Farmers are bracing for the potential impact of China’s new anti-dumping investigation into Canadian canola imports, which comes amid an already tumultuous year of economic and environmental challenges.
China’s announcement Tuesday was in response to Canada planning to impose increased tariffs on Chinese-made electric vehicles, steel and aluminum. While the federal government says those tariffs are meant to protect Canadian jobs, the agricultural sector is worried it may end up paying the price.
“A political decision on the other side of the world has a direct impact on our bottom line,” John McKee told Global News from his canola and wheat farm in Stirling, Alta.
“This is one more thing we’re going to deal with that comes out of left field. That is just a frustration.”
Tuesday’s announcement comes as food producers continue to recover from the four-day-long railway shutdown that choked Canada’s supply chains late last month.
CN and CPKC have said it could take weeks to get freight traffic back to normal despite federal government intervention that got trains moving again.
Their trains haul a combined $1 billion worth of goods per day, according to the Railway Association of Canada. The latest Statistics Canada data shows nearly seven million tonnes of canola were moved by rail in 2022.
Farmers have already been struggling with the rising cost of farmland and inflationary pressures on everything from feed to equipment. Persistent droughts have also affected output and market prices, though some farms have been able to plant more canola in the fall due to climate change delaying the so-called “killing frost.”
McKee said the market price for canola in southern Alberta dropped by nearly a dollar Tuesday following China’s announcement. That would wipe $100,000 of revenue out of his operation, he said.
“When that income doesn’t come in it means we have to massively rethink how we’re moving forward,” he said.
“It’s not going to destroy us. … But to keep everything running smoothly, you need to operate at a certain level. And just losing that amount of money … well, it’s disheartening.”
Beijing is accusing Canada of undercutting its export price on canola to get an unfair market advantage, a process known as dumping.
The accusation is similar to the ones Canada has made to justify slapping a 100 per cent tariff on Chinese EVs, which Ottawa says are in response to massive subsidies that could spur mass Chinese exports in an industry Canada is looking to gain a foothold in.
China is Canada’s top export market for canola seeds, oil and meal. The Canola Council of Canada says economic activity with China reached $5 billion in 2023, and three-quarters of Canada’s exported canola seeds alone went to China between January and June this year.
“China has demonstrated over many years that they value our high quality canola, and Canada is the largest producer of high quality canola globally. So I believe we have a shared interest in making this work,” Chris Davison, president and CEO of the council, told Global News.
Experts had predicted to Global News that China would go after a specific agricultural sector in retaliation over Canada’s EV tariffs — and canola has been a prime target before.
In 2019, Beijing barred canola seed imports from two major Canadian companies, alleging it had detected pests in their shipments.
The canola ban took place amid heightened tensions between the two countries following the Canadian detention of Huawei executive Meng Wanzhou at the request of the U.S., and China’s subsequent detention of two Canadian men, Michael Kovrig and Michael Spavor.
Canada launched a WTO challenge in 2020, but the review panel was suspended in August 2022, three months after China reinstated shipments of Canadian canola.
The Canola Council of Canada says the value of Canadian canola exports dropped from $2.8 billion in 2018 to $1.8 billion in 2021, the last full year under the ban. An analysis conducted on behalf of the council in 2021 suggests the suspension of export licenses cost the industry up to $2.35 billion between the start of the ban and August 2020.
Davison said the council’s focus right now is to ensure open and predictable market access for canola moving forward.
“We will support (China’s) investigation, as appropriate, to demonstrate what we know is the fair access and competitiveness of Canadian canola,” he said. “I wouldn’t want to speculate on the outcome of an investigation that hasn’t even started yet.”
Saskatchewan’s agriculture and trade ministers sent a letter to their federal counterparts Tuesday expressing concern about the Chinese probe, noting the province is the top canola producer in the country.
Agriculture Minister Lawrence MacAulay wrote on social media China’s move is “deeply concerning” and that he is working with government and industry colleagues to “monitor developments closely.” International Trade Minister Mary Ng issued a similar statement.
At an unrelated event in Edmonton, Employment Minister Randy Boissonnault defended the government’s tariffs and said Ottawa had ways to help farmers.
“We have programs inside Agriculture Canada to help farmers that find themselves with a low-commodity price,” he said. “And I know the minister of agriculture will be responding and reaching out to producers.”
Those measures include the price pooling program that guarantees protection against unexpected drops in market prices, as well as loan programs.
Back on his Alberta farm, McKee said he may need to consider planting less canola — or no canola at all — to avoid losing money if the price impact continues.
But he’s also choosing to believe cooler heads will prevail in the Canada-China dispute.
“I’m sure that it will be resolved,” he said. “It might take six months, but they’ll be back when they need to eat, when they need the food. They will buy it. But right now there’s this political event.”
— with files from Global’s David Akin and the Canadian Press