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Component Pricing In Canola - Weighing The Options

Feb 17, 2016

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SaskCanola supports the current marketing system for canola. Upon analysis completed by New West Public Affairs there will be no net benefit to Saskatchewan canola producers of a component pricing marketing system.

The export market would be inclined to switch to an alternative oil (soybean or palm) before paying a premium because canola oil is
easily substitued and the importers of canola seed are price sensitive.
Weather and the length of growing season have the most impact on oil content therefore producers have limited ability to increase oil content through management practices. Farmers can choose higher oil varieties, but the range of oil content is quite narrow.
Increasing complexity of the canola market will add costs with administration, segregation, and testing, which would add costs to an efficient system.
The supply chain is already extracting most of the value available in the canola market therefore a baseline would be set with premiums which would also need to be offset by discounts.

Source : Saskcanola

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