Research

Harvesting the future: How far can Australia scale canola crushing?

13 May 2026 13:00 RaboResearch

Australia’s canola supply can expand, but seasonal variability and an export‑led system limit reliability unless domestic crushing capacity grows.

Intro

With biofuel demand on the rise, Australia has an opportunity to increase its canola production. Canola production and crushing capacity can grow together in Australia, but sustained expansion depends on crushing’s ability to anchor margins and share risk across seasons.

    Australia has the capacity to increase canola production. But without a material expansion in domestic crushing, supply growth has remained incremental and variable. Until now, additional output has largely been cleared through export markets rather than through structural change in the domestic supply chain. Structural gains in cropping area, genetics, and agronomy can lift Australia’s average annual canola production toward around 7m tonnes over the next 10 years, up from recent averages near 6.5m tonnes. The constraint is not agronomic potential, but variability caused by economic fundamentals and seasonality: supply expands unevenly year to year rather than through a smooth, predictable scale‑up. Seasonal variability defines supply reliability, not upside potential. Assuming continued area growth, national canola output is expected to be around 7m tonnes per year, with production typically ranging between 4.4m and 11.1m tonnes. In renewable‑diesel terms, this equates to around 2.4bn litres per year, with seasonal production ranging from 1.5bn to 3.9bn litres. Western Australia offers the clearest, most scalable supply expansion opportunity. If domestic crushing expands, Western Australia is poised to anchor supply growth, supported by rising area, improving yields, and a large, export‑oriented surplus. Kwinana, Albany, and Esperance stand out as the most reliable supply hubs, collectively exporting around 2.6m tonnes in recent seasons, close to 45% of national exports. By contrast, parts of New South Wales and Victoria have more limited growth potential due to competition from others winter season land uses. Income-supporting mechanisms are strategic tools that can be used to boost canola’s profitability and support area expansion. Crushing expansion supports area growth – but only if margins hold. Canola area responds to relative margins, not short‑term price spikes. Canola’s variable costs are typically AUD 150 to AUD 300/ha higher than those of wheat, limiting rapid area shifts. Today, canola accounts for roughly 14% of Australia’s winter cropping area, versus approximately 28% in Canada, where a large crushing industry underpins stable demand. Expanding domestic crushing would support a lift in total winter cropping area and more persistent canola plantings over time. More crushing improves price stability and grower confidence. Australia’s export‑led system amplifies farmgate price volatility: surplus years pressure prices, while low‑production seasons intensify competition between exporters and crushers. Regions with higher crushing density already exhibit more stable pricing dynamics than export‑dependent zones such as Western Australia. Expanding crushing capacity 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.

The Australia and New Zealand canola supply and crushing industry series

This is Part 2 in our series exploring opportunities and challenges for Australia and New Zealand’s farming sectors in leveraging regional biofuel production from canola. Part 1 examines how rising biofuel demand could underpin canola prices and support the development of canola value chains. Part 3 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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