The canola export issue between Canada and China is not going away.
Frankly I don’t see a solution cropping up for several months. It is likely the Chinese have secured much of their need for the time being, and won’t be getting internal pressure for a Canadian source of canola oil until closer to the 2019 harvest. When such pressure does come from companies within China the pressure to negotiate toward a real solution will mount.
Whether my guess is right, or way out in left field, the issue for Canadian canola growers is real today.
In response to that reality the federal government finally came out with some programming on May 1 to help producers.
Agriculture minister Marie-Claude Bibeau announced a plan to provide additional credit to producers through the Advance Payments Program, expanding available credit to $1 million and providing up to $500,000 interest-free for canola production.
The obvious question is whether increasing a farm debt is really helping, or whether farmers should have to carry the costs of a purely politically motivated trade barrier?
Reaction to the announcement has not exactly been glowing.
“The China decision to block canola has had a major impact on grain farmers with no end in sight. Farmers don’t want tax dollars in the form of interest free loans, we want to be able to grow our grains and export them without political interference,” said Gunter Jochum, president of the Western Canadian Wheat Growers (WCWG), in a release.
The WCWG release noted; farmers are accustomed to managing risk associated with factors that are outside of their control such as weather. Factors such as trade markets and political interference should be within our government’s control.
The new program sounds impressive with a maximum advance of $1 million but the WCWG notes, to be “eligible for $1 million advance on canola where $500,000 is interest free, you have to produce approximately 200,000 bushels of canola. In order to qualify for the maximum, you need 5,263 acres at 38 bushels per acre, which is roughly a 16,000-acre farm.”
The Saskatchewan Association of Rural Municipalities also noted the help is purely a loan.
“Farmers will be expected to repay dollars borrowed through the Advanced Payment program, since it is a loan and to be clear it is a temporary solution,” stated Ray Orb, president of SARM in a release.
“While this announcement is a step in the right direction, it still does not address the problem with China,” explained Orb. “We are frustrated and will continue to push for a diplomatic resolution to the problem. Canada needs an ambassador to China and Ministers Bibeau, Carr and Freeland also need to be more involved.”
Nearly half (40 per cent) of canola and canola products produced in Canada go to China. Saskatchewan is the largest exporter of canola in Canada and globally. As SARM noted, access to the world market is critical to the success of the agriculture industry and the provincial and national economies.
The loan announced by the feds is at best a stop gap measure. While trade diversification minister Jim Carr also announced efforts to expand exports to other Asian markets, the real solution is getting to the table with China and finding an equitable solution to what is essentially a temper tantrum at the highest levels of the Chinese government.