China is continuing to give new life to Canada’s flax industry, keeping it an attractive prairie crop five years after the industry seemed to be dying.
“It looked bleak, all right, but it’s funny how the world works,” Wild Oats market newsletter publisher John Duvenaud said about China’s heavy buying of Canadian flax in recent months.
China imported 42,300 tonnes of Canadian flax in April, making it that month’s biggest buyer. It’s become a familiar situation, said Chuck Penner of LeftField Commodity Research.
Read Also
China’s grain imports have slumped big-time
China purchased just over 20 million tonnes of wheat, corn, barley and sorghum last year, that is well below the 60 million tonnes purchased in 2021-22.
“They are probably the most important market now,” he said, noting China’s steady demand for Canadian flax at good prices.
“They are pretty critical and will be more so in 2015-16.”
That’s because U.S. flax acreage has increased to an estimated 401,000 acres, up from 311,000 last year, which means that premium-priced market will probably have less appetite for Canadian flax when the new crop is harvested.
European demand is lower than historical levels, which is likely to be a continuing factor, said Penner.
However, reduced European de-mand is no longer the result of the Triffid disaster, when an unapproved genetically modified flax variety was found in Canadian flax shipments in 2009 and effectively shut down the market for years.
Instead, the new competitors that stepped in to fill the void are not backing off, even though Canadian flax is again accepted. Flax from Kazakhstan and Russia is filling much of Europe’s demand.
Penner said those supplies are closer to the European Union, giving them a competitive edge that will be hard for Canada to beat.
As a result, China’s evolution as a steady buyer of Canadian flax has been a godsend.
“They really stepped in and saved our bacon,” said Penner.
Duvenaud said the Chinese are no longer bargain basement shoppers.
“Some Chinese buyers started buying it (in 2009-10) because it was the cheapest veg oil in the world, and they figured out what we have figured out: flax is a hugely healthy product for people and animals,” he said.
“The Chinese have evolved into the highest-priced flax buyers.”
The growth of markets serviced from the West Coast means that instead of Manitoba dominating production, Saskatchewan now produces 80 percent of the crop with Alberta and Manitoba sharing the remainder.
However, that’s only a partial explanation for flax’s demise in Manitoba. Farmers there now find bigger money in canola.
“Why grow flax when you can grow canola?” said Duvenaud.
“Even with flax’s premium prices, canola yields just blow flax out of the water (in eastern Manitoba.)”
Penner said the development of premium-paying Chinese buyers for health food such as flax also offers hope for oats. If the Chinese learn the health value of oats, then perhaps Canada’s industry can have an alternative market to today’s almost total reliance on the United States.
“It would be nice if we could diversify our oats market to there as well.”
