Growing, Processing, and Selling Omega-9 Canola Oil

Growing, Processing, and Selling Omega-9 Canola Oil

Summary

WORK ACTIVITIES
Growing:
In 2011 B & B Farms grew 100 acres of canola, which was an increase from the 60 acres grown in 2010. We also switched varieties to an Omega-9 canola (Nexera) and experimented with both Clearfield (non-GMO) and Roundup Ready (GMO). In 2011 we ran a test on our Clearfield canola with foliar feeding with nitrogen, boron, and a fungicide. Additionally we were able to simplify and automate our handling, storage, and shipping of canola seed at harvest.

Our SARE grant encouraged us to expand our acreage of canola and move from hobby-farm production to more of a full scale producer. In Michigan the spring weather was very wet and our planting was delayed about 2 weeks, but we were able to still get all but one field planted in April. By using minimum tillage (sustainable practices) we conserved the early moisture and had excellent germination and early growth.

Although we had experimented with Nexera varieties in test plots in the past, this year we took the risk of switching to Nexera canola in all our fields. Both the Clearfield and Roundup Ready varieties were hybrids, and Dow AgroSciences sent us two new experimental varieties to test in one of our fields. One problem we faced in growing canola is lodging from a strong July thunderstorm. Most of the lodged heads still filled with seed, but it was difficult to combine and resulted in greater seed loss. While lodging was worse on our Clearfield fields, the yields ended up higher. We do prefer Clearfield over Roundup Ready from a germination, growth, and yield standpoint.

Most of the large canola growers in Canada do foliar feeding at the pre-bloom stage of growth. This is accomplished by driving a large sprayer over the field and spraying nutrients directly on the leaves where absorption takes place. The Canadians also commonly use a fungicide with this application to prevent diseases. We used this on about half our Clearfield acres as a test this year and were not satisfied that it was worth the cost and effort.

We produced about 3,000 bushels of canola this year, which was too much to move with our previous methods. We use an 18 x 21 foot steel bin which will hold about 3,200 bushels and updated it with a new floor and auger system. This worked beautifully and we found we could fill a 1,800 bushel truck in about an hour for shipping. We are now set up to handle about 3,200 bushels of canola a year.

Processing:
Processing is a major focus of our SARE grant, and the part we knew least about when we submitted the grant a year ago. We divide this up into three parts: 1) licensing by the Michigan Department of Agriculture (MDA), 2) pressing the oil out of the canola seed, and 3) bottling and labeling the oil.

We found the licensing to be no small step, starting in June with getting our label designed and approved. This process took us until the first part of August. We then took a month off to harvest, and by the first of September we began working closely with The Starting Block, a Michigan State University (MSU) sponsored commercial incubator kitchen in Hart, Michigan. Their staff coached us and trained us in the food business, and what we needed to know and do for our inspection to get a food license. On October 7, 2011 we had our inspection which we passed, and now have our MDA food license. This license includes pressing the oil out, collection and settling of the oil, and bottling and sealing the oil. The only remaining license we need is for packaging and shipping, which we plan to get in December 2011.

Our plan when we wrote the SARE grant was to not do the pressing ourselves, but to hire that done for us. After spending 6 months trying to find someone in Michigan or other nearby state to press food grade oil, we finally gave up and decided we had to buy our own press or we wouldn’t be able to complete this project. We were apprehensive about the cost of a press (ours was $8,000), about operating a press, about where to store a press, and about upkeep on a press. But we decided to buy one anyway and overcame the problems as they came up. In May we ordered a small press from AgOilPress in Wisconsin which was delivered near the end of June. We are now getting a half gallon to a gallon of oil an hour out of it. Canola seed contains about 43% oil and our goal was to get 30% out by cold pressing our own. We are currently getting about 34% yield.

All pressing and bottling are done at The Starting Block. After pressing, our oil is transferred to a 55-gallon drum where we let it set for at least a week so all solids can settle out, then it is bottled in 1-pint bottles, boxed, and prepared for shipment. Since we have opted to do an all-natural oil, we do not refine, deodorize, or bleach it. It is truly an all-natural, locally grown product with an earthy color and nutty fragrance, and contains all the natural nutrients available in canola oil.

Selling:
We have both been involved in sales in the past, but neither of us has ever sold a food product or been involved with the food industry. This has not stopped us from using our “gut instinct” to begin selling our product. Our first sales took place October 19, when we did our first food show. Our goal was primarily to be informational and to observe and learn about the industry, but we sold 6 pints of oil and had our first revenue.

We began paving the way for sales in May 2011 when we pressed out one gallon of oil on a small borrowed press, and bottled it in small sample bottles and gave it out to friends and family. This gave us feedback on the smell and taste of the oil, and started a small circle of demand. It also gave us confidence to continue.

About the same time we began work on a new website. We hired a professional website development company to develop the site and continue to work with them to improve our search engine results. Our site (www.canolaoilproducts.com) went live on October 15, and we believe will be fully functional by November 15. This site is both informational and marketing oriented and contains an order form for buying our canola oil.

Currently we have made sales to the Kalamazoo Peoples Food Co-op, Evergreen Market in Traverse City, a new restaurant starting in Flint, and to numerous individuals. We are talking to several other larger companies including Ric’s Supermarkets and Whole Foods. The original target market described in our SARE proposal was Farmers Markets. We began pressing oil too late in 2011 to attend Farmers Markets, but we plan to in 2012.

RESULTS
Goal 1: To use a mechanical press to extract the oil from 1,500 pounds of Omega-9 canola seed.
Results: A mechanical press was purchased using $2,000 of SARE grant money and $6,000 of Project Leaders money. So far about 300 pounds of canola seed have been pressed yielding about 12 gallons of oil. The press is set up in a licensed commercial kitchen to meet MDA food grade requirements.

Goal 2: To refine the Omega-9 oil to commercially acceptable standards.
Results: We have learned that our canola oil does not need to be refined. In fact it is acceptable, even preferred, by health conscious consumers as unrefined, undeodorized, and unbleached.

Goal 3: To bottle the oil in one-quart plastic bottles.
Results: We have found the correct bottle for our canola, which is a specialty oil, to be one-pint (16 oz). We have also changed to glass bottles which better display our oil as an upscale product. 430 one-pint glass bottles have been purchased.

Goal 4: To design a label that incorporates “grown locally” and healthy oil information.
Results: The label has been designed and approved by the Michigan Department of Agriculture. See sample included with this report.
Goal 5: To test market to 3 small food processors.
Results: We have done test marketing, but have changed our target audience, because our oil is too expensive for small food processors. Upon analyzing our cost structure per bottle of oil it is clear that small food processors can buy canola oil much cheaper than ours. For example, we have our gallon size container priced at $24, which is low margin for us, but still twice what a gallon of commodity canola oil could be bought for. We instead did a test market of 30 consumers and have received feedback from many of them.

Goal 6: To select one farm market to test retailing the product.
Results: This will be done in 2012. Since our press didn’t arrive until mid-summer we didn’t have time left to attend any Farmers Markets.

Goal 7: To work with two farmers to grow Omega-9 canola in 2011.
Results: We worked with four farmers in 2011, as well as with the MSU Extension Service which planted several test plots. We have also applied to Dow AgroSciences to become a Nexera seed dealer and were approved with exclusive rights to sell Nexera canola seed in Michigan.

Goal 8: To develop and maintain a website to promote Omega-9 oil, inform the public of its health benefits, and provide information to farmers.
Results: We contracted with a professional web services company to build our website which went live on October 15. Among the features it has are a Blog where we do a running commentary on what we are doing, including an account of growing canola for farmers to use. We also provide a link to the Northern Canola Growers Association which published a booklet called “Canola Production Field Guide” by North Dakota State University. This is an excellent farmer resource for growing canola. We also have a “Health Benefits” section and various other canola information.

Goal 9: To disseminate the information learned.
Results: Information dissemination is just starting now. To date we have participated in the MSU Product Center Food Show, did a presentation at the National Small Farm Trade Show & Conference, NCR-SARE Farmers Forum, and hosted a mini farmers day with MSU Extension and our local farmers cooperative. We have also designed two flyers to hand out to people.

When the proposal for this grant was written we had been talking with Dow AgroSciences for about 2 years and had a good relationship with them. They had attended one of our Field Days, and we had been to their offices in Indianapolis. We had numerous phone calls and emails and thought we were all set for producing their patented Nexera Omega-9 oil. We received notice in May that we were fully approved to grow Nexera canola, but were not licensed to process it, and were too small to be licensed at this time. Since this occurred we have changed our marketing to just “canola oil” and are no longer using Omega-9. We will, however, continue working with DAS to become licensed at some point and once again use the Omega-9 labeling.

WORK PLAN FOR 2012
Next year we plan to switch to all Clearfield (non-GMO) canola because it fits best with our market. By doing this we will reduce the chance for cross pollination between GMO and non-GMO canola. This will also qualify us for membership in “The Non-GMO Sourcebook”.

To change to non-GMO canola on our farm we will have to change our crop rotation sequence to a 1-year rotation form the current 2-year rotation. This means we will be growing canola for one year then rotate to another crop for one year, then back to canola. We will do this because of the need to control volunteer canola from year to year, as well as pest control. The other benefit of this is that it actually makes us a more “sustainable” farming operation.

Another plan for next year is to participate in Farmers Markets, which we missed in 2011. We have several in our area and will decide which ones best fit our needs.

Our costs of production for the oil are very high now, and within 1 – 2 years we would like to have a production facility where we can run the press 24 hours a day. Our press is designed for that and will actually run better than the current 6-8 hours at a time we do now. This will significantly reduce our largest single cost line item which is the leased facility.

Finally for next year we need to do our production easier than we do now. Currently we can do 40 bottles a week, or about 2,000 a year - but it takes a lot of work. We have several ideas for improving this that we will start moving towards.

OUTREACH
(1) Informational website
(2) MSU Product Center Food Show (200)
(3) Flyer (40)
(4) Co-sponsor of mini Field Day (8)
(5) Member of West Michigan Food Processors Group (20)

Future plans call for a press release to local media, a farmers meeting, and a field day.

Information sharing will be more complete by the final report.