China stops buying Canadian canola

China has expanded its restriction on buying canola from one company to all Canadian exporters, says Canola Council of Canada president Jim Everson.

The move follows a decision by Chinese officials earlier this month to stop buying canola from Richardson International, Canada’s largest grain company.

The canola council posted a notice on its website on March 21 announcing the newest development.

“We felt it important that we be transparent about the fact that Chinese importers appear at this point to be unwilling purchase Canadian canola seed,” Everson said in an interview.

China has not issued a notice that it has stopped buying Canadian canola, and the restrictions are thought to be aimed at new sales, not contracts already in place.

“We have been seeing this develop over a period of time as opposed to the decision that was made earlier in China to impose a restriction on one company,” Everson said. “We have seen a kind of an erosion of an opportunity to sell to China for other exporters.”

China buys 40 percent of Canadian canola seed, oil and meal exports. The council says canola seed exports to China were worth $2.7 billion in 2018, but the entire canola trade with China is valued at $3.6 billion, representing about half of Canada’s agricultural exports to China.

Briefing notes prepared for a meeting with Chinese officials in 2017 stated that canola is a “crucial element of the bilateral commercial relationship” between Canada and China.

Everson said Chinese demand for Canadian canola “has been very strong until recent disruptions.”

“We believe it is fundamentally a strong market in the sense that China has … in past years … been buying increasing volumes for canola seed.”

Following a meeting in November between Chinese trade officials and Lawrence MacAulay, who was Canada’s minister of agriculture at the time, Canada announced its intention to double agricultural exports to China by 2025.

When China announced a purchasing ban from Richardson, problems with “hazardous pests” were cited, but tests of canola in Canada have not confirmed the presence of pests.

“We’re very confident of the quality of Canadian canola from all of our exporters,” Everson said. “It’s my understanding that the work the (Canadian Food Inspection Agency) has done has indicated that they have not been able to detect these pests as have been alleged by China.”

It’s thought by some Canadian officials that China’s actions are intended to pressure Canada into releasing Meng Wanzhou, chief financial officer of the state-owned telecommunications firm Huawei, who was detained in January in Vancouver at the request of the United States pending extradition.

Since Meng’s detention, China has arrested two Canadians for allegedly stealing state secrets, and a Canadian who had previously been sentenced to 15 years in jail was retried and sentenced to death.

Still, the best way to address China’s ban on Canadian canola is to examine the technical issues and ensure an ongoing dialogue with Chinese officials, Everson said.

“I do think the way of dealing with this issue is to take Chinese concerns very seriously and be able to have a dialogue at the technical and science level with the Chinese to get to the bottom of why it is they have one view and we have another.”

Such a dialogue is taking place, he said. “There’s been an exchange of information and exchange of dialogue between officials of the Canadian food inspection agency and their Canadian counterparts in China.”

Asked if there is any reason for optimism for a quick resolution to the dispute, Everson said complex issues such as this can take time.

“When it deals with questions around sanitary and phytosanitary restrictions where the interpretation of data and even the methodology that can be used to test products can be different, my experience is those issues are not quickly resolvable,” he said.

“We hope they can be in this case and we certainly urge our officials and Chinese officials to do everything they can to get together and share information and resolve this situation, but they’re often complex and take time.”

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