The emerging biofuels market will provide Prairie farmers with several benefits, not the least of which is less reliance on uncertain export markets.
Speaking as part of a Canola Council of Canada-sponsored webinar on the federal government’s new clean fuel regulations last month, producer Dean Roberts, the vice-chair of SaskCanola, said new biofuel facilities like the one being built by Imperial Oil near Edmonton will give farmers increased marketing and delivery options here at home.
The new Imperial facility – expected to come online in 2025 - is forecast to consume about 1 million tonnes of canola oil per year – an amount that would demand about 2.5 million tonnes of canola seed production. That is roughly equivalent to the entire annual Japanese canola export market for Canada, Roberts said.
“I think there is a precedent out there for market disruption to happen. I think the environment we operate in now is more unpredictable than ever; I don’t know what news headline would be shocking anymore,” he said.
According to Roberts, 90% of Canadian canola seed exports now go to just five different markets, with 75% of those shipments going to only two markets – the US and China. With the canola market so reliant on so few export destinations, there is the potential for disaster should any access be lost.
“While these export markets are important and valued, farmers are vulnerable should conditions suddenly change.”
It has happened in the past, with China banning canola imports for a few years from a pair of Canadian grain companies in 2019 in response to Canada’s arrest of tech giant Huawei's chief financial officer Meng Wanzhou in Vancouver in late 2018.
The clean fuel regulations, meanwhile, offer an opportunity for market diversification. The regulations, which officially took effect last year, set increasingly stringent requirements on fuel producers and importers to reduce the carbon intensity of transportation fuels such as gasoline and diesel with the eventual goal of decreasing the carbon intensity by approximately 15% below 2016 levels by 2030.
The mandate has sparked a flurry of private sector investment in biofuels, with Canadian renewable diesel production capacity alone expected to jump from less than 500 million litres currently to more than 4 billion litres by the end of 2027. Canola oil is expected to be among the major feedstocks in renewable diesel production.
Along with an additional market for canola producers, Roberts said the clean fuel regulations will also provide farmers and communities with such other benefits as increased value-added production, job creation and spark ongoing investment in canola research.
Source : Syngenta.ca