Chinese tariffs disadvantage Canadian canola

(Resource News International) — China’s recent soybean tariff reduction puts Canadian canola producers at a disadvantage, according
to Dave Hickling of the Canola Council of Canada.

Hickling , the council’s vice-president of canola utilization, said a variety of issues are responsible for
Canada’s canola seed exports declining in September and
October. One of those, he said, is the existing tariff in China on
canola imports.

“Freight rates are an
issue, the high Canadian dollar is an issue and recently
there has been a tariff reduction on soybeans which served as
a further disadvantage to Canadian canola. So I think they all
contribute.”

The Chinese tariff on soybeans previously stood at three
per cent. The Chinese government recently lowered the tariff,
however, to one per cent on a three-month temporary basis, from
October through to December. The tariff on canola imports remained, at nine per cent.

“There is skepticism that they will increase it back to
three per cent in January. At least our industry doesn’t think
that is likely to happen. And the canola tariff is at nine so
whereas there was a six per cent differential, there is now an eight
per cent differential which is keeping us out of the market.”

China’s soybean tariff reduction helps
reduce the costs of China’s feed industry, Hickling explained. Soybeans, much like
canola, may be crushed into soybean meal which is an important
ingredient in animal feed.

Another reason, according to
Hickling, is China’s concern over the high price of vegetable
oil. Canola and soybeans can often be used interchangeably
although canola oil is the healthier of the two oils.

“But why they didn’t lower it on canola and other
associated products? That’s a really good question. They say
they’re not interested in lowering it at this time and that’s
not really a good answer.”

Hickling said canola oil exports have been fairly steady
but pointed out that Canada’s canola oil exports to China are
less significant. “Canadian crushers are basically at capacity
and they have other markets for canola oil.”

He emphasized, however, that the CCC is hoping the Canadian
government will assist it in promoting tariff reduction for
both canola seed and canola oil, both of which, he said, are
important issues for the canola industry.

“We’ve been asking the government to do a lot more in
furthering our objectives on tariff reduction in China. We’ve
made it very clear that it’s a priority for our industry. It
has the potential to have a significant economic impact if our
canola sales suffer on a long-term basis to China.”