N.D. canola may not meet producers' demands

By | December 15, 2006
North Dakota is the U.S. canola king, and the state has seen heightened biodiesel activity over the past year with three plants currently under construction that plan to use the oilseed as a feedstock, along with another proposed project. More may follow.

The Archer Daniels Midland Co. (ADM) facility, which is currently under construction in Velva, is expected to be the largest biodiesel producer in North America with a nameplate capacity of 85 MMgy. Magic City Biodiesel is a 30 MMgy facility being built in Minot, adjacent to an oilseed crushing facility. All-American Biodiesel will produce 5 MMgy of biodiesel in York. These three enterprises will take in approximately 1.5 million acres of canola per year when they come on line before summer 2007, according to Barry Coleman, executive director of the Northern Canola Growers Association, based in Bismarck, N.D.

Coleman said North Dakota, which grows about 95 percent of the nation's canola crops, only harvested 930,000 acres of canola in 2006, but 2007 predictions are reaching 1.3 million acres. "Beyond that, we're not sure, but there's certainly potential for a much larger increase in '08 and '09, depending on prices, the Farm Bill, the crops and other factors," Coleman said.

Another biodiesel plant is under development in North Dakota, as well. There is a feasibility study underway for a plant in Munich, N.D., which also plans to use canola.

North Dakota canola is not only in high demand from the biodiesel industry; it is also a crop that is gaining popularity in the food sector, said D.C. Coston, vice president for the agriculture and university extension at North Dakota State University (NDSU). "[Publicizing] the health benefits that come along because of direct human consumption of canola has the potential to create great demand, too," Coston said. "There are some very positive things happening with this crop, and it holds great potential for North Dakota."

Coleman said announcements by fast food chains such as Taco Bell, which said it will start using canola oil in its food preparation, will have a large impact on the canola market. Likewise, diesel engine companies issuing B20 warranties in their vehicles will have a large impact on the biodiesel industry, as well.

The demand created by biodiesel manufacturing shouldn't strain the supply for the traditional canola markets, but it will provide some price competitiveness, Coston said. "Materials and other things tend to go places where people pay for them," he said. "If traditional markets will pay a price that is reasonable, there will be plenty for that along with the biodiesel. We're optimistic that the canola industry here will be supplying all those [traditional markets], as well as these new and opening markets."
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