Oat prices to stay put over next 24 months
Manitoba farmers could be poised to capitalize on a growing global demand for oats — if Canada gains access to the Chinese market.
Speaking to producers at CropConnect in Winnipeg last week, market analyst Randy Strychar said that changing consumption patterns at home and abroad are presenting new opportunities for Prairie oat growers, particularly those in Manitoba where growing conditions are conducive to high levels of beta glucan.
“The biggest problem we’re having right now getting oats into the Chinese market is that the protocol is not in place for us to put oats in there,” said Strychar. “We can put seed oats in there, but we can’t put oats for human consumption in.”
Concerted efforts over the last 24 months have put Canadian oats on the Chinese trade agenda.
“(Growers) did send a delegation over there this summer and it is now on the agenda, (but) at what pace the Chinese move on that I don’t know,” he said, adding that Australia is currently the largest exporter of PRC-bound oats.
But with Chinese oat imports predicted to grow by as much as 35 per cent over the next five years, the owner of the Vancouver-based oatinformation.com said Canada can still take advantage of the growing market if access is secured.
“The middle class is emerging as a huge buyer of… western-based products, specifically breakfast cereals and snack bars,” Strychar said. “The diets are changing for the younger generation — the traditional Chinese breakfast is being replaced as the economy changes.”
However, changes in North American breakfast preferences are also impacting demand. As consumers seek healthy breakfast foods with less sugar content, oats are becoming a favoured ingredient, he said.
“Breakfast cereals and snack bars have a fairly high concentration of oats and those two industries are showing solid growth,” he said. “There are a lot of positives for the oat industry moving forward and most of it has to do with the breakfast cereals and the snack bars.”
Doyle Penner of the Manitoba Oat Growers Association agrees that there is room for growth in the industry.
“I absolutely do believe there is room to grow in the Red River Valley, we are a prime growing area, we are good with our beta glucan counts and there is a great opportunity,” he said. “And we’re close to the border, so as far as our movement south, we’re in a prime position for it… the opportunity for growth is definitely there.”
According to Statistics Canada, total Canadian oat acres rose 13.6 per cent from 2016 to 3.2 million acres in 2017. In Saskatchewan, farmers planted 1.7 million acres, an increase of more than 20 per cent, while Alberta’s acreage decreased about 4.2 per cent to 690,000 acres in 2017.
Manitoba saw one of its biggest oat crops in 2017. Manitoba Agricultural Services Corporation estimated there were 461,804 insured oat acres in the province, an increase of 32 per cent from the previous year.
Gone are the days when oats were seen as an also-ran crop.
“It’s pretty prominent now,” said Penner. “With the way we have to look at our inputs and everything… it’s a calculated thing that we’re going into when we plan our acres and ultimately, we’re basing it on the price that we’re going to be selling it for and we’re all trying to make a living at it.”
However, Strychar noted it’s not increasing acres driving oat production in Manitoba — it’s yield.
“They are not just throwing it in the ground, people historically viewed oats as one of those six major crops that they didn’t pay a lot of attention to, that’s not the case,” he said. “More and more farmers are paying more money to get a better crop.”
But just because demand is rising, it doesn’t mean that prices are rising with the same gusto.
“It could be 24 months where we struggle with averaging $3 (cash price), maybe $2.75, $3.25 in Manitoba,” he said. “If you’re looking for $3.50 in Manitoba, I don’t think you’re going to see it… we’re going to have a struggle for about 24 months.”