Canada ‘playing chess’ on canola file

MarketsFarm — Canola seed sales to China remain at a standstill with little fresh news to report, according to a Canola Council of Canada briefing to farmers held Friday morning together with federal International Trade Diversification Minister Jim Carr.

However, efforts on a number of fronts are ongoing, as Canada works to resolve the issue.

“We have to play chess here, not checkers,” said Carr in the teleconference as he outlined some of the strategy for dealing with the problems Canada is having selling canola to China.

Engagement with China “as best we can under the circumstances we find ourselves” was described as a key pillar of the strategy, according to Carr.

Canada has asked for an invitation from China for a senior delegation of scientists to inspect canola shipments that are alleged to contain impurities and pests. However, China has not yet responded to those requests.

That lack of response from China to the request “is very much a disappointment,” Canola Council president Jim Everson said, adding “we believe China has an obligation to come forward and engage with us about that.

“Our primary goal moving ahead is to regain this market,” said.

While quality concerns have been cited by China as the main reason for stopping Canadian canola purchases, industry participants generally believe the more likely scenario was that canola was caught in the middle of a political dispute between the two countries, stemming from Canada’s detainment of Huawei executive Meng Wanzhou on behalf of the United States. A number of Canadians have also since been detained by China.

“We don’t have any evidence, but we’re not blind or silly and we certainly understand why people would conclude that there are geopolitical reasons for the timing of Chinese action,” said Carr. “We have to look at all of our options, but we also have to look at the consequences of the actions we take.”

The trade minister has been speaking with many of Canada’s allies and said “all options” were on the table when asked about the possibility of blocking Chinese imports or taking a complaint to the World Trade Organization.

“We have to be cautious on how we escalate the issue… and we want to avoid unnecessary escalation,” added Carr. “We are prepared to use (the) diplomatic and political levers that are at our disposal when we believe the time is right.”

In the meantime, recently announced increases to the Advance Payments Program may not attack the root issue, but will provide some help in the short term, Carr said.

“The fix to the problem is to get China back to buying our canola,” said Rick White, CEO of the Canadian Canola Growers Association, also on the call. However, he added, cash flow needs in the short term will be helped by the increase in available loans.

On the matter of diversifying canola markets, Carr said “we know that it’s not going to be possible to replace the Chinese partnership in the short term, nor do we think we are going to have to, but it just makes sense for Canada to expand its export markets.”

A trade mission to Japan and South Korea is also being planned.

“This isn’t the first time we’ve had a problem with the Chinese on the canola file,” said Carr.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.