China develops taste for canola meal

Feed for fish, livestock | New market worth $300 million; blackleg research also discussed

Market development work paid off in a big way last week when a Chinese feed company announced its intention to buy up to $300 million of Canadian canola meal by 2015.

Tongwei, one of the world’s largest producers of livestock feed, plans to buy up to one million tonnes of the product to use in its aquaculture, swine and poultry feeds.

The company already imports 200,000 tonnes of Canadian canola meal annually, worth about $60 million.

The announcement was made during a trade mission to China that included federal agriculture minister Gerry Ritz and prime minister Stephen Harper.

“China is excited about the beneficial results when using canola meal in the aquaculture and animal feed sectors,” Ritz told reporters during a conference call at the conclusion of the trade mission.

Jim Everson, vice-president of corporate affairs with the Canola Council of Canada, said it has been a good week for the canola industry.

“When Chinese dairy and aquaculture producers become more aware of the benefits of canola meal, the Canadian canola industry benefits through strong prices and increased market options,” he said.

The Tongwei commitment is the direct result of the council’s market development efforts in China paid for through Canada’s Economic Action Plan.

“Last year, we did a number of feed demonstration trials, which allowed us to demonstrate to the feed industry and the dairy industry in China the value of canola meal because they didn’t know the product very well,” said Everson.

Les Nernberg, canola meal manager for the council, said the Tongwei commitment is huge.

Sales of the product to China have been 600,000 and 800,000 tonnes per year over the past two years, and future Tongwei purchases alone will double those export volumes in a few years.

Finding new buyers is critical because rapid crush expansion in Canada has resulted in four million tonnes of annual canola meal production.

The U.S. dairy industry consumes two million tonnes a year and the Canadian livestock sector another 650,000 tonnes. That leaves 1.35 million tonnes that must find a home in overseas markets.

China is the real growth market for all kinds of oilseed meal.

“Their demand for protein supplements is growing with their demand for protein,” said Nernberg.

Canola meal offers advantages over China’s rapeseed meal. It is low in glucosinolates so it can be incorporated into feed rations at higher levels than rapeseed meal, which has a bitter taste and can cause liver and thyroid problems when used at high levels.

In demonstration trials with China’s five largest dairies, replacing soybean meal with canola meal increased milk production for two of the operations and decreased feed costs for another two.

“It really showed the Chinese dairy industry or gave their nutritionists more confidence in using canola meal in their dairy feeds,” said Nernberg.

The council also ran a tilapia fish feeding trial in conjunction with Tongwei, which showed the feed manufacturer it could use up to 40 percent canola meal in its aquaculture rations compared to a 20 percent maximum for Indian mustard meal that many feed manufacturers now use.

Nernberg said the biggest opportunity for canola meal is in aquaculture feed, followed by hogs, poultry and dairy feeds, in that order.

The council felt the dairy trials were the best showcase for the feed ingredient because canola meal has been shown to increase North American milk production by up to one kilogram per animal per day. China has established a goal of doubling milk production by 2015.

Everson also praised the federal government for signing a memorandum of understanding with China to conduct joint research toward re-solving the lingering trade restriction surrounding blackleg disease.

Canadian exporters are now able to ship canola to eight plants in China that have a combined four million tonnes of processing capacity.

“It is quite a considerable amount of access we have on seed,” said Everson.

Canada exported $1.8 billion worth of canola and canola products to China in 2010. However, access is limited to ports along the coast, which has added costs for an industry that was accustomed to delivering product to the Yangtze River delta.

The MOU will provide additional science on blackleg and ways to mitigate its transfer to Chinese rapeseed crops.

“The council’s objective is to advance this research for review by China later this year,” said Everson.

Ritz said he also raised the tariff disparity issue during his trip. Canola seed faces a punitive nine percent tariff into China compared to three percent for soybeans.

“Whenever (buyers) raised price, we always said, ‘well, it would be very easy to fix simply by having your government remove that nine percent,’ ” said Ritz. “As we move forward and strengthen our ties, those are the types of things we can seek to remove and that makes it even easier to move more good quality canola into China.”

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