Canola Waits in the Wings

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John Van Dam thought he was going to be busy this fall selling canola seed to farmers who could potentially make more on the oilseed than on the wheat they would normally plant. Then wheat prices skyrocketed and biodiesel margins tightened, leaving Van Dam's expectations unfulfilled. The national canola product manager for Winfield Solutions LLC isn't discouraged, however, because developments around the nation indicate it may only be a matter of time before canola reaches its potential in the United States.

In 1962, when Van Dam moved to Park River, N.D., canola fields reached fewer than 100 miles east and west of him in the northern counties of North Dakota and Minnesota. Interest in canola has mushroomed in the past few years, he reports. "I've been exposed to canola in 38 states in the past three years, including in Alaska-whether it's for simple testing or people wanting to try some seed or doing seed production." This winter he added a 39th state, Hawaii, where he's provided seed and consulting on canola production.

The key to canola's expansion is its development as a winter crop. Canadian plant breeders developed spring canola in the 1960s from rapeseed varieties, but yields can be drastically reduced if high temperatures occur during flowering. That trait has limited the canola growing region to Canada and northern regions of North Dakota and Minnesota. Winter canola varieties have the potential to expand the growing region greatly. Winter canola planted in the fall, flowers in moderate spring temperatures and is harvested in early summer. Double cropping opportunities are limited, however. "In areas where canola grows really well, you won't be getting the crop off until the end of June or July,"

Van Dam says. "These are areas where they're getting 3,000- to 3,500-pound crops, which require a longer [growing] season." Thus it doesn't work well in double cropping situations with corn or soybeans, limiting its potential in the Corn Belt. Winter canola is catching on among winter wheat growers as an alternative winter crop and in most years provides a better return to the grower. Farmers in Georgia, Florida and south Texas can't plant winter canola, however, because it requires a couple weeks of continuous freezing temperatures to trigger the plant to switch from growing vegetation to its reproductive stage. Thus, the warmer states are testing spring canola planted in the fall.

Great Plains
The biggest growth in canola acres has occurred in south central United States where wheat is king and winter canola fills an important niche. "Canola rotates so nicely with wheat," Van Dam says. "It doesn't have the same insects or weed pressure. We've also seen some extremely positive wheat yields after canola." To help farmers there adopt the crop, several initiatives are being developed. The Great Plains Canola Association was officially launched last summer to support growers in Oklahoma and Kansas. The agricultural universities in both states are working together to support canola breeding and agronomic improvements. The crop received another major boost by the modification of the cottonseed crushing plant in Oklahoma City operated by the Producers Cooperative Oil Mill. The plant is contracting with canola growers for its first crush in 2008.

Developments in Oklahoma and Kansas have prompted neighboring states to investigate the oilseed crop. "I've had a lot of discussions with people in Tennessee, Kentucky and Arkansas, all are looking at using canola for biodiesel," Van Dam reports. Small acreages are also being planted as a feedstock for biodiesel production in northeastern United States, including the states of Vermont, Maine and Maryland. A farmer who grows five acres of canola and gets 1,200 pounds per acre can produce enough oil for a few hundred gallons of biodiesel.

Southeast
Biodiesel is also driving interest in canola production in North Carolina. "We have seven smaller biodiesel plants, 1 MMgy to 4 MMgy," says Anne Tazewell, the transportation program manager with the North Carolina Solar Center at North Carolina State University. "We're building the market for locally produced fuels that are marketed locally." The North Carolina Bioenergy Crop project, which is funded through the tobacco settlement in an effort to develop alternative crops, is in the second season of canola trials planted at four sites, growing 56 winter canola varieties. Nic George, biofuels project coordinator, says the variety trials have produced a wide range of yields, but 3,000 pounds per acre should be achievable. In North Carolina, winter canola will give growers another option for a winter cover crop, one with a higher value than other alternatives.

With farm program subsidies for cotton in question, and the potential for maximum canola yields in Georgia, Ben Deal, a Bristol, Ga., farmer and board member of the U.S. Canola Association, firmly expects the crop will gain ground in his state once wheat prices return to normal. A cottonseed processor in southeast Georgia was ready to begin contracting for canola this year, when the project was put on hold. "We had a good bit of acres of canola lined up for fall seeding and then $8 [per bushel] wheat happened," Deal says "With wheat's infrastructure already in place, it was like shooting yourself in the foot not to grow wheat." Under good management practices and ideal weather conditions canola growers can expect 60 to 70 bushels (3,000 to 3,500 pounds) per acre, he says. In Georgia, canola could replace winter wheat and be double cropped with soybeans, peanuts, cotton, grain sorghum or other crops. There's a potential for outstanding yields from canola, Deal says. "The University of Georgia has exceeded 100 bushels (5,000 pounds) per acre on test plots several times," he says.

Georgia tried to develop canola as a crop in the mid-1990s, but abandoned it when markets didn't materialize. This time, Chickasha of Georgia LLC has plans to put an idled oilseed extractor back into service crushing canola at its cottonseed processing plant. The initial plan was to add a biodiesel processor to utilize the oil produced by the 800-ton-per-day crusher, but that has been put on the back burner, Deal says.

Biodiesel Mandates
West Coast producers became interested in canola for two reasons: biofuels mandates in California and the Pacific Northwest and dairy producers like using canola meal in feed rations. In a feed deficit area, canola meal will have a competitive edge over meal shipped in from Canada.

In California, Van Dam says growers in the Sacramento Valley are testing spring canola planted in the fall. "The summers are too hot for canola and the ground is too valuable. They have a lot of high-input, high-return summer crops. But in the winter, they're looking for something to cover that ground, and that's where we saw canola fitting in," he says. Canola wouldn't require any fertilizer to produce yields from 1,900 to 2,400 pounds per acre if it's planted on ground that was once planted to highly fertilized vegetable crops. The oilseed crop also requires little or no added water, so growers would save on irrigation costs. Van Dam says one trial field was so dry at flowering time that it was irrigated once, and still yielded 2,400 pounds per acre. "That's intriguing people," he says. "There are a number of projects going on now to see how much water canola needs." Irrigators in other regions have also had good results. In the Columbia River Basin of the Pacific Northwest, canola yields 3,500 to 4,000 pounds per acre under irrigation, Van Dam says. New biodiesel producers in the area are looking for canola production to begin so they have a local feedstock source.

Canola Country Developments
While canola is being developed in new areas, North Dakota and Minnesota remain the dominant producers. Canola's share of the biodiesel market was boosted this year when Archer Daniels Midland Co.'s 85 MMgy biodiesel plant came on line alongside its canola crushing facility at Velva, N.D. Two other canola biodiesel projects on the drawing board in Hallock, Minn., and Munich, N.D., have evolved into canola crushing facilities for the food market. Northstar Bioenergy underwent a name change to Northstar Agri Industry LLC when organizers decided to focus on building a crushing facility first. "We're designing the infrastructure and the plant site to accommodate biodiesel once the economics get straightened around," Northstar President Neil Juhnke says. "Our project was always an integrated plant with crushing capacity for our own oil." The plant will crush 340,000 tons of canola annually yielding 34 million gallons of oil per year and more than 190,000 tons of meal.

Van Dam serves on the board of the Northern Prairie EnviroFuels LLC, which is planning a canola facility near Munich, N.D. Originally proposed as a 30 MMgy biodiesel plant, the plan now is to build a 10 MMgy crushing plant plumbed for the future addition of a biodiesel plant.

Canola growers in the region are concerned about the build up in crushing capacity. ADM's Velva facility crushed 1.3 million metric tons (1.4 million tons) of canola in 2006, which was twice the amount grown in the United States that year, a company official said at a canola forum last year. What wasn't sourced from U.S. growers was imported from Canada. Canada produces about 12 million acres of canola per year compared with 1 million acres in the United States.

Like other crops this year, canola prices have been high. In mid-November, prices at Velva were $19.84 per hundredweight compared with a Minneapolis cash price of $9.92 per bushel for soybeans. With canola weighing in at 50 pounds per bushel, the price comparison would be $9.92 per bushel for canola. It is more difficult to compare oil prices because unlike soy oil, canola is not publicly traded. One industry observer commented that canola oil is currently running at a premium to soy oil, unlike a few years ago when it was priced lower. Crush margins would appear to favor canola as the seeds produce 37 percent to 40 percent oil, compared with 18 percent to 20 percent for soybeans. With numbers like that, canola is likely to increase its presence in the biodiesel market.

Susanne Retka Schill is a Biodiesel Magazine staff writer. Reach her at sretkaschill@bbibiofuels.com or (701) 738-4962.