During the early 1990s, farmers in Oklahoma, Kansas and four other southern Great Plains states planted more than 32 million acres of wheat annually. Much of it was produced practicing little or no rotation, and with mounting problems due to deliberate monocropping.
A group of university researchers representing these states recognized the dire need for crop diversification and the development of alternative crops. They identified the soft-seeded (minor) oilseeds as promising for the region and zeroed in on canola, which promised the benefit of breaking disease and other pest cycles in wheat. The group formed the Great Plains Canola Council (GPCC) in 1990.
In the years since, growers have learned a lot about producing canola and each year has added to their knowledge and experience. The most significant problem now is how to make a profit on what they can successfully grow. Prices for most commodities are now only about 50 percent of what they were a few short years ago.
Farmers never want to hear the phrase “returns below the cost of production” but currently, that is the case for most commodities. The world is awash in wheat and other grains, prices are absolutely in the tank and producers are constantly reminded of this reality. There is great uncertainty about the future and legitimate fears that agriculture could be facing its first sustained slump in some time.
If the problem of oversupply was limited to this region, then growers might be able to do something to turn the tide. But since much of what is produced here is for the world market, the oversupply is devastating wheat prices as well. In Oklahoma alone, it’s estimated that there may be 10 million bushels of wheat stored in bunkers – a sure sign of oversupply.
Farmers have been challenged before in finding a profit when prices plummeted and the cost of production continued to rise rapidly. With low commodity prices and narrow or even non-existent profit margins, producers have to look for efficiencies in all areas of their operation. That’s easy to say and much harder to do, but there is wide variability in how producers fare due to their ability – or inability – to control production costs. Using good agronomic practices holds down costs, leaving more for the profit column, but there’s only so much that can be done.
A Canola Solution
In the 1980s, economists told growers that they couldn’t produce wheat for $3 per bushel – and that was true. Three decades later, cash prices are actually below that, but the costs of production are well above those for the same period. However, trying to eke out a profit from wheat isn’t the only option available. Canola hasn’t been spared a sharp reduction in the price farmers receive either, but the cut has been less severe than that for wheat.
My own experience with canola started in the early 1990s with the GPCC. We were looking for a profitable alternative crop and initially saw little success with canola. That’s the way things would have remained without the development of winter hardy varieties and a market for the crop. A lot of the production kinks have been worked out and while wheat will, and should, continue to dominate crop plantings in this region, there are sound reasons for wheat producers to add canola to their operations, including the very basic one of economics.
The Great Plains Canola Association (GPCA), founded in 2007, is trying to get wheat growers to understand the potential benefits to their wheat from rotating with canola as well as profiting directly from the canola crop itself.
Cash prices for wheat are currently only about a third of the 2012 price. In that year, prices set the high water mark for most commodities during the last several decades. In the southern Great Plains, canola prices are consistently highest in June or “right off the combine.” In June 2016, Oklahoma canola prices were about 60 percent of the price at harvest in 2012, which is a much higher percentage than the one for wheat.
Wheat’s low prices and the likelihood of poor returns on investment, at least for the foreseeable future, should prompt growers to look at other options. Canola has the potential to provide real economic benefits.
Since the start of the GCPA, a lot of folks here in the southern Great Plains have worked hard to establish a “canola culture” where each year, canola growers aren’t deciding if they will grow the crop but how much to plant. That’s the commitment we need to see for this crop to really take hold and be long-term, sustainable and profitable in the southern Great Plains.
Ron Sholar is executive director of the Great Plains Canola Association in Stillwater, Okla.