New Data in Gro Highlights Australian Production and Acreage

At a time when China is blocking much of its imports of canola from Canada, Australia looks set to ramp up production of the oilseed. The Australian Bureau of Agricultural and Resource Economics, or ABARES, which was recently added as a data source in Gro, projected canola production in 2019 of 3.7 million tonnes, up from 2.2 million tonnes in the previous year, when drought, and crop shifting to more lucrative grains, cut into canola production.

With China’s imports of soybeans hurt by its trade war with the US, China is expected to have boosted canola imports by 19% to 5.6 million tonnes in 2018/19, to make up a shortfall in imported protein meal, ABARES said. Australia, among the world’s top five canola producers and exporters, sends most of its canola to the EU. China traditionally gets 10% of its canola imports from Australia, with the bulk coming from Canada, the world’s largest producer. Canola is an oil-rich, low erucic acid cultivar of rapeseed.

Chinese officials have said Canadian cargoes were rejected because of insect infestation. But there is speculation of political motivations following the December arrest in Canada of Meng Wanzhou, an executive with Huawei, a Chinese telecommunications company. China also recently announced a government-sponsored plan to support domestic rapeseed production in China’s Sichuan province.

In 2018, Australia’s canola production plummeted 41% to a decade low of 2.18 million tonnes, driven by a 31% reduction in planted acreage. The canola crop was battered in Eastern Australia by drought for two successive years. And in Western Australia, where two-thirds of canola is produced, growers converted acreage to more profitable barley production. Next year’s expected production increase is seen keeping up with EU demand for biodiesel and non-GMO oilseeds, as well as increased Chinese demand.

Australia is not without its own trade disputes with China, however. China has significantly slowed imports of barley after accusing Australia of manipulating the feed market with subsidies to barley growers. The China Chamber of International Commerce contends that Australia is flooding the market with cheap barley and hurting Chinese producers. Australia, similar to Canada, interprets the Chinese actions as retaliatory political moves. Australia has taken steps to limit Huawei’s involvement in building the country’s future 5G networks. More recently, the UK government warned that Huawei’s equipment poses security risks.

The left chart below shows that Australia’s canola production declined in 2018 as drought battered crops in the East and farmers converted acreage to more profitable barley production in the West. At right, ABARES data on area harvested shows that barley and canola are Australia’s second- and third-most produced crops, respectively, after No. 1 wheat. The size of the circles is the symbol map is proportional to the acreage each crop covers in each Australian state.