Farmers brace for more Chinese retaliation

No one knows what will happen now that a Huawei executive’s extradition case has moved forward, but exporters worry

Agricultural commodity groups are on edge after the British Columbia Supreme Court ruled the extradition case against Huawei executive Meng Wanzhou could proceed.

“It’s very troubling,” said Dan Darling, president of the Canadian Agri-Food Trade Alliance.

He was hoping for an outcome that would have paved the way for a return to normalcy in trade with China.

Many feel that China’s sanctions against Canadian oilseed exports was in response to Canada’s detention of Meng on behalf of the United States.

There is widespread concern that last week’s ruling will lead to further retaliation, although nothing had happened as of The Western Producer’s publication deadline.

“It’s hard to know what direction China is going to go,” said Darling.

Brian Innes, vice-president of public affairs with the Canola Council of Canada, said there is ongoing anxiety in that sector.

“Our value chain remains concerned that we’ll be hit again by China for something completely unrelated to canola,” he said.

Canadian canola sales to China were down $1.9 billion in 2019 from previous year levels. That has had a direct financial impact back on the farm. Statistics Canada data shows a $700 million drop in canola revenue last year.

Exports to China took a big jump in March to 367,800 tonnes from 115,300 tonnes, which gave the false impression that trade was picking up between the two countries.

That is not the case, said Innes. Exporters simply wanted to move a lot of product before the March 31 expiry of a memorandum of understanding (MOU) between China and Canada regarding the management of blackleg disease.

That agreement has now expired and China has indicated it is not interested in discussing a new MOU to replace the old one.

Innes said if China initiated further trade action against Canadian canola, the market would need to send more product to alternative markets such as the European Union.

“The challenge is that doesn’t happen overnight and often does not come with the same value that we have been getting from the Chinese market,” he said.

Chris White, president of the Canadian Meat Council, said there have been no signals out of China that beef or pork exports are in jeopardy.

But he acknowledged there are some lingering jitters due to last summer’s meat trade disruption surrounding fake veterinary health certificates.

“There is a sense that something will happen but until it happens it doesn’t help to speculate because that will just make everybody nervous,” said White.

“If it happens, we’ll deal with it.”

At least Canada now has an ambassador in China. The industry has confidence in Dominic Barton, he said.

FarmLink Marketing Solutions analyst Neil Townsend thinks it would be difficult for China to go after Canadian barley because it is already embroiled in a dispute with Australia over that commodity. But yellow peas could be a target.

“They might be able to cry about that with us in their baby ways,” he said.

Greg Cherewyk, president of Pulse Canada, said there has been no scuttlebutt that peas are a target.

“We have very consistently met their phytosanitary requirements for over 20 years,” he said.

“There’s nothing that we’re aware of in that regard that we couldn’t address.”

Pea protein use in China has increased 140 percent over the last three years and Canada supplies 95 percent of those peas.

Cherewyk said the pulse industry is aware that it is far too dependent on a few markets and that is a big risk when the world appears to be drifting away from rules-based trade.

The industry has been working on diversification strategies for many years, starting with the 2016 International Year of Pulses and continuing with Pulse Canada’s 25 by 2025 target.

The association wants 25 percent of Canada’s pulse production to be sold into new markets or for new uses by 2025, including 1.1 million tonnes of peas.

Cherewyk agrees with White that it is nice to have Barton in place in China but he noted there is an entire government bureaucracy that works tirelessly behind the scenes on market access issues as well.

Darling hopes at some point practical reality will trump political reprisals in China.

“Common sense would say there’s not a whole lot more on the ag front that China could do to us because their folks have to eat,” he said.

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