It takes two to tango.
That’s why Canada hasn’t sent a ministerial-level trade delegation to restore Canadian canola exports to China. An official in a position to know says the Chinese government hasn’t agreed to such a meeting.
However, the official speaking for background, said Canadian and Chinese government officials have been communicating via teleconferencing.
At press time Canada announced it has asked China to meet with Canadian Food Inspection Agency officials to try and restore Canadian canola shipments to Canada’s largest canola seed market. A letter requesting a face-to-face meeting between technical officials was sent to the Chinese government March 31, an official in Agriculture Minister Marie-Claude Bibeau’s office said at press time Monday.
Bibeau also announced the creation of a working group to help reopen the Chinese market.
“We’re pleased that the government has recognized the seriousness of the issue and taken action,” Canola Council of Canada president Jim Everson said in a news release April 1. “As a group, we’ll be meeting right away to continue resolving the issue and to help the sector navigate the uncertainty it is causing.”
But the ball is clearly in China’s court.
“They have to share the information with us — their test results, their methodology,” Everson told CBC Radio’s “The House” March 30. “That can take some time, but we are hopeful that we will be able to engage them very soon.”
Asked if the federal government shares that optimism, Everson replied: “I’d say there’s a good chance that this will be a challenge over time.”
China has a reputation for hardball. After Norway in 2010 awarded a Nobel Peace Prize to imprisoned democracy advocate Liu Xiaobo, it took six years for the nations to normalize relations. During that period China boycotted Norwegian salmon, costing the country billions of dollars.
Opposition parties, some farm groups and Manitoba Agriculture Minister Eichler have called on Ottawa to send a delegation.
The Chinese government says it’s blocking canola because shipments from Richardson International and Viterra contained weed seeds and canola diseases — a charge both companies and the Canadian Food Inspection deny, based on samples retained from those shipments.
It all started with China blocking canola exports shipped by Richardson in early March.
March 21 the canola council announced China had stopped buying any Canadian canola seed. March 25 Viterra confirmed China had removed it from the list of companies approved to deliver canola.
Many presume the ban has more to do with China’s displeasure over Canada’s decision to arrest Meng Wanzhou, vice-president of Chinese technology firm Huawei, at the request of U.S. government.
Last week the federal government was talking tougher.
“The restrictive measures imposed by China are said to be rooted in science,” Public Safety Minister and Saskatchewan MP Ralph Goodale said in a statement. “We have asked for the evidence. To date, none has been supplied. We will keep pushing as hard as we can on this vital point.
“We will intervene at the right level of seniority and intensity — scientifically, strategically and diplomatically — to have the best possible impact,”
Meanwhile, following a meeting with Richardson in Winnipeg March 27, Prime Minister Justin Trudeau said he was concerned about the ban and he could send a delegation to China for discussions.
The Conservative opposition wants that and fast.
“We fear that if this issue is not resolved expeditiously, farmers will suffer significantly because of the prime minister’s ongoing mishandling of the Canada-China relationship,” Conservative MPs said in the letter requesting an emergency meeting of the Commons agriculture committee on March 29.
There are other plausible explanations for the ban besides Huawei, including markets. Perhaps all are factors.
China has slowed imports of Canadian canola before. The speculation was China wanted to push up domestic rapeseed prices.
University of Saskatchewan agricultural economist Richard Gray says it’s possible a decline in Chinese hog production due to African swine fever is a factor. He’s more confident that’s why world oilseed prices are down, including for Canadian canola.
“Not only do they (China) have shrinking demand for international grains and oilseeds because of their hog industry, they’re supposed to buy more stuff from the U.S.,” he said in an interview March 29. “It’s another convenience that might drive them in the direction of protectionism.”
The canola council doesn’t see a link with Chinese hog production. Canola is an oilseed not a meal seed, council vice-president Brian Innes said in an interview.
But Gray said soybeans drive world oilseed prices, including canola. Moreover, it might be cheaper now for China to import vegetable oil than crush Canadian canola.
“If you resolved this (canola ban) issue tomorrow unless something else happened in the world oilseed complex it’s not going to return prices where we were a few months ago because the hog herd is really in trouble in China,” he said.
As further evidence Gray points to the fact that Canadian crush margins are just $11 a tonne higher than a year ago.
Gray stressed however, that China’s actions are not helping Canadian farmers.
“I don’t want to discount the fact that even 10 per cent lower prices can be really tough and may even be the end of some farmers too,” he said.
That’s why the Agricultural Producers of Saskatchewan (APAS) is calling for improvements to AgriStability and the cash advance program.
In 2016 fewer than 40 per cent of Saskatchewan farmers were enrolled in the safety net program, APAS said in a news release March 29. It blames funding cuts and red tape.
APAS wants improvements to AgriStability to deal with export market issues. It also wants:
- 2019 enrolment fees waived;
- Enrolment deadline extended past April 30 and late enrolment penalties dropped; and
- Government to be prepared to make interim payments.
APAS also wants to revise the cash advance program year limits to ensure farmers can receive an advance on stored grain from 2018 production with flexible repayment terms while still having access to the full $400,000 limit for 2019 spring advances.
APAS also wants an increase in the interest-free portion of the advance.
With spring seeding looming Chuck Fossay, president of the Manitoba Canola Growers Association, urged farmers to not overreact.
“Don’t make the wrong decision based on headlines,” he told the Co-operator.
He said that the situation, while concerning, could be resolved before seeding even starts, never mind harvest next fall. He added farmers are used to planting crops in the face of uncontrollable variables like weather and prices.
He said many farmers will undoubtedly go ahead with their seeding plans and planned input purchases, citing rotation concerns and limited flexibility this late in the winter.