Canola Looks to China, Remains Tied to the US

Talk to our our team about Gro's offering
Talk to our team


Canola/rapeseed now sit alongside palm oil and soybean oil as one of the most produced vegetable oils in the world. The crop trails only soybean meal in popularity for feed use. This success has been achieved in just 40 years. Prior to World War II, rapeseed oil was primarily used as a high-temperature lubricant on steam ships. Once diesel engines replaced steam, rapeseed oil industrial lubricant usage plummeted.

The Food and Drug Administration (FDA) banned rapeseed oil for human consumption in 1956 due to high levels of erucic acid, which was shown to damage heart muscle in animals. Rapeseed use in feed meal was similarly limited due to erucic acid and high levels of glucosinolates, an organic compound that can reduce animal growth rates when consumed in large quantities.

By 1960, Canadian agricultural scientists Baldur Stefansson and Keith Downey would discover the first low-erucic acid seed and transfer that trait to a rapeseed variety. Downey also developed a Brassica rapa variety that was crossed with a zero erucic acid producing seed. New research methods made identifying low-glucosinolate seeds easier in 1970 and, by 1973, these “double low” varieties, or low-erucic acid rapeseed (LEAR), would be used in most of the Canadian rapeseed crop. Erucic acid levels fell to below the 5 percent standard for food use. In 1978, the Canadian rapeseed industry adopted the name “canola” for its new varieties to highlight the product’s unique set of traits. Canola production rose from 252,200 tonnes in 1960 to 3.5 million tonnes in 1978 due to these innovations.

Canola in North America

By Jan. 1, 1985, the FDA granted LEAR varieties Generally Recognized as Safe (GRAS) status. Canadian canola oil exports increased as a result of heightened demand from the new US market. Acreage and production quickly expanded to supply the US with vegetable oil. The research which paved the way for GRAS status in the US also revealed canola’s health benefits. Some scientific evidence indicates 1.5 tablespoons of canola oil daily may reduce the risk of coronary heart disease. Canadian canola production soared from 7.2 million tonnes in 1994 to 19.7 million tonnes in 2017. Total exports also increased from 3.9 million tonnes to 11.5 million tonnes during that time.

The US was Canada’s top foreign market for canola oil and imported 1.9 million tonnes in 2016. China was a distant second with imports totaling 657,000 tonnes. While the uncertain future of NAFTA weighs heavily on the Canadian trade outlook, the country’s canola industry has a few reasons to remain optimistic despite threats from the Trump Administration. Unless the Canada-U.S. Free Trade Agreement is also repealed, canola tariffs would remain at zero if NAFTA were repealed. Additionally, Canada hopes to expand canola oil exports to China as the latter begins to consume more vegetable oil in diets that increasingly mirror those of their Western counterparts.

China wants seeds, not oil

Canada’s canola trade consists of seed, oil, and meal exports. The US imports the most oil and meal from Canada, but China imports the most seeds. While the US has remained a steady trade partner, the rapidly-developing Chinese market presents new opportunities for export growth. The total value of Canadian canola exports to the US were valued at CA$3.6 billion compared to CA$2.7 billion for China.

Seed exports to China have fluctuated over time, but reached 3.5 million tonnes and a value of CA$1.9 billion in 2016. Canola oil exports to China increased to 657,000 tonnes in 2016 and China has signaled its intent to increase Canadian canola seed imports. Canada’s industry, optimistic ahead of Prime Minister Justin Trudeau’s December 2017 trip to East Asia, hoped he could secure favorable trade deals in the region. Because talks failed to materialize, Canada’s canola industry now sets its sights on the Comprehensive and Progressive Trans-Pacific Partnership and emerging markets like Vietnam to boost exports.


Canada’s canola industry was built on the reinvention of rapeseed as a viable product for humans and animals. But canola faces new trade challenges that can’t be resolved through research. NAFTA’s fate remains uncertain and the latest round of negotiations sees Canada and Mexico trying to keep the US from leaving despite steep demands from the Trump Administration. Canada’s failure at opening trade talks with China limits canola exports to unprocessed seeds and not the more profitable oil and meal. With China’s strong preference for importing raw materials for domestic processing, Canada must settle for lower value canola seed deals.

Climate change could also impact canola production and acreage in the near future. Warmer temperatures are pushing wheat northward and the same will likely hold true for canola. Farmers see canola and wheat as crops to grow in areas where dry, short seasons limit corn and soybean production. Modern Canadian canola production is primarily located in the southern parts of the provinces of Alberta, Manitoba, and Saskatchewan. With growers increasingly able to plant more lucrative corn and soybeans, canola and wheat production will be forced northward or into decline.

The canola crop has several highly valuable attributes, however. It will continue to appeal to careful consumers looking for healthier oil options. Environmentalists appreciate canola’s lack of association with deforestation, in contrast to soybean oil and palm oil. However, Canada’s inability to strike new East Asian deals means that canola producers must continue to rely on their historic US trade relationship for now.

Get a demo of Gro
Talk to our enterprise sales team or walk through our platform