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Flax Output Seen Down On Further GM Issues

Canadian flaxseed production in the upcoming 2010-11 crop year will be significantly lower than during 2009-10 if Canada’s ability to export it remains impeded in Europe, Japan and now Brazil, according to industry sources.

“The concern that buyer after buyer would become concerned with importing GMO-contaminated flaxseed from Canada is slowly becoming a reality,” said Mike Jubinville, an analyst with ProFarmer Canada in Winnipeg.

That concern was seen causing greater difficulties in Canada unloading the product on to the world market and, in turn, causing Canadian producers to seek out alternative crops, he said.

His comments follow news from the Flax Council of Canada that the government of Brazil has now ordered the mandatory testing of all flaxseed shipments entering the country from Canada.

The council said the government of Canada has engaged Brazilian authorities with hopes of determining the basis for the action and that no action will be taken against the imported products that test positive for containing trace amounts of the genetically modified (GM) variety, dubbed CDC Triffid.

While Canada may not ship huge amounts of flaxseed to Brazil, it was hoped that the country may develop into a bigger market, given that Europe has stopped importing the commodity, Jubinville said.

Data from Statistics Canada show Canadian flaxseed exports to Brazil during the 2006-07 crop year totalled only 23 tonnes. In 2007-08, 1,039 tonnes of Canadian flaxseed were exported to Brazil while in 2008-09, 990 tonnes were shipped.

During the first three months of the 2009-10 crop year, Canada had already exported 1,791 tonnes of flaxseed.

“PROTECTION MODE”

“Brazil may only be a small importer, but the fact customers are in full protection mode does not bode well for Canada’s flaxseed sector,” Jubinville said.

In November, Japan also initiated testing of all Canadian flaxseed entering the country after the discovery of GMO contamination.

The GMO material in the Canadian flaxseed was the same material that has been found in shipments to the European Union. Because of the GM discovery, the EU has since suspended all Canadian imports of the commodity.

Glenn Lennox, an oilseed analyst with the market analysis division of Agriculture and Agri-Food Canada in Winnipeg, said the area seeded to Canadian flaxseed in the spring of 2010 is already anticipated to be down from the 2009 level, given the large supply situation of the crop.

However, with the continued inability to export to Europe and other potential customers, the area base may decline by an even larger amount.

Based on early and rough projections, Lennox said his initial estimate had flaxseed area in Canada dropping to around the 1.483-million-acre level, but with the added export problems and the resulting weak new-crop bids for the crop, the planted area could now be in the 1.235 million-acre range or possibly even lower.

“NOWHERE ELSE”

The lowest area base for Canadian flaxseed was seen during the 1992-93 season, when seeded area to the crop totalled only about 741,000 acres. Seeded area in 2007-08 was only 1.305 million acres while in 2008-09 seeded area to flaxseed totalled 1.709 million.

“With current cash bids for flaxseed currently in the $8.30-a-bushel area, which is already low, the few new-crop bids in the $6.90 area will not be enough to entice producers to plant the crop,” Lennox said.

“Unless we can get a change in policy in Europe, there is just nowhere else Canada can move significant amounts of flaxseed,” Jubinville said.

He forecast that producers in Canada would seed only 1.3 million to 1.4 million acres to flax in the spring of 2010.

“To tell you the truth, producers may not grow any flaxseed at all, given the current exporting problems and alternative cropping options,” Jubinville said.

Meanwhile, efforts to send some test ships of Canadian flaxseed to Europe remain inconclusive.

Export sources noted that two cargoes of Canadian flaxseed were loaded onto vessels destined for Europe in December, one with 7,500 tonnes and the second 19,000 tonnes. The sources said neither ship received final clearance for Europe and the whereabouts of the vessels was currently unknown.

Officials from the Flax Council of Canada were not available for comment.

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