- Canola has quickly become top crop, commanding more acres and higher value than any other grain or oilseed
- Soybean crops making way to Western Canada and are Manitoba’s third-largest crop after canola and wheat
- Canadian pulse crops account for about 35% of the world pulse trade
Canola, once dubbed the Cinderella crop, is now queen of Canadian field crop production, commanding more acres and a higher value than any other grain or oilseed. How did canola surpass wheat in a nation that once prided itself on being the breadbasket of the world?
Many factors are part of the decision-making matrix as farmers choose what crops to plant. The crop needs to be adapted to the region and the farming practices. It has to fit into the rotation. But above all, crop choice is governed by economics and profitability. That, in turn, is linked to demand.
Homesteaders flocked to the Canadian Prairies in the early 1900s, attracted by the promise of available land and a settlement policy designed to fill Britain’s need for wheat. Wheat was king for decades, and remains a major crop.
While the major crops and acres grown haven’t changed dramatically, productivity gains in the past 10 years have been significant.
Few would have guessed, in the early ’70s – when rapeseed was transformed into canola by Canadian scientists – this upstart crop would eventually surpass wheat, creating a revolution in the agriculture of Western Canada.
The harvested area of canola first exceeded 10 million acres in 1993. Then came genetically modified, herbicide-resistant varieties, followed by hybrids and canola with specialty oils. In the last five years, around 20 million acres have been harvested.
The first time average yield exceeded 30 bushels per acre was 2005. Now, average yields are typically in the high 30s, and the Canola Council of Canada is aiming for an ambitious 52 bushel per acre average by 2025.
Canola fueling international demand
Worldwide demand for canola seed is strong, and it competes well with soybeans. Still, a strong and expanding domestic crush industry helps provide price strength and demand stability. The Canola Council website lists 14 major canola crushing facilities in the country, including two in Ontario and one in Quebec.
Nearly half the country’s canola seed is crushed domestically, with most of the resulting oil and meal going to American markets.
Brian Innes, vice-president of government relations for the Canola Council, points out that biodiesel production has also become significant, referring to a recent USDA report estimating production at 400 million litres in 2016 and forecasting 550 million litres in 2017.
“The main feedstock for Canadian-produced biodiesel is canola oil,” Innes says, “with the largest plant being ADM in Lloydminster, Alberta.”
Can canola remain on top?
But just as canola wrestled the throne from wheat, other contenders may steal acres from canola in the years to come. If canola has become queen, the new prince would be pulse crops.
Canada now accounts for about 35 per cent of the world pulse trade and is the world’s largest exporter of peas and lentils. In 2015, Canada exported six million tonnes of pulse worth more than $4.2 billion.
Fixing their own nitrogen, pulses are a great sustainability story, and North American consumers are discovering the nutritional attributes – and increasing their consumption. However, the huge demand from India and China has been the major reason for the dramatic increase in Canadian production.
Soybeans and corn?
Long a staple in Ontario, soybeans have made major inroads in Western Canada, particularly Manitoba. With varieties that require lower heat units and fewer days to maturity, Manitoba’s soybean area has exploded to 1.6 million acres, making it the province’s third-largest crop after canola and wheat.
Major seed companies are betting the years ahead will bring millions more soybean acres west. They also believe corn will capture millions of acres, arguing that once new varieties can reliably generate high yields with a lower heat unit requirement, corn becomes more profitable than other options.
That has certainly been the experience in other regions including North Dakota, but long-time market analyst Chuck Penner of Leftfield Commodity Research isn’t so sure.
“All commodity groups believe they will win the acreage battle,” Penner notes. He points to massive world production of corn and soybeans as the reason prices are often soft. Will Canadian farmers want to compete in these high-volume markets, or will they opt for higher value, more specialized crops?
Back in 1990, Penner points out, one-third of Western Canada’s acreage remained fallow each year. With the practice of summerfallow all but discontinued, there’s no reservoir of land to bring into production. If the acreage of one crop increases, acres must drop on another.
Same crops, different markets, in Central Canada
The favorable climate and soils in the productive areas of Ontario and Quebec enable incredible crop diversity. Ginseng, processing peas and sweet corn, tender fruit, vineyards, dry edible beans – an enormous range of crops are possible. And while there are many examples of successful niche and small-acre crops, the big three in Central Canada are still corn, soybeans and wheat.
In Ontario, these three crops account for five million to six million acres, and many growers remain committed to a corn-soy-wheat rotation where possible. From 2005 to 2015, Ontario corn acres ranged between 1.5 million and just over two million acres. Over the same period, soybean acres ranged from a little over two million to just over three million. Wheat acres are more of a wildcard, ranging from a low of 600,000 to over 1.2 million.
In Quebec, wheat is less of a factor as the feed market drives demand for corn and soybeans. Corn acres ranged from 872,000 to 1.1 million and soybeans between 657,000 and 852,000.
These numbers are small relative to Western Canada, and seemingly insignificant when we consider U.S. acres planted last year: over 90 million of corn and over 80 million of soybeans.
If wheat acres drop and corn or soybean acres spike, it’s usually due to wet weather in the fall preventing timely seeding of winter wheat, notes Grain Farmers of Ontario marketing manager Todd Austin. “Trends in acres grown for the major crops have remained relatively steady,” he says.
While the major crops and acres grown haven’t changed dramatically, productivity gains in the past 10 years have been significant. Not long ago, per-acre yields of 200 bushels for corn, 50-plus for soybeans and 100 for soft red winter wheat would have been record yields for many growers. Today, they represent legitimate yield objectives – and many growers aim well beyond.
Where is the extra production going?
Diversity in demand has been key for growers. “For corn, without ethanol and other industrial users like corn sweetener, we’d have a significant oversupply,” Austin says.
For soybeans, as much as one-third of eastern production is in Identity Preserved, or IP, production systems. These non-genetically modified soybeans are grown on contract for products like soy milk and tofu, and fetch a premium that varies year to year.
“Our growers have a great reputation for being diligent in segregating IP from crusher varieties and meeting high standards for end users,” Austin says. The U.S. and South America dominate the commodity soybean market, with China buying as much as two-thirds of global production.
Demand for Eastern wheat is split roughly three ways, with domestic millers and feed-and-seed markets taking about a third each. The remainder goes across the border to U.S. millers. “We’re a small-volume wheat producing area, but we’re always looking for new markets as trade barriers start to come down,” Austin says.
Commodity or specialized markets?
The factors at play for grain growers, in the short term, will continue to include filling demand for ethanol production to meet the federal government mandate for ethanol in gasoline. “Energy markets are tough to predict in the long term, because they’re less about supply and demand, and more about government policy,” Austin says. He also suggests that a favourable exchange rate will continue to help maintain local cash prices and stimulate exports.
In the longer term, Austin sees potential for demand for eastern corn, soybeans and wheat to continue to evolve away from a commodity mindset and more towards filling demand for specialized products or ingredients.
“IP soybeans are a good example of adding value beyond commodity prices; we may be able to do more of this for all crops. It appears food processors are responding to consumer demands for enhanced food safety, perceived health and environmental benefits, and sustainable production practices. Canadian growers should be prepared.”
Ethanol, industrial use and IP opportunities have spurred a dramatic increase in on-farm storage, letting farmers participate in the “just-in-time delivery” nature of these markets. This storage capacity also sets growers up to participate in specialty production systems.
Lastly, new genetic editing techniques hold great promise in delivering output traits that will benefit the food consumer. It remains to be seen how dramatically or quickly gene editing impacts corn, soybean and wheat production in Central Canada, but it is possible we’ll see some very different versions of these crops in the coming years.