pulse and canola farmer organizations and conducted by Golden Meadow International Inc.
“We’re showing on paper that it does pay to set up a pea-canola meal plant in Manitoba,” said Francois Catellier, the consultant who did the study, who is also the part-time executive director of the Canadian Special Crops Association.
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The Manitoba Pulse Growers Association has been trying to spur development of a pea-canola meal plant in the province for about two years.
“It’s fair to say that there’s commercial interest (in starting a plant) from companies doing this in Saskatchewan and Alberta,” said Catellier.
A couple of Manitoba farmer-entrepreneurs have also expressed interest in the idea, he said.
Agricore owns a pea-canola meal plant in Camrose, Alta., while Naber Seed and Grain Co., a special crops processor, operates one at Tisdale, Sask. Saskatchewan Wheat Pool makes some pea-canola meal through its CanGro division, said Catellier.
But no one has ever tackled a pea-canola meal plant in Manitoba because of perceptions that cheap soybean meal would prevent a plant from being feasible.
In 1997, Canadian hog farmers imported 625,000 tonnes of U.S. soybean meal worth $253 million, said Catellier. One-fifth of the imports were likely used by Manitoba hog farmers.
Soybean meal is a backhaul for trucks shipping products like potash into the United States, which generally cross the border at Emerson, Man., making southern Manitoba the cheapest place in the prairies to buy soybean meal.
Catellier collected prices for a dozen different hog feed ingredients over a period of five years, then ran them through a computer model to select least-cost feed formulations.
A break-even price for pea-canola meal in Manitoba was as low as $165 per tonne and as high as $285.
“That’s quite a range,” said Catellier.
Over five years, the average gross return based on those prices would have been $19.52 per tonne, but returns strengthened significantly to $25 after the loss of the Crow transportation subsidy in August 1995.
After fixed and variable costs adding up to $15 per tonne, the processor would be left with $10.
A converted wooden elevator producing 20,000 tonnes of meal per year could have net returns of $200,000 per year, said Catellier, but marketing costs during the first few years would be significant.
The plant would have to give away meal to demonstrate its benefits and soybean meal marketers would likely price meal more competitively to retain buyers.
A pea-canola meal processor would need about 13,000 tonnes of feed peas and 6,667 tonnes of canola meal, easily supplied by Manitoba farmers, said Catellier.
The Pembina Valley would be a logical place to locate a plant, he added, because of its proximity to pea and hog farmers.
