Richardson and Viterra, two large Canadian grain trading companies who had their licenses suspended after Chinese officials alleged they had detected quarantine pests in canola shipments, are now allowed to export canola seed again to China.
In a statement released on Wednesday this week, Mary Ng, Canada’s trade minister and Marie-Claude Bibeau, the country’s agriculture minister, said they welcomed this decision to remove the restrictions on the two exporters.
“Canada will always firmly uphold the international rules-based trade system and related dispute settlement mechanisms, as well as a science-based approach to resolving such issues.”
Jim Everson, Canola Council of Canada (CCC) president, weighed in on the move, describing it as a positive step forward, and that it would restore full Canadian trade in canola with China. “We will continue efforts to nurture and maintain a predictable, rules-based trade environment,” he added.
Canada requested WTO consultations with China in September 2019, on the basis that China had not provided sufficient scientific evidence to justify its measures on the Canadian canola seed exporters. WTO members eventually agreed to establish a panel in July 2021 for the case and the panel was composed in November 2021.
Market access restrictions for canola seed to China were first implemented on March 6, 2019. Up until those export challenges, China had been a major market for Canadian canola, accounting for approximately 40% of all its canola seed, oil and meal exports, said the Council.
Seed exports to China fell from $2.8bn in 2018 before the restrictions to $800m in 2019, $1.4bn in 2020 and $1.8bn in 2021, according to the CC. Canola oil and meal exports from Canada to China continued, however.
Trade vital for Canada’s canola industry
Canola is one of the most important crops in Canada. The vast majority of canola production is exported, either in the form of seed, oil or meal. This makes trade vital for the industry. Any disruptions to market access have negative financial impacts to farmers, grain companies, processors and other industry participants, said the CCC, in a report last year.
Raw, unprocessed canola seed is the largest exported product by volume and by value. Canola meal exports are focused on markets with significant import protein demand and where canola meal, which is used mainly for animal feed, makes economic sense compared to alternative products, reads that publication.
Breakdown of Canadian canola exports by seed, meal and oil and per market.
For Canadian canola, the largest export market is the US, followed closely by China. Japan, the EU and Mexico round out Canadian canola’s top buyers internationally. China represents a significant buyer for seed, oil, and meal while the US is the dominant buyer of oil and meal.