Australia canola\'s re-entry into Chinese market threatens Canad

Australia canola's re-entry into Chinese market threatens Canada's dominance

Kate HelmoreAgriculture and food policy reporter July 30, 2025

https://www.theglobeandmail.com/business/economy/article-australia-canola-china-market-tariffs/

Australian canola is poised to take a sizable chunk of Canada’s market share in China, where Canada has historically dominated sales but is now facing significant trade winds. 

Five cargoes of 150,000 to 250,000 tonnes of Australian canola are set to enter the Chinese market, the largest amount since Beijing barred the crop in 2020 over concerns about a disease called blackleg. 
The shipments are part of a trial of a new framework between China and Australia intended to address concerns over the disease. 
The Australian shipments will barely put a dent in China’s canola demand. China is the largest importer globally, averaging four million tonnes a year over the past five years, and Canada accounts for the vast majority of these imports. 
But Canada’s canola industry is worried this is the start of higher-volume shipments from Australia that will damage its dominance of the Chinese market. Should this market access be lost, some of the blame would fall on Ottawa. 
Chinese tariffs on canola products leave Canadian farmers caught between two trade fights
Canada’s canola industry is facing 100-per-cent tariffs from Beijing on canola oil and meal, a retaliation for Ottawa’s 100-per-cent tariff on Chinese-made electric vehicles. 
Beijing is also investigating Canada for dumping canola. Updates on this investigation are expected this fall. The investigation was launched shortly after Ottawa’s EV policy came into force. 
“From a farmer’s perspective, they feel really exposed,” said Tracy Broughton, executive director of the Saskatchewan Canola Development Commission. “Canola farmers are being used as a pawn in these trade negotiations and discussions.”
China still depends on Canada for canola. In the 2023-24 marketing year, China imported 4.9 million tonnes and 4.6 million tonnes were supplied by Canada. 
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A pumpjack by a canola field near Cremona, Alta. Canada accounts for the vast majority of China's canola imports.Jeff McIntosh/The Canadian Press
In an attempt to deal with this, China has been pursuing a policy of market diversification for the past five years, said Marlene Boersch, co-founder of Mercantile Consulting Venture Inc., an agricultural market insights firm in Winnipeg. 
Australia is a good option, she said. The country is geographically close and is the second-largest canola exporter worldwide. In 2023, it exported US$4.03-billion worth of canola, compared to Canada’s US$4.57-billion worth of exports, according to the Observatory of Economic Complexity. 
Australia is also expanding production and exports. Farmers are forecast to produce 8.1 million tonnes of the crop by 2035, according to the Australian Oilseeds Federation. Canola exports are expected to reach between 2.1-billion and 3.2-billion Australian dollars in 2027-28, according to Grains Australia (about $1.9-billion to $2.9-billion). 
Australia’s high-quality grain crop is a direct competitor with Canada’s crop, said Wade Sobkowich, executive director at the Western Grain Elevator Association in Winnipeg. 
The country’s agricultural production is similar: advanced and large-scale. For this reason, Beijing has historically played Australia and Canada against each other. 
Canada has sometimes been a beneficiary, he said. For example, in 2020, Beijing imposed 80.5-per-cent tariffs on Australian barley following an 18-month anti-dumping investigation. Annual Australian barley exports to China averaged around 1.2-billion Australian dollars (about $1.1-billion) over the previous five years. 
“It is an ebb and flow in the trade world,” said Mr. Sobkowich. 
But the rate of Beijing’s trade diversification is tied to political tensions, said Ms. Boersch. 
“China is giving us the signal. If Canada does not move on electric vehicle tariffs . . . then we will not be super considerate.” 
Canola farmers feel their livelihoods are being sacrificed to save the auto industry
The impacts could be stark, she added, pointing to what happened with Canadian pea exports to China. Four years ago, Canada had around 97-per-cent market share. Beijing and Russia agreed to phytosanitary protocols in 2022. Russia is now China’s top pea supplier. 
Australia may not be able to win that much share of canola, said Ms. Boersch. The Australian shipments to China are trial based. It is not a done deal, she said. And Australia, while expanding production, might not be able to meet this volume of demand. But it is still a real threat to Canada. 
“Australia is chipping away at a really dominant position we have.” 
And the Australian threat should get Ottawa to revisit its position on EVs, she said. Canada’s tariffs on Chinese models were imposed during the Biden administration. Relations with the United States were different at the time, and an integrated North American auto sector was a given. 
The current context is vastly different. U.S. President Donald Trump has threatened to destroy Canada’s auto industry and levied tariffs on the Canadian auto sector that amount to around 12.5 per cent after U.S. content is subtracted.
“I think it is time to clarify our route. Which way are we turning as a nation in terms of alliances and how long does it take to make any such decision? The world is moving very quickly right now,” said Ms. Boersch.