Growth opportunities coming for oats

The crop has become a leading alternative to cow’s milk in beverages

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Oats have long had a reputation as a heart-healthy cereal, but the plant-based eating trend is creating new opportunities for this crop.

That includes oat-based dairy alternatives, in particular oat beverages. Nielsen data shows an almost 250 per cent increase in Canadian oat beverage sales over the last two years, and in the U.S., oat drinks surpassed almond beverage as the fastest growing non-dairy milk-type beverage last year.

This growth is driven in part by soaring demand from coffee shops responding to consumer demand for plant-based alternatives. Oat drinks are vegan-friendly, as well as suitable for people with dairy and nut allergies. They are also low in fat and high in vitamins and minerals.

Why it matters: Canada is a large exporter of oats, so there will be opportunities for farmers in the growth of the sector.

In January, Starbucks launched oat milk replacements in 1,300 stores across the U.S. Midwest, and the company just announced it was expanding the product into its Chinese stores as they re-open after coronavirus shutdowns.

According to Statistics Canada, Canada is the world’s largest exporter of oats, accounting for about 75 per cent of the global market. In the last five years, annual Canadian production averaged 3.267 million tonnes on 1.259 million hectares (3.1 million acres).

Most of that crop is grown in Western Canada, but this means new opportunities for Ontario farmers too, says Joanna Follings, cereals specialist with the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA).

“Oats are traditionally a feed crop in Ontario, especially for horses, as well as going into milling oats for human consumption,” Follings says. “But there is a lot of interest from end users in oats, and those emerging markets are growing.”

A typical year means an average of 50,000 to 60,000 acres of oats in Ontario, but in years with bad fall planting conditions or significant winter kill, that increases as farmers replace wheat in their rotations – 2019 saw 82,000 acres and in 2015, oat acres rose to 115,000, she says.

Guelph-based ag accelerator Bioenterprise has seen an increasing number of oat-based start-ups come through its doors in recent years.

Bioenterprise support helped Ottawa’s Oat & Mill launch oat ice cream several years ago that is now sold in stores like Metro, Fortino’s and Sobeys across Ontario and Quebec. A food service line for craft ice cream parlours has also been popular, but the pandemic has forced a recent pivot to local online shipping, according to founder and CEO Candace Tierney.

“Although this is really common in the U.S. where almost every craft ice cream producer ships online, it hasn’t really been done in Canada,” she says.

Oat & Mill ice cream made with oats. photo: Oat & Mill

Bioenterprise funding also helped Toronto’s Mylko get its oat beverage product to market, supporting scale-up product development trials and testing. They now sell in smaller retail stores like Pusateri’s and Goodness Me, but coronavirus has paused the 40 per cent of their sales that went into food service.

“Even with demand dropping off, keeping up is hard, but we’re hanging in there. This (pandemic) is bigger than all of us, but we’re on the brink of some good things – we love oat and we’re not done with it,” says Faiza Vassanji, who co-founded the business with husband Adam Toth.

Will Spencer of rND Bakery in Smiths Falls used a Bioenterprise grant to meet growing demand for his oat-based, gluten-free bread products targeted at consumers with severe allergies. The pandemic may delay some field trials of a promising higher yielding oat variety in development at Agriculture and Agri-Food Canada in Ottawa, and has paused a St. Lawrence College project into properties of oat bread.

“Right from the start, it was about finding good varieties of oats that could be grown organically, sustainably and be used to make bread,” Spencer explains. “It’s a supply chain we need to grow here.”

He currently sources oats from two local farmers and a third provides the processing. His long-term vision is building a network of Ontario farmers to grow the oats that he needs, especially in eastern and northern Ontario.

Tierney and Vassanji are also eager to source from Ontario farmers, although they’re struggling to access enough gluten-free certified supply. Oats are naturally gluten-free, but must be certified as such – which means no cross-contamination with wheat or other cereals anywhere in the supply chain – in order to be used in food products bearing a gluten-free label.

That supply is currently limited in Ontario, so most of their oats are sourced from Western Canada where there is greater availability.

In February, Avena Foods Ltd. announced plans to build a new gluten-free oat processing facility south of Regina.

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