Study warns Canada’s canola exports still over-reliant on China, US

A new study from the Simpson Centre for Food and Agricultural Policy at the University of Calgary has concluded Canada’s canola sector is heavily over-reliant on two export markets — China and the United States.The two nations currently account for 90% of Canadian canola exports worth billions of dollars annually, which researchers say leaves Canadian producers vulnerable to retaliatory tariffs and policy changes outside of their control.“We don’t want to have the same market concentration and keep the sector vulnerable to retaliatory tariffs or trade policy changes,” Farzana Shirin, one of the study’s authors, told the Canadian Press.The paper — released earlier this month — comes as Prime Minister Mark Carney announced an agreement last week with China under which that country will significantly reduce tariffs on Canadian canola seed and temporarily lift tariffs on canola meal, in exchange for Canadian concessions on tariffs applied to Chinese electric vehicles.The study outlines several obstacles preventing Canada from expanding canola exports beyond its dominant markets.In the European Union, strict regulations on genetically modified organisms effectively block Canadian canola, most of which is genetically modified, from entering the food market.Other countries also lack sufficient infrastructure to crush canola seed into oil, limiting their ability to absorb large volumes.Domestically, transportation bottlenecks further constrain Canada’s ability to export higher volumes of processed oil.“Our export system is designed primarily for seed, not oil,” Shirin said.“If Canada wants to diversify and tap into the biofuel market, the infrastructure needs to be upgraded.”Shirin noted the EU could still represent an opportunity if Canadian canola oil were used for biofuel rather than food.“That’s one new market that aligns with the push for domestic capacity building and oil production, instead of focusing on seed exports,” she said.The study also highlights stalled domestic investment as a key vulnerability..Canola farmers warn losses from China tariffs could top $2B .Several planned canola crushing facilities in Saskatchewan have been delayed or cancelled due to rising costs and economic uncertainty, limiting Canada’s ability to process more seed at home.Rick White, president of the Canadian Canola Growers Association, said regulatory reform is needed to ensure more Canadian canola is used domestically for biofuel production, saying the country's existing capacity is not using as much canola as it could."We have to be a little more selfish and not be importing other stuff instead of canola," White said.Alberta Canola chair Andre Harpe also echoed that sentiment, saying during a recent webinar that there needs to be more calls for greater domestic consumption of canola, citing biofuel feedstock as one option, calling it an “easy answer.”Harpe has also previously lobbied Premier Danielle Smith to raise Alberta’s bio-based diesel mandate to 5% from the current 2% — a move he says would cost drivers just 1.5 to two cents per litre at the pump.In terms of infrastructure, Imperial Oil’s new renewable diesel plant in Strathcona, AB, has been touted as one possible option to process much of the canola produced in Alberta.The facility is set to produce one billion litres of fuel per year when it is running at full capacity and will require roughly one million tonnes of canola oil, or about 2.5 million tonnes of seed, at full capacity.Will Holowaychuk, policy analyst with Alberta Canola, says the facility would be “able to eat up approximately 40% of the canola that is produced in [Alberta].”As industry groups are pushing Ottawa to ensure those changes make Canadian canola more competitive with imported feedstocks, Ottawa has launched a short-term Biofuel Production Incentive for 2026 and 2027 and announced targeted amendments to the Clean Fuel Regulations in its latest budget.However, Shirin warns that without coordinated trade, climate and infrastructure policy, Canada risks repeating the same cycle of exposure it has previously experienced from Chinese and US buyers — even as tariffs are reduced and markets are reopened.

Study warns Canada’s canola exports still over-reliant on China, US

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