A country that is home to 54 percent of the world’s hogs just made it
feasible for Canadians to export feed peas there.
China has lowered its value-added tax on feed peas from 17 percent to
13 percent, bringing it into line with the tax charged on other feed
ingredients. It’s something the Canadian government has been asking the
country to do for years.
“This move will provide Canada with more equitable access to the
Chinese marketplace and, therefore, help boost our sales abroad,” said
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It was the second step in a two-part move that has put peas on equal
footing with other imported feed ingredients in a nation that raises
454 million hogs.
When it joined the World Trade Organization last year, China agreed to
reduce the import tariff on dried peas to five percent, the same as
charged on soybean meal.
But the value-added tax was still higher. Feed peas were charged at the
same rate as food peas, which was four percent higher than what soybean
meal importers paid.
“At a four percent price difference, there is no way peas would ever
go,” said Pulse Canada chief executive officer Gord Bacon.
Now everything is equal.
“We really have market forces that will influence whether peas are used
in the Chinese market, and not Chinese tax or tariff policy,” said
Bacon.
The new agreement is the result of four years of hard lobbying by
Canada’s pulse industry, and the federal agriculture and trade
departments.
Bacon said it’s too early to tell what the results could be.
“This policy change alone isn’t a guarantee that any (feed) peas will
go to China,” he said.
But if the price relationship between peas, soybeans and corn was such
that peas were attractive and Chinese farmers decided to include them
in hog rations, the effect on the Canadian pea industry could be
astonishing.
“They could come in and snap up our whole production and it wouldn’t
even cause a ripple in their total demand. That’s the nice thing about
having a big market like China,” said Bacon.
Canada exports no feed peas to China now. The entire $27.1 million
worth of peas that were sold into China in 2001 went for human
consumption.
Peas are a “non-traditional ingredient” in Chinese hog rations. That
used to be the case in Canada as well, but attitudes are changing. In
2001, Canadian hog farmers bought 300,000 tonnes of feed peas. This
year peas have been priced out of rations, but analysts expect they
will eventually make their way back into hog diets.
Bacon said on his first trade mission to China four years ago, feed
buyers were puzzled by the thought of feeding peas to pigs. Since then
Pulse Canada has conducted numerous feed trials in China and brought
buyers here to see what Canadian growers have to offer. Another
delegation will be coming to the Prairies this summer.
If the sales pitch works and a buyer nibbles, Canadian exporters will
no longer have to worry about trade barriers. Instead, market factors
like competing commodity prices and freight rates will make or break a
deal.
