May 14, 2015 – Opportunity for the Canadian canola industry to have improved access to the Asia Pacific market may be just around the corner. Concluding the Trans-Pacific Partnership (TPP) could bring significant benefits to Canada and the canola industry by eliminating tariffs and establishing disciplines on non-tariff barriers in a growing market.
“By eliminating tariffs on canola oil and meal, the TPP could really help the industry increase the value of our exports,” says Patti Miller, president of the Canola Council of Canada (CCC). “We believe that the TPP could increase canola exports by up to $780 million per year – representing about one million additional tonnes of canola oil and meal exports combined.”
Eliminating tariffs on canola oil and meal is important for the profitability of the canola processing sector and the entire value chain. The processing sector has invested over $1.5 billion in the last several years, leading to a doubling of the amount of canola processed in Canada, from 3.4 million tonnes in 2004 to more than seven million tonnes in 2014. New and expanded plants have meant more marketing options for Canadian producers, more jobs and economic growth across the country.
Currently, Canadian canola oil faces tariffs of approximately 15% when it is exported to Japan. As a result, most Canadian exports to Japan consist of canola seed that is processed in Japan. With a successful TPP that eliminates tariffs on oil, the industry estimates that more oil and meal will be shipped to Japan increasing the overall value of exports.
“Our industry plans to double the amount of canola we process in Canada over the next 10 years,” says Miller, referring to the industry’s strategic plan Keep it Coming. “In order to process 14 million tonnes of canola in Canada, we need to have stable and open trade – the TPP would be a significant enabler of investment and job creation.”
The TPP includes key canola markets of Japan, the U.S. and Mexico, as well as countries with significant opportunity for growth such as Vietnam and Chile. As a regional agreement, the TPP could not only eliminate tariffs but also establish disciplines around 21st century trading realities – such as rules around biotechnology, and sanitary and phytosanitary measures. It will set significant new trading standards.
“As an industry based on innovation, science-based rules in areas like biotechnology are critical,” says Miller. “More stable trade means less risk, which means we can capture more value from export markets for seed developers, producers, processors and exporters.”
Concluding the TPP is especially urgent as Canadian canola oil is now at a disadvantage compared to a major competitor in Canada’s original canola market – Japan. As Australia has concluded a free trade agreement with Japan, their oil faces lower tariffs – a difference that will grow each year. Japan is a consistent and high value market for canola, demanding $1.2 billion in Canadian canola in 2014 – exports that are at risk should Canadian exporters continue to be at a disadvantage.
The CCC is a full value chain organization representing canola growers, processors, life science companies and exporters. Keep it Coming 2025 is the strategic plan to ensure the canola industry’s continued growth, demand, stability and success – achieving 52 bushels per acre to meet global market demand of 26 million metric tonnes by the year 2025.
Media may contact:
Heidi Rubeniuk, Director, Communications