【By Wang Yi, Observer News】After refusing Canadian canola, China is accelerating its efforts to diversify supply sources and increasing the procurement of canola from Australia, India and other countries. According to a report by Reuters on November 5, China's record-breaking purchases, combined with sufficient rainfall that has provided favorable soil moisture for crop growth, have led to a significant increase in India's canola planting area, which is expected to reach a historical high this year.

The report said that Indian farmers typically plant canola between October and November. So far, the planting area has reached 4.17 million hectares, an increase of 13.5% compared to the same period last year. Last year, the canola planting area in India was 8.93 million hectares, higher than the average of 7.9 million hectares over the past five years.

"Farmers made a lot of money growing canola last year, so they naturally planted more this year," said Anil Chatar, a leading trader in Jaipur, Rajasthan, India. He predicted that the total planting area of canola and its close relative, mustard, would grow by 7% to 8% this year.

B.V. Mehta, Executive Director of the Indian Association of Solvent Extractors (SEAI), said that domestic demand for rapeseed oil in India is strong this year, and China's import demand for canola meal is also very robust.

According to data from the association, in the first six months of the current financial year starting April 1, China imported a record 488,000 tons of canola meal from India, while the previous financial year saw only 60,000 tons in total.

Chatar pointed out that the strong domestic and international demand for canola meal and rapeseed oil has kept canola prices above the minimum support price set by the Indian government for the crop at 5,950 rupees per 100 kg (about 478 Chinese yuan). This year, the Indian government has increased the minimum support price for the new season canola by 4.2% to 6,200 rupees.

"Canola has a much higher oil content than soybeans. If production grows in line with the planting area, it will help slow the growth of India's edible oil imports," said a trader from a global trading company who did not want to reveal his name. The demand from China for canola meal has increased the crushing of canola in India, which has also improved the supply of domestically produced rapeseed oil."

Indian farmers harvesting canola straw. Reuters

As the world's largest canola exporter, Canada had almost monopolized China's import market. In 2024, nearly all of China's 6.39 million tons of canola imports came from Canada.

However, last year, the Canadian government violated World Trade Organization rules by announcing tariffs on electric vehicles, steel and aluminum products imported from China. In response, China, based on the laws and regulations such as the "People's Republic of China Tariff Law", the "People's Republic of China Customs Law" and the "People's Republic of China Foreign Trade Law", as well as the basic principles of international law, imposed additional tariffs on a range of Canadian imports including rapeseed oil and meal starting March 20 this year. In August, China announced a 75.8% countervailing duty on Canadian canola.

Bloomberg noted in May that after the trade dispute with Canada escalated, Chinese buyers turned to Australia, the second-largest canola exporter, to purchase supplies, and also increased their purchases of canola meal from India. Sources revealed that some trial shipments from India arrived in China as early as May.

India had previously exported large quantities of rapeseed meal to China until 2011. Due to the detection of malachite green contamination in Indian rapeseed meal by China, exports were suspended. Later, China allowed the import of Indian rapeseed meal again, but under strict conditions.

"We hope China will relax its import standards to allow more Indian goods to enter the Chinese market," said Mehta. "This could increase India's rapeseed meal exports to China by about 500,000 tons annually, while the current volume remains relatively limited."

The report said that currently, only three Indian companies are allowed to export rapeseed meal to China, but there is great potential for expanding exports. According to data from the Indian Association of Solvent Extractors, the EU, another major supplier, has an export price of 332 USD per ton of rapeseed meal at Hamburg port, while the export price in India's Kandla port is only 202 USD per ton.

The U.S. Department of Agriculture stated in a September report that after China imposed tariffs on Canadian rapeseed meal in March, India became China's main supplier of rapeseed meal.

The Indian Association of Solvent Extractors said they are urging the Indian Ministry of Commerce to negotiate with China to further relax entry requirements to expand exports.

The Indian Economic Times reported that India is the third-largest producer of rapeseed in the world, with exports exceeding 2 million tons, but its exports to China accounted for less than 1%. South Korea, Bangladesh, Thailand and Vietnam are the main buyers of Indian rapeseed. However, sources said that if the current trend continues, China is expected to become one of India's largest rapeseed buyers.

Meanwhile, Canadian farmers have been lamenting the loss of the Chinese market. On October 31, the Canadian Broadcasting Corporation reported that as the canola harvest season in Saskatchewan approaches its end, local farmers are anxious despite the bountiful harvest.

Tracy Broughton, Executive Director of the non-profit organization "Sask Oilseeds" representing canola farmers in the province, said that farmers are feeling complex emotions about this year's harvest. Although the yield this year is quite good, many producers feel nervous each time they unload canola because they worry they may not be able to sell it at the initially expected price.

Broughton emphasized that China is the biggest export market for canola from Saskatchewan, with as much as 67% of the province's canola sold to China in 2024. "I think the most important task for the federal government is to resolve these trade issues as soon as possible."

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