Clean fuel regulations driving canola crush expansion on the Prairies

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Within the last month, three grain companies have announced plans to add nearly five million tonnes of canola crush capacity in Western Canada.

Richardson first announced a doubling of production to 2.2 million tonnes per year at its Yorkton, Sask. site, then Cargill announced plans to build a new 1 million tonne plant at Regina, Sask. and expand existing plants at Clavet, Sask. and Camrose, Alta.

Now, Viterra has confirmed plans for a massive 2.5 million tonne per year plant just north of Regina.

Kyle Jeworski, CEO of Viterra North America, says that the announced crush and processing plant planned for Regina will use more canola seed than Canada currently ships to some export markets, including Japan or Mexico.

The expanded crush capacity, added jobs, and economic activity are being cheered by the agriculture industry, canola growers, and more — but what’s driving this seemingly sudden growth?

New fuel standards aimed at reducing carbon emissions are driving at least part of the growth, as Jeworski says the Canadian government’s proposed Clean Fuel Standard regulation is just the latest catalyst to increase demand for canola oil, beyond growth in the food industry.

“When we look at the crushing industry, it’s been running at full capacity for last number of years, supplying predominantly food but some fuel demand. With the Clean Fuel Standards act we see an even increased opportunity to supply canola oil as an essential feedstock into the renewable fuel industry,” Jeworski says, discussing the plans for the Regina plant in the interview below (story continues below).

Several companies, including True North Renewable Fuels which was bought by Federated Co-op earlier this month, and Covenant Energy, are looking at building renewable diesel production facilities in southern Saskatchewan, which would require significant amounts of canola oil.

There’s also the matter of supplying this increased domestic crush demand and satisfying export demand of canola seed and oil. Doing the math, either average canola yields need to climb or acreage needs to expand significantly — or both — to create more commodity. Conversely, the domestic crush could consume some of what is currently exported.

From Viterra’s perspective, Jeworski says they are confident western Canadian farmers are up to the task. That, combined with new and improved genetics, he says, bodes well for a significant increase in production now, and in to the future.

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