Anthony Eliason, director of Sask Oil Seeds, looks over the snow-covered fields as at Golden Dee Farms in Saskatoon, on Feb. 13.Liam Richards/The Globe and Mail
A $2-billion investment in canola processing plants in Regina – set to churn out 15,000 barrels of renewable diesel daily and create more than 2,500 long- and short-term jobs – has been put on hold as uncertainty over trade and biofuels takes hold in Canada’s breadbasket.
The investment, announced three years ago, was part of a rush into canola biofuels, driven by legislation to promote renewable options in the U.S. and Canada.
The Regina investment, a joint venture between Federated Co-operatives Limited and AGT Foods and Ingredients, included two plants – one for crushing canola and the second for refining the oil.
But three days before U.S. President Donald Trump’s inauguration, Federated Co-operatives announced the plants were on hold, blaming escalating costs alongside “regulatory and political uncertainty” and “potential shifts in low-carbon public policy.”
The move shook Saskatchewan’s canola industry – the province’s largest crop by acreage, and its most lucrative. Saskatchewan scientists (with help from Manitoba researchers) developed the crop around 50 years ago. It has since travelled the world, but Canada – and by extension Saskatchewan – still grows more than anywhere else.
The clean-fuel momentum was envisioned as a way to push canola into another level of processing capacity – an area in which the crop already excelled. Where many of Canada’s commodities are exported in raw form, with the value from processing fleeing overseas, most of the canola grown in Canada is processed within Canada.
And that percentage was set to climb to 65 per cent by this year, not only because of the Co-Operative plant, but also five other major investments in canola crushing plants led by agricultural heavyweights Cargill, Richardson International, Viterra Inc. and Louis Dreyfus. Combined, these plants would expand processing capacity by 6.7 million tonnes – a 60-per-cent increase over four years.
The boon from processing and refining canola – driven by the biofuel legislation in Canada and the U.S. – went further than biofuel. It had lucrative applications for the mountain of byproduct from crushing plants.
But farmers, researchers and others in Saskatchewan’s canola sector now worry the pause of the Co-op plants marks a decline from those ambitions. This is not just about Mr. Trump and tariffs. Canadian businesses are backing down on ESG; Saskatchewan is looking to refurbish its fleet of coal-fired power stations; and, specifically with regards to biofuel, Pierre Poilievre has called Canada’s clean fuel standards a “second carbon tax.”
With political tides turning against renewable energy, canola is in the frying pan – and not in a good way.
The rush on canola crushing plants followed new or changing rules around fuel standards in Canada and the United States. Both Canada’s Clean Fuel Regulations and the U.S. Renewable Fuel Standard program incentivizes gasoline producers to insert clean fuels into their mix.
Canada launched the regulations in 2023 and the U.S.’s program – almost two decades older – included canola-sourced fuel options in 2022.
The industry was off to the races. Between 2021 and 2023, Viterra unveiled plans for the largest integrated canola crushing facility in the world, located in Regina. Richardson International said it would double its crush capacity at a Yorkton facility, in the southeast corner of the province. Cargill announced a new facility with an annual production capacity of one million tonnes. And Louis Dreyfus – a global agricultural company headquartered in the Netherlands – also expanded its crush facility, with plans to more than double output.
Saskatchewan Premier Scott Moe celebrated the barrage of investment, saying three years ago that the move into renewable energy from canola was emblematic of an “independent, strong and sustainable Saskatchewan.”
The promise of a canola crushing industry has fuelled research into what to do with the byproducts.
When canola seed is crushed, 40 per cent is turned into oil, which can be used for clean fuel. The other 60 per cent is canola meal. And a single seed-crushing plant would produce thousands of tonnes of the stuff daily.
“Circular agriculture is a thing,” said Rex Newkirk, an associate professor at the University of Saskatchewan. “It’s all about using the byproducts.”
A Saskatchewan Research Chair in Feed Processing Technology, he is also the scientific lead at the Canadian Feed Research Centre, a six-storey building owned by the university and funded by industry partnerships. It is around 1½ hours away from Saskatoon, along a dead-flat Prairie highway.
His research centre is part industrial-scale processor with the capacity to make 125,000 tonnes of feed annually (leased to Cargill until it pulled out at the end of January) and part experimental recipe lab. The ingredients available are far-ranging, from the leftover blood from slaughterhouses (dubbed blood meal) to dried worms and larvae of African black solider flies.
But canola is probably Prof. Newkirk’s favourite. This is largely because it has an amino acid ratio that makes it a complete protein – the most complete of the plant proteins.
Prof. Newkirk, who worked in canola marketing for more than a decade, played a role in developing international markets for canola meal, specifically as feed in the dairy industry. In 2023 Canada shipped $2-billion of canola meal to the U.S., much of it to California’s dairy industry.
Over the last few years, he has been working closely with AGT Food and Ingredients Inc., The new plant – with 15,000 barrels of oil – meant a lot of byproducts would be coming online, and these byproducts had market potential, said Prof. Newkirk.
One option is fish feed. Currently canola meal is an essential ingredient in feed for China’s tilapia and grass carp aquaculture industry. But Prof. Newkirk has his sights set on the high-value, rapid-growth salmon industry. Historically, the salmon aquaculture industry has fed its livestock crushed marine life. This is unsustainable. The industry has largely switched to plant-based protein for feed. Canola meal’s protein makeup has the potential to meet some of this demand, said Prof. Newkirk.
And he only looks at the potential for canola meal in livestock feed. Elsewhere at the university – such as at the fermentation lab – researchers such as Nirpesh Dhakal are exploring the potential for cheap and available canola protein as a feed for the micro-organisms used in antibiotics production, or as a source of yeast for breweries and distilleries. Research so far shows that canola protein is not only cheaper and easy to work with than current options, but also just as effective – and sometimes more effective.
“Wherever it goes, it goes well,” said Mr. Dhakal.
But these applications require continued investment in canola biofuel.
“The big surge in biofuels created opportunity for local processing,” said Prof. Newkirk.
The retreat of the Federated Co-operatives/AGT crush facility is therefore a blow to the sector as a whole. And Prof. Newkirk is concerned that it reflects larger concerns which could affect overall investment in the space.
“All of a sudden, I’m a little bit depressed,” he said.
He’s not the only one. Investment into value-added processing demands a steady supply of local product, said Anthony Eliason, a canola farmer who sits on the board of directors for Sask Oilseeds, an association that represents farmers of canola and flax seeds.
This means grain companies are invested in farmers, and that farmers are not paying the costs associated with transporting to international markets. It also insulates them somewhat from supply chain disruptions.
“It gives us a premium market to sell into,” he said.
The biofuel momentum led to a virtuous cycle of processing, which would have produced an array of products, all of which would boost Canada’s trade diversification strategy – just as the country’s largest export market is threatening a tariff war.
However, this is not the end, said Chris Vervaet, executive director of the Canadian Oilseed Processors Association, which represents Richardson International, Cargill, Viterra and Louis Dreyfus. The Co-operative plans have not been cancelled, he said. They are on hold. Three of the other major investments are – as of now – still in the works. Richardson International’s expansion of its Yorkton crushing plant finished in 2024.
But for canola processing to thrive into the future, the industry needs certainty, said Mr. Vervaet.
“We cannot lose sight of why we process canola,” he said. “It’s about the oil and the demand for biofuel. We need governments to offer a predictable and reliable regulatory framework.”