China has been buying about 40 per cent of the canola seed Canada exports, so losing that market, even temporarily, is a blow.
That’s a lot of eggs in one basket. But it shouldn’t be a surprise, says Brian Innes, the Canola Council of Canada’s (CCC) vice-president of public affairs and president of the Canadian Agri-Food Trade Alliance.
“China buys 60 per cent of all the oilseeds traded in the world,” he told the Manitoba Co-operator. “So if we’re exporting oilseeds and we’re not selling to the person buying 60 per cent of all the oilseeds traded in the world, you’re closing yourself off to a pretty big market.”
China is a very dominant player in oilseed markets, which by default makes it a large buyer of Canadian canola. Everyone in the industry wants to get the most value for product and China has been a very good customer that paid those good values, Innes said.
The canola council has been proactive in developing new markets and keeping existing ones open. Almost 10 years ago it launched its market access plan. Market access is among its top three strategic priorities for 2025 along with promoting a sustainable and reliable canola supply and differentiating value.
In theory, the risk of being so reliant on one customer is mitigated by trade rules, to prevent trade barriers such as China has imposed, Al Mussell, an agricultural economist with Agri-Food Economic Systems said.
But even though China joined the World Trade Organization in 2001, it isn’t playing by the rules, he said.
Jean-Marc Ruest, Richardson International’s senior vice-president of corporate affairs and general counsel, made the same point in an interview.
“Given the size and growth potential, China becomes an obvious marketplace,” he said.
“You expect that your trading partner is going to act reasonably and predictably.”
The CCC maintains China needs Canadian canola because of its huge population and that Canada has the supply to meet its demand.
But some agricultural economists, including Mussell, say that’s not the case because African swine fever has decimated China’s swine herd and because canola can be replaced by other oilseeds, including soybeans.