Export concentration leaves Canada's canola sector vulnerable, research finds amid trade talks
Calgary, AB – January 19, 2026
As Canada and China announce a landmark tariff agreement, new research from The Simpson Centre shows that Canada’s canola sector remains structurally vulnerable due to heavy export concentration and limited diversification capacity.
Based on analysis of Canadian export data from 2010-2025 and examination of market concentration patterns across canola seed, oil, and meal, our research team examined how export dependence on China and the United States creates distinct vulnerabilities across different segments of the canola value chain. These two markets collectively absorb nearly 90% of Canadian canola exports, with limited capacity to reallocate shipments to alternative destinations when trade disruptions occur.
The research identified several critical challenges preventing export diversification:
Insufficient crushing infrastructure in alternative markets means many countries cannot process Canadian canola seed at scale.
EU restrictions on GMO products effectively close off a major consumer market for Canadian canola oil.
Domestic transportation bottlenecks limit Canada’s ability to handle increased volumes of processed oil even as crushing capacity expands.
Addressing these issues is essential for building resilience in Canada’s export-dependent agricultural sectors.
“While the prime minister’s latest deal with China, which may drop seed duties nearly 70% by March, is welcome news, the fact remains: even as one barrier comes down, the underlying structural vulnerabilities persist,” said Farzana Shirin, Agricultural and Applied Economist, The Simpson Centre.
The research comes at a pivotal time for Canada’s canola sector, as negotiators work to restore normal trade relations with China while uncertainty persists around U.S. biofuel policy changes that could exclude Canadian feedstocks from critical incentive programs. With Canadian producers managing simultaneous challenges in both major export markets, understanding the constraints preventing rapid diversification is essential for developing effective policy responses that strengthen industry resilience beyond short-term tariff relief.
This research exemplifies The Simpson Centre’s mandate to bridge cutting-edge analysis and practical policy outcomes. The findings contribute to informed decision-making at all levels of government and inform policy frameworks addressing export concentration risks, domestic processing investment, and trade diversification strategies for agricultural commodities.
Subject of Research
Not applicable
Article Title
The Case of Canadian Canola and the Downside Risks from Export Market Concentration
Article Publication Date
19-Jan-2026
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