Home PageNext Page


Australian Oilseeds Federation, P. Salisbury and T. Potter


  • Australian growers have various contract options, the most common of which is a fixed tonnage/firm price contract.
  • Canola in Australia is generally priced on an export parity basis against Canadian canola into the Japanese market.
  • Australia has a national oilseeds crushing capacity of about 1.2 million tonnes per annum, predominantly in the eastern states.
  • Canola is the major soft oil used in Australia, representing approximately 40% of the total soft oils.
  • In 1998-99 almost 1.3 million tonnes of canola seed were exported to China, European Union, Japan, Mexico and the Indian sub continent.


The marketing strategy of Australian canola growers involves making a decision on how much crop to sell forward, how much to sell at harvest and how much to hold. There are various contract options available to growers. The most common type of contract offered is the firm tonnage/firm price contract. This form of contract can be used as a forward pricing tool or as a prompt delivery arrangement. The seller agrees to sell a firm tonnage at a firm price and to deliver to a set receival point within a set delivery period.

The extenuating production difficulties brought about by the 1994 drought saw the introduction by most companies of a roll-over contract. This allowed growers who were caught short on production in a rising market to roll their production forward into the next season at a discount between the replacement cost and the contracted value of the crop.

Several variations to the firm tonnage contract are available including firm tonnage contract with no fixed price which allows a grower to deliver a tonnage of grain, and to price that grain within a given period of time after delivery. Most grain contracts are accepted verbally over the phone and the contract confirmation is later mailed or delivered for signing.

State Regulations

The market of oilseeds in both domestic and export markets is free from legislation in Victoria, South Australia and Queensland. In these states a number of crushers, traders and exporters compete for seed.

In New South Wales, the New South Wales Grains Board has sole export rights for oilseeds grown in New South Wales and can, at any time, totally acquire the New South Wales crop. This acquisition power has not been used, although the Board does exert its sole export rights. The marketing of oilseeds is by legislation vested within the New South Wales Grains Board. Oilseed buyers must be licensed by the Board to purchase oilseeds for the domestic market only. These marketing arrangements are currently the subject of a review under the National Competition Policy Legislation.

In Western Australia, marketing for canola for export is vested in the Grain Pool of Western Australia (GPWA), with the domestic market having been deregulated in 1996. This means that the GPWA is the only body able to export canola seed from Western Australia, although value added products are free to be exported.

Most oilseeds traded in Australia are done so under the quality standards (Table 9) set by the Australian Oilseeds Federation (AOF).

Table 9. Quality trading standards for canola

Trading standard reference


Quality trading standard

Price adjustments and comments

CSO – 1

Canola (Brassica napus or Brassica rapa)

Glucosinolates as specified: max 30
micromoles per g. of oil-free air-dry solids

Erucic acid in oil max 2%

oil - 40%

1.5% premium or deduction for each 1% above or below 40%

Impurity - max 3%
(Rejectable over)

Gross weight will be adjusted by 1% for each 1% up to 3% max.
2 for 1 penalty over 4%

Moisture - max 8%
(Rejectable over)

If accepted over max, 2% deduction for each 1% over the allowed level

Broken seed – max 7%
(Rejectable over)

If accepted over max, 0.5% deduction for each 1% over the allowed level

Damaged seed - 3%
Sprouted - max 5%
Green – nil (2%)
Total – max 10%
(Rejectable over)

0.5% deduction for each 1% over the allowed level - except for green seeds which shall incur a penalty of 1% for each 1% over zero (nil) to a maximum of 2% over which green seed level, the seed is rejectable


Canola in Australia is generally priced on an export parity basis against Canadian canola into the Japanese market. Price fluctuations in recent years are illustrated in Figure 16. Changes in world export prices are linked to the Winnipeg canola market and Chicago soybean market.

Figure 16. Price fluctuations for canola 1995-98 (based on Cargill prices delivered to Melbourne)

Crushing Capacity

Australia has a national oilseeds crushing capacity of about 1.2 million tonnes per annum, predominantly in the eastern states (Figure 17). The crushing capacity has expanded significantly during the 1990s. Cargill Australia owns about 80% of the capacity, with major plants in Brisbane, Newcastle and Melbourne crushing canola, sunflower and soybean, and plants at Narrabri and Moree crushing cotton seed. Other plants of significant size are located at Numurkah in north-eastern Victoria and Maitland, near Newcastle in New South Wales. A large new plant is under construction at Albany, on the southern coast of Western Australia.




Capacity (t)















WC Caines












Australian Country Canola




Cootamundra Oilseeds
















Davison Oils




Kojinup Oils


Figure 17. Distribution and capacity of Australian oilseed crushing plants

Domestic Use Of Oils And Meals

Currently, total Australian consumption of edible oils and fats for food use is just under 500,000 tonnes per annum. Consumption of oil in Australia has seen a trend towards healthier products, with the demand for canola and other monounsaturated oils growing significantly. Soft (or seed) oils are increasing their share of the total fats and oils market and now account for 50% of total oil usage. Canola is the major soft oil, representing approximately 40% of the total soft oils. Approximately 250,000 tonnes of canola seed are used in the domestic market.

Canola meal is regarded as good quality protein meal suitable for most livestock diets as canola quality varieties have eliminated the previous problems of erucic acid and glucosinolates. The livestock sector and usage of feedstuffs has grown rapidly, bringing with it an increased demand for oilseed meals. Currently, a substantial share of this is met by imported soymeal. As production of canola and cottonseed has expanded, the use of domestically produced meals has also increased. Canola meal use of about 135,500 tonnes currently represents around one quarter of the total meal market in Australia. It is mainly used in pig and poultry rations.


The Australian industry began its export focus in 1992. There are significant exports from each of the four producing states today, with the vast majority of the Western Australian and South Australian crops exported, due to distance from major crushing plants. In 1998-99 almost 1.3 million tonnes were exported to China (375,000t), European Union (300,000t), Japan (250,000t), Mexico 150,000t) and the Indian sub continent (200,000t). A limited amount of value-added production (oil, margarine etc.) is also exported.

Future Directions

Enhanced production of specialty quality oilseed types in Australia is expected to have a significant impact on traditional marketing practices. Likely changes include the replacement of imported oils and seed with local production, more use of contract production and a trend toward export of value-added products, rather than seed.

Previous PageTop Of PageNext Page