600,000 tonnes annually | Chinese and Canadian scientists working on new blackleg risk assessment
The door to China has opened a little wider, giving Canadian canola a bigger potential market — at least temporarily.
The Canadian and Chinese governments have agreed to allow canola into a 600,000 tonne per year crusher in Nantong in Jiangsu province. The deal, which alleviates but does not eliminate import controls on Canadian canola, gives the plant temporary permission to buy the seed while the new import controls are tested.
Three more Chinese crush plants have been given permission to receive Canadian canola in the past few months, increasing the total potential market to 5.5 million tonnes.
Access to the Nantong plant is attributed to joint work of Canadian and Chinese scientists to develop a way to monitor the amount of blackleg present in canola received at the plant and analyze the risk it poses to China’s domestic crop.
It’s the first inland plant to get permission to process Canadian crop, and the canola industry hopes it is a sign of things to come.
The Nantong plant is in a province where farmers grow canola and rapeseed, so the permission for it to accept Canadian seed is seen as a substantial change to the previous situation, where only port plants could recieve Canadian canola.
“This is an initial step, with some science behind it, taking the steps needed to open the market,” said Todd Hames, president of the Canadian Canola Growers Association.
Restrictions on Canadian canola were imposed in 2009. The Chinese government said it was concerned that blackleg on Canadian seed could end up in China’s canola fields and damage domestic crops.
Many Canadian farmers and industry people scoffed, arguing that blackleg is a minor, manageable problem and already present in China. However, access halted for a few months. Australian canola was also blocked.
After much negotiation, China eventually agreed to allow access to a several plants at or near ports and not in canola growing regions.
The number of plants at ports approved for imports increased over the years, so the restrictions have not been onerous lately. China imported 2.9 million tonnes of Canadian canola seed worth $1.8 billion last year.
Canola oil and meal shipments to China surged as Canadian crushers took advantage of the restrictions on raw seed to ship processed materials. Meal and oil sales of $1.34 billion are close to that of seed alone.
Analyst Greg Kostal said the deal was welcome, but there’s potential for more.
“This is just a step along the journey. The more opportunities you have, the better,” said Kostal.
However, China’s demand remains unpredictable because its government can always change regulations to fit domestic priorities.
“I don’t think China’s ever going to want to relinquish complete control over what can go over there,” said Kostal.
Many in the Canadian canola industry speculated that China’s restrictions have more to do with boosting prices for domestic canola and rapeseed than with concern about blackleg.
Kostal said Canada needs to be able to scramble the way it did with blackleg to maintain access if something like that happens again, for whatever reason.
“You can’t be complacent,” said Kostal. “Any number of things can randomly surface.”
Hames said the new deal expands the number of buyers, so that’s a plus at a time Canada is producing more canola. However, Canada isn’t the only canola provider knocking on China’s door.
“I’m assuming whatever we open up there will open up for the Australians,” said Hames.
Kostal said incremental improvements like this agreement show industry and government officials are working diligently to ease more canola into China.
“It’s an ongoing journey towards eliminating restrictions and allowing market economics and dynamics to dictate flow more than politics,” said Kostal.
The canola industry praised federal agriculture minister Gerry Ritz and the federal Market Access Secretariat in regaining access to much of the Chinese market and for the Nantong success.
A deal that prime minister Stephen Harper and Chinese premier Wen Jiabao signed last year formed the basis of the Nantong expansion. It set the stage for work to establish a scientific protocol for judging the blackleg risk of Canadian canola.