Little progress is being made in Canada’s canaryseed standoff with Mexico.
That has prompted the Canadian Special Crops Association to declare force majeure on canaryseed exports destined for the country, which gives exporters more time to fulfill their contracts.
“That clock can continue to tick without going into default,” said Gordon Bacon, chief executive officer of the association.
On June 23, Mexico implemented a hold and test policy on canaryseed shipments from Canada. Any shipment containing quarantine weed seeds was to be rejected.
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Two of the prohibited weeds on the list are buckwheat and stinkweed, two common weeds on western Canadian farms.
Mexico’s sudden action tied up about $1 million worth of Canadian canaryseed at the Mexican border.
Canadian agriculture minister Gerry Ritz intervened, arguing that Mexico had failed to provide Canada with the customary 60-day advance notice of a change in import policy.
The two sides reached an agreement allowing any Canadian canaryseed shipments testing positive for the quarantine weeds to be moved to a cleaning facility in Mexico where the shipment is re-cleaned and then moved to its final destination.
That temporary arrangement expires on Sept. 17.
“There is a big unknown, a complete unknown, after the 17th of September,” said Bacon.
The two sides are using the reprieve to reach a long-term solution that would allow for the resumption of predictable trade after Sept. 17. But the talks have not been going well.
“We’re not seeing that business is going to be able to resume,” said Bacon.
CSCA’s board of directors felt Mexico’s latest proposal was a step backward, which prompted the board to declare force majeure for contracts signed on or before Aug. 19, 2010.
Contracts negotiated under the CSCA’s trade rules will be extended until the board feels a workable solution is in place.
The measure prevents buyers from walking away from contracts in default.
Mexico is a crucial market for Canadian canaryseed. The country bought 28 percent of last year’s exports. Sales have averaged more than $25 million per year over the last three years.
Losing that market is having a profound impact on Canadian farmers. Canaryseed prices have tumbled to about 17 cents per pound from 22 cents before the border blockage.
Canada supplies almost all of Mexico’s canaryseed needs, which is why Bacon feels there is hope for a quick resolution to the problem despite the lack of progress.
“There is not a huge number of canaryseed suppliers that can backfill immediately to Mexico, so I think there is an interest on both sides of the border to find a way to resolve this,” he said.
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