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EU bio diesel related demand for canola oil is almost certainly stronger than any food need could be expected to be(700 words).

Canola, or more accurately rapeseed as it then was, was first grown commercially on the Canadian Prairies in the early 1940's when there was war related demand for rape oil as a marine lubricant. Since then, plant breeders have been successful in developing it as a preferred vegetable oil for human consumption.

In 1979 the industry adopted the name canola for varieties which contained very low levels of erucic acid and glucosinolates, which detracted from the value of rapeseed oil and meal, respectively. Japan has always been an important market for Canadian canola and the discipline of serving this very quality conscious market was clearly important in maintaining the priority that the industry has always placed on health and quality issues.

Critical as the Japanese market has been to the Canadian canola industry in the past, the US market has gained rapidly in importance in recent years. Canola oil has had US Federal Drug Administration (FDA) GRAS (generally recognized as safe) status for many years but with the US having abundant sources of vegetable oils, most notably soya and corn oil, this was a challenging market for Canada.

But as interest in health issues has increased, canola has become well established as a premium vegetable oil in the US market. With annual exports of over half a million tonnes of oil and several hundred thousand tonnes of seed, the US is starting to rival Japan as Canada's most important export market. And canola consumption is now second only to soya oil in the US food market. Further growth seems assured as the FDA has recently approved qualified health claims on canola labelling.

It might be supposed that the sudden appearance of Western Europe on the tally sheet of destinations for Canadian canola oil exports might reflect the belated realization in Europe of the quality of canola and the desire to make up for lost opportunity. Western Europe imported almost 250,000 tonnes of canola oil during the crop year ending July, compared with less than 400 tonnes the previous crop year. Over the first four months of this crop year almost 100,000 tonnes have been imported, about three times last year's rate.

The reality is, of course, very different.

The European Union (EU) was very slow in establishing approval mechanisms for genetically modified organisms. By the time this was done, environmental groups had managed to create a public perception that they were potentially injurious to the environment and/or human health. While these perceptions have never been proven and the necessary EU scientific approvals have been granted for several GM foods to be imported, these approvals have not been accepted by several member states and in practical terms the embargo on GM foods remains.

This rather bizarre situation is probably more a consequence of the political tangle in which the European Union finds itself in than any premeditated attempt to impose a barrier to entry.

But, of course, canola oil is not being imported for human consumption even though it is almost certainly a better product than the indigenous OSR (oilseed rape) oil. It is being used to produce bio-diesel, mainly in Germany. While the EU some years ago implemented targets for renewable energy, Germany has been more diligent than other member states in meeting them. This is almost certainly the result of a governing alliance between the German Social Democratic Party and a junior Green Party that existed for several years following a 1998 election.

There is a double irony in all this. Having spent more than 50 years planting breeding for, and having been particularly successful in producing, a superior product, European demand reemerges for the original utility product. And the activities of one environmental interest, which were almost certainly aimed at private sector, capitalist, plant breeding endeavours which developed GM crops, were counteracted by other environmental interests who may have been aiming at private sector capitalist oil interests.

Bio diesel related demand in this bizarre situation is almost certainly stronger than any food need would be under normal circumstances.

David Walker

January 25, 2007