Biofuels: Fuelling Demand for Your Canola

Diversifying markets and creating new opportunities for Canadian canola is critical to help drive added value for canola farmers, especially during a time of increasing trade volatility. And as farmers head into the 2026 growing season, they’ll be paying close attention to trade and market access to ensure they have reliable markets for their crop.

One market with significant value potential, but not always top of mind, is biofuels.

Over the past few years, Canada’s biofuel industry has been driving demand for higher volumes of canola oil, expanding the domestic market for farmers. It is anticipated that by the end of 2026, Canada could have the capacity to process 15 million metric tonnes annually through the expansion of canola processing on the prairies.

In fact, the recently constructed facility in Strathcona, Alberta, can drive demand for up to 2.5 million metric tonnes of canola seed—a volume rivalling each of Canada's top seed export markets. 

Ultimately, what does that mean for farmers? A growing, diversified market and more value for your crop.

Canadian Canola Growers Association (CCGA) recently completed a study showing that the current domestic biofuel policy is estimated to add nearly $600 million in value to farmgate prices in the 2025/2026 crop year, which breaks down to $0.62 per bushel of canola. 

In another study commissioned by CCGA in 2023, the data shows that crusher basis levels are consistently at a premium over elevator bids. In other words, crushers are drawing in more farmer deliveries due to higher demand, often resulting in better prices for farmers. 

The report further states, “It is reasonable to anticipate the significant expansion of crush capacity in Western Canada will have a positive impact on basis levels for farmers, particularly in regions where new plants get built that don’t already have a significant crush presence, although there are various factors that will influence this.”

“It is estimated that one in three acres of Canadian-grown canola ends up in a biofuels market in either Canada, the U.S., or the EU,” says Brittany Wood, CCGA’s Senior Manager, Trade and Transportation Policy. “We're working to ensure domestic biofuel policy supports the use of local feedstocks. This will help drive canola market diversification."

Markets for Canada's Canola Oil

Top Five Canadian Canola Oil Destinations in 2025

Canadian canola oil is consumed in two major markets: the U.S. and Canada. As you can see, Canada’s canola oil consumption is significant. In 2025, domestic consumption rose nearly 60% compared to 2021 due to domestic biofuel production. 

“At the end of the day, farmers need reliable markets,” says Andre Harpe, Chair of CCGA and Alberta Canola. “Export markets can change quickly. The biofuels market helps strengthen our position and manage risk, creating more opportunities for canola that’s grown in Canada to be used in Canada."

Advocating for Biofuel Policy that Works for Farmers

Although the current biofuels market is a good news story for Canadian agriculture, more can be done within the Clean Fuels Regulations amendments to further support farmers and industry. 

In a joint submission to the federal government, CCGA, Canola Council of Canada (CCC), and the Canadian Oilseed Processors Association (COPA) advocated for three areas of improvement to federal biofuel policy:

1. Only allow fuels made from domestic or North American feedstocks to be eligible for new programs that support domestic biofuel production within these amendments.
2. Reduce the risk of fuels made from potentially fraudulent foreign used cooking oil (UCO) from entering the Canadian clean fuels market.
3. Provide a strong market signal that expands domestic biofuel production volumes, resulting in increased demand for local feedstock.

CCGA, along with CCC, COPA, and the provincial canola commissions, will continue to advocate for policy changes to the Clean Fuel Regulations that will benefit canola farmers and the industry. 

Industry Biofuels Summit