Wary optimism on China

Rick Bergmann is both relieved and excited.

The pork producer, from Steinbach, Man., is pleased that the Chinese ban on Canadian beef and pork is over. He’s also thrilled by the opportunity to sell hundreds of millions in Canadian pork to China, in the coming months and years.

“In short, it’s just fantastic. It’s great news,” he said in a telephone interview from Japan.

“That said, we just need to ensure that this (ban) never happens again.”

That could be very difficult.

Trade uncertainty and borders opening and closing may be the new norm for Canadian farmers.

“The Canadians are very influential in trying to breathe new life into the WTO (World Trade Organization),” said Al Mussell, an agricultural economist in Ontario.

“But we also have to plan for, the possibility, that rules-based trade will be nothing like it has been…. It makes it a very erratic situation to operate in.”

Last week Canadian exports of pork and beef to China were allowed to resume. China banned the import of Canadian meat June 25. The Chinese government implemented the ban because its inspectors found fake veterinary health certificates for Canadian pork. China also claimed it found traces of ractopamine, a growth promotant, inCanadian pork.

Ractopamine is banned in China.

The four-month shutdown was a blow to Canada’s meat industry. In the first half of 2019 pork exports were at $500 million and on pace to hit $1 billion to China for the year. Beef exports to China from June to January were at $99 million, compared to $97 million for all of 2018.

China is importing larger quantities of pork, beef and chicken from Europe, South America and elsewhere because African swine fever has decimated hog production.

China will now accept Canadian beef and pork because the Canadian Food Inspection Agency sorted out the technical issues for meat export certificates and the Chinese accepted the changes.

Many Canadians believe the ban wasn’t about export certificates. Instead, China was punishing Canada for the detention of Meng Wanzhou, an executive with Huawei, a Chinese telecommunications firm, so is wanted in the U.S. for violating international sanctions on Iran.

Some analysts believe there’s a tug of war in China, between the ministry of foreign affairs and the ministry of agriculture. The agriculture bureaucrats realize China has an ASF crisis and cannot ban meat imports for geo-political reasons. Meanwhile, the foreign affairs ministry wants to hold Canada’s feet to the fire for Meng Wanzhou.

Bergmann and a delegation from Canada’s meat industry are in China, re-building relationships and restarting pork and beef sales.

There is an opportunity because of ASF, as it could take five years or much longer for China to rebuild its pig herd, once half of the world’s pork.

But farmers and exporters should proceed with caution, says a former ambassador to China.

“If you listen to what the spokesperson for the Chinese ministry of foreign affairs, Mr. Geng Shuang, said… he said the fact that China is resuming imports of pork from Canada is not a sign that relations are getting better,” said Guy Saint-Jacques, Canadian ambassador to China from 2012-16 and a senior fellow with the China Institute at the University of Alberta.

Meng’s case won’t be resolved quickly because the U.S. in unlikely to drop the extradition, Saint-Jacques added.

“I wouldn’t be surprised if Ms. Meng is still in Canada, four or five years from now,” he said. “For farmers and Canadian business people, now what we have seen what I like to call the ‘dark side of China’, it means you take into account the risk of doing business in China.”

Farmers and exporters are likely aware of the risk and will incorporate that into their plans, Mussell said.

“You would be foolish to not be bearing that in mind, as a processor or investor. Or even as a producer that wants to expand.”

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