Turkey is buying Canadian durum, using subsidies to make it into pasta and dumping it back into Canada, the Canadian Pasta Manufacturers say.
Pasta imports from Turkey more than doubled in 2015 compared to 2014, while its value tripled, Don Jarvis, president of the Canadian Pasta Manufacturers Association (CPMA), said in an interview from his Ottawa office Feb. 2.
“They (Turkey) are buying Canadian durum, shipping it all the way over there, making it into pasta and shipping it back, according to some of my members, cheaper than what they paid for the semolina (milled durum) here in Canada,” Jarvis said. “You’re shipping this wonderful durum across the ocean and it comes back as the finished product cheaper than you can make it in Canada. That’s the problem.”
The CPMA will seek countervailing duties on Turkish pasta if Canadian firms don’t voluntarily stop importing it, Jarvis said.
“We are already doing preliminary research as a prelude with going forward with a substantial case,” he said, noting the first step is getting the message out to Canadian importers.
“If one large retailer determines they want to stock a lot of this, another one will do it to be price competitive and then pretty soon the domestic industry could be in serious trouble. That’s why we’re trying to reach out and communicate that we see a problem. We’d rather not proceed with a time-consuming and costly case.”
Under domestic and international law Canadian pasta makers are allowed to seek countervailing duties on imported pasta to even the playing field. However, before duties are applied it must be proven the offending imports are subsidized and/or dumped (sold in Canada below the selling price in Turkey) and injuring Canadian pasta makers. That process takes at least seven months, is costly and the duties, which go to the Canadian government, not pasta makers, aren’t retroactive.
- Read more: The countervailing duty process explained
During the first 11 months of 2015, Canada imported 5.25 million kilograms of Turkish pasta, up from two million in 2014, Jarvis said.
“The value has gone from just under $2 million to $5.5 million for an 11-month period,” he said “With another month it will be around $6 million. It will have tripled (in value).”
The average landed price of Turkish pasta in Canada last year was $1 per kilogram versus $1.5 and $2.20 for pasta from the United States and Italy, respectively.
Turkey is now Canada’s third-largest export pasta supplier after the United States and Italy, Jarvis said.
The United States slapped countervailing duties on imported Turkish pasta years ago and recently renewed them, Jarvis said.
Canada is the world’s largest durum wheat exporter, averaging 3.8 million tonnes a year based on average production of 5.3 million tonnes. Canada exports 80 per cent of its durum turning a little less than one million tonnes annually into pasta.
Four companies produce almost all of Canada’s pasta: Italpasta, Brampton, Ont., Primo, North York, Ont., Catelli, Montreal, Que., and Grisspasta, Longueuil, Que. Sales total $300 million to $400 million a year.
“There are jobs and investment here,” Jarvis said.
The alleged dumping is also a concern to Canadian durum millers who produce the semolina (durum flour) Canadian pasta makers use, said Gord Harrison, president of the Canadian National Millers Association.
“Canadian market demand for durum semolina and flour has been steady in recent years but still below long-term average, as is the case for other milled wheat products,” he said in an email. “Canada’s durum millers are highly dependent upon the Canadian market. In this context, the surge in imports of pasta is of concern.”
Canadian durum exports to Turkey rose to 105,800 tonnes in 2013-14, versus 82,700 the previous crop year, according to Canadian Grain Commission figures.
“Given Canada’s market share in Turkey, I suspect some of that pasta coming to Canada was made with Canadian durum,” said Cereals Canada president Cam Dahl.
While durum exports to Turkey are important, so are sales to Canadian millers, he added.
“It’s in Canada’s interest, and all of the value chain’s interest, to have that processing in Canada so it is a concern when subsidies from other governments threaten that industry,” he said. “Yes, we might be exporting some of that durum to Turkey to come back as pasta… but if it’s based on government support then what happens when that government support disappears and we’re left without the export opportunity and the value added here in Canada?
“I am always concerned when foreign subsidies are putting Canadian processing at risk as opposed to genuine market conditions.”
Dahl doubts asking companies to voluntarily stop importing Turkish pasta will work.
“I don’t know of the approach having worked in the past anywhere, put that way.