Staying king may be challenging

Canola dominates the prairie crop mix, but future growth could depend on developing specialty oils. Expanding soy acres presents competition.  |  File photo

Canola plantings are expected to top 22 million acres in Western Canada this year, which would be a record high and cement canola’s status as the “king” crop of the Prairies.

Canola’s expansion has been an incredible story over the last two decades. Acres have nearly doubled since the late 1990s, and consistent financial returns from the oilseed have saved hundreds of farms.

But with acreage nearly maxed out, agricultural industry leaders are wondering where the story goes from here.

The Canola Council of Canada addressed this question at its annual meeting in March during a panel discussion with executives from Cargill Canada, Viterra and Bunge.

Tyler Bjornson, Canada Grains Council president and facilitator of the panel, asked the executives if canola can retain its crown.

Viterra president Kyle Jeworski summed up the panelists’ sentiment in one sentence: “I think canola can stay king, but I think it’s going to be challenging.”

Jeff Vassart, president of Cargill Canada, Tim Gallagher, executive vice-president of Bunge North America and Jeworski all said the acreage expansion phase is basically over and the industry must now focus on new opportunities for growth.

They made their comments more than a month before an April 21 Statistics Canada seeding intention report, which predicted two million more acres canola compared to 2016.

The executives said higher yields will drive industry growth in the future, but other prospects shouldn’t be ignored.

“Consumer interest and consumer demands are things I think we need to listen closer to,” said Vassart, who grew up in Pilot Mound, Man.

“I think we also need to be cognizant and listen to demands from consumers around… sustainable production.”

Canola oil is one example of changing consumer demand. A segment of buyers want vegetable oils with specific health and wellness traits.

“Oil demand, I think it’s going to evolve,” Vassart said.

“The next generation oils, for example, I think present opportunity. Whether that be low lin (linoleic), omega 3 … we see opportunities in those spaces.”

Vassart also expects more demand for expeller-pressed canola oil.

“I like to equate it to the brewing industry and the craft brewing industry,” he said.

“It’s quite small, but (a) growing segment.”

Producing specialty canola oil could push sales higher, but the protein content of canola could curb demand.

Robust global demand for vegetable based protein is expected to continue, and soybeans are better suited to meet that demand.

“Soy is a protein oriented crop. It’s 80 percent protein and 20 percent oil. And canola is 60-40. So there is an economic benefit to soy in a protein oriented market,” Gallagher said. “That’s something to watch out.”

Manitoba farmers seeded more than 1.6 million acres of soybeans in 2016, and acres could hit 2.2 million this spring, based on the Statistics Canada survey.

If soybeans continue to move westward and become more than a novelty in Saskatchewan, the expansion could cut into canola acres.

Jeworski said soybeans are moving into southern and central Saskatchewan, but a “battle” for acres could encourage more innovation in the canola sector.

“I don’t think competitive pressure is a bad thing.”

Jeworski is more concerned about the cost of canola processing on the Prairies.

Canadian wages are much higher than in Mexico or China, which could limit future investment in canola crushing.

“When you look at some of the (other) geographies … that’s very challenging for Canada.”

There may be obstacles and hurdles, but Gallagher has faith in canola. He said the Canola Council of Canada is a unique organization and a powerful force to propel the industry forward because few organizations have farmers, canola processors, grain handlers and biotech company representatives around the same board table.

“There aren’t many industries that take that approach,” he said.

“So with (that) behind you and favourable market conditions, I think things look pretty bright.”

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