Industry notices strong interest in China, but recent political tensions between the two countries may get in the way
Wayne Thompson had some good news to share with flax growers after years of declining acreage and production.
Two recent trade missions to China have left him with the impression that there is considerable interest from Chinese buyers in investing in value-added processing in Canada.
Ming Hai recently opened a crush plant south of Saskatoon that will process 25,000 tonnes of Saskatchewan flax annually, exporting the oil to its buyers in China.
And that is just the tip of the iceberg, according to Thompson, who met with a number of Chinese companies as recently as last September.
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“There is a lot of interest from other companies from China coming to Canada to set up a flaxseed crushing plant,” the executive director of the Saskatchewan Flax Development Commission told delegates attending the group’s annual general meeting at CropSphere 2019.
“We hope to see those come forward in the next year or two.”
However, he noted that the growing political divide between Canada and China sparked by Canada’s detention of Huawei executive Meng Wanzhou is casting doubt on whether that interest turns into reality.
“The certainty has become an uncertainty with the political climate,” he said in an interview following his presentation.
Canada has three larger scale flax crushing plants — Ming Hai, Shape Foods in Brandon and TA Foods in Yorkton. Several smaller crush plants also service local markets.
Thompson said there is definitely room for more.
Some of the Chinese companies he spoke to are more interested in sourcing their seed directly and sending it back to China rather than building a crush plant. They want to sidestep the middleman.
“For the volumes they’re looking at, they want to source what they’re going to use and save those brokerage dollars,” he said.
Thompson got the sense those companies are interested in more than just an export office.
“My understanding is they’re looking at physical facilities. They’re looking at volumes big enough that they will need some of their own logistics,” he said.
Companies considering building crush plants are in the exploratory phase where they are trying to understand the Canadian business climate, how to interact with farmers and what they would do with the meal.
Building a crush plant or two could halt the downward slide in acres, which have fallen to half of the 1.64 million acres seeded in 2015-16.
“If there is more processing that takes place here in Western Canada, it’s all good,” said Thompson.
Canada isn’t the only option for investment. Chuck Penner, grain market analyst with LeftField Commodity Research, told CropSphere delegates that China is already investing in flax business projects in the Black Sea region.
Thompson believes those projects are likely to do with sourcing seed because he thinks it would be too complicated to ship value-added product across the border in places like Kazakhstan and Russia.
