The Canadian canola industry was dealt a serious blow this week, and as the dust settles, farmers and industry are wondering if this is could be the first volley in a impending trade war.
Reuters is reporting China has canceled Richardson International Ltd.’s registration to ship canola to the country. This is according to documents obtained by reporters Dominique Patton and Rod Nickel which listed approved exporters — excluding Richardson — on the website of the Chinese customs administration as of March 1.
Canadian agriculture products, which make up 17 per cent of Canada’s exports to China, have benefitted from the trade disputes between the U.S. and China. For instance, China stepped in on the pea market and purchased a big percentage of the 2018 Canadian pea supply after trade issues with India all but halted trade. Canola, wool, and some other products had also seen added demand stemming from the U.S. dispute.
This isn’t the first time Canada’s canola industry has had to grapple with trade issues with China, however unlike past friction that centred on whole-industry phytosanitary issues, such as blackleg, or regulatory topics, such as approving genetically modified traits, this recent move targets one company.
The Canola Council of Canada (CCC), the value chain organization that has been very heavily involved in developing the canola market in China, recently announced changes to how it will approach work in China and other international markets (read more on that here).
Today, a statement from the council to RealAgriculture, says:
China is an important market for Canada’s canola industry, approximately 40 per cent of our exports of canola and canola products go to China. News about blocked exports hurts the whole value chain. Demand for high quality oil and protein remains strong in China, and Canada remains a reliable and sustainable supplier of food for China. We look forward to the company involved resolving the current issue. We are aware of challenges our exporters have faced shipping to China – these are concerning as they create instability and add costs. While diplomatic frictions are concerning, there is no clear evidence that current challenges are linked to these frictions.
Richardson pulled its membership with the Canola Council in January, 2018.
According to Statistics Canada’s latest ending stocks report, canola ending stocks sat at a record-high 14.6 million tonnes, an increase of 4.9 per cent from 2017. Although total canola production declined last year, lower exports and high carry-in farm stocks from the previous crop year has kept stock volumes high. Relatively low prices in the second half of the calendar year also contributed to fewer sales.
This story will be updated as more information becomes available.