Some producers might have second thoughts about seeding the crop, says the president of Agricultural Producers Association of Saskatchewan

Canadian farmers are being thrown another curveball by forces beyond their control.

In a move considered to be retaliation for tariffs Canada placed on Chinese imports, including electric vehicles, China announced a dumping investigation into Canadian canola.

Dumping refers to a trade practice where a country sells goods in a foreign country for a lower price than at home.

Ian Boxall, president of the Agricultural Producers Association of Saskatchewan (APAS), who farms near Tisdale in the province’s northeast, said the timing of the announcement was interesting for several reasons.

“The timing of it is on purpose. The Western Canadian harvest is in full swing and they put an investigation into us dumping canola a year and a half ago,” he said. “The timing of it is pretty strategic on their part.”

Boxall said China has taken similar steps in the past in regards to canola, usually when farmers were in the fields harvesting. He said making such moves can benefit China because it’s the largest importer of Canadian canola.

“Who benefits when the price goes low? China does,” he said.

Boxall noted canola has historically been an important crop for Saskatchewan farmers — it’s the largest and generates valuable cash.

He said it’s too early to tell whether farmers will plant smaller amounts of canola in the future, but some producers might have second thoughts about seeding it.

“We’ll see how volatile the market is next spring,” he said.

Producers need stable markets for their crops, Boxall noted, calling on the federal government to do everything in its power to work with China to resolve the current issue while also working to open new markets.

“We need this issue resolved.”

Saskatchewan’s Minister of Trade and Export Development, Jeremy Harrison, said it’s still unclear what China’s anti-dumping investigation will entail. He said the move is concerning for the province and shows the importance of developing new markets for agricultural exports.

“This is why we have international offices; this is why we undertake trade missions,” Harrison said.

In a note to investors, CIBC Capital Markets analysts Jacob Bout and Anshul Aggarwal speculated China’s move is likely intended to send a message to larger trading partners, specifically the United States and the European Union.

They said China is the biggest buyer of Canadian canola, originally expected to buy 70 per cent of Canada’s canola shipment this year. China would have a difficult time replacing it, as the crop is not currently in a surplus position globally, they noted.

The canola supply in Canada as of July was at a four-year high of 3.1 million metric tons, according to Statistics Canada data — a 67 per cent increase from a year ago — and that was before this year’s harvest.

Another further potential complication for China is its inability to turn to the world’s second-largest canola exporter, Australia, due to a dispute dating back to 2020.

“The Chinese market is effectively closed to them after the Chinese government enforced a no tolerance policy for blackleg disease in late 2020,” the CIBC analysts said. 

The move by China may not be as impactful as what occurred in 2019, when the country imposed a ban on two canola exporters that was in place for three years, they said, adding that canola producers in Canada are better positioned to weather potential negative impacts this time around because the industry is not as dependent on exports.

Bout and Aggarwal added that these recent events are similar to a dispute China had with Australia over barley.

Source: The Star Phoenix