Trading with China is important for Canada, but especially for its farmers.
China is Canada’s second-biggest export market for agricultural goods behind the United States, says a recent report from the Canada West Foundation.
“The significance of this growing trade with China is of particular concern for Western Canada which ships close to two-thirds of all Canada’s exports to China,” the report says.
It also notes how important agriculture is to the economies of the four western provinces, but especially Saskatchewan and Manitoba… “where 44 and 36 per cent, respectively, of their total exports to the world are agricultural exports.”
“Saskatchewan’s agricultural export also accounts for 20 per cent of its GDP (total industries at basic price) followed by Manitoba (nine per cent), Alberta (three per cent) and British Columbia (two per cent). Such export dependence in agriculture makes walking away from the largest agriculture market and its consumers very difficult.”
Agricultural commodities and agri-foods account for one-third of Canada’s total exports to China.
“As of 2019, nine per cent of Canada’s total agricultural exports to the world were shipped to China,” the report says.
The rate in growth of farm exports to China is outpacing those to the U.S.
“While Canadian exports of all goods and services to China have been growing at an average rate of 10 per cent over the last two decades, agricultural exports have been growing even faster at 15 per cent. As of July 2020, monthly export data shows that it is still growing. Where Canada has seen drops in exports, it has been on exports targeted by Chinese government action in specific years. China, on the other hand, has been hit with a series of natural disasters and disease that have significantly harmed food production and set back long-standing efforts to raise domestic contributions to food security.”
More than $6 billion, or 27 per cent of Canada’s exports to China, were agricultural products in 2019, the report says.
“Furthermore, nearly three-quarters of those agricultural exports came from the four western provinces.
“Furthermore, despite the downturn in bilateral relations, the significance of the Chinese market for Canadian agriculture is expected to continue to grow,” the report says. “Based on OECD projection, our analysis shows that by 2028, China will be the largest consumer for some of the key agricultural goods which Canada produces, such as oilseeds, soybeans, protein meals and cereals.
“While Canada’s exports to the world are expected to drop 16.4 per cent from 2019 to TTM (trailing 12 months) July 2020, its exports to China are expected to increase by three per cent.
“For agriculture, Canada is expected to see an export growth of eight per cent to the world compared to 36 per cent to China for the same observed period.”
While Canadian canola seed exports to China declined in 2018-19 and rose a bit in 2019-20, there were even bigger gains in wheat sales, which were up 112 per cent.
Field pea exports were higher too, the report says.