‘Huge uncertainty’ for Canadian farmers: China stops buying canola just weeks before planting begins
Chinese importers have halted purchases of canola just weeks before planting season for the crop begins, creating “huge” uncertainty for Western Canadian farmers, industry groups say.
Citing reports from Canadian seed exporters, the Canola Council of Canada said Chinese importers have stopped all new purchases of the crop.
The development comes just weeks after China — Canada’s largest export market for canola — blocked shipments of the crop from Winnipeg-based Richardson International over concerns about “prohibited pests.” The company and government officials have insisted the shipments met quality standards.
Though Richardson had its authorization to export canola to China revoked, no other Canadian firms have received the same treatment, Canola Council president Jim Everson in an interview.
“This doesn’t seem to be related to an official decision as far as we can tell,” Everson said. “It’s just that canola importers in China now seem to be very reluctant to buy Canadian canola.”
With planting season in southeastern Alberta and southern Manitoba set to begin in about 15 days, the chill in sales to China comes at a “terrible time” for farmers, said Steve Vandervalk, a canola and wheat farmer and Alberta vice-president for the Western Canadian Wheat Growers Association.
“I really can’t stress how big an issue this is for Western farmers,” said Vandervalk, who rotates his planting among wheat, barley and canola crops. “Farmers have made all their planting decisions by now and if we’ve lost that market we need to make changes if we can. So the uncertainty is huge.”
Canadian farmers seeded 22 million acres of canola in 2018 and produced more than 20 million tonnes of the crop — which is sold as seed, oil and meal. About 90 per cent of those goods are exported, with China taking the lion’s share at 40 per cent. Canola seed exports to China accounted for $2.7 billion in 2018.
Vandervalk has already invested $250,000 in canola seeds for the coming season, which he intended to plant on 4500 acres at his farm near Lethbridge, Alta. But as trade turmoil drives down futures prices, he is having doubts. The May canola futures contract was trading at $458.30 per tonne Friday afternoon — down nearly 2.2 per cent.
“Right now if something doesn’t change, I’ll lose money for sure,” Vandervalk said.
The continued disruption in canola trade with China comes amid ongoing tensions between Beijing and Ottawa following the arrest of Huawei chief financial officer Meng Wanzhou in Vancouver on Dec. 1. The arrest, made on a U.S. extradition request, was followed by the detentions of Canadian citizens in China in apparent retaliation.
Industry leaders declined to comment on whether the trade and diplomatic disputes are linked.
“We can only go on what China says the problem is,” said Rick White, chief executive of the Canadian Canola Growers Association. “They say it’s an issue with quality and our inspections say otherwise. So there’s a discrepancy there.”
I really can’t stress how big an issue this is for Western farmers
A spokesperson for federal Agriculture Minister Marie-Claude Bibeau said a discussion this week between plant health experts from Customs China and the Canadian Food Inspection Agency involved an exchange of “some initial technical information.”
“Officials from both countries will continue to engage in order to find a science-based solution to this issue as quickly as possible,” spokesperson Katie Hawkins in an email.
Hawkins could not confirm whether any other Canadian crops had experienced disruptions in trade with China. Representatives from Soy Canada, the Canadian Pork Council, Pulses Canada and Cereals Canada all said they had not seen any significant changes involving exports but were monitoring the situation carefully.
“We are very concerned and we’ve expressed that to the government,” said Cam Dahl, president of Cereals Canada. “There is a significant concern in all of agriculture because China is a big market but also because the list of trade issues we’re facing is getting long. There’s India, Saudi Arabia, Italy and now China.”
India, one of the largest importers of Canadian pulses, began hiking tariffs on peas and lentils in 2017 amid an abundance of domestic supply. Italy’s imports of Canadian Durum wheat have fallen following the imposition strict country of origin labelling rules. And Saudi Arabia has cut off purchases of Canadian wheat and barley amid its own diplomatic row with Ottawa.
“We have all these concerns now and it’s getting to be a very difficult trading environment out there for Canadian agriculture,” Dahl said. “When trade becomes based on politics instead of market conditions things become very unpredictable and can change very quickly.”
Saskatchewan Premier Scott Moe echoed concerns over the canola reports in a statement and said the provincial government remains hopeful that the federal government will continue to engage with Chinese officials on a technical level.
“We have also requested that the federal government elevate their engagement to a diplomatic level to rectify this situation as soon as possible.”
— With a file from The Canadian Press
Published at Fri, 22 Mar 2019 23:23:40 +0000