WINNIPEG — Canada’s inability to deliver canola to its biggest export customer this year could lead to fewer sales permanently, says the president of the Japanese Oilseed Processors Association.
Delays in west coast exports have “severely strained” relations between Japanese crushers and Canadian canola suppliers, Masaji Shima said in a written interview from Japan.
A rail car shortage, strike and weather problems have combined to put Canada’s export program from the West Coast months behind schedule.
As a result, some Japanese processing plants face shutdowns because delays have left them with no seed left to process.
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“Several members of our association have already started to diversify their origination of canola away from Canada,” he said.
Japan imports at least 1.8 million tonnes of canola annually. Traditionally imports from Canada have accounted for 95 of that country’s total crush. “However some members now consider it too risky to rely so heavily on one supply source for canola due to these delivery problems.”
Shima said France, Germany, Australia, Argentina and China have all recently become “significant” suppliers of canola to Japan.
It has been offering Australian growers minimum pricing contracts to boost production — and it’s working. Australian canola production is expected to reach a new high of 316,000 tonnes this year, 80,000 tonnes of which is destined for the Japanese market, UGG market analyst Greg Kostal told an industry conference last month.
May become permanent
“If these problems continue, then this trend may accelerate and lead to a permanent reduction in the purchase volume of Canadian canola by Japan,” Shima said.
During the past 32 years, Japan has imported 28 million tonnes of canola seed from Canada. Until recent years, Japan has consumed more than half of Canada’s annual canola production.
In a speech to the Canola Council of Canada board of directors recently, Shima said he recognizes that the canola industry has entered a “new phase” in its supply and demand picture.
The growing U.S. market for oil, the potential for sales into Mexico and the startling rise in European sales this year all indicate a more diversified market for Canada.
Shima said that’s all the more reason for Canada to do what it must to look after its customers. He said more rail cars should be built to accommodate increased southern movement, cleaning capacity should be improved at inland and seaboard terminals, labor disputes should be prevented and “any red tape, if you find there is, that prevents quick improvement should be cut off promptly.”
