trade It came despite a huge drop in canola seed export, which record wheat sales helped offset
Canada exported a record 44.6 million tonnes of major crops when the 2018-19 crop year ended July 31, up six per cent from the previous record of 41.9 set last crop year, according to Canadian Grain Commission (CGC) statistics.
“If there is potential for profit farmers will grow the crop,” Keystone Agricultural Producers president Bill Campbell said in an interview Aug. 26. “But in 2019 we have seen a drop in the prices of our crops so it will be interesting without favourable income to see what will happen going forward.”
Late in the crop year China all but stopped buying Canadian canola and soybeans, yet it was a major importer of Canadian wheat, canola oil and meal and pulse crops.
Why it matters: Canadian farmers are producing more, grain companies are finding markets and the logistical system is getting it delivered. But trade barriers and lower crop prices are potential threats, which could hurt not only farmers, but Canada’s economy.
Exports are important but so are prices, says Brian Innes, president of the Canadian Agri-Food Trade Association and vice-president of public affairs at the Canola Council of Canada.
“What we’ve seen in the last few months is how (trade) uncertainty can take value of crops down and that does not encourage more investment… and that does not encourage us to produce more and export more,” Innes, alluding to several trade disputes, including with China, said in an interview Aug. 23.
“It’s wonderful that we’re able to produce and export record amounts. It’s equally important that we get the most for our exports and that it is why we keep on working on (reducing) trade barriers… ”
The AGGrowth Coalition is demanding the federal government “support… export-oriented farmers facing significant market disruptions as a result of global trade action.”
Meanwhile, Canadian processors crushed a record 9.295 million tonnes of canola in 2018-19.
Canada exported a record 18.2 million tonnes of wheat (excluding durum), up 12 per cent from 2017-18 and 10 per cent above the five-year average.
The previous record of 17.7 million was set in 2014-15.
In sharp contrast, canola seed exports fell 39 per cent to 9.3 million tonnes in 2018-19 and were five per cent lower than the five-year average of almost 9.8 million tonnes.
Much of it was the result of China, Canada’s top export canola seed customer, all but stopping imports starting in March. While China claimed it was because of weed seed and plant disease contamination in Canadian canola, it’s widely believed China is showing its displeasure with Canada’s December 2018 arrest of Huawei executive Meng Wanzhou at the request of the United States.
Agriculture and Agri-Food Canada (AAFC) projects a record 3.7 million tonnes canola seed carry-over into the current 2019-20 crop year. But an AAFC analyst noted the 2018-19 stocks-to-use ratio of 19 per cent is not a record. Twenty-two per cent is the record, set in 2009-10.
Canadian exports of wheat, durum wheat, barley, soybeans, peas, corn, canary seed, mustard, dry beans, lentils and chickpeas were higher than the previous crop year.
Oat, rye, flax and canola exports were lower.
While China turned its back on Canadian canola, it was a big Canadian wheat customer buying around two million tonnes in 2018-19, Cam Dahl, Cereals Canada president, said in an interview Aug. 21. (Total export volumes by destination were not available at press time.)
Indonesia, a traditional big Canadian wheat customer, bought more than two million tonnes. Bangladesh and Japan were also big buyers.
“The number that really stands out for me is the carry-out,” Dahl said. “I don’t think it’s quite a record low, but it’s pretty close. There’s under four million tonnes of spring wheat in the bin. That’s empty.”
Despite record wheat exports, Canadian wheat prices have declined about 16 per cent since January, University of Manitoba agricultural economist Derek Brewin said in an email.
Dahl is uneasy about wheat sales in 2019-20. Australia, traditionally a supplier of high-protein wheat to China, has been out of the market because of drought.
China traditionally imports American wheat too, but hasn’t since March because of a trade war.
“We had a really good (export) year,” he said. “That was because of weather and politics in many cases and both of those are rather unpredictable and we’re entering this protectionist time so it’s very, very uncertain.”
Meanwhile, relations between Canada and China worsen, he said, alluding to Meng’s arrest and Canada’s warning to China not to undermine democracy in Hong Kong.
Durum wheat exports to Italy continue to be impeded by illegal country-of-origin labelling restrictions and Vietnam, while a small Canadian wheat buyer, is blocking imports claiming they are contaminated with weed seeds.
Peru has also raised concerns about weed seeds, but remains open. Dahl is confident its concerns will be resolved during a meeting in Winnipeg early this month.
Cereals Canada wants the Canadian government to help importers build their own science-based inspection systems.
Canadian exports of many pulse crops went up in 2018-19, but prices were mostly lower, Pulse Canada president Gordon Bacon said in an interview Aug. 25.
“Tonnage doesn’t tell the story,” he said. “You need to look at the dollar value of exports. And even then you need to consider the cost of growing a crop… and where did farm profitability end up in all of this.”
Canadian pulse growers are still recovering from the loss of the Indian market due to a combination of tariff and non-tariff trade barriers.
“Nearly 36 per cent of all (Canadian) pulses went to China (in 2018-19),” Bacon said. “India has dropped down to 10.6 per cent. The U.S. was a major market at 9.8 per cent.
“That’s a real shift from where it was when India was taking over a billion dollars of (Canadian) pulses themselves.”
Canadian pea, lentil and chickpea exports were up three, 109 and six per cent, respectively, in 2018-19 versus the year previous.
Canada’s top five pulse export customers in 2018-19 were China, India, the U.S., Turkey and European Union.