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Prairie soy sector standing still

The budding soybean industry in Western Canada is suffering from lack of local processing

Western Canada’s soybean sector is experiencing its chicken-or-egg moment.

Production has grown quickly over the past several years, but still nobody has stepped forward to build a soybean crush plant in the region, according to Ron Davidson, executive director of Soy Canada, even though the economics are now in support of it.

He told the Senate agriculture committee a group of regional private sector representatives are promoting the idea, and the industry remains optimistic it will happen.

“We are confident that as soybean production continues to expand, someone will either construct a new plant or convert an old plant to do both canola and soy,” Davidson said.

Companies may have hesitated in the past because the size of the annual harvest didn’t justify a crushing facility, he said. With the expansion of production into Saskatchewan and Alberta from Manitoba, “There is enough volume there now.”

Manitoba and Saskatchewan produced 2.7 million tonnes, accounting for 35 per cent of total Canadian soybean production in 2017, and the crop continues to creep westward.

“This year Alberta has joined Soy Canada because of the expansion of interest in soybean production into other western provinces,” Davidson said.

The lack of a crushing facility amounts to a threefold loss for the region, he said. Western Canada is not capturing the economic benefit it could bring. Soybeans must compete with other grains for rail transportation to export positions. Livestock producers are paying higher transportation costs for imported soybean meal, thereby reducing Canadian export market opportunities for meat.

“We have in Canada very large multinational crushers who are able to compete in Canada, the United States and other countries around the world, and I would imagine there is a little bit of reticence at this point to put up an independent crushing plant.”

A crushing plant “would also reduce the distance in which we’re transporting American soymeal into Canada now through those Canadian feed plants and Canadian operations,” he said. “We export about $5 billion of soy products, and I think we’re importing about $1.5 billion, both meal and oil. Particularly in Manitoba, it’s the meal that’s coming in, in large quantities for the pork production.

“Manitoba, and to some extent, Saskatchewan also, are huge producers of pork, which are major consumers of soybean meal,” he said. “According to the Manitoba pork producers, they believe they’re paying about $40 a tonne for importing meal from the United States and that they could have that much cheaper if they were able to source it locally. That would then make pork more competitive in the international markets which they export to.

“While the size of the transportation challenge in Western Canada isn’t going to be solved by one plant, it would help,” he said. “It would certainly make a difference in the soybean industry, which has experienced the same difficulties everybody else has had this year of getting product out of the Prairies.”

Most of the potential expansion in soybean production will come in Western Canada as new varieties are developed to suit the region, he said.

“There is room to grow in Eastern Canada but the rotations are pretty stable in Eastern Canada,” he said.

Eastern growers generally produce higher-protein soybeans because of a more favourable climate, he said. “Because of the warmer conditions around the Great Lakes, where soybeans first came into Canada, which does assist substantially in increasing the protein content.

“We’ve started discussions in the industry about making producers aware in Western Canada of how much it is costing them because of lower protein content and different ways of responding to that including, for example, publishing in a unique list the protein content of the different varieties that are available and encouraging the companies that are doing the research to place a higher emphasis on protein.

“Until now, the real focus has been on yield and there have been tremendous increases in yield but less of a focus on protein.

“Soybeans are not native to Canada,” he said. “The first report by Statistics Canada of commercially significant soybean production was in Ontario in 1941. Between 1941 and 2017, soybean production expanded from 5,900 tonnes on 10,900 acres in one province to 7.7 million tonnes on 7.3 million acres in eight provinces, all the way from Nova Scotia and Prince Edward Island to Alberta. Furthermore, soybean production is projected to double yet again during the next decade.

“At the same time, the average yield increased from 19.9 bushels per acre in 1941 to 44 bushels per acre in 2016. Stated differently, while extending constantly into new production frontiers, there has been an increase of 121 per cent in yield value per acre.”

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