The devastation and disruption of Japanese port cities is raising worrisome questions about prairie farmers’ exports to that key market.
“There are so many things happening all at once in Japan it’s hard to get a really accurate picture of what the impact’s going to be,” said Canadian Wheat Board ocean transportation specialist David Przednowek.
“There’s a lot of uncertainty.” The earthquake and tsunami that devastated many communities in the island nation’s central and eastern coastal areas killed thousands, has caused dangerous breakdowns at nuclear power plants and has damaged many ocean-side buildings and infrastructure, including ports.
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Japan is a vital market for Canadian farm exports, buying almost $3 billion of agri-food products in 2009, according to Agriculture Canada. It was the second largest foreign customer for Canadian wheat in 2009-10, buying 927,000 tonnes, according to the CWB.
According to Industry Canada, Japan bought $979.7 million worth of Canadian canola in 2010 and $799 million of Canadian pork.
The Canada Beef Export Federation said Japan bought 17,000 tonnes of Canadian beef in 2010.
Pulse Canada chief executive officer Gordon Bacon said a bean trader he spoke with on the weekend thought that there might be short-term disruption to shipments and sales, but the main pulse-unloading ports were not badly affected by the earthquake or tsunami.
In the medium term, the problems might actually increase Japanese demand for Canadian products because radiation leaks from damaged nuclear plants could spook consumers and retailers about the safety of Japanese crops, fruits, vegetables and meat.
“People there are going to be very worried about the fresh market there,” said Bacon.
Przednowek said there will be many effects caused by the snarl up at ports. Anywhere hit by the earthquake or tsunami will need to undergo safety assessments and that will stop or slow ship unloading.
“There may be no huge damage … there, but they’re going to have to be inspected to make sure that everything passes and is safe for discharge, whether that’s terminals or discharge equipment,” said Przednowek.
“That sort of stuff is not going to happen right away because there are all sorts of demands on systems right now.”
Many ships will be stuck waiting off Japanese ports as unloading facilities get back into operation and power systems are fixed. That will tie up some ocean transportation that grain shippers use.
The first thought of the Canada Beef Export Federation staff in Calgary was for their staff in Japan, who they were delighted to hear from on the weekend.
“They’re safe, including their families, thank God,” said CBEF vice-president for exports Cam Daniels.
But the office there, like thousands across Japan, is dealing with disrupted communication systems and rotating power outages.
“According to our office, things will be slow until April or May,” said Daniels. That also applies to Canadian beef exports.
“It’s going to slow things down and things will be delayed,” said Daniels.
The Japanese market is important for Canadian farmers because it consumes a large amount of most prairie farm commodities and pays top dollar for high quality crops and meat.
Japan’s disaster caused both commodity and stock markets to slump March 11, and some of the selloff continued on March 14, just prior to deadline for this issue.
But by mid-day March 14, most crop futures contracts had retraced their early losses and showed signs of stabilizing.
Cattle prices seemed to stabilize too, which began on March 11.
Lean hogs futures, however, continued to slump. Japan is the biggest foreign buyer of American pork, as well as a major customer of Canada’s.
Generally, crop and hog futures have been weakening over the past two weeks, so the slump on the earthquake and tsunami news was not the beginning of a new trend, but the continuation of an existing one.
