Richardson and COFCO: testing where Canadian canola should be processed

Can Canadian crushing plus separate oil and meal sales outperform exporting seed for Chinese processing? The policy basis for testing this question remains asymmetric: covered Canadian seed carries a definitive additional 5.9% anti-dumping duty through February 28, 2031; listed oil faces an additional 100% tariff; listed meal’s additional 100% tariff is suspended through December 31, 2026.^[1][3][4] These differences suggest a potential advantage for the seed route, but do not establish superior commercial returns.^[1][3][4]

Use Richardson International and COFCO as illustrative counterparties in this exercise, without assuming a transaction, purchasing commitment or particular operating capability. The worksheet requires quotations and costs supplied by prospective participants; it does not estimate either company’s margins.

One input, two decisions

Use one tonne of Canadian seed, one currency and matched delivery periods. Request seed, oil and meal quotations, measured output yields, freight, handling, processing, financing and loss assumptions. Specify each output’s quality, destination and the party bearing each cost. Ask the relevant importer to confirm customs valuation and applicable charges. Seed’s 9% MFN duty plus 5.9% anti-dumping duty totals 14.9%, before other applicable taxes and costs; oil’s additional 100% is not a comparable total rate.^[2][3]

On the Canadian seller’s worksheet, define seed-export netback as gross sale proceeds less all seller-borne logistics, border and financing costs. Define Canadian-crushing netback as oil yield × net oil realization plus meal yield × net meal realization, less processing and other costs not already deducted. Express yields as tonnes of output per tonne of seed and realizations as revenue per tonne of output. Deduct the same seed acquisition cost from both routes to compare contribution.

Use the same starting location for both routes and include transport to the Canadian crusher where relevant. Define net realization as destination revenue after seller-borne freight, handling and border charges. Count each cost once. This avoids giving either route an artificial advantage through inconsistent quotation terms.

On the Chinese buyer’s worksheet, calculate crushing contribution as the local sales value of both outputs less the landed cost of Canadian seed, Chinese processing and other operating and financing costs. Separately compare imported Canadian meal with an equivalent local offer. Do not require a meal buyer to purchase Canadian oil. Record tax cash payments, any confirmed recoverable amounts and financing costs separately; assume no recovery without verification.

The two worksheets answer different questions. In this model, a higher Chinese seed bid improves the Canadian export netback while reducing the Chinese processor’s contribution, all else equal. It also raises the opportunity cost of processing that seed in Canada. Treat these as sensitivities to test, not evidence of company behaviour or a reason to expect agreement on price.

Separate the policy scenarios

Meal relief continues: assume an extension solely for testing, holding seed and oil treatment unchanged. Compare meal sales to China plus oil sales elsewhere against the seed-export netback. Extending meal relief would lengthen its planning horizon without removing oil’s additional tariff; ordinary duties and taxes would still need to be included.^[3][4]

Meal relief expires: without an extension, the additional 100% tariff returns on covered meal after December 31, 2026.^[5] Recalculate the buyer’s landed cost and seller’s netback separately under the proposed pricing terms. Test another meal destination and its freight before rejecting Canadian crushing. For earlier delivery, request storage, financing and clearance assumptions rather than booking a guaranteed saving.

Oil relief changes: model removal of the additional oil tariff as a separate hypothetical scenario. The current oil measure remains distinct from the temporary meal suspension.^[3][4] Do not build oil relief into a meal-extension case. Also retain a case with no policy change: matched quotations could still show Canadian crushing winning because output realizations or processing and logistics costs outweigh the tariff difference.

Before the December 31 meal-relief deadline, obtain quotations covering delivery periods on both sides of year-end.^[4] The useful result is a break-even seed bid for each processing scenario, alongside the Chinese buyer’s maximum workable landed seed cost. Re-run those comparisons when firm output bids, freight or yields change. Consistent Canadian-crushing outperformance would challenge the original commercial inference without requiring any tariff change.