Processors not only want farmers to grow canola but their variety.
That s the especially true for Dow AgroSciences, which says supply can t keep up with demand for its healthy, high stability (omega-9) Nexera canola oil. The company is asking farmers to switch all their canola acres to Nexera in 2012.
In the past we used to ask for 20 or 30 per cent of a grower s canola acres, said Mark Woloshyn, Dow AgroSciences brand leader for Nexera. We re going to go out, depending on the contractor (crusher), and we will be asking for all the acres.
Woloshyn doesn t expect to get them all and admits Dow AgroSciences couldn t handle them all, but it speaks to the phenomenal demand for high-stability canola oil.
We re short of performance oils, said Tyler Groeneveld, Dow AgroSciences market manager for omega-9 canola oil. There s not enough right now. It s an opportunity for the canola industry to respond and fill the void that s there right now.
Many restaurants, including A&W, Boston Pizza, and Earls, have switched to Nexera s omega-9 oil, which combines the health benefits of non-hydrogenated canola oil (no trans fats, low saturated fat) with the stability, long fry-and shelf life of hydrogenated canola oil or other less healthy oils such as palm or coconut.
Now food manufacturers are making the switch including, Frito Lay, North America s single largest vegetable oil user. All of Frito Lay s Canadian-made potato chips are now made with Nexera oil, said Steven James, senior director of purchasing for parent firm PepsiCo Foods Canada.
As we look to expand it not only into the U.S. but into Mexico we re going to need a lot more (Nexera) oil. I m essentially a tenth of the U.S. volume, if you will, he said.
We ve really got some work ahead of us in supply chain. We re trying to go as fast we can but in a sustainable way.
Frito Lay began using canola oil to fry its potato chips for 20 years but changed to NuSun, a high-stability sunflower oil to remove trans fats from its chips. The Canadian division began switching over to Nexera in January 2010 and carefully monitored consumers reaction.
It did not impact the product or how consumers perceived it, which is great, said James. (Y)ou change it at your peril if you don t do it right.
The company uses nearly one billion pounds of oil in North America annually, and any change in its buying pattern is huge, said Curt Vossen, president of Richardson International, which has canola crushing plants at Yorkton, Sask., and Lethbridge, Alta.
Frito Lay s demand alone is significantly higher than any contract amounts of high-stability oil that we ve produced in the past, said Vossen. We got to increase acreage contracted almost geometrically to provide supply for them.
Farmers will grow Nexera because it has the most profit potential of any canola, said Woloshyn. He said Nexera yields are competitive with conventional canola, and it typically commands a premium, which Vossen expects it will be at least $1 a bushel.
It may be better than that, he said. It s the old supply and demand thing. They ve got to encourage more acres and how do you encourage more acres? You give performance guarantees and you induce through some type of price premium.