SASKATOON — China’s tariffs on Canadian peas will disrupt trade flows, seeding plans and could encourage investment in seed cleaning plants in China, say analysts.
China intends to hit Canadian peas with a 100 per cent tariff starting tomorrow.
Russia is expected to be the biggest beneficiary of Canada’s misfortune.
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The country was already gaining market share in China at breakneck speed after it gained access to that market in late 2022.
Russia displaced Canada as the top supplier to China in 2023-24, exporting 1.09 million tonnes of peas compared to Canada’s 955,663 tonnes.
Most of Russia’s peas were sold into the feed market, while Canada’s superior quality peas were absorbed by China’s food market.
The U.S. Department of Agriculture was expecting Russia to continue gaining market share in China even before the tariff announcement.
“Industry sources indicate that Russia will continue to be the top supplier as it benefits from lower prices, shorter shipment times and can settle payments in renminbi (Chinese currency),” the USDA stated in a Feb. 28 report.
Sergey Pluzhnikov, chief executive officer of Russian Pulses Analytics, said China’s purchases of old crop Russian peas have slowed, but he anticipates business to pick up substantially with the arrival of the 2025 harvest.
However, there is still the problem of overcoming the poor quality of Russia’s peas. He believes China’s long-term solution to that dilemma will be to build its own cleaning facilities.
“China is striving to diversify, and if an industry is created right in the near-port area, where an extra-pure product will be produced from peas of any quality, and all split, broken grains and grains of other colour will be sold for the needs of the feed industry, the quality difference between Canadian and Russian peas will be minimal,” he said in an text message.
That investment would keep pea prices affordable, and the rejected leftovers from the sorting process would reduce feed costs.
In the meantime, Russia’s pulse industry continues to work on improving the quality of its peas and to push for better market signals from China.
“Ideally, we should have intergovernmental agreements in order to reserve supply volumes in advance and ship shipments from deep-sea ports with a set rhythm,” said Pluzhnikov.
“This will take into account the interests of all market participants, reducing the risk of overproduction or shortage of goods, which may lead to overproduction of the next season.”
Pluzhnikov said the loss of the Chinese market poses a real problem for Canadian exporters.
“Comparable volumes of peas can only be bought by India, which is very sensitive to the price of pulses and always builds a balance between the price for its own farmers and the availability of vegetable protein on the market,” he said.
India’s duty-free window for yellow pea imports closes May 31, before Canada’s new crop peas will be harvested.
In the meantime, India is harvesting its rabi, or winter, crop and will not likely accept ships full of peas rerouted from China.
Increasing the availability of cheap peas would pull down the price of desi chickpeas, which is the last thing government officials want to do, said Pluzhnikov.
Indian farmers are expected to harvest 11.54 million tonnes of chickpeas, a 4.5 per cent increase over last year.
Canada could ship more peas to the United States, but U.S. president Donald Trump is threatening to impose a 25 per cent duty on all Mexican and Canadian goods starting April 2.
Statistics Canada is forecasting Canadian farmers will plant 3.52 million acres of peas, a 13 per cent increase over last year.
However, that estimate is based on a survey conducted long before China’s tariffs were announced.
Analysts believe pea acres will be smaller than the government is forecasting because yellow pea prices have dropped about $2 per bushel in the wake of China’s announcement.
“Many growers are already reconsidering pea acres and exploring other pulse options, while buyers back away from the purchasing table,” Rayglen Commodities Inc. said in a recent grain market commentary.
In the meantime, Canadian farm organizations continue to press for a resolution to the trade spat.
Saskatchewan Pulse Growers (SPG) recently sent a letter to newly minted prime minister Mark Carney asking him to take steps to protect $800 million to $1 billion in annual trade with Canada’s top pea market.
“We strongly encourage you to initiate a substantive dialogue with China and president Xi Jinping immediately, prior to the start of a possible Canadian election, in order to retain market access that Canadian farmers and the agricultural sector have worked so hard to build,” SPG chair Winston van Staveren stated in the letter.
