Expanding domestic crushing capabilities will be key to scaling up Australian canola production in the future, Rabobank says in new industry research.
The specialist global agribusiness bank says Australia has the capacity to lift its average annual production of canola – the country's primary oilseed crop – to around seven million tonnes a year over the next 10 years, up from recent annual averages of 6.5 million tonnes. This is made possible by "structural gains" in cropping area, genetics and agronomy practices, it says.
However, the report – Harvesting the future: How far can Australia scale canola crushing?, by the bank's RaboResearch division – cautions that without a material expansion in domestic crushing capacity, canola's production growth will likely "remain incremental and variable".
Report author, RaboResearch senior grains and oilseeds analyst Vitor Pistoia says growing global demand for biofuel has seen Australia's canola sector respond with significant supply growth in recent years, however this has primarily been in the form of increased canola seed exports to be crushed off shore.
"Australia's export-led system has responded to global demand growth largely through higher canola seed exports rather than by expanding domestic crushing capacity (to enable oil exports)," he said. "And this has limited the extent to which that demand growth is translated into local value-adding, job creation and more stable domestic price formation."
The report says expanding local canola crushing capacity could result in improved price stability and boost grower confidence.
"Regions in Australia with higher canola-crushing density already exhibit more stable pricing dynamics than export-dependent zones such as Western Australia," Mr Pistoia said. "Expanding crushing capacity in Australia would absorb surplus supply, stabilise basis and reduce volatility, creating a positive feedback loop that supports grower confidence, sustained area and long-term supply growth."
Canada comparison
Mr Pistoia said a comparison of Australia with other major canola-producing regions in the world, such as Canada, highlighted the importance of domestic processing in supporting area expansion.
Today, canola accounts for roughly 14 per cent of Australia's winter cropping area compared with approximately 28 per cent in Canada, where a large crushing industry underpins stable demand.
"In Canada, a large share of canola production is absorbed by domestic crushers, creating a stable demand base that supports persistent cropping intensity alongside exports," Mr Pistoia said.
He said expanded domestic crushing in Australia would support a lift in total winter canola cropping area and more persistent canola plantings over time.
Local production
The report says Australian canola area has increased at an average rate of around 3.5 per cent per year since the early 2000s and is projected to reach 4.1 million hectares, or around 16 per cent of Australia's winter cropping area by 2030.
"Over the past two decades, production and planted area have expanded steadily, supported by varietal improvements, advances in agronomy and buoyant export demand, particularly from Europe and Asia," Mr Pistoia said.
Assuming continued area growth, national canola output is expected to reach about seven million tonnes a year. In renewable diesel terms, this equates to around 2.4 billion litres a year, Mr Pistoia said.
Over the past five seasons – 2021/22 to 2025/26 – canola area has averaged around 3.4 million hectares within a total winter cropping area of approximately 24.1 million, he said, indicating recent growth has been "incremental rather than transformational, with the share of the cropping mix still relatively low, despite price increases".
Grown primarily in Western Australia, New South Wales and Victoria, these states account for approximately 92 per cent of canola-cropped area in Australia.
Mr Pistoia said canola was generally "viewed as a high-value break (rotational) crop" within cereal-based farming systems, although now for some regions it is a core element of the cropping program.
"Canola delivers rotational benefits, but remains sensitive to seasonal conditions, with moisture availability during establishment continuing to impact year-to-year outcomes," he said.
Western Australia
Western Australia offers the clearest, most scalable supply expansion opportunity for Australian canola, the report said.
"If domestic crushing expands, Western Australia is poised to anchor supply growth, supported by rising area, improving yields and a large, export-oriented surplus," Mr Pistoia said. "Kwinana, Albany and Esperance stand out as the most reliable supply hubs, collectively exporting around 2.6 million tonnes in recent seasons, close to 45 per cent of national exports."
By contrast, parts of New South Wales and Victoria have more limited growth potential "due to competition from other winter season land uses", he said.
"Australia's exportable canola surplus is overwhelmingly concentrated in WA, while New South Wales and Victoria already divert a significant share or production into domestic crushing."
Report
The Harvesting the future: How far can Australia scale canola crushing? report is part two in a three part-series exploring opportunities and challenges for Australia and New Zealand's farming sectors in leveraging regional biofuel production from canola.
Part one examines how rising biofuel demand could underpin canola prices and support the development of canola value chains. Part three, yet to be released, will look at canola meal, considering the sectors that could potentially absorb the increase in this coproduct as canola production expands.
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