Statistics show that Pakistan has quickly become Canada’s fourth-largest canola buyer.
Statistics also show that Canadian canola has bitten deeply into the market share held by Australia and the European Union.
But those impressive numbers are not likely to create a lasting market, says a canola industry analyst.
“In a year like this when Europe has an excess of (canola) seed and Australia looks like it has a big crop, I wouldn’t be expecting much,” said Nolita Clyde of Ag Commodity Research.
“In the last couple of years we’ve had pretty good exports, but I wouldn’t expect that to continue.”
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In the 2002-03 crop year, Pakistan imported about 101,000 tonnes of Canadian canola and more than 380,000 in 2003-04.
But those imports were the result of short crops in the EU and Australia and excess Canadian supply, Clyde said.
Usually, Australia and the EU dominate the Pakistani import market because they are closer and can ship canola more cheaply. However, the short crops in those countries drove their prices up, and Canadian canola became relatively affordable for Pakistani crushers.
Canola Council of Canada representatives have just completed a trip to Pakistan to meet with crushers and processors.
The council sent processing experts to help Pakistani users improve their handling of the crop.
Clyde said Pakistan is a cost-conscious buyer, so in years when Canadian canola becomes more expensive, it will switch to other suppliers. The prime markets for Canadian canola will continue to be Japan, Mexico and the domestic crushing industry. Those markets want high quality Canadian canola and will make sure they get it every year. Markets like Pakistan are an afterthought.
“We are always going to fulfil the demand for Mexico and the demand for Japan and the demand to our crushers, but in years when you have more seed than that, you have to start looking at Pakistan and China,” said Clyde.
That doesn’t mean Pakistan is unimportant. Low-end markets such as China and Pakistan are needed to soak up excess Canadian production. The canola council has set the goal of annually producing at least a seven million tonne crop by 2007, which if achieved, will make secondary markets important.
The expansion of canola demand from Pakistan, whether it’s for Canadian, European or Australian canola, is a good thing. More demand means a bigger overall market underlying prices, no matter who buys Canadian canola.
According to the federal international trade department, expanded exports to Pakistan were encouraged by the Pakistani government’s decision to alleviate tariff and tax policies that discriminated against Canadian canola.
