As harvest operations wrap up across Saskatchewan, farmers seem to be in for another winter of discontent.

The spring brought hope in the form of good soil moisture conditions and rising prices — a vast improvement over last year, when hopes for a bumper crop were dashed by early frost and untimely rains.

In June, the Canadian Wheat Board predicted a 14% above-average wheat and durum crop across the Prairies. But as the growing season unfolded, Prairie farmers’ old enemy, drought, returned — with a vengeance. In many parts of the grain belt, rain was almost non-existent in June and July. Perversely, the northeast — where 1.8 million acres were not sown — was inundated by rain, heavy snow and flooding this spring.

By early August, the forecast for Sas-kat-chewan’s grains, oilseeds and specialty crops was revised downward to a slightly below-average harvest of 24.5 million tonnes. And in late August, day after day of hot, dry weather shrivelled farmers’ hopes of a bumper crop and reduced expectations to below-average production. Fortunately, it will probably be of higher quality than last year’s poor crop.

Prices, however, remain stubbornly low. Wheat prices fell in the second half after rallying to almost $5 a bushel in the spring, the highest price in years. Canola prices have also been depressed. After briefly flirting with $6 a bushel in the spring, canola prices have sunk back down to the $5 range, well below profitable levels.

But just when things seemed bleakest, a ray of hope shone across the Prairies with the news that not one, but two canola-crushing plants would be built in the east-central city of Yorkton and start operations in 2008.

First, Winnipeg-based agrifood conglomerate James Richardson International Ltd. announced plans for an 840,000-tonne-a-year plant that will employ up to 70 people and cost $100 million.

Hours later, Louis Dreyfus Canada Ltd. announced plans to build an 850,000-tonne-a-year plant for $90 million, creating 45 jobs.

The announcements have raised some eyebrows. Larry Weber of Weber Commodities Ltd., a Saskatoon-based commodities broker, notes the two plants would consume almost half the canola grown in the province. With annual production of 3.5 million tonnes, Saskatchewan accounts for half the country’s production of the edible oil product, which is low in saturated fats. Added to the province’s existing crushing capacity of 1.7 million, the two new plants would gobble up all the canola the province can produce.

But Judie Dyck of the Saskatchewan Can-ola Growers Association says the industry will expand Canadian production to 14 million tonnes by 2015, double current production. Biodiesel is the reason.

Canola oil is used as a feedstock in the production of biodiesel, which can reduce carbon monoxide emissions by 50% and carbon dioxide emissions by almost 80%. With Ottawa’s announcement that Canada will move to a renewable fuels standard of 5% by 2010, more biodiesel is needed. Hence, more canola-crushing capacity.

In Kyoto-conscious Europe, there’s a shortage of both biodiesel and the canola oil needed to produce it.

To fill the gap, two firms are investing almost $200 million in Saskatchewan’s agricultural processing sector.

It’s the best news the province’s producers have heard in years. IE