Photo by Susan Reidy.
“Western Canada has gone from having not optimal to better protein levels over time and we’re getting very close to the average U.S. protein,” said Jim Everson, executive director, Soy Canada. “Unless we get protein levels up, we’re likely to take discounts on international markets.”
Analyzing the availability of land in Western Canada suitable for soybean production and profitability of the crop led Soy Canada to an estimate of 10 million acres of soybeans by 2027, Everson said. That compares to 5.46 million acres in 2016.
A large boost in Western Canada — 6 million acres in 2027 up from 1.9 million acres now — will contribute significantly to the overall increase.
“We want to have a discussion with our community, the soybean industry, and our partners in the industry about how we meet these targets,” Everson said. “I don’t think we have all the answers, I just think our analysis gives us a good sense of what is possible.”
From that acreage, it is estimated production will reach 13 million tonnes nationally. Most — about 10.5 million tonnes — will be exported.
Protein level is an issue because it speaks to the quality of soybeans and their attractiveness on the international market, Everson said. It is also an economic concern since lower protein levels can amount to a 20¢- to 40¢-per-bushel discount depending on the time of year, said Bo Hallborg, grain merchandiser with Viterra, Inc.
“To secure continued growth and acreage in western Canada, it’s important to improve the protein,” he said. “The protein level isn’t that bad compared to the U.S. It’s really just educating our export customers on our product.”
The goal is to have a protein content of 41.1% on a dry matter basis in Eastern Canada, up from 40.5% now, and 40.2% in Western Canada, up from 39.2% now, in the next 10 years. As soybeans have been bred for new traits, there has been a drop in protein levels, said Francois Labelle, executive director, Manitoba Pulse and Soybean Growers.
He also noted that first-time soybean growers see a drop in protein, but as they get more attune to growing them properly, the protein improves.
China is going to be an important export market for anyone growing soybeans because its need is so large. China will import 94 million tonnes of soybeans this year, and will crush about 82 million tonnes, Hallborg said. That’s only a 55% utilization rate of its crush capacity.
“The growth potential in the Chinese marketplace is still massive, even with global acreage increasing,” he said.
Western Canadian soybeans are still working their way into the Chinese market. About half of the region’s 2 million tonnes of soybean production in 2016 went to the China marketplace.
“It has been more or less forced, it’s not like China is coming to us pursuing Western Canadian soybeans,” Hallborg said. “The protein lacks, and we don’t have the clout some of the other origins do. Brazil has the clout with production of 115 million to 120 million tonnes, of which they’re going to export more than half.”
With enough acreage and solid protein level, Hallborg said the possibility of a crush plant in Western Canada is a very real possibility. He estimates 4 million to 5 million acres of soybeans would be needed in the region before someone committed to building a sustainable crush plant.|
“An interesting statistic to me is that about 600,000 to 700,000 tonnes of soy meal is imported into Canada per year, that in and of itself is almost enough justification to build a crush plant,” he said. “Once the acreage piece falls into our lap, it seems like it’s going to be a no brainer. I would be very surprised if someone doesn’t announce the construction of a crush plant in the next five years or so.”
The Soy Canada 10-year outlook also included growth of non-GM soybeans. Canada already has a successful, small production of non-GM soybeans that is food grade. It has just the right composition for such products as tofu and is sold to discriminating markets such as Japan, Everson said.
Current acreage is 1 million tonnes and is estimated to reach 1.25 million tonnes by 2027. Production now is about 1.25 million tonnes and could grow to 1.8 million tonnes in the next 10 years.