Despite the ongoing efforts of Canada’s canola industry and the federal and provincial governments, China still is not importing Canadian canola seed, or even willing to discuss its de facto boycott that began in March.
“It appears there is no immediate solution to this issue,” Canola Council of Canada president Jim Everson told a webinar updating the situation May 24.
Why it matters: China is Canada’s biggest canola seed export customer importing 4.8 million tonnes worth $2.7 billion in 2018. Since China ceased imports spot canola prices have fallen about six per cent.
Canada continues to export canola oil to China but there have been delays due to heightened Chinese inspections, he said.
“We continue to monitor the situation,” Chris Vervaet, executive director of the Canadian Oilseed Processors Association, said in an email May 24. “Product is making it in. It is fair to say that there’s a general sense of uneasiness.”
China claims Canadian canola seed shipments were contained with pests, but the Canadian Food Inspection Agency (CFIA) says the samples it inspected meet China’s specifications. As a result, many observers suspect China is signalling its displeasure with Canada’s arrest late last year of Meng Wanzhou, vice-president of Chinese technology firm Huawei, at the request of U.S. government.
Meanwhile, farmers won’t have access to higher loan limits under the Advance Payments Program for a while yet.
“I wish it was a matter of a few weeks, but it could be a couple of months,” Agriculture Minister Marie-Claude Bibeau told webinar participants.
“… I cannot assure you of a specific date, but… we’re all working on putting it on the fast track.”
Under the current rules farmers can borrow up to $400,000 against growing or stored agricultural products, with the first $100,000 interest free.
Under the new rules Bibeau announced May 1 eligible farmers can borrow up to $1 million and canola growers can borrow up to $500,000 of it interest free.
But first program regulations must be changed and published in the Canada Gazette II. Then the government must sign agreements with the 36 groups administering the program, Bibeau said.
The new $1-million loan limit is a permanent change; the $500,000 interest free on canola advances is just for 2019-20, she said.
“We are challenging the government to speed it up at its end knowing there’s a lot of process it has to go through,” Canadian Canola Growers Association CEO Rick White told the webinar. “But at the same time we very much understand the urgency and we have expressed that urgency to get this done… because we understand how much pressure is on people out there. We’re ready to go at our end.”
While cash advances can’t replace canola seed exports, they can help farmers with short-term cash flow, White said.
Although resuming canola seed exports to China remains the top priority, the working group struck to do that is also exploring market diversification and ways to support canola growers should more aid be necessary, Everson said.
In addition, the deadline for farmers to enrol in AgriStability has been extended to July 2.
The program is supposed to help farmers when incomes fall. But many contend changes by the previous government prevent payouts unless there’s a disaster.
The working group struck a subcommittee to monitor canola prices, sales and carry-over to keep Bibeau informed on additional aid farmers might need, White said
“We’ve talked about other help… but again the government has been focused on a needs-based approach and a strategy-based approach to this,” he said.
One possibility is aid for additional canola storage.
“No decisions have been made, of course, but the issue has been raised,” White said.
Buying bins is expensive and needs to be planned for, he added.
Finding new markets for canola is also top of mind. Raising the federal renewable fuel mandate to five per cent from two would use 1.3 million tonnes of canola, White said. It won’t replace China but “every little bit helps.”
“The cost of expanding the mandate to five per cent would be negligible at the consumer level — 0.7 cent per litre would be the financial impact at the pump,” he said. “We think it has lots of merit.
“(I)t would reduce greenhouse gases by 3-1/2 million tonnes per year.
“We are very active in getting that discussed and on the radar of the government federally to push that forward through the working group.”
Canola could end up in biodiesel in the United States and Europe too, Everson said. To that end the canola council is working to update the permits certifying canola production as environmentally sustainable — a requirement for accessing European markets, he said.
The industry is also looking to export more canola seed to countries that have crushing plants, including Pakistan, Bangladesh, and United Arab Emirates.
Last year American farmers received almost US$12 billion in direct, commodity-specific payments, including US$1.65 a bushel on soybeans to offset losses due to Chinese tariffs.
The U.S. has announced a similar US$16-billion program for the current year.
While Bibeau said the government is “open to reconsider” an American-style subsidy to canola farmers, she said Canada has a different philosophy.
“Just having a quick reaction, financial support… we are afraid it could create a distortion in the market and we believe that it is more important to work together,” she said. “We value your input obviously — but still as Canadians we believe it’s more important to bet on stability and predictability.”