Canola could play a bigger role on farms across regional Victoria in coming years, with growing demand for biofuels opening up new markets for the crop.

A new Rabobank report says canola oil is increasingly being used to make renewable diesel and more sustainable aviation fuel.

These fuels are aimed at cutting emissions in trucking, mining and aviation, industries that still rely heavily on liquid fuels.

The report’s lead author, RaboResearch senior grains and oilseeds analyst Vitor Pistoia, said diesel and jet fuel would remain essential for many years, driving interest in biofuels as a lower‑emissions option.

“Diesel and jet fuel remain central to freight, mining and aviation, and these are key sectors where biofuels are gaining traction as a lower‑emissions alternative,” Mr Pistoia said.

“For Australia, this creates a genuine opportunity to rethink how canola fits into both our agricultural system and our energy system.”

For canola growers across North Central Victoria, including areas such as the Loddon, Campaspe and Buloke shires, this could mean extra demand for grain.

Biofuels are not expected to replace existing food and stock feed markets, but could provide another outlet, helping spread risk and support prices over time.

Australia currently exports most of its canola as raw seed.

The report suggests that increasing local crushing and processing could keep more value onshore and strengthen demand closer to home.

“At the moment, we export the raw material and import the finished fuel,” Mr Pistoia said.

“That means a large share of the processing margin and jobs sits offshore.”

There is also growing demand from nearby countries including Japan, Indonesia and India, which are investing heavily in renewable fuels.

Australia’s close distance to these markets makes it a competitive supplier.

For North Central Victorian farmers, where canola already plays an important role in crop rotations, stronger demand could create market opportunities.

Mr Pistoia said outcomes would depend on government policy, processing investment and transport costs.

Without the right settings, much of the opportunity could still be captured overseas.

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