Canola industry hunkers down to hear if the next Chinese shoe drops

Canadian canola trade with China is not new to disruptions

This has happened before, and it will happen again. But the worrisome situation with Canadian canola exports to China might get worse before it gets better.

That was the prevailing mood of exporters, canola industry leaders and farmer representatives at the Canadian Crops Convention in Montreal this week, as the industry grappled with news about Chinese action against one Canadian exporter and coped with the reality that Canadian canola might be caught up in a dispute the canola industry can do nothing about.

Kyle Jeworski, President and CEO of Viterra, speaking at the Canadian Crops Convention

“We have to have a long term focus,” said Viterra President and CEO Kyle Jeworski in an address to the newly constituted convention, which combines the previously separate conventions of the Canola Council and Canada Grains Council. Jeworski and other exporters and market analysts said that China needs canola and its need for foodstuffs is growing with time, so any disruption to Canadian canola imports is unlikely to become permanent.

But in the meantime, as news sunk in that Richardson International had at least temporarily lost its ability to export Canadian canola to China, farmers and exporters expressed concerns that the Chinese block against Richardson could be expanded to other or all Canadian shippers. Many speculated that the Chinese ban, said by China’s import authority to be due to the presence of a pest a shipment by Richardson, was actually part of China’s perceived campaign of retribution against Canada for executing a US extradition warrant against Huawei executive Meng Wanzhou. Canola is Canada’s largest export to China, so hitting canola would be an easy way for China to inflict some pain on Canada, some speculated.

However, others were cautious when looking at the Richardson situation. As one person with much China experience told me, not everything that happens in China occurs as part of a carefully scripted political play. China is an enormous and complex country with many moving parts, and every ministry, authority and element of state authority is not necessarily following a master plan. The action against Richardson could actually be due to the reason that the import authority stated.

China has also taken action against Canadian canola before, for various stated reasons. China first blocked in 2009 and then restricted Canadian canola imports due to alleged concerns about blackleg. Many saw that action as an attempt to restrict imports in order to raise domestic canola prices for Chinese farmers, while others felt China might have been truly concerned about new blackleg strains being brought into China through Canadian canola.

Addressing and relaxing China’s concerns has taken efforts by the Canadian government and the canola industry and led to a consistent trade-building effort with the country. Both Conservative and Liberal governments have made reliable Canadian access to the Chinese canola market a focus of their trade discussions.

Two federal government ministers spoke to the Canadian Crops Convention, with each saying the government has been involved since the Richardson situation appeared and hoped to resolve China’s concerns.

Foreign Minister Chrystia Freeland speaking with Canola Council of Canada President Jim Everson.

“We are working very hard on that,” said Foreign Minister Chrystia Freeland.

“I think it’s really important for us to gather information before drawing conclusions.”

Newly-minted Agriculture Minister Marie-Claude Bibeau said she has been working with Agriculture Canada and the Canadian Food Inspection Agency

“We are having a conversation with the Chinese officials on a science-based . . . approach,” said Bibeau, who made the convention her first official public appearance as agriculture minister. While the Chinese have said they found “irregularities” in a recent shipment, samples taken in Canada do not show the same problem.

Agriculture Minister Marie-Claude Bibeau

Bibeau has also been talking with provincial agriculture ministers about the situation, she said.

Nobody expressed much hope that this situation would disappear overnight, especially in the context of Canada’s diplomatic problems with China today. That pessimism about the Canada-China situation was also voiced by Chantal Hebert, a national affairs columnist and commentator.

“What we are seeing is an escalation of this conflict,” said Hebert.

Chantal Hebert

But while hunkering down for a possibly bad period, most canola exporters seemed to see the situation as a painful but temporary problem, rather than a threat to long time export prospects with China, which has a growing hunger for vegetable oils and meals.

Jeworski said the present situation highlights the need for an organization like the CCC, which has the size and scope to deal with a situation that goes beyond the ability of any one player to address.

“I think it’s important that we bring the collective strength of the industry together,” said Jeworski.

 

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