Canola caught in middle of diplomatic dispute

Winnipeg – Political tensions between Canada and China have put the Canadian canola sector in the crossfire, with the latest move seeing China blocking imports from one of Canada’s largest canola exporters.

Richardson International Ltd. has been denied registration to sell canola into China, according to Chinese customs data dated March 1, 2019.

“It’s been ongoing, but to have a major announcement like this was a little bit of a surprise for the trade,” said a canola exporter with another company. He said issues with re-inspection of cargoes and import permits had already caused problems for the past few months exporters.

“It’s obvious that it’s fallout from the arrest of the Huawei CFO being extradited to the U.S.,” said the trader, adding that China was likely trying to put pressure on the Canadian government.

Huawei executive Meng Wanzhou was arrested in Vancouver in December 2018 and is currently facing extradition to the United States. China has retaliated by detaining and accusing two Canadians with espionage.

The exporter said canola was caught in the middle of the political dispute, adding that “as time goes on we can expect more of these types of issues.”

Canola prices have dropped sharply over the past week, with the May contract settling at C$457.80 per tonne on March 5, having lost roughly C$30 per tonne over the past month.

“China is an important market for Canada’s canola industry,” said Heidi Dancho of the Canola Council of Canada in an email. She noted that roughly 40 per cent of all of Canada’s canola seed and product exports go to China.

“We are aware of challenges our exporters have faced shipping to China – these are concerning as they create instability and add costs,” said Dancho. However, “while diplomatic frictions are concerning, there is no clear evidence that current challenges are linked to these frictions,” she added.

“News about blocked exports hurts the whole value chain,” said Dancho. Despite that she added “demand for high quality oil and protein remains strong in China, and Canada remains a reliable and sustainable supplier of food for China.”

“We look forward to the company involved resolving the current issue.”

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