The Canadian government has acknowledged for the first time publicly what most suspected: canola to China is the symptom, not the illness.
China’s decision not to buy Canadian canola seed since March is linked to Canada’s arrest late last year of Meng Wanzhou, vice-president of Chinese technology firm Huawei, at the United States’ request.
“We know that Canadian canola is the best in the world, is unimpeachable in terms of its quality and China is simply using phytosanitary concerns as an excuse to prolong what is fundamentally a conflict, not even with Canada, but between the two largest economies in the world,” Prime Minister Justin Trudeau told reporters in Edmonton May 10.
“I just had a conversation with President Donald Trump yesterday (May 9) where we highlighted the challenges against Canada because of this conflict with China.”
Trudeau repeated his support for Canadian canola growers, including using trade missions to find “better and more reliable” markets.
“But at the same time we need to continue to work to end this… conflict with China,” he said. “We are going to continue to work directly with China and engage in as many different ways as we possibly can to lower the temperature on this, to get the Canadians who have been arbitrarily detained back to safety, but also to continue our trade relationships as we know so many Canadians and Chinese depend on.”
Farmers, exporters and government officials have been driven to distraction that China, Canada’s largest canola seed customer, has not only not been buying since March, but won’t even discuss it.
The few things known for certain include:
- Chinese regulators complained in early March some Canadian canola shipments were contaminated with weed seeds and plant diseases and suspended the licences of Canada’s two biggest canola seed exporters, Richardson International and Viterra.
- The Canadian Food Inspection Agency (CFIA) says those claims don’t match samples it has.
- Soon after, canola seed exporters told the Canola Council of Canada that Chinese canola importers were no longer buying at all.
- Chinese regulators have not agreed to Canada’s request for a face-to-face meeting in China to review its complaint.
But from the outset there has been speculation China’s actions were motivated by concerns going back to 2009 that Canadian canola could infect domestic rapeseed crops with a more virulent strain of blackleg, a fungal disease.
It came to a head in 2016 when China threatened to stop buying Canadian canola unless dockage was cut to one per cent from 2.5.
Canada said then and now, the risk is low.
“Our research has shown that dockage in Canadian canola posed a low risk to Chinese rapeseed and other brassica crops,” CFIA said in an email May 10.
“A dockage study report prepared in December of 2015 concluded that the blackleg risk did not vary significantly with the level of dockage in canola. However, China did not agree with the report’s conclusions. Additional research in response to China’s concerns was initiated in 2016 and completed in late 2018, which has not been shared with China.”
In 2016 Canada and China signed a memorandum of understanding (MOU) allowing Canadian canola seed shipments to contain up to 2.5 per cent dockage until March 31, 2020 when the MOU expires.
Some wonder if Canada has lived up to the MOU.
“China has not linked its decision to suspend imports of canola seed from two Canadian exporters to dockage levels in canola,” CFIA said in an email May 10. “Meanwhile, we have been working around the clock on the canola issue, and we will continue pushing to resolve it as soon as possible.
“The MOU included a commitment for both countries to set up a joint working group to work co-operatively on blackleg risk mitigation strategies. Canada has lived up to its obligations in this area and has published reports for 2017 and 2018 outlining blackleg risk mitigation measures undertaken in Canada to minimize the risk associated with blackleg in canola exports.”
Mitigation efforts include an annual blackleg survey to measure its extent and severity and deregistering susceptible varieties, Canola Council of Canada president Jim Everson said in an interview May 10.
In 2009 China also started requiring imported Canadian canola be crushed at facilities near ports and away from rapeseed-growing areas.
“It recognizes that blackleg is a disease in Canada and its total eradication in Canada is not likely to happen and therefore there needs to be mitigation done,” he said.
If China wants one per cent dockage why don’t Canadian exporters deliver it?
It makes sense when the buyer and seller agree, but not when imposed by government, says Canadian Canola Growers Association CEO Rick White.
“We have to listen to customer demands, but when we look at country regulation that influences trade and cost that’s a different story,” he said in an interview May 8.
“That’s where you need a more scientific rationale otherwise it’s a government body injecting costs on the Canadian system where it’s not justifiable.”
At the very least removing more dockage will increase cleaning times and decrease export capacity, both of which cost exporters money, White said.
Some believe going to one per cent dockage would also cost grain companies as buyers would essentially get more canola for the same price. But that assumes canola buyers pay the same price for dockage as they do for canola.
A number of grain industry officials contacted by the Manitoba Co-operator said it depends on the contract. Sometimes buyers pay just ‘net canola,’ while other sales are ‘gross canola,’ which includes dockage.
It’s not unusual for farmers to deliver canola to primary elevators at less than 2.5 per cent dockage thanks to herbicide-tolerant varieties.
Often farmers are irritated when canola exporters add dockage, even though it’s legal.
While a number of grain industry officials said dockage is an ongoing trade irritant, going to one per cent tomorrow wouldn’t immediately restore Canadian canola exports to China.