Why it matters: The American biofuel sector could prove a huge market for Canadian canola, however the loss of a tax incentive has limited demand.

The tax credit, established by former President Joe Biden’s Inflation Reduction Act but not finalized during his tenure, could prove lucrative for oil and biofuel producers who can demonstrate lower carbon intensity of their fuels.

The House tax and spending bill passed in May also extends the tax credit, known as 45z, through 2031, but bans most foreign feedstocks from being eligible for credits.

Both the House and Senate bills would exclude the emissions from tilling land to grow feedstocks like corn and soy from calculation of a biofuel’s credit value.

That change would make it easier for corn-based ethanol to qualify for the credits.

As of January 1, Canadian canola oil no longer qualifies for the U.S. 45Z biofuel production tax credit. This has severely limited demand for the Canadian feedstock.

The amount of canola oil used for biofuel production in January 2025 was 193 million pounds, down from 524 million pounds in December, U.S. Energy Information Administration stats show. February and March saw 92 million pounds and 234 million pounds used, respectively. The same months last year saw 296 million pounds and 326 million pounds used.

—With files from Glacier FarmMedia

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The coalition also recommended total federal biofuel blending mandates for 2026 at 25 billion gallons, the sources said. The coalition, led by the American Petroleum Institute, a top U.S. oil trade group, presented the figures to the EPA in a meeting last week.

Why it matters: The trajectory of the U.S. biofuel market has implication for Canadian oilseed producers

While the recommendations were for one year of mandates, the EPA is expected to release a proposal that covers both 2026 and 2027, Reuters previously reported.

API declined to comment on specific numbers, while the EPA did not respond to a request for comment.

The coalition’s suggestion of 5.25 billion gallons for biomass-based diesel mandates was slightly lower than the range of 5.5 billion to 5.75 billion gallons considered ahead of the meeting and previously reported by Reuters.

Big Oil and the Farm Belt’s biofuel makers are traditional competitors in the multibillion-dollar U.S. gasoline market, but have come together to form a consensus at the request of the White House in recent months in hopes of avoiding the type of clashes that defined the first Trump administration.

The new 5.25 billion-gallon figure from the API-led coalition is in line with a number recommended to the EPA by Clean Fuels Alliance America – a U.S. biodiesel trade group – along with farm and feedstock groups.

In a mid-March letter to EPA Administrator Lee Zeldin, that coalition said EPA’s previous mandates failed to support the growth of the advanced biofuel industry and undercut the market.

The EPA set biomass-based diesel mandates for the 2025 compliance year at 3.35 billion gallons.

Under the U.S. Renewable Fuel Standard, oil refiners must blend billions of gallons of biofuels into the nation’s fuel mix, or buy tradable credits from those that do.

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Joe Kerns, of Ever.Ag, told the Ontario Swine Conference that the Trump era will be painful, but will have an end.

Why it matters: Chaos in the agriculture marketplace has made decision making challenging for farmers.

“It’s tough not to start to get a little downtrodden, a little confused and confusion is going to have to be part of your game for as far as the eye can see,” Kerns said. However, he encouraged farmers to “stay out of the ditches” and get through the next four years.

“I can’t emphasize this enough. Agriculture is not the tip of the spear,” he said.

Kerns pointed to the fact that there are indications that Americans are already souring on Trump, including long-time popular Republican Chuck Grassley being run out of some of his annual listening tour sessions and large crowds showing up for rallies Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez who he called “two of the most radical left folks we’ve got in Congress. “

“The worm is already turning guys,” he said, adding that Trump didn’t get the mandate he thinks he did, the Democrats just ran a poor candidate against him.

That said, there’s going to be a period of chaos, with tariffs used as a bargaining tool. Tariffs are not bans on products, just a dam put into a river of the flow of goods, he says. The products will continue to flow, but the distribution will be less efficient.

There will be repercussions of the Trump government’s policies for agriculture, including the potential of a large fee proposed on Chinese original and built ships docking at American ports, which could significantly reduce United States crop exports.

However, Kerns said that biofuels, which “has made us really really wealthy” in agriculture, will be gradually marched back and future uses in biodiesel and sustainable airplane fuel are much less likely to happen.

Ethanol made some sense, he said, as it can create about as much power as fossil fuel gasoline per unit. Biodiesel and sustainable airplane fuel don’t hold nearly as much potential to replace fossil fuels one to one.

The 911 terrorist attacks on the U.S. drove the introduction of biofuels, he said, as a moment in time when Americans felt threatened and wanted to reduce reliance on Middle East fuels.

Now we’re in another inflection period in history and there’s little impetus to continue the focus on biofuels.

President Joe Biden didn’t implement the 45Z Clean Fuel Production Credit before the end of his term, leaving it to President Trump, who Kerns said is unlikely to move forward with it.

Now, close to half of the U.S. corn crop goes to biofuels. Biodiesel would have provided an outlet for soybeans. Canadian companies have added refining capacity for canola with an eye on the U.S. market, but recently canola was removed from the acceptable biofuel sources.

Kerns predicted that agriculture revenues are about to plunge in the grains sector.

Agriculture’s wealth has been driven by biofuels and that’s affected the appreciation of land values in North America, he said. In Iowa, land values have increased from about $2,000 per acre 20 years ago to $16,000 per acre. Eighty-four per cent of the 30 million farmland acres in Iowa are debt free, mostly because 60 per cent of that land is owned by people older than 65 and 35 per cent is owned by people older than 75. About half of it is owned by women.

That means there’s about $302 billion worth of land wealth that hasn’t been taxed.

“We’re wealthy, but we’re in trouble,” Kerns said, as the strong crop price of the early 2020s dropped making the past couple of years challenging. He expects those growing soybeans in 2025 will lose about $2 per bushel and corn might break even.

The stale U.S. agriculture economy will be challenged going forward, as Brazil continues to add about two million acres per year in crop area and has enough land to continue that pace for 25 more years. Northern Brazil can grow two crops per year.

Some optimism for meat protein

Despite the negative sentiment around crops, Kerns is optimistic for meat, especially for the pork producer audience he spoke to in London, Ont.

World meat protein demand continues to grow and long-term, he said that should be good for Canadian pork producers who compete in specialty markets and do it well.

The challenge for farmers is that costs to build new facilities have increased and mean very little return for the producer, he said.

As a country with enough energy and good trading relationships elsewhere, Canadian pork producers are well situated, said Kerns. The increasing number of slaughter pigs going into the U.S. from Canada is a blip in the total U.S. market – four per cent of the slaughter – he said, but it will be hit by tariffs. He pointed to the large increase in Canadian pork that went to Mexico during the last round of Trump tariffs. He also said the European Union’s growth is done and it is rapidly decreasing as an exporter of pork, which can creates an opportunity for Canadian pork. Lower crop prices, which means lower feed prices are expected for at least four years, he said.

“Canada is not in bad shape in a world market as we roll here,” Kerns said. “The U.S. might be doing you a favour by accident.”

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Why it matters: The rise and fall of the biofuel sector has major implications for Canadian canola, already beleaguered by tariffs and trade tensions

The splintering relationship between the North American neighbors could upend a multi-year biofuel industry boom that has provided farmers growing demand for their crops as fuel makers have soaked up record volumes of vegetable oils.

Trump’s wavering approach to tariffs is rippling down to processors on both sides of the border, who crush oilseeds into meal and oil, and to farmers, who are finalizing their spring planting plans.

Processing capacity threatened

While new U.S. tariffs are threatening to make imported feedstocks unaffordable, uncertainty over U.S. biofuel subsidy programs, including a Biden-era tax credit that determines how much producers pay for the oils and fats they make into biofuel, is further hobbling the industry.

The contraction of the green fuels sector could also hurt rural communities and efforts to decarbonize the economy, experts said.

“If this uncertainty drags on, which is what we expect, the biodiesel and renewable diesel industry will contract but not disappear. It will shrink, painfully at times,” said Paul Niznik, director of energy at Capstone LLC in Houston.

Citing uncertainty and rising costs, Federated Co-operatives Limited has shelved a renewable diesel and canola processing plant project in Saskatchewan, one of five projects slated to expand Canada’s canola crush by 60 per cent over five years.

In the U.S., a biodiesel plant in Iowa was idled in late December and others have slowed production, resulting in the lowest output of the fuel in five years. In January, renewable diesel production fell 17 per cent from the 2024 monthly average, according to Environmental Protection Agency data.

Glut of renewable fuel

U.S. capacity to produce biodiesel and renewable diesel, two chemically unique fuels made from animal fats and vegetable oils like canola and soy, has grown around 60 per cent since 2022, government data shows, spurred by federal policy to lower greenhouse gas emissions and reduce reliance on foreign oil. The United States is the world’s largest producer and consumer of biofuels.

U.S. soybean crush capacity increased 10 per cent in that time as grain giants like Archer-Daniels-Midland and Bunge raced to meet growing demand.

Record oilseed processing margins helped the two companies, which operate half of Canada’s canola plants and represent nearly 40 per cent of U.S. soy crush capacity, turn in their best ever profits in 2022 and 2023.

Now, there is a glut of diesel made from non-fossil sources and both ADM and Bunge have warned that 2025 earnings could sink to the lowest in six years due to the uncertainty.

U.S. turmoil

Canada dodged a February tariffs deadline only to see Trump impose 25 per cent duties on imports on March 4. Two days later, levies on some products were paused until April 2.

“Just how do you set a price when you don’t know if you’re going to be wrong a day later, a month later, six months later?” said Capstone’s Niznik.

Meanwhile, Trump’s administration has yet to provide clarity on clean fuel tax credits.

Former U.S. President Joe Biden transformed U.S. biofuels policy in his signature Inflation Reduction Act, moving from a flat $1 per gallon blenders credit for biomass-based diesel to a variable producers credit based on the carbon intensity of feedstocks.

Biden, however, left office without finalizing guidance about how the policy, known as 45Z, would be implemented. Now, it is unclear whether those rules will take effect at all, industry sources said.

That uncertainty is the main reason Western Dubuque Biodiesel, a million-gallon-per-year biodiesel plant in Farley, Iowa, has been idled since late December, its lengthiest downtime since 2010, according to General Manager Tom Brooks.

“If I were to run today, I lose 46 cents a gallon under 45Z. Under that previous credit, I would have made 15 to 20 cents a gallon,” Brooks said.

The industry is also urging the Trump administration to increase biofuel volumes under the Renewable Fuel Standard, another crucial source of government support for producers.

Under existing RFS volume mandates set to expire this year, the amount of biodiesel and renewable diesel production backed by the RFS is only 3.35 billion gallons annually, well below the industry’s capacity of around 5 billion.

The EPA, which administers the RFS, did not respond to a request for comment.

Risks on the farm

Canada shipped $6.02 billion in canola and canola products to the U.S. in 2023, including $4.37 billion in oil. Those products, and any Canadian-produced biofuel, face 25 per cent tariffs starting April 2.

“Given the risk, prices are going to drop. Shipments are going to slow. Long-term contracts are going to get very, very tenuous,” said Rick White, president and CEO of the Canadian Canola Growers Association.

Analysts say the uncertain future has already depressed canola prices by up to $100 per metric ton.

U.S. soybean growers are also expected to slash plantings this spring amid a supply glut and tepid demand, with crush margins down almost 60 per cent from a year ago.

Kody Blois, Canada’s new agriculture minister, said on Monday that he was working with Prime Minister Mark Carney to create more demand in Canada.

Meanwhile, Alberta farmer Andre Harpe still has canola from the 2024 harvest.

“Right now we don’t know if we should be selling or holding or dumping,” Harpe said.

Farmers can alter what they plant this spring, but for a giant crushing plant built to feed what had been a growing market for vegetable oils, adaptation is no easy thing.

“Not knowing what your biggest market is going to do tomorrow is frustrating, to say the least,” Canadian Oilseed Processors Association Executive Director Chris Vervaet said.

—Additional reporting by Stephanie Kelly and Jarrett Renshaw

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“Canada’s ethanol industry is at a critical juncture, and we must ensure that policies reflect the realities and needs of our domestic producers and agricultural partners,” Kevin Norton, CEO of Alco Energy Canada said in the release.

“The Farms and Fuels Alliance will provide a unified voice to advocate for solutions that strengthen our competitiveness, drive investment, and create long-term economic benefits for rural communities.”
FFA’s core mission is to modernize renewable fuels policies, programs and carbon accounting to recognize Canadian innovation and eliminate what it calls “potentially exploitable loopholes” available to non-domestic feedstock and biofuel producers.
The coalition said it will advocate for balanced policies that unleash Canada’s full potential in the ethanol sector while supporting domestic agriculture producers.

Speaking to Farmtario, GFO’s Director of Government Relations Debra Conlon said “What we want to do is make sure that we have a strong policy environment that helps us build an ethanol business, because we’re pretty lucky that we have what we have right now.”

She noted that with a new administration in the United States, an upcoming Canadian federal election as well as a provincial election, the coalition wants to be prepared for any policy changes that change in leadership may bring.

“The future of biofuel policy in the United States is definitely something that would impact Canadian biofuel production, and I don’t think that anyone knows where that’s going to land at this point,” she said.  “Having a good voice together, formalized, helps us look at all of those changes and what they could mean and then be prepared to have a conversation and a singular voice on each one of those issues when we talk to the provincial and federal governments.”

Andrea Kent, Greenfield Global vice president of Industry and Government Affairs, said in the release
“Canada has spent decades building a world-class domestic ethanol industry that delivers strong economic and environmental advantages, but we must remain proactive and focused on growth. Now is the time to safeguard our past achievements and position ourselves for the next chapter – one that ensures policies reflect the full economic potential of homegrown biofuels and stand up in a competitive global landscape.”

With Alco originating in Belgium and Greenfield having operations in Ireland, Conlon said the two organizations would offer a strong international perspective.

“You’ve got three groups with a lot of experience domestically, provincially, Canada-wide, (in) the U.S. and internationally.

“Our focus is on strengthening what we’ve got and building from there to take advantage of the additional corn that we’re producing.”

Jeff Harrison, GFO chair, said he’s excited to collaborate with two of Canada’s top ethanol producers and, through FFA, “ensure farmers’ voices are heard in policy discussions.”

“Canada’s farmers and ethanol producers need policies that help them remain competitive and promote strength in our domestic value chains,” he said.

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The move is unusual because the oil and biofuels industries are frequently at odds with each other on issues related to the Renewable Fuel Standard (RFS) program, the around two-decade-old law that requires refiners to blend billions of gallons of biofuels into fuels like gasoline, or buy credits from those that do.

The oil industry has historically seen biofuels, like corn-based ethanol, as unwanted competition to petroleum-based fuels. Both industries’ interests, however, align in opposition to electric vehicles, which pose a threat to any form of liquid fuel.

President Donald Trump last month revoked his predecessor Joe Biden’s executive order to make half of all new vehicles sold in 2030 electric in an effort to slash greenhouse gas emissions.

“While our organizations have not always agreed on every detail, we have joined together in recognition of the critical role liquid fuels serve in the American economy, to advance liquid fuels, and ensure consumers have a choice of how they fuel their vehicles,” the groups said in a letter to Lee Zeldin, the new administrator for the Environmental Protection Agency, dated Wednesday.

“We believe strong, steady volumes for conventional biofuel targets, biomass-based diesel, and advanced fuels would more accurately reflect the availability and ongoing investments in feedstocks and production capacity,” the letter added.

One of the groups clarified to Reuters that they want an increase in volumes.

The groups that signed the letter included the American Petroleum Institute, one of the nation’s top oil trade organizations, and the Renewable Fuels Association and Growth Energy.

The American Fuel and Petrochemical Manufacturers, another oil group that typically weighs in on RFS-related issues, was absent from the letter.

The groups also urged the EPA to release multi-year standards for the RFS to provide more market certainty for both refiners and renewable fuel producers.

Renewable volume obligations, commonly known as RVOs, were proposed and finalized annually until the compliance year 2023, when standards were set through 2025. The administration soon will likely need to begin considerations for 2026 volumes.

The EPA finalized biofuel blending volumes at 20.94 billion gallons in 2023, 21.54 billion gallons in 2024 and 22.33 billion gallons in 2025.

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The U.S. Treasury Department issued the guidance, saying it provides new details on how to ensure fuels meet certain emissions-reductions criteria to access the subsidy, and adding that a crucial climate model upon which the program relies will be available in the coming days.

“This guidance will help put America on the cutting-edge of future innovation in aviation and renewable fuel while also lowering transportation costs for consumers,” said Deputy Secretary of the Treasury Wally Adeyemo.

“Decarbonizing transportation and lowering costs is a win-win for America.”

Biofuels groups were less enthusiastic, saying the guidance left several final decisions to President-elect Donald Trump’s administration.

“This long-overdue guidance is far from complete – it still lacks the critical details that are needed to help ensure that American biofuel producers and their farm partners can lead the world in clean fuel production,” said Growth Energy CEO Emily Skor.

Reuters reported earlier on Friday that the administration intends to release the program’s climate model next week, but that it will not include adjustments for so-called climate smart agriculture practices – like no-till farming – which the ethanol industry hoped it could use to meet lifecycle emissions requirements.

“While we appreciate the work of (U.S. Agriculture) Secretary (Tom) Vilsack to champion our issues on behalf of rural America, today’s announcement falls short of providing the information that our industry and its farm partners need, including a model for an expanded number of eligible decarbonization technologies and guidance on climate smart agriculture (CSA) practices,” Skor said.

“We look forward to working with the next Administration to fill in the gaps left by today’s announcement,” she said.

Trump has vowed to repeal Biden’s 2022 Inflation Reduction Act, which launched the program, to pay for the extension of his tax cuts, but doing so would require support from Congress.

Biden’s administration set a target to generate 3 billion gallons of sustainable aviation fuels by 2030.

Air travel contributes around 2.5 per cent of global greenhouse gas emissions, making it a big target in the fight against climate change.

—Reporting by Stephanie Kelly in New York

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In an article posted to FCC’s website Wednesday, senior economists Justin Shepherd and Graeme Crosbie, questioned the extent to which U.S. consumers will demand “made in the USA” beef and pork once rules when voluntary country of origin labeling (vCOOL) rules kick on January 1, 2026.

This spring, the USDA ruled that meat processors claiming their product as a “Product of USA” must only use animals born and raised in the U.S. For example, under vCOOL, the four million piglets Canada sends to the U.S. annually would not qualify for a “Product of USA” label.

Canadian hog producers, who already face reduced domestic processing capacity, may face greater risks under this policy, especially with insiders reporting that some U.S. processors intend to enforce vCOOL rules as early as mid-2025, FCC said. Labeling requirements may also reroute trade flows and add costs.

Biofuel tax credit

U.S. tax credits for biofuel production are changing January 25, 2025. This may challenge Canada’s biodiesel industry and domestic canola and soy oil production just as new Canadian crush capacity is coming online, FCC said.

Under current U.S. policy, blenders mixing biodiesel (or renewable diesel) with conventional diesel are eligible for a dollar-per-gallon tax credit. Other policies add further incentives. Historically, almost all Canadian-produced biodiesel has been exported to the U.S. to qualify for these credits.

Under new policy, credit will shift from blenders to producers. This means only U.S.-produced biodiesel will be eligible, although inputs can still come from abroad. Unless a similar credit is introduced in Canada, experts suggest the construction of biofuel plants in Canada will face an upward battle.

The U.S. farm bill

The U.S. is overdue for a new farm bill which sets parameters like commodity insurance programs and price supports for U.S. producers. These bills usually expire after five years but the current bill was given a one-year extension in 2023 that has since run out.

Canadian producers may want to monitor the farm bill for potential impacts, Crosbie and Shepherd said.

“Changes in support prices or insurance programs could alter crop decisions of U.S. producers,” they wrote.

“For instance, better insurance for corn might lead to more corn planting in the U.S., pushing prices down. Ultimately, choices made on U.S. farms significantly affect futures markets and, consequently, Canadian prices for both grain and livestock.”

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Bioindustrial Innovation Canada (BIC) will receive up to $6,592,913 from the AgriScience Program – Clusters Component under the Sustainable Canadian Agricultural Partnership to lead a Bioproducts Cluster. Research activities by the cluster aim to support the transition to a renewables-based economy and reduce greenhouse gas emissions (GHGs), Agriculture and Agri-food Canada (AAFC) said in a release.

Why it matters: Emerging bio-industrial technologies could represent a new revenue stream for farmers.

AAFC said this will be achieved by improving biomass production, developing new bioproducts from Canadian crops, and turning by-products into value-added bioproducts.

“Integrating agricultural feedstocks and downstream bioproducts into a variety of industry value chains will not only increase Canada’s agriculture opportunity but support industrial decarbonization,” said Meaghan Seagrave, BIC executive director, in the release.

Seagrave explained that agriculture represents a significant opportunity to develop and commercialize biochemicals, biomaterials, biofuels, energy, and novel agricultural tools and practices to provide sustainable feedstock and co-products for these applications.

“These technologies provide added and alternative value opportunities to the sector, complement existing traditional value chains and support industrial decarbonization, lower the overall carbon intensity of all sectors involved,” Seagrave explained.

BIC previously received $5.5 million in funding through the Growing Forward 2 framework and another $11.2 million through the Canadian Agricultural Partnership framework.

Previously funded projects included:

• Developing commercially viable biodiesel and bioethanol plants that convert sugar beets into biobutanol through an advanced continuous fermentation process.
• Converting bio-based feedstock into high-performing, cost-competitive and sustainable plastic.
• Microbial bioproducts as a fungicide adjuvant against various crop pathogens, eventually reaching a commercial scale.

“This funding underscores our commitment to advancing technologies that will reduce greenhouse gas emissions and increase the value of Canadian agricultural products,” said Peter Fragiskatos, London North Centre MP, during the Aug. 19 funding announcement in Sarnia. “Together, we are strengthening our agricultural sector and building a greener future.”

The Bioproducts Cluster, led by BIC, is providing farmers with a new profit stream for by-products, which would otherwise go to waste, said Lawerence MacAulay, Minister of Agriculture and Agri-Food, in a statement.

“It’s a win for farmers and a step toward a more sustainable future for all Canadians,” said MacAulay.

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Governments are making legislative overtures to boost production of biofuels. In Canada, that includes the Canadian Clean Fuels Regulation, which lays out rules for fuel production and aims to encourage development of cleaner fuels and limit greenhouse gas emissions.

Why it matters: Global market pressures can have a trickle-down effect that changes local input prices.

Governments around the world are enacting similar mandates and the livestock feed sector expects spillover impacts from those shifts.

According to Aaron Hanson, a senior economist with GlobalData’s agriculture division (formerly LMC International), 2010 global production of biofuels was 20 million tonnes a year. That’s expected to explode with the advent of new fuel mandates.

“If those mandates are met, we have something like 110 million tonnes of biofuels that we’re looking at supplying,” he told the Animal Nutrition Conference of Canada in Winnipeg May 15.

That will be a dramatic shift for a key indicator of feed prices. Hanson said vegetable oils and meat are two main factors that underpin that market.

Oilseed sectors like canola have been effusive about their expectations for biofuels. In February, Chris Vervaet, executive director of the Canadian Oilseed Processors Association, suggested that canola crush capacity could grow “from 11.3 million metric tonnes today to 18 million metric tonnes in three or four years.”

While canola oil is gearing up for an expanded market, canola meal is pulled into the feed stream, in particular for dairy, pigs and poultry. Meat prices have also been rising.

The first biofuel wave

Hanson divides the biofuel boom into two waves. The first happened in the 2000s and was focused on production of ethanol and biodiesel using food-based crops like corn.

“In the 2000s, when the first biofuels wave began, there was an extra element of stress placed on vegetable oil demand,” he said, and palm oil stepped in to fill the market niche.

“Palm is far and away the best and most efficient source in terms of area in use for providing vegetable oils,” said Hanson.

Soybeans are at the opposite end of the spectrum because more of the seed is meal.

Pressure on oils has played out in crop production across North America.

“The supply of grain crops has been growing very slowly over the past couple of decades, with the exception of corn because of its use for animal feed,” he said.

“Whereas the growth of oilseeds is much faster as people start to consume more vegetable oils. Palm grew faster than everything else because it was trying to satisfy both vegetable oil demand for food and biofuel demand.”

But the massive increase in acreage dedicated to palm cultivation was criticized for its environmental impacts in Indonesia and Malaysia. Growth in acres of palm production plummeted as a result.

“You can say that the success of palm has been its own downfall,” said Hanson. “It was too rapid, and there were too few constraints, so there was a backlash.”

The second wave

The mandates behind the current wave aim to avoid the negative food-versus-fuel debates and unpopularity that haunted the palm oil boom.

They employ a new series of feedstocks for biofuel: waste oils like tallow and used cooking oils, as well as synthetic fuels. But Hanson said it’s unlikely these feedstocks will be able to meet demand, at least in the short-term.

“For the rest of this decade, we expect it to lean very heavily on food crops.”

That raises the question of where the oil will come from. Because of its efficiency as an oil-producing plant, palm is the obvious choice, but the backlash makes it untenable. It would also take years to effectively ramp up production.

“A palm planted today won’t be producing at peak yield for 10 years,” Hanson said. “So, in the near term, palm oil yields are not going to save the world from this big oil deficit.”

Bridging the production gap will fall to oilseed crops, likely canola and sunflower seeds.

“But agronomic constraints mean that the resulting growth will not be enough to plug the gap, and that means vegetable oil demand starts to fall back on soybeans.”

That could flood the feed market with meal. Soybeans are less than 20 per cent oil. They’re mostly meal, and the production of enough soybeans to meet oil requirements could leave a glut of soy meal on the table, let alone any meal surplus from increased canola production.

“Very broadly, that means you will have protein meal supply outstripping demand at quite a significant rate.”

Hanson doesn’t think that inbalance will get as bad as implied by the mandates because it’s unlikely all of those mandates will be met, he said. Still, it will be enough to exert influence on feed markets.

“You’re going to have protein meal growing faster than demand, whether it’s quite fast or very fast … And feed operations are likely to benefit from lower meal prices in the next five to 10 years or so.”

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