Retaliating against China over its import restrictions on Canadian canola will only make the dispute harder to resolve, according to MarketsFarm analyst Mike Jubinville.
Some commentators and farmers are demanding Canada retaliate, for example, by subjecting Chinese imports to intense inspections.
“Taking an aggressive position with China is absolutely pointless,” he said in an interview July 22. “You’re not going to bully China into anything. The Americans have leverage and look, they’re unsuccessful in trying to bully China. We have no chance.”
However, Jubinville added Meng’s extradition case should be expedited. The sooner it’s resolved, the sooner Canada and China can discuss canola trade, he said.
Jubinville doesn’t expect Canadian canola seed exports to China to get back to normal any time soon.
“I can’t even see an end to it,” the MarketsFarm analyst said.
Jubinville’s colleague, Bruce Burnett, MarketsFarm’s director of markets and weather, is pessimistic too.
“I’ve always viewed this problem as something that’s going to be a very long, drawn-out affair,” Burnett said during an interview July 23.
“I think it’s very important as to how long this lasts because if we get to next spring and we haven’t shipped very much (canola to China) that means our total shipments are going to be abysmal because the Chinese would not import significant amounts during their (canola) harvest time (which is March-April).”
There’s lots of speculation about why China has restricted Canadian canola imports. China says it’s because Canadian canola seed shipments were contaminated with weed seeds and plant diseases.
That’s consistent with China’s phytosanitary complaints about Canadian canola in 2009 and 2016.
But because the Chinese government refuses to meet with Canada to discuss its latest complaints, many observers speculate it’s retaliation for Canada arresting Huawei executive Meng Wanzhou at the United States’ request in December 2018.
There’s also the view China put the brakes on canola imports to bolster domestic canola farmers.
A recent paper distributed by the Canadian Agricultural Policy Institute (CAPI) concludes China wants to be more food self-sufficient. (The Canola Council of Canada disagrees with the paper’s conclusions and says China’s growing population needs to buy more Canadian canola.)
Perhaps it’s all of the above.
Burnett sees Huawei as part of the problem, but he doesn’t discount other factors, including reduced Chinese meal demand and a desire to support domestic canola production.
“It is interesting that the canola council feels that it’s (Chinese protectionism) not necessarily a risk because I personally think it is,” he added. “Not to disparage the Chinese, but if some senior-level bureaucrat wants China to be self-sufficient in canola and has the political wherewithal to push it through it could happen.”
While Canada exported just 112,000 tonnes of canola to China in May based on sales made before the current dispute, down 79 per cent compared to May 2018, Canada’s share of total Chinese canola imports dropped to 85 from 95 per cent, Burnett said. That’s an indication China didn’t need or want as much canola and it wasn’t targeting just Canada, he said.