January 30 – 3-4 Million Acres of Canola in the US?

It looks like there could certainly be more soybeans planted in the US in 2018.

But might there be another oilseed trying to climb the ranks?

It looks like there could certainly be more soybeans planted in the US in 2018.

But might there be another oilseed trying to climb the ranks?

The US Canola Association is looking to increase the number of canola and sunflower acres in the United States for the purpose of “providing more suitable habitat for honey bees and wild pollinators”.

The real intent behind the program though, according to the assistant director of the USCA, is to slow the spread of corn and soybean acres.

While the language is still be drafted for the next Farm Bill, the Conservation Stewardship Program requires farmers to sign a five-year contract, but without a guarantee that they’ll get a subsidy.

This doesn’t necessarily suggest that farmers in more common canola-growing states will start growing the crop, but actually those in more southern states. Those areas would ideally see more winter canola acres go into production, much like what we’ve seen in Oklahoma the pat few years.

In the US Canola Association’s ideal world, there would be three or four million acres of winter canola growing across the central and southern US Plains.

The obvious question with the switch for many farmers is “where will the canola production go?”

In the past, I’ve discussed how the US is now taxing the imports of palm-oil based biodiesel from Indonesia and soy oil-based biodiesel from Argentina. And this impact on biodiesel imports could push more soybeans into the crush-for-soy-oil-and-then-into-biodiesel column.

Ultimately though, the idea that we could see 3-4 million acres is more than a few years away. That being said, the market will ultimately determine how many acres can indeed get seeded.

There are two catalysts that make the “ideal scenario” of three-to-four million acres possible. The first is there would need to be more canola going into US industries that soy oil once owned outright.

The second would be this government subsidy to grow canola. Given today’s market prices, anything that would help make another 5-10% ROI would certainly be welcome.  

However, the market could just as quickly price in this subsidy into the purchase price. This is indeed the problems about subsidies – the market tends to account for them.

 

American industry lays plan to increase canola acres

U.S. growers receive subsidies for adopting conservation stewardship practices

The proposal is to offer a federal subsidy for growing canola and sunflowers as a way to expand the habitat for bees

The U.S. Canola Association wants farmers to receive a federal subsidy for growing the crop.

It has created a proposal in conjunction with the National Sunflower Association and the American Honey Producers Association to increase the acres planted to canola and sunflowers to provide more suitable habitat for honey bees and wild pollinators.

U.S. growers receive subsidies for adopting conservation stewardship practices such as no-till seeding and variable rate fertilizer application.

The proposal is to add another enhancement to the program, which is growing canola and sunflowers.

“If you had a couple million acres more of canola and sunflowers scattered around the country, that would be a lot of habitat,” said Dale Thorenson, assistant director of the U.S. Canola Association.

The Natural Resources Conservation Service (NRCS) initially rejected the proposal because it wasn’t interested in adding new enhancements to the Conservation Stewardship Program.

So the three groups changed tactics and attempted to have the provisions included in the 2018 U.S. farm bill.

The office responsible for drafting farm bill legislation contacted the NRCS for clarification and guidance on some of the language to use in the bill.

NRCS officials told them that there was no need to go the legislative route when the agency could accomplish the same results by making simple administrative changes.

The NRCS contacted the groups and asked them to resubmit the proposal along with a cover letter from a member of Congress who is supporting the proposal.

Thorenson hopes the submission will be sent in the next week or two.

“The request is for (implementation) this year. Whether or not that could be put in place that fast, I don’t know,” he said.

He doesn’t foresee the program leading to an explosion in U.S. canola acres. It is aimed at stemming the tide of soybeans and corn taking land away from small-acre crops such as canola.

“That’s the intent behind it,” Thorenson said.

“It’s not to get a major expansion of (canola and sunflowers), it’s just to try and preserve the infrastructure so we have the crop growing here.”

The program is not a straight per acre subsidy. It is a complicated points-based system that requires growers to sign a five-year contract.

Not every farmer who applies gets the subsidy. It depends on how many other applicants are in their county and how many enhancements they are making.

However, Thorenson thinks the program could get farmers to try growing the two oilseed crops.

He believes it could be particularly attractive to winter canola growers. In states like Kentucky, Georgia and Oklahoma, farmers can grow winter canola, harvest it by June 1 and then plant soybeans.

The winter canola is a great cover crop that prevents nitrogen leaching. Thorenson believes the conservation program could convince more farmers to try double cropping and discover how profitable it can be.

“There’s no reason that there isn’t three or four million acres of winter canola being grown across the mid-south and into the Plains,” he said.

H/T: Western Producer
About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.