“This artificial trade barrier is really becoming a big hindrance.”
– GREG POROZNI
China is not accepting new Canadian canola imports, despite telling the world’s top canola exporter recently that the oilseed carrying the common blackleg disease could enter some ports.
China has said it’s concerned about diseased canola, which it imports to use as cooking oil, infecting its domestic crop, but Canadian officials have said they believe China is simply winnowing down its large stockpiles.
“Everything is (at) a full stop,” said Greg Porozni, a member of the board of directors for the Canola Council of Canada and an Alberta canola grower. Canadian exporters have been unable to get permits from Chinese authorities, even for those Chinese crushers willing to accept the canola, he said.
The council estimates the dispute with China will cost the industry $1.3 billion, the value of sales last year, and affect one million tonnes of lost sales this crop year, Porozni said.
China was Canada’s biggest export market last year, importing 2.87 million tonnes.
Blackleg, a disease caused by a fungus that can kill the canola plant but poses no health risk to humans, is commonly found on canola seed. It is not a major threat to Canadian crops because of resistant crop varieties.
China has previously said it would restrict the import of Canadian canola with blackleg disease to ports away from rapeseed-growing areas as of Nov. 15, a move that takes away the ports favoured by Canadian exporters. The canola council had originally predicted the restrictions would curb Canada’s canola exports to China by 70 per cent.
China is still accepting Canadian canola that was shipped before the deadline but has not yet arrived, said an industry source, who asked not to be identified.
Canola without the disease could in theory move freely, however blackleg is common in Canadian canola.
China also has restrictions in place against Australian canola with blackleg disease as of Oct. 15.
“This artificial trade barrier is really becoming a big hindrance,” said Porozni, who is also an official with Alberta’s canola association. “This is really concerning us as an industry.”
Canada had already shipped between 1.1 million and 1.2 million tonnes to China before the restrictions took effect, he said.
Canadian Prime Minister Stephen Harper will visit China in early December and is expected to raise the canola issue. Canada sent officials to China to try and negotiate a resolution shortly after the dispute became public on Oct. 22. It’s unclear if those officials are still meeting in China, Porozni said.
Porozni said he’s concerned about the China dispute’s impact on canola prices for this and the following crop year.
ICE Canada front-month canola futures plunged four per cent on Oct. 22 but have since risen 6.6 per cent as traders said the market had already factored in the dispute.