Canola is a huge Canadian success story. Developed by Canadian plant breeders four decades ago, canola has become one of the country’s most popular field crops, with production in 2011-2012 reaching a record 14 million tonnes, much of which was sold into export markets.
What may surprise some is that — from a global perspective — canola is still something of a niche crop, produced by relatively few growers for specialized uses. Although it has experienced enormous popularity as an oilseed in North America in recent years, it has yet to make significant breakthroughs into some key overseas markets. If and when it does, demand could increase dramatically.
“Even though canola is such a major crop for us, on the world stage it’s more like a specialty crop,” says Chris Beckman, an oilseeds analyst with Agriculture and Agri-Food Canada in Winnipeg. “Many other countries grow their own varieties of canola-quality rapeseed, while others — such as India — prefer rapeseed/mustard as an oilseed.
“However, as third world countries become wealthier‑and at the same time more concerned with health — the health benefits of canola could open up new opportunities going forward,” he says.
As canola grows in popularity worldwide, Canada could be in a good position to serve that expanding market. “Over the past 40 years, Canadian canola has benefitted greatly from both public and private sector investment as well as producer innovation,” says Cory McArthur, vice-president of marketing development with the Canola Council of Canada. “In the process, the Canadian canola industry has laid foundations for growth that many other countries lack.”
Where Canada fits
Canola was developed in Canada in the early 1970s to reduce nutritionally undesirable components of rapeseed: erucic acid and glucosinolates. To meet the internationally recognized definition of canola, varieties must contain only minimal levels of both erucic acid glucosinolates.
Canada is by far the world’s largest producer of canola. The U.S., at an average of 650,000 tonnes a year, produces a relatively small amount but is the largest export market for Canadian canola oil and seed. China, Mexico and Japan are also major importers of Canadian canola.
Although Canada is one of only a few countries to grow canola, others produce canola-quality rapeseed that approximates canola standards, and much of this product is consumed domestically.
“Our only real competition among the canola-quality rapeseed producers is Australia and Eastern Europe,” says McArthur. “Their oil product looks like and behaves very similarly to Canadian canola oil but they don’t export. They’re net importers. We really don’t have to compete with them other than when we’re shipping products into Europe.”
China key market
China has proven to be a key but erratic market for Canadian canola. A ban on canola seed (since 2009) due to concerns over blackleg has caused overall canola exports to China to fluctuate wildly over the past several years. However, Beckman expects Chinese demand to increase as its standard of living increases, and consumers begin to insist on healthier oils and domestic production fails to meet that demand.
China currently produces what it claims to be canola-quality rapeseed, although the industry consensus is that most of this product is actually conventional rapeseed. “We believe that (China) has modified the internationally-accepted definition of canola in order to label its rapeseed canola-quality,” says McArthur. “It contains high erucic acid and tends to smoke when you cook with it.”
India a hard sell
India has proven to be a tough market for Canadian canola oil to break into, says McArthur. “India grows a mixture of high-erucic acid mustard seed and rapeseed similar to what’s grown in China,” he says. “A large segment of the Indian population prefers the pungency of mustard oil. However, we are starting to see a small niche market of consumers who want the neutral flavour and health benefits that go along with a low-erucic acid product such as canola oil.”
Europe focuses on biodiesel
Countries in the European Union have largely removed themselves as competitors in the edible oil market as they focus their oilseed production on biodiesel, says Beckman. “They’ve been importing palm oil to backfill their shortage of edible oil, although we estimate that 400,000 to 800,000 tonnes of canola seed gets sold into EU countries as oil after processing in the United Arab Emirates. It’s kind of an indirect market for Canadian canola.”
Generally, however, the EU market remains closed to Canadian canola due to ongoing resistance to genetically modified organisms (GMOs) in food products. Beckman does not see this attitude eroding any time soon.