Dive Brief:
- Oat production in Canada is expected to plunge after rain and snow caused delays in harvests across the prairie provinces, with production set to drop 13% to 2.976 million metric tons, Agriculture and Agri-Food Canada indicated in a Bloomberg report.
- More than 90% of Canada’s oat exports go to the U.S., where companies such as General Mills and Quaker Oats use them in everything from snack bars to cereals.
- American processors depend on Canada to supply approximately 57% of what they need. Canada oat exports are expected to drop to a four-year low of 1.5 million tons in the year that began Oct. 1, down from 1.6 million tons last year, according to the U.S. Department of Agriculture.
Dive Insight:
For major manufacturers, this could have a big effect.
Of course, those in the food manufacturing industry must deal with these sorts of problems and fluctuations all the time. Earlier this year, prices on sugar, soybeans and coffee all rose due to bad weather in South America. Last year, the North American pecan crop came in nearly 90 million pounds short because of widespread adverse weather and disease. This caused prices of pecans to rise to record highs.
Oats were once a bountiful crop in the U.S., especially in Iowa where in 1876, it peaked with about 3.4 million acres planted, according to the National Agriculture Statistic Service. By the 1940s, oats only grown on 1 million acres. In 2013, it was just 220,000 acres. U.S. farmers have mostly quit growing the grain for the simple reason that they can make more money with corn and other crops.
While those companies dependent on oats have yet to comment officially, it’s expected that prices will continue to rise in the year ahead.