A Canadian canaryseed exporter says there is no end in sight to a lingering trade dispute with Mexico.
As a result, the risks are mounting for those shipping product there.
David Nobbs, general manager of Canpulse Foods, said phytosanitary certificate requirements introduced by the Canadian Food Inspection Agency in March will slow the flow of exports to Mexico to a trickle.
Mexico notified the CFIA last June that it would reject canaryseed shipments containing weed seeds on its quarantine list, which includes wild buckwheat, stinkweed and cow cockle, three common weeds in Saskatchewan.
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Canada negotiated an interim arrangement allowing canaryseed shipments testing positive for the quarantined weeds to be recleaned in Mexico and then moved to the final destination. That arrangement expires June 26.
Nobbs said there has been little progress at finding a permanent solution, such as establishing a tolerance level for the noxious weeds. He travelled to Mexico in March and is convinced Mexican authorities will not budge from their zero tolerance stance.
“It’s 10 months old and we’re still no closer to any kind of solution than we were then,” he said.
In the meantime, the CFIA has implemented more stringent requirements for its phytosanitary certificates. The agency used to allow 100 quarantined weed seeds per kilogram of product destined for Mexico. In March, that was tightened to 50 seeds.
Nobbs said it was strenuous enough meeting the 100 weed seed requirement.
Canpulse shipped one rail car of canaryseed to Mexico that contained 75 quarantine seeds per kg according to the sample taken at the plant. However, while the product was en route to Mexico, CFIA notified the company that the official sample contained 125 seeds.
“We had to reroute that product into Houston and sell it to a different buyer as a distressed sale,” he said.
With tighter specifications comes an even greater risk of distressed cargo and less incentive to sell to Mexico.
Nobbs thinks sales to Mexico will fall to about 25,000 tonnes this marketing year, down from 40,876 tonnes in 2009-10.
However, sales have been strong despite the trade barrier. Exporters shipped 20,785 tonnes through the first seven months of the 2010-11 campaign, down from 22,288 tonnes in the same period a year ago.
Nobbs expects the Mexican standoff to keep canaryseed prices in the 20 to 30 cents per pound range over the next year.
“When Mexico is in the market, it keeps it liquid. There’s always the threat of Mexico coming in for a couple of months of supply,” he said.
“Without a free flow into that country, the market is a lot more sloppy. That’s why we’ve seen the market trend from 30 cents at the Crop Production Show (in Saskatoon in January) down to 25 cents today.”
Kevin Hursh, executive director of the Canaryseed Development Commission of Saskatchewan, said even if trade with Mexico collapses, there are other countries buying the product that account for three-quarters of annual sales.
“You could still get to a situation where if production is down enough or producers are tight enough holders of the product, it can still be an attractive crop,” he said.
Statistics Canada is forecasting 320,000 acres of production in 2011, up slightly from last year’s 295,000 acres.
That’s a small crop, considering carryout is expected to be next to nothing. However, Nobbs said acreage could be higher, considering the crop can be seeded later than most others.
Nobbs said the only solution is for growers to be more vigilant about ensuring their fields are as free as possible of quarantined weeds by watching for a late flush and applying a second application of herbicide if needed.
Processors will need to either double clean product or slow their processing lines to ensure a more thorough job.
However, he said it is not commercially viable for Canadian plants, which usually clean at 250 to 350 bushels per hour, to slow down to the 50 bu. per hour rate of the Mexican cleaning facilities.
Nobbs said Canadian product will never be completely free of the quarantined weeds but it may fall to a level where Mexican regulators turn their attention to other issues.
Shipping extra-clean product will add costs, but Nobbs is confident Mexican buyers will be willing to pay for it.
“I think there is premiums there for the grower.”
