The planned expansion of canola crushing capacity in Saskatchewan is nothing short of amazing and will have wide-reaching ramifications.
Here’s a recap of recent announcements. Ceres Global is planning a 1.1 million tonne facility near Northgate along the United States border. Cargill has plans for a one million tonne crush plant in Regina. Meanwhile, Viterra is targeting a 2.5 million tonne facility for Regina. And Richardson started the parade with plans to double its crush capacity at Yorkton, adding an additional 1.1 million tonnes.
The projection is for all this new capacity to be in place for 2024. Dollar figures weren’t attached to the Richardson and Viterra announcements, but Ceres and Cargill are each talking $350 million. Total investment for all four is likely to be in the range of $1.5 to $2 billion.
Currently, Western Canada grows about 19 million tonnes of canola annually, with roughly half crushed domestically and the rest exported as raw seed. The additional crush capacity of 5.7 million tonnes is huge. The Clean Fuel Standard and the push for renewable diesel is likely providing much of the impetus.
How big is 5.7 million tonnes? Well, if a typical high-throughput prairie terminal moves 400,000 tonnes a year, this additional crush capacity will replace the handling of about 14 terminals. Meanwhile, new terminals continue to be built. It’s difficult to see where the export grain is going to come from to keep them all busy.
It will also be interesting to see what the explosion of crush capacity will mean for canola acreage. If canola becomes even more economically attractive compared to other grains, more pressure will be exerted on rotations and canola will continue to surge in the non-traditional growing regions of the southern Prairies.
The Canola Council of Canada is targeting 26 million tonnes by 2025. That estimate seems more plausible than ever. But will the expanded production come mainly from yield increases or from stealing acreage from other crops? Promoters of smaller acreage crops should be concerned.
Dire warnings of a clubroot disaster from tight canola rotations seem to be falling on deaf ears. If you want to grow canola on canola on canola year after year, crop insurance has no problem with your decision. The same government subsidy on your premium still applies even though agriculture departments warn against the evils of continuous canola.
Various research projects have shown better canola yields when the crop is in a two or three year rotation, but the yield advantage is not huge. Canola breeding companies are investing serious money to try and keep one step ahead of the devastating disease issues that a continuous monoculture can bring.
Observers often complain about Canada’s lack of value-added processing. Somehow the canola crushing industry is overlooked. It’s an amazing success story.
For years, canola has been Canada’s top crop and the crush expansion will only solidify that standing. It seems disingenuous to complain about the goose laying golden eggs, but there’s a lot to be said for crop diversity and not putting so many of your eggs in the same basket.
Canola prices this spring surged just ahead of seeding and attracted even more acres than expected. Despite the knowledge that diversity has inherent advantages, economics will rule. The yellow wave will continue to capture more acres in the years ahead, perhaps a lot more, and that will have a large impact on all facets of agriculture.
Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at email@example.com.