WESTERN PRODUCER — Canola acres in Canada reached 20.9 million in 2014, an increase of about 57 percent from the 13.2 million acres in 2005.
During the same period, nitrous oxide emissions from Canadian cropland jumped to 12.7 million tonnes in 2014 from 8.3 million tonnes in 2005 in carbon dioxide equivalents, an increase of about 53 percent.
Those numbers are from Statistics Canada and an Agriculture Canada discussion paper on reducing emissions from fertilizer used in crop production.
A 57 per cent rise in canola acres and 53 per cent increase in emissions suggests the two things are correlated.
“Increased N2O (nitrous oxide) emissions on cropland are driven by the combined effect of a continued increase in area under annual crop production, an increase in the area under fertilizer intensive crops, and an increase in soil degradation, which has contributed to carbon (C) and N losses from soils,” Ag Canada said in early March in the discussion paper.
“The area under more fertilizer-intensive crops such as canola and corn has expanded considerably since 2001, while the area of some crops requiring lower fertilizer rates, such as wheat, barley, oats and tame hay, has decreased.”
On grain farms, the main source of greenhouse gas emissions is nitrous oxide, a powerful greenhouse gas (GHG) connected to nitrogen fertilizer and manure. One kilogram of nitrous oxide released into the atmosphere is equal to 300 kg of carbon dioxide.
As part of its effort to achieve a 40-45 percent emission reduction by 2030, the federal government wants to cut fertilizer-related emissions 30 percent by 2030.
The discussion paper says there’s a relationship between canola acres and increased N2O emissions, but the data supporting that connection is murky.
“We don’t understand, really, the relationship between nitrogen use and nitrogen emissions,” said Jim Everson, Canola Council of Canada president. “Because there isn’t a good understanding of how you measure emissions, as opposed to measuring actual use of (nitrogen fertilizer).”
Ag Canada admits there are limitations in how it collects and tracks data on N2O emissions, saying there are “challenges with obtaining and measuring data at the individual farm level.”
“While improvements in NIR (national inventory) reporting on N2O are underway… these improvements do not yet capture on-farm activity related to fertilizer application practices due to a lack of data at this scale.”
Another crucial piece of data, which is missing from the Ag Canada discussion document, is the economic benefits of a nitrogen-dependent crop like canola.
In 2005, the economic impact of canola on Canada’s economy was $7.5 billion, says a 2016 report from LMC International, an economic consulting firm in England.
By 2014, thanks to more acres, construction of crushing plants and other investments, the economic impact had grown to $26.5 billion.
Over a decade, the economic impact of canola increased by $19 billion.
The trade-off from that economic growth is that farmers applied more nitrogen fertilizer and nitrous oxide emissions from Canadian farmland increased.
By assigning a price to carbon, it is possible evaluate the economic gain and environmental impact of more canola.
“The usual way economists would approach this trade-off is to measure the cost of increased carbon emissions,” said Peter Slade, a University of Saskatchewan agricultural economist and Canadian Canola Growers Association chair in agricultural policy
“The idea being that carbon emissions led to global warming which, in turn, causes a host of economic damages that could, in theory, be measured.”
Economists use the trade-off approach to analyze choices and activities, such as producing more canola, because win-wins are rarely an economic reality.
“Almost everything is a trade-off,” Slade said. “It’s pretty easy to reduce emissions if we want to completely kill our economy.”
However, assessing the economic benefits of canola vs. the cost of emissions does require some assumptions.
For one, more acres may have pushed the economic impact of canola to $27 billion as of 2014, but canola took acres from other commodities, thus reducing the economic value of wheat, barley and other crops.
However, it’s safe to assume that more canola acres, more exports, more domestic crushing of canola and more use of canola meal and oil have created additional wealth in Canada, Slade said.
Also, nitrous oxide emissions climbed 4.4 million tonnes in carbon dioxide equivalents between 2005 and 2014, but canola wasn’t responsible for the entire jump in emissions. Farmers also applied more nitrogen to corn, wheat and other crops.
As a result, the following assumptions can be made:
- The boom in canola production has added $5 to $10 billion to Canada’s economy every year, based on canola having higher gross revenue than other crops, more export value and more value-added processing in Canada than competing crops.
- The increase in acres caused N20 emissions to increase by two to three million tonnes in carbon dioxide equivalents per year.
- The cost of carbon is $50 per tonne.
“At current carbon prices, the economic cost of two million tonnes of GHG emissions is $100 million. Even at 2030 carbon prices ($170 per tonne), the cost is $340 million,” Slade said.
Those figures are much, much lower than the $10 billion estimate for the economic benefits of canola. Even if the estimate is cut in half, to $5 billion, the economic impact remains 50 times larger than the current cost of emissions.
As of 2019, the economic impact of Canada’s canola sector was $30 billion per year, LMC International said in a 2020 report. That number doesn’t include the economic activity that was lost because canola grabbed acres from other crops.
That $30 billion figure is expected to jump now that Cargill, Viterra and Federated Co-operatives Ltd. have invested billions into new crushing facilities or renewable diesel plants in Saskatchewan.
The province has established a goal of crushing 75 per cent of the province’s canola by 2030. Premier Scott Moe said it is on target to exceed that goal far earlier than anticipated.
Globally, demand for vegetable oil is expanding and growth of palm oil production is slowing. This means there’s an opportunity for canola to fill market demand and the sector could become a $40 billion industry in Canada.
“You look at the market today and we’ve got this opportunity for growth…. And you look at the investment that companies are making in new processing facilities in southern Saskatchewan, there’s no doubt that there’s going to be a demand for nitrogen,” Everson said
“It (nitrogen) is a critical part of canola production…. That’s the reality of the marketplace.”
