Feeding the future: The coproduct that determines how far Australia can scale crushing

Canola crushing is not only an oil story. Once meal is properly considered, the question becomes how to connect surplus seed with oil demand and protein feed demand at a profitable netback. Western Australia (WA) offers the largest exportable canola surplus and limited existing crush capacity, while eastern Australia and New Zealand provide the largest nearby demand pool for incremental canola meal.

The import pool of feed is already large. Australia and New Zealand already import a sizeable feed-protein pool that can serve as a benchmark for canola meal demand. Together, the two markets imported around 2.3m tonnes of canola meal equivalent in the form of soybean meal and palm kernel expeller (PKE). Converted back into seed, this equates to approximately 4.1m tonnes of canola crush equivalent.

Import replacement could materially lift crush. This pool could support up to 2m tonnes of additional Australian canola crush, more than twice the current installed capacity of about 1.6m tonnes. Against a future canola production baseline of around 7m tonnes, this would lift domestic processing from roughly 25% of production today to around 50%, putting Australia’s crushing industry closer to international benchmarks. In Canada, crush is projected to reach about 64% of the national crop in 2026/27.

Import substitution is the first scalable meal opportunity. Existing feed-import channels provide a practical route for canola meal allocation. The key commercial challenge is to place canola meal at a competitive level against soybean meal, PKE, and other feed ingredients on a delivered nutrient-value basis. Recent prices across the Tasman show that canola meal can substitute for some, but not all, soybean meal and PKE on a
nutrient-value basis.

Meal logistics are central to the crush case. The Australian East Coast and New Zealand are central to the meal solution. New South Wales and Victoria are closer to domestic feed demand, while New Zealand is a large structural importer of feed ingredients. WA has several supply-side characteristics that support the new-crush case. The state has Australia’s largest exportable canola surplus, limited existing crush capacity, and strong oil-export pathways or biorefinery greenfield optionality. Reduced meal consumption does not remove WA’s advantage, but it requires consistent meal logistics into eastern Australia and New Zealand, or to Southeast Asia.

Livestock sectors, led by dairy and beef, offer the strongest demand outlook. Canola meal’s largest addressable pool exists in Australia and New Zealand’s dairy and beef industries, supported by large herd scale and established feed demand. Poultry uptake is likely to remain selective, due to canola meal’s higher fibre content relative to soybean meal.

The feedback loop is material. More crushing supports more stable seed demand. More stable seed demand can support price baseline and planted area. Larger and more reliable canola supply improves crushing viability. More crushing also produces more canola meal, reinforcing the strategy’s two-sided value: local crush can stabilise canola demand, while local meal can improve feed availability and reduce exposure to imported protein-meal prices.

This is Part 3 in our series exploring how regional canola-based biofuel production can help Australia and New Zealand’s farming sectors thrive. Part 1 examines how rising biofuel demand could underpin canola prices and support the development of canola value chains. Part 2 looks at Australia’s capacity to reliably supply canola to a larger crushing industry and the structural limits to expanding canola output over the next decade.