Canada’s $27B canola market could lose $2.7B over China’s import block

China’s decision to block imports of Canadian canola products signals a significant threat to Canada’s canola farming industry — and has the government rushing to resolve the dispute.

The canola farming and export business in Canada is a major economic driver and represents one of the country’s most valuable commodities.

The crop contributes approximately $26.7 billion to the economy every year and employs more than 250,000 people, according to Brian Innes, vice-president of public affairs with the Canola Council of Canada (CCC),

Canada is currently home to 43,000 canola growers.

“The impact is huge. To put it in perspective, agri-food is one in seven jobs in the country, and canola is the largest source of farm income in agriculture so canola is a big part of what we do in agriculture in Canada. And most of what we are able to do in canola in Canada comes from exports,” Innes explained.

Approximately 40 per cent of canola produced by Canadian farmers is supplied to China. This made China the largest importer of Canadian canola products in 2018, Innes said.

The United States represented the largest importer of Canadian canola until 2018.

Therefore, China’s punitive measure is a blow to $2.7 billion worth of Canadian exports.

WATCH (March 22, 2019): China has stopped all canola imports from Canada, industry group says

1:47 China has stopped all canola imports from Canada, industry group says

With figures like these, it’s no surprise that Prime Minister Justin Trudeau and officials are exploring several options to resolve this dispute. Recently, the prime minister proposed sending a high-level delegation to China to negotiate a solution.

“We know that the canola produced here in Canada is top-quality, and the oversight, inspection and science that surrounds what we do here is top-notch and world-class, and that is certainly something that we are going to continue to impress upon … our Chinese interlocutors on this issue,” Trudeau told reporters this week.

The Chinese have offered an explanation for their decision to block canola imports on the country’s General Administration of Customs website. One of the reasons provided includes detecting hazardous organisms in canola shipments from the Regina-based Viterra Inc. and Winnipeg-based Richardson International — a claim that hasn’t been verified, the CCC has stated.

WATCH (March 22, 2019): Canada’s canola industry calls on government for help

2:20 Canada’s canola industry calls on government for help

The Canadian Food Inspection Agency (CFIA) has also investigated and subsequently cleared canola shipments of these hazards.

The impact of canola is truly widespread across the country, based on CCC data.

While Saskatchewan receives the most significant economic book from the canola industry at $12.22 billion, Alberta and Manitoba are not far behind with $7.3 billion and $4.16 billion, respectively.

In these provinces, the impact of China’s trade decision would be felt deeply.

Earlier this week, Alberta Premier Rachel Notley said that if Ottawa can’t mend its relationship with China and ensure that exports keep flowing, Albertans will look to the federal government to help relieve the province’s robust canola industry.

“It’s a huge hole to fill when we lose the ability to export canola seeds to China, and that means a lot of uncertainty for growers, lower prices and less money coming into Canada to drive communities across the country,” Innes explained.

Canadian farmers are also becoming concerned that, come harvest season, there won’t be a market for their canola crops.

“There is a lot of confusion amongst farmers about what is able to be exported,” said David Quist, executive director of the Western Canadian Wheat Growers.

“Therefore, a lot of people are saying: ‘What should I be planting? What should I be putting in the ground? Is there going to be a market for my product by the end of harvest season when it’s coming off the field?'”

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So far, other major importers of Canadian canola products have not raised the issues that China claims to have found. Should officials fail to resolve the trade dispute, Innes explained that they would look to other major importers of Canadian canola, including Japan, Mexico, Europe, Pakistan, Bangladesh and the United Arab Emirates, to make up the difference.

“Well, we’re very focused on resolving this issue because the China seed market is very difficult to replace … We’re also very interested in selling to other customers in the world who appreciate the quality of our canola … the signal being sent to Canadian farmers is to find other countries to feed who will value the quality of our products,” Innes said.