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KAP grapples with China canola trade dispute

Can science trump politics and what sort of government aid, if any, is needed?

What, if any, support the federal government should provide canola farmers following the loss of their biggest canola customer China, was discussed at the Keystone Agricultural Producers (KAP) advisory council meeting here April 2.

Members also talked about how to get the Chinese government to engage with Canada to try and fix the impasse.

China says recent canola shipments contained pests. Canadians believe the real reason is Canada’s arrest of a senior executive with Huawei, a giant Chinese corporation with close ties to the Chinese government.

“We need to address the political issue in China and hold our own government to standards of integrity and that’s what I’d like you to bring to the federal government,” said District 2 farmer Lyndsey Friesen, sparking applause.

China sees the arrest of Huawei’s Meng Wanzhou as political, Friesen explained later in an interview. Huawei must be held accountable, she said, adding the same applies to Canada’s SNC-Lavalin. The government’s handling of that affair has weakened Canada’s claim of following the rule of law.

George Graham.
photo: Allan Dawson

“I don’t think there’s any political will from taxpayers to help us,” said District 8 farmer George Graham. “I think we have to fight fire with fire. China has several hundred (citizens) training for the winter Olympics in Canada. Send them home. It’s a small step, but it’s a step.”

But Jake Ayre from District 1 disagreed, saying China claims the issue is contaminated canola, therefore Canada should focus “on the science.”

Views varied on what government support KAP should seek to offset loss of the Chinese market.

Les Felsch, from District 4, admitting some farmers might not like his comments, questioned if any government aid is warranted since farmers have tools to protect against canola price fluctuations.

“We have been advocating open markets for years,” he said. “Everybody could’ve priced all their canola… six, seven months ago. We complain now after the fact. This is not something new that happens to us. It’s always a political game we play as producers.”

Bill McVicar, also from District 4, noted canola prices are currently not at historical lows. Farmers may have lost a pricing window, but “it’s not the end of the world… ” he said.

Perhaps the Canadian Food Inspection Agency should deliver an ultimatum: China has four weeks to decide whether it wants any more Canadian canola this year, he added.

District 12’s Leonard Gluska said the simple solution is a straight government subsidy to canola growers. U.S. President Donald Trump set the precedent in sending payments to farmers who saw their prices fall during the trade war he started with China.

Gluska said canola payments could be based on a formula comparing current prices compared to the three-year average.

The AgriStability program is supposed to aid farmers when their incomes fall, but KAP president Bill Campbell doesn’t have much faith in it.

“I don’t think we’re in that area where AgriStability will be beneficial to us, so asking for a modification or a change or an extension to AgriStability, I’m not sure it would be beneficial,” he said. “I certainly don’t want to go to Ottawa and tell them we are doing fine and dandy and this is just great that we lose 40 per cent of our market and we’ll suck it up and take it.”

Chuck Fossay.
photo: Allan Dawson

Manitoba Canola Growers Association president Chuck Fossay agreed, suggesting Ottawa could eliminate the penalty for farmers who want to rejoin AgriStability. Extending the signup deadline would help too, he said.

Extending the repayment deadline for 2018 cash advances and the interest-free portion on 2019 advances could also help in the short term, he said.

“If prices don’t improve from the low they are at now due to lack of demand, many farmers will have difficulties paying their advances back,” Campbell said in a release, echoing concerns raised by Pam de Rocquigny, general manager of the Manitoba Corn Growers Association, which administers cash advance.

Campbell mused about a canola set-aside.

“If we lose 40 per cent of our market are we willing to produce 100 per cent of what we can?”

Fossay said he was uneasy about that idea, adding there are things farmers can do, including locking in prices when profitable.

G3 was offering more than $10 a bushel for canola, he said. Some companies are offering $10.50 for new-crop canola and $11 for speciality oil canola, Fossay said.

“Maybe as producers we need to rethink our price expectations,” he said. “Maybe the days of $12, $14 canola are gone for a few years and we’re looking at $9 at the low end and $11 at the high end, $10 might be the average. I still think that can be a profitable crop when you compare it to others. Work your budgets and maybe you’ll have to talk to your landlords about that $100-an-acre rent you’re paying.

“Don’t sit on canola thinking you’re going to get $12.”

About the author

Reporter

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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