Should Farmers Get Paid on Oil Content?

The 2012 canola crop is not just smaller than expected, it’s also light on oil content. According to the Canadian Grain Commission, this year’s crop is averaging a mean oil content of 43.5% (on a 8.5%  moisture basis, No. 1 grade). That’s down quite a bit from last year when it was 45.2%. The 10-year mean is 43.8%. Earlier, I asked if there was enough total canola to go around; lower oil content of existing bushels pinches crush supply even more.

Lower than average oil content is not a surprise. As Murray Hartman, oilseed specialist with Alberta Agriculture, explains, oil and protein are the last components created in the seed after the embryo and starch. Anything that interferes with growth at pod and seed fill also interferes with oil and protein production, though the complex oil building components are much more affected by growth reductions caused by stresses than the protein building. “Canola is a cool season crop and does best when days stay around 20 degrees Celsius,” he says. The hot weather experienced at flowering and pod fill this year reduced oil content. Cool nights can offset hot days somewhat, which is why canola in Alberta tends to average a slightly higher oil content than Manitoba, but this year was just too hot for the crop. Pests can also impact oil production, as anything that cuts off nutrient and photosynthate supply to the pods will decrease potential oil content, Hartman says.

The weather then plays a large role in reaching that potential, but there are other factors that can influence oil production. Oil content potential is genetic. Hartman says that it’s not unexpected to see as much as 4% difference in oil content between varieties, all other things being equal. Early seeding helps to avoid the heat at flower, and lower rates of nitrogen tends to bump oil, but can hurt yield (so fewer seeds, but higher percentage of oil per seed).

But, wait, farmers don’t get paid on oil content, so why should this matter? In most years (though not this one, as there’s more than enough high protein wheat to go around), farmers are paid a premium for protein in wheat, as protein is the desired component by end-users. The reverse is true for barley for malting. So why not pay farmers for higher oil content in canola?

It’s not a new concept, of course, but with the tight tonnage this year and a lower than average oil content should farmers be pushing for an oil premium? Those in Manitoba may not be as keen, as oil is often slightly lower due to warmer days and nights, however, Manitoba farmers enjoy very low green seed counts (vs. Alberta which enjoys slightly higher oil content, but higher green seed).

What do you think? If crushers want what’s in tight supply, should you push for a premium?

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