Canadian Farmers Continue to Struggle with China’s Ban on Exports

The hardship is mounting for Canadian farmers hurt by China’s decision to stop buying certain agricultural exports from Canada in the wake of Ottawa’s arrest of a top Chinese tech executive

by Steven Chase – The Globe and Mail

“Since the end of December we have not sold a single vessel – a shipload of soybeans – to China,” Ron Davidson, executive director at Soy Canada, said.

Relations between Beijing and Ottawa turned sour late last year, at a time when Canadian farmers were already struggling with the turmoil in agricultural markets caused by the mid-2018 trade war between the United States and China. The catalyst was Canada’s detention of Chinese tech giant Huawei Technologies Co. Ltd.’s chief financial officer last December on an extradition request from the United States.

“We’re still processing hogs every week and the product is moving into the global market. It’s just not moving to the best market that there is”

 

In the months since Meng Wanzhou was arrested, China has increased retaliatory economic pressure on Canada, and the casualties have included Canadian soybeans, canola, pork and beef. With the loss of a major market sowing uncertainty in the industry, farmers of these products are scrambling to find alternative buyers.

Agriculture Minister Marie-Claude Bibeau said in a statement Tuesday that the government will ensure farmers “have the support they need.”

“In recent weeks, we have announced over $27-million in support of our grains, oilseeds and meat industries, aimed primarily at developing international markets,” she said, adding that Ottawa is working with provinces to improve farm financial-support programs such as AgriStability.

“We are working around the clock to resume trade of key agricultural exports with China as soon as possible.”

Canola producers are still struggling with a suspension of canola seed purchases from China – a loss that amounts to one-quarter of their exports. “Canada on average ships about $2.7-billion in canola seed [annually] to China. This has slowed to a trickle,” said Brian Innes, vice-president of public affairs at the Canola Council of Canada, which represents 43,000 producers.

“This is by far the most challenging disruption this industry has ever seen.”

For pork producers – now banned from China – they’re working to shift export sales to other foreign markets such as Japan, Korea and Taiwan. But the buyers there know Canadian pork is barred from China and the prices fetched will reflect that, said John Ross, executive director of the Canadian Pork Council.

“Nothing was certified for export after June 25. So that product is really looking for a home,” said Mr. Ross, whose organization represents 7,000 producers.

A ban on shipments of Canadian pork and beef to China took effect late last month. Chinese officials cited falsified export certificates.

Mr. Ross said Canadian pork producers were on track toward $1-billion in sales to China this year, or as much as one-quarter of exports, before the ban.

He added China also purchased pig heads and feet, and there’s no significant alternative market for these parts now.

“We’re still processing hogs every week and the product is moving into the global market. It’s just not moving to the best market that there is.”

For soybean farmers, the closing of the China market is the latest in a turbulent world market. After China slapped major tariffs on U.S. soybeans in 2018, the American crop ending up flooding other markets including Canada and Europe. Before Ms. Meng’s arrest, China had offered Canadian soybean farmers an alternative export destination.

“We got pushed out of the Canadian market. We got pushed out of the European market, which is the second biggest world market and we became overdependent on China,” Mr. Davidson said. “And now something happened in China and we’re not selling there either.”

He said the soybean industry – which during the last census amounted to more than 30,000 farmers – is looking to Ottawa for help.

The canola industry’s Mr. Innes says prices have fallen 10 per cent, which is a significant change for farmers. “Taking away 10 per cent takes away farmers’ ability to meet costs and takes away profits.” Over a year, a 10-per-cent decline in prices means a loss of $1-billion in revenue, he said.

The Canadian government has been trying to solve the impasse with China, but Beijing has not been receptive. “The government is making all effort to engage the Chinese but it takes two to engage. The response from China has not been very positive,” Mr. Ross said.

Ottawa is also trying to find new markets for products. Mr. Innes praised the work of International Trade Minister James Carr who has helped spur more outreach to other buyers such as Japan, Korea, Pakistan and European countries.

The canola industry is also seeking the federal government’s help to boost requirements for biodiesel that contains crop-base oil such as canola.

One of the biggest problems now is not knowing what comes next.

“I would suggest that for all producers, the suspension of the pork trade with China immediately injected a significant level of instability and uncertainty in our industry,” Mr. Ross said.

“In turn, this instability impacts producer’s confidence in the market and their willingness to invest in both the maintenance and/or growth of their farms.”

Source: The Globe and Mail