Canadian producers see government support in ongoing canola trade spat

By Aerin Einstein-Curtis contact

- Last updated on GMT

© GettyImages/Pitiphothivichit
© GettyImages/Pitiphothivichit

Related tags: Canada, China, Canola, Trade

The Canadian government is stepping in to support canola producers as a period of trade uncertainty stemming from a slow down in exports to China continues.

The additional support​ provided for canola producers during the trade slow-down was announced Wednesday [May 1] by the Canadian Government. The decision comes as Canadian producers continue to see restrictions​ in the export market to China.

Two Canadian exporting companies – Richardson International Limited and Viterra Inc. – have had their licenses suspended in China meaning they cannot ship canola seeds to China, said Jim Everson, president of the Canola Council of Canada.

The Canola Council of Canada hosted a webinar about the new supports and the state of the trade situation on Friday [May 3].

“We also have a report of unwillingness on Chinese buyers’ behalf to buy seed from Canada, at this point,” ​he told listeners. “So effectively new seed sales have been interrupted on our largest market that last year was worth C$2.7bn.”

However, exports of both canola oil and canola meal have been continuing, he said.

In 2018, the Canadian canola industry exported about C$11bn in canola products to more than 50 countries, according to market information.

“There are ongoing technical discussions between China and Canada and the CFIA [Canadian Food Inspection Agency] that are continuing,”​ Everson said.

A request from Canada to have a delegation sent to China to discuss the issue has been answered, but there has been no commitment made in terms of an actual meeting, he added.

“We believe that China really has an obligation to come forward and engage with us.”  

Supports provided

Changes made to farmer support programs are a recognition that they are facing a period of risk, uncertainty and anxiety, said Rick White, CEO of the Canadian Canola Growers Association. However, he said the changes are intended to provide support and are not a “fix”​ to the situation.

“The fix is to get China back to buying our canola. Over this time of uncertainty for farmers, we have to ensure that you are able to get the job done, get the crop in, get it marketed over time with this disruption of trade with China.”

"We are working out a short-, medium- and long-term strategy because, as this unrolls, nobody knows how long this is going to take."

Market diversification 

Jim Carr, Canadian minister of international trade diversification, said the response to the issue needs to be  multifaceted and includes engaging with China, supporting producers and diversifying the canola market.

“We know it is not going to be possible to replace the Chinese partnership in the short term, nor do with think we’re going to have to, but it makes sense for Canada to expand its export markets,” ​he said on the call.

Talks have already started with several trading partners and there are upcoming trade missions to Japan and Korea, he added.

Additionally, a method to manage future instances of non-tariffs barriers also needs to be developed, Everson said. “We need to have the capacity to deal with them – issues like improved insurance for exporters into new markets and all these things are being looked at actively,” ​he added.

When asked about the potential for a political element to be involved in the trade slowdown, Carr said that there is no evidence.

“We’re not blind or silly, and we certainly understand why people would conclude that there are geopolitical reasons for the timing of Chinese actions - we don’t have evidence of that,” ​he said. “We also think that we have to be cautious on how we escalate the issue and there are other possibilities and we want to avoid unnecessary escalation.”

“We’re prepared to use every diplomatic and political lever that [is] at our disposal when we believe the time is right,”​ he added. However, all the steps in the response have to be considered.

“We have to play chess here not checkers,”​ Carr said.

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