Canada should retaliate against China’s boycott of Canadian canola seed, say several canola industry officials.
That’s an option, but also a last resort, says the Canola Council of Canada (CCC).
“I would say no issue is off the table in terms of various approaches that we can take as a country to deal with the issue,” CCC president Jim Everson said during a webinar April 18, following a meeting of the working group set up to deal with the China-canola trade issue. “We have been briefed as a working group on various dispute settlement mechanisms and actions that can be taken — diplomatic, legal and technical. So I would say nothing is off the table. Retaliation is always something that you do as a last resort. Our initial goal is to be able to have a good discussion about the issues that China has raised and to resolve through technical discussions.”
China will soon respond to Canada’s request to discuss its complaints that Canadian canola shipments in March were contaminated with weed seeds and plant diseases, according to one source. If Canada goes ‘political’ that could close the door to a resolution, the source said.
It’s widely suspected 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.
According to one canola industry official the impasse has dragged on long enough.
He isn’t alone.
Guy Saint-Jacques, a former Canadian ambassador to China, said last month Canada should expel Chinese athletes training for the winter Olympics in Canada.
“We are going to lose billions of dollars in trade and it’s time to show our displeasure,” Saint-Jacques was quoted as saying.
Following trade rules is laudable, but harder to do when one party doesn’t, Al Mussell, an agricultural economist with Agri-Food Economic Systems, said in an interview April 17.
“The other guy is playing outside the rule book so maybe it’s time we started playing outside the playbook too,” Mussell said.
Mussell, however, acknowledged China, because of its size and the amount of trading it does, has more leverage than Canada.
Retaliation could also make matters worse, he said.
In the short term China can find other oilseeds.
“But in the intermediate term it needs canola so that does return to us some degree of influence — I wouldn’t say leverage because Canada is a very small country,” Mussell said.
China imports about 40 per cent of Canada’s canola seed making it the country’s biggest seed market generating $2.7 billion in sales last year, Everson said.
“The good news actually about oil exports to China is that they have approximately doubled over the last two years… ” he said. “At the moment, in terms of this disruption of canola seed trade, it has not been affecting the oil trade.”
In 2018 China imported 1.2 million tonnes of canola oil from Canada and 1.3 million tonnes of canola meal.
“As far as we are aware there are no other Canadian agricultural commodities that have China as a market that have been affected by this issue,” Everson said, dispelling rumours to the contrary.
Grain companies are still buying canola and honouring contracts, he said.
In the meantime, the Canadian Canola Growers Association (CCGA) has sent a “loud and clear” message to the federal government “and it is committed to helping farmers through this,” CEO Rick White said.
The CCGA suggests helping farmers’ cash flow by doubling the amount of money loaned through cash advances to $800,000 and expanding the interest-free portion.
“(W)e may have to look to the government for help on infrastructure investment for the building of bins or other storage equipment to keep canola in storage for a longer period of time,” White said.
Other suggestions include making it easier for farmers to enrol in AgriStability and possible changes to AgriInvest.
The CCGA is also lobbying for Ottawa to increase the biodiesel mandate to at least five per cent, up from two per cent. That would use up 1.3 million tonnes of canola, White said.
“From our point of view it not only creates domestic demand for Canadian canola, it’s good for the environment and it’s good for farmers,” he said.
The federal government has been listening to industry concerns and has moved quickly to try and restore canola exports to China, Everson said.
He noted Marie-Claude Bibeau, the new federal agriculture minister, has initiated much of the activity within government. She’s got other departments including Global Affairs Canada, the Canadian Food Inspection Agency and others involved. Her efforts have also included vocal support for the scientific approach and clear statements of confidence in the quality of Canada’s inspection system, Everson said.
Everson said CFIA has not been able to find the same level of contamination in samples of shipments sent to China as claimed by China.
“We are of a view that shipments that have been made by Canada are acceptable in terms of the standards that China has — that they are high quality,” Everson said.
In addition to restoring canola trade with China the industry-government working group is pursuing market diversification and ideas to assist canola growers in the short term.