A major expansion of Australia's canola crushing industry could create a significant new source of high-quality livestock feed for New Zealand's dairy and beef sectors, according to new research from Rabobank.
The report, Feeding the Future: The coproduct that determines how far Australia can scale crushing finds New Zealand sits at the centre of the commercial equation underpinning future growth in Australian canola processing, due to the country's large dairy sector, increasing reliance on imported feed ingredients and established feed-import infrastructure.
Authored by Rabobank senior grains and oilseeds analyst Vítor Pistóia, the report argues that while growing demand for vegetable oil and biofuels is driving interest in expanding canola crushing capacity, the industry's long-term viability depends equally on finding profitable markets for canola meal, the protein-rich feed ingredient produced during processing.
"New Zealand is a key addressable market for Australian canola meal," Mr Pistóia said.
Vítor Pistóia, Rabobank Senior Analyst - Grains & Oilseeds
"The country's large dairy herd, structural dependence on imported feed ingredients and increasing use of more intensive farming systems make it one of the most attractive markets for additional canola meal production."
The report notes Australia (1 million tonnes) and New Zealand (1.3 million tonnes) together already import around 2.3 million tonnes of canola meal equivalent annually primarily through purchases of soybean meal and palm kernel expeller (PKE). Converted back into canola seed, that represents demand equivalent to approximately 4.1 million tonnes of canola crush.
According to the report, replacing a portion of these imported feed products with Australian-produced canola meal could support as much as two million tonnes of additional Australian canola crushing capacity, more than double Australia's current installed crushing capacity of about 1.6 million tonnes. For New Zealand livestock producers, this could create greater access to a regionally-sourced protein feed ingredient while reducing exposure to global feed supply disruptions and international freight costs.
"The opportunity isn't simply about building more crushing plants in Australia," Mr Pistóia said.
"It's about creating a more integrated trans-Tasman supply chain that connects Australian canola production with demand from animal protein sectors in both Australia and New Zealand."
The report identifies New Zealand's dairy industry as one of the strongest long-term demand outlets for canola meal. New Zealand's dairy herd currently numbers around 4.7 million cows and the sector accounted for approximately 75 per cent of the country's feed imports, consuming most of the 2.6 million tonnes of PKE and 0.6 million tonnes of distillers' dried grains imported during the 2025 calendar year.
"New Zealand's dairy industry already has significant experience incorporating imported feed ingredients into production systems," Mr Pistóia said.
"As barn-feeding systems become more common and production systems become increasingly intensive, demand for reliable sources of high-quality protein feed is likely to grow."
The report finds canola meal compares favourably with a number of imported feed alternatives when assessed on a nutrient-value basis, particularly in dairy and beef production systems. While soybean meal remains the benchmark protein feed globally, canola meal offers strong protein value and nutritional characteristics that make it well suited to ruminant diets.
Compared with PKE, canola meal provides higher nutritional density and more consistent feed value across key nutritional measures, positioning it as a higher-quality protein source for livestock producers.
According to the report, the biggest challenge for Australian crushers will be ensuring canola meal remains competitive with imported alternatives on a delivered nutrient-value basis.
"The commercial question is not whether canola meal can move across the Tasman, but whether it can do so profitably," Mr Pistóia said.
"New Zealand already has sophisticated feed-import channels handling large volumes of PKE, soybean meal and other products. Those same supply chains could potentially support the distribution of significantly larger volumes of canola meal."
Rabobank's research highlights that New Zealand's feed imports have expanded significantly over recent decades, reflecting the country's limited domestic grain production and growing animal protein industries.
The report notes that major North Island ports including Tauranga, New Plymouth and Whangārei already anchor a large dairy-led feed-import system capable of handling substantial feed volumes. The report argues that this existing logistics network means canola meal can potentially utilise well-established infrastructure and customer channels rather than requiring an entirely new distribution system.
More broadly, Mr Pistóia said stronger trans-Tasman integration between Australia's canola sector and New Zealand's livestock industries could deliver benefits for both countries.
"More crushing supports more stable demand for canola seed and can encourage greater canola production in Australia," he said.
"At the same time, increased supplies of canola meal could help improve feed availability for livestock producers and reduce reliance on imported protein meals sourced from further afield."
"From a New Zealand perspective, dairy and beef producers are likely to remain among the most important drivers of future canola meal demand. The scale of those industries and the country's existing feed-import requirement make New Zealand potentially a critical part of the long-term growth story for Australia's canola crushing sector."
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