With South Africa having recorded its largest canola harvest in history last year, farmers are set to benefit from great export opportunities.
According to agricultural role players, the canola oil market is still growing in South Africa and not nearly big enough to absorb the oil from last year’s crop. This was reportedly at least 75% bigger than a year ago, and 37% bigger than the previous record.
However, poor harvests in international markets presents a golden opportunity for Mzansi farmers to replace traditional sunflower oil markets overseas.
According to Southern Oil’s (SOILL’s) managing director Kellie Becker the 2020 canola season will be remembered for a long time as the year that not only camps, but also canola farms harvested three tons of canola per hectare.
Camps are farms that occasionally plant canola as part of their crop rotation.
SOILL, represented by Becker, is an oil extraction plant and edible oil refinery with relations with over 500 local canola producers.
“In September our crop estimate was adjusted from 122 000 tonnes to 144 000 tonnes. Now, we are already harvesting 161 734 tonnes of canola. A total of 73 680 hectares were planted, thus achieving an average yield of 2.20 tonnes per hectare for the entire Western Cape,” Becker explains.
Where will all that canola go?
Most of South Africa’s canola is produced in the Western Cape. Only a few farmers in North West and Limpopo have also started planting it.
Meanwhile, the biggest question industry leaders are asking is what will happen to all the canola?
“The canola oil market in South Africa is growing well, but is not nearly enough to absorb the oil from last year’s crop.
“However, since September, sunflower oil developed a significant premium against canola oil due to poor harvests in Eastern Europe and Russia, which gives us the opportunity to do replacement in traditional sunflower oil markets,” says Becker.
Ruan Schutte, an economist and marketer with Grain SA, explains that last year’s positive rainfalls in production areas led to the extraordinarily high yield.
Although in some regions the rains were below the long-term average, the timing of rain could not have been better.
“The temperatures during the production season played along very well also, although at the end there were some regions that had little rain in harvesting time and got pre-germination on the crop,” says Schutte.
This leads to feed-grade quality canola, he explains, “but it was a very small amount, not enough to impact the bumper crop we had.”
Despite these challenges faced by producers, South Africa still achieved its highest yield average in the history of canola production.
Schutte is excited about the future of canola production in the country. “Canola has a bright future and has a very important role to play in the crop rotation systems that are being followed in the Western Cape.”
Better days ahead
According to SOILL’s agricultural resource manager, Zander Spammer, even better days are ahead for South Africa’s canola oil market.
With canola oil being very competitively priced against sunflower oil, the demand should remain strong under current prices, he predicts.
Spammer is, however, concerned about the impact of ever-changing weather conditions on the industry going forward. Unstable weather patterns remain the industry’s biggest challenge.
“Canola is a smaller or niche crop that is only planted in the Western Cape, so if we experience a bad planting season the whole crop and year is compromised,” he explains.
Ultimately, the less barley, the more wheat and canola.
Meanwhile SOILL says it took note of producers’ 2021 planting intentions, which indicate significant increases. This is largely due to the restriction on barley quotas as well as the relatively good gross yields that canola offered in 2020.
The longer the Covid-19-induced alcohol sales ban continues, the less barley will be malted for beer-making and the smaller the demand will be for the following year.
Ultimately, the less barley, the more wheat and canola, Spammer says.
“We have already started a large capital investment programme that provides for storage and increased processing capacities at both Swellendam and Moorreesburg. We are preparing for sustainable, larger plantings and larger yields and are constantly working to grow the canola oil market,” says Becker.