Biofuel key for bright oilseeds future

CBA agricultural economist Dennis Voznesenski said biofuel demand, principally from the European Union, had played a large role in the Australian canola industry's renaissance over the past decade.

He said trends were that diverse demand from sectors including motoring, agriculture, shipping and aviation meant the a changeover to EVs would not impact the biofuel industry in the short-to-medium term.

In fact, Mr Voznesenski said Australia's oilseed industry could increase, with fuel only crops such as Carinata, an oilseed developed by Nuseed specifically for use in biofuel manufacturing and designed for low rainfall zones, could find a solid foothold in Australia over coming years while canola plantings continue to rise.

"As we set our sights on 2030, strong demand is expected to continue for Australian canola from the biofuel sector," Mr Voznesenski said.

He pointed to positive signs from the two large economies most important for Australian canola, the EU, as our largest export destination and Canada, our largest competitor.

"Governments in both economies have implemented very sizeable programs to decarbonise their transport sectors," he said.

"While renewable electricity powered vehicles are the ideal, it takes time for the existing fossil fuel powered transport fleet to be replaced, creating an opportunity for biofuels."

He said the Canadian oilseed sector had reacted to the increased local demand for biofuel, particularly from the neighbouring US, by markedly increasing its crush capacity.

This in turn will impact Canada's status as an exporter of raw canola.

"In Canada, we expect canola exports to decline towards 2030 because of a rise in canola crush capacity."

Meanwhile in Europe, while Mr Voznesenski said there would be a reduction in overall biofuel usage reduced production will mean demand for imported canola is likely to rise, in particular as the EU tries to limit the amount of palm oil it uses.

However, while the international biofuel story is positive, Mr Voznesenski tempered canola grower expectations that a local biofuel sector would create significant additional demand, saying competition from waste products and potentially Carinata could be limiting factors.

"At first glance, the news appears very positive for canola growers, and that may be the case."

"However, there are important factors that may limit the demand for canola in a local biofuel sector.

"Available waste and animal fats are likely to be used in preference to vegetable oils because of their comparatively lower carbon intensity.

"The possible adoption of Carinata oilseed in northern NSW and Queensland crop rotations could increase total oilseed production in Australia.

"This increase in oilseed supply would help those seeking feedstocks for biofuel but could also mute the price upside to canola."

"We also have to be aware that the development of a larger scale local biofuel sector is not set in stone."

Mr Voznesenski said the numbers over the past 20 years highlighted the growth of importance of canola in Australian cropping systems.

"Canola planting as a proportion of Australia's total winter crop has grown from 5pc in 2006/07 to as high as 16pc in recent years on the back of favourable pricing and improved agronomics."

He said national production has increased from an average of 1.2 million tonnes between 2006 and 2008 to 5.9m tonnes between 2021 and 2023 because of increasing yield and area planted.