Canola worth $26.7 billion, economic impact study shows

Total economic impact rising dramatically, independent analysis shows

Canola’s value to the Canadian economy has tripled in the past decade, now coming in at $26.7 billion a year, according to a newly released study.

That’s an increase of nearly $6 billion compared to the three-year period of 2009-11, with a large part of the value stemming from the 250,000 jobs and the $11.2 billion in wages the industry now generates.

The independent analysis was prepared by agribusiness research firm LMC International calculating the benefits between 2012 and 2015 from canola, developed, grown, processed and marketed in Canada.

Its findings were much discussed during the Canola Council of Canada’s 50th annual convention held here last week, with past president Patti Miller highlighting its results in her address to the convention.

Jobs and wages

“When you look at the three years covered by this latest study one thing that stands out is the very steady impact on jobs and wages,” said Miller, adding these are jobs created in research organizations, on farms, in handling and transportation, processing and in the livestock sector. These are good, steady jobs, paying higher-than-average wages too; $62,000 compared to the average Canadian salary of $50,000.

“Canola has matured into a reliable mainstay of the Canadian economy,” she said.

The LMC’s analysis also shows that the number of jobs generated increased by 41 per cent in the time period analyzed.

“There’s been a substantial increase in the benefits from canola that are rippling through the Canadian economy,” said Brian Innes, the Canola Council’s vice-president of government relations in a press release.

The industry’s impact is also felt across Canada, including the economies of Ontario ($1.48 billion), Quebec ($1.06 billion), British Columbia ($554 million) and the Maritime provinces ($120 million). The economic benefits are especially pronounced in the three Prairie provinces including Saskatchewan ($12.22 billion), Alberta ($7.13 billion) and Manitoba ($4.16 billion).

Canola’s impact is driven by various factors, including substantially increased production as growers continue to achieve record yields.

“The canola value chain is working hard to grow these economic benefits by continuing to increase yields, expand into new markets and build on the advantages of our exceptional products,” said Innes.

On target to 2025

Miller said the industry remains on target for meeting its 2025 goal of 26 million tonnes, despite last year’s difficult circumstances, both related to trade and agronomic issues.

The latest Statistics Canada crop figures peg production for 2016 at 18.4 million tonnes, but final numbers for last fall’s complicated harvest are still in question.

“Some believe the final number may be even higher,” Miller said.

Importantly, this is the third year in four that production has surpassed that 18-million-tonne mark, notably due to increased yields, not expanding acres, she added.

On average growers produced 42.3 bushels per acre last year, which, said Miller, is “an outstanding accomplishment in a difficult year.”

The industry’s goal is to achieve 52 bushels per acre by 2025.

Another is to expand its customer base, Miller said. They now have strong relationships with Japan, Mexico, the U.S. and China but as Canadian production grows are also exploring new markets in South Korea, India and Vietnam.

Listen to customers

An assembly of industry executives during a separate session at the convention said they see challenges ahead for canola to tackle going forward.

Jeff Vassart, president of Cargill Canada, said he thinks oil demand will continue to evolve, but it’s also very important that the industry be listening very closely to what consumers continue to say about GMOs and sustainable production.

“Those present opportunities,” he said. “We need to listen closely to the demands, or what customers are asking for, and try and postion ourselves and anticipate what those needs are going to be.”

Tim Gallagher, executive vice-president of Bunge North America, said he sees canola remaining a key crop producers will continue to grow, but others, namely soybean are also in the mix.

“The world wants to see simpler labels and it wants to see healthier products and canola has done a wonderful job of building that benefit and marketing that benefit,” he said. But with soybean at 80 per cent protein and 20 per cent oil, compared to canola at 60 to 40, soybean has an economic benefit in a protein-oriented market.

“I can see a continuation of protein orientation staying relatively strong,” Gallagher said.

“That’s something to watch and where it’s even more important to differentiate yourself and find those benefits on the oil side to the consumer or down on the feed side to the dairy producer.”

Kyle Jeworski, president and CEO of Viterra, said the industry must remain focused on key parts of its value chain to keep the crop competitive.

“Farmers are going to continue to grow canola if they can make a return on canola,” he said. “I think canola can stay king. But I think it’s going to be challenging. And I think we can’t take our eye off the ball.”

About the author

Reporter

Lorraine Stevenson is a reporter and photographer for the Manitoba Co-operator with 25 years experience writing news and features. She was previously a reporter with the Farmers Independent Weekly and has also written for community newspapers in Winnipeg and Manitoba's Interlake.

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