In yesterday’s United States Department of Agriculture planting intentions report, American farmers say they intend to massively increase their acreage of canola this spring.
They’re going to jack it up 40 percent or so. Wow! Big deal, huh?
Well, I suspect you already are saying: “No it’s not. Americans don’t grow much canola anyway.”
That’s the truth. The massive percentage increase in acreage is going to boost total acreage to 1.2 million acres. That’s pretty small.
So small, in fact, that canola doesn’t count as one of the U.S.’s big eight crops that the USDA likes to discuss in length. I always think that sorghum sounds like a silly sort of crop, with a silent “H” and an acreage that you don’t see if you travel around the prairies and the great plains. But it’s one of the big eight, and getting bigger. (I remember seeing fields of it in west Africa a couple of decades ago and thinking it was something exotic.) An analyst I was talking to last week said he thinks sorghum is going to take over a lot of wheat acreage in the hard red winter wheat area.
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So this acreage expansion – almost all in North Dakota – is a sign that North Dakota farmers are are smart as prairie farmers and see the same return possibilities that that yellow crop offers up here. But it won’t be enough to add significant pressure to the canola market. Canola’s held up pretty well in the post-report slump, despite a rising Loonie, so we can take some relief in that, a trader told me this morning. Canola’s been comparatively weak to soybeans this winter, but it’s not taking the same hits right now.
So, short-term marketwise this report isn’t very bad news for the canola market in particular. But to me it does highlight another problem that canola has in the U.S. and that was explained to me by a Washington, D.C. consultant yesterday: the crop seems as exotic to many Americans as sorghum does to me.
Canola is grown in such small quantities and processed so little domestically that it doesn’t often register in officials’ minds. This consultant was involved in putting together the data necessary to convince the U.S. government to give canola-based biodiesel the same approval that soybean-based biodiesel got a few months ago. Without that approval, canola biodiesel doesn’t get the regulatory supports that makes biodiesel economically viable to produce. Many were shocked when canola didn’t get the approval a few months ago.
Many – and I must admit I was among these – immediately jumped to the conclusion that it was xenophobic American officials and politicians conspiring to kneecap our crop. The truth is rather more mundane. From speaking to a few people it seems that U.S. officials didn’t look at canola when approving soybean biodiesel because they assumed canola was just a high price food product and would never sell so cheaply as to end up in folks’ gas tanks. That’s not a bad assumption to have, in a lot of ways.
But it’s not necessarily true. There are lots of circumstances in which canola could be an affordable feedstock, canola biodiesel advocates say. So it shouldn’t be written off. And U.S. officials also didn’t seem to realize that canola biodiesel is already being produced in the U.S., so it’s worth considering.
U.S. officials, according to people I’ve spoken to, have been very willing to consider canola now this has been raised and do not appear to be resistant. They just didn’t realize it was a realistic prospect. Canadian and U.S. canola associations are now working hurriedly to get data to American regulators so that canola can get into the approval lineup.
At the Canola Council of Canada convention a couple of weeks ago, Senator, former Canadian representative to New York City and – most importantly – long time journalist from Saskatchewan Pamela Wallin chided Canadians for our often automatic anti-Americanism. She pointed out that it’s not just economically suicidal to be unpleasant to our neighbors and trading partners, but also stupid and useless if we’re trying to understand why they do some of the things they do.
And that was the case here. Lots of us assumed it was just a form of protectionism and trotted ourselves into a satisfying state of fulmination. I’m glad there were some grownups around the assess the situation better and move canola closer to getting the necessary approvals, because the real problem may be that – just like the Canadian population – canola may be nice but it’s small and easy to forget about.
