“This agreement is a significant
achievement for western Canadian farmers in a very competitive market.”
– CWB CEO IAN WHI TE
China has been an important wheat customer for Canada over the years, but not so much recently as it strived for greater food self-sufficiency.
But a memorandum of agreement signed July 3 in Shanghai between the Canadian Wheat Board (CWB) and China National Cereals, Oils and Foodstuffs Corporation (COFCO) will see a minimum of 500,000 tonnes of Canada Western Red Spring (CWRS) wheat exported to China between August, 2010 and Dec. 30, 2011.
At current market values the deal is worth $130 million.
China was a major buyer of CWB wheat and some years its biggest customer in the 1980s and 1990s. But last crop year (2008-09) the CWB exported just 37,000 tonnes to China and the year before that, none.
Over the previous 10 crop years Canada exported an average of 580,000 tonnes of wheat, including durum, to China, making it Canada’s ninth-largest wheat export customer behind the U. S., Ja p a n , I r a n , In d o n e s i a , Mexico, Algeria, Venezuela and Italy.
China, the world’s second-largest wheat producer, bought 200,000 tonnes of Canadian wheat, durum and wheat flour from August 2009 through April 2010.
In recent years the CWB exported more malting barley to China than wheat, said CWB spokesman John Lyons.
The wheat deal follows the largest long-term agreement ever for malting barley signed in April between China and the CWB.
“This agreement is a significant achievement for western Canadian farmers in a very competitive market,” CWB president and CEO Ian White said in a news release.
“Agreements such as this are not possible without the strong support of government. We thank Minister (Gerry) Ritz and government officials for their direct involvement in the achievement of this important agreement.”
The long-term relationship between the CWB and China smoothed the way to making the deal, said Lyons. The CWB made its first wheat sale to China 50 years ago – 10 years before diplomatic relations were established between Canada and China.
Back then the Cold War was still raging and “Red China” was widely viewed as a potential threat to Canada and the West.
That first CWB wheat sale to China occurred during a famine and Chinese officials have never forgotten, Lyons said.
“When we have senior people in China meeting their senior people, that’s always commented on,” he said. “That’s a very big factor.”
To celebrate 50 years of agricultural co-operation with China, Ritz hosted a barbecue, featuring Canadian beef, in Beijing where he presented a plaque to the Chinese Ministry of Agriculture.
Poor weather is expected to downgrade China’s domestic wheat production this year. That’s thought to have been a factor in the deal.
Western Canadian wheat production is also struggling due to excessive rains. The CWB says wheat plantings this spring were the lowest since 1971. Some of what was seeded has been damaged or even destroyed.
However, Bruce Burnett, the CWB’s director of weather and market analysis, says the West should have enough wheat to fulfil the deal.
Between crop years 1981-82 and 1990-91, the CWB exported an average of 3.8 million tonnes of wheat to China, including 7.6 million tonnes in 1987-88.
During the 1990s average exports dropped to 2.9 million [email protected]