Government boosts loan supports and plans trade missions to support Canadian canola producers
May 1, 2019
By Top Crop Manager
The Canadian Government is increasing loan limits and leading canola trade missions in other Asian markets in response to the ongoing Canada-China canola seed trade dispute.
Minister of Agriculture and Agri-Food Marie-Claude Bibeau and Minister of International Trade Diversification Jim Carr announced loan limits under the Advance Payments Program (APP) will be temporarily increased for the 2019 year.
For all producers, the loan limit will increase to $1 million, up from the previous limit of $400,000. The first $100,000 will remain interest free on all commodities except canola. Canola advances will be eligible for up to $500,000 interest free. For producers who have already applied for APP this year, the new rules will be applied retroactively to existing loans taken for the 2019 year. These changes are an effort to ease cash flow pressures that farmers are facing and to help them manage the impacts of market disruptions in key export countries.
Minister Bibeau also announced a two-month extension to the AgriStability deadline, now July 2, 2019, for all provinces. The program offers financial assistance to producers who experience large margin declines due to production loss, adverse market conditions or increased costs and is administered provincially.
In addition to expanding financial supports, Trade Minister Carr announced he will be leading a canola trade mission to Japan and South Korea in early June. Minister Carr’s outreach will build on his work to diversify trade and to engage other high-potential countries including UAE, Thailand, Malaysia, Pakistan, Bangladesh, Mexico, Germany and France.
Trade missions “open doors” and Minister Carr reassured that Canada’s trade diversification strategy is ongoing: “It didn’t start today, and it doesn’t end tomorrow.” With the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Canadian farmers and producers now have preferential market access to an estimated 1.5 billion consumers in more than 50 countries.
While producer support and market diversification are important, regaining access to the Chinese market remains a priority, stated the Canola Council of Canada (CCC) in a release.
“We need to consider all options to resume seed exports to China,” says Jim Everson, president of CCC. “Predictable, rules-based trade is critical to Canadian agriculture and China remains an important market.”
China has been a major market for Canadian canola, accounting for approximately 40 per cent of all canola seed, oil and meal exports. Canola seed exports to China were worth $2.7 billion in 2018. Demand has been very strong until the recent disruptions starting in early March where the licenses of two companies, Richardson and Viterra, to export canola seed to China were suspended. While technical discussions have taken place between the Chinese and Canadian governments, the scientific basis for China’s actions remain unclear.
Canada has requested to send a high-level technical delegation to China lead by the Canadian Food Inspection Agency, but has not received a response to their request. “[China is] not responding directly to the request but we are pursuing the conversation through video conference, so I think that the important thing is that the conversation is ongoing,” answered Minister Bibeau in response to questions after the press conference.
In response to why Canada has not retaliated with its own trade measures to add pressure to the situation, Minister Carr said, “There is agreement across the sector, across provincial governments, across producers, that we should engage China on the basis of their allegation. The basis of their allegation is that there are impurities in canola that has been sent by Canada to China.”
Despite there being no scientific evidence to support China’s claims so far, the Government stood by its message that they will continue to engage China on the scientific basis of their allegation and in the meantime provide a support package to producers and continue market diversification.
“It’s true that we hadn’t had any evidence that they’ve found irregularities, but I don’t think it’s a waste of time to stand for the high quality Canadian canola and for our very robust inspection system. It’s a matter of protecting Canadian reputation in terms of the quality of our Canadian production and exports,” said Minister Bibeau.
In a press release, the Canola Council of Canada, a member of the industry-government canola working group, stated, “In light of how technical engagement to date has not resolved the issue, it’s clear that industry and government need to work together on a comprehensive plan to develop alternative markets.” The Council suggests seizing the opportunity created by the Comprehensive and Progressive Trans-Pacific Partnership, as well as utilizing canola oil in Canada for biofuel that lowers greenhouse gas emissions. The CCC is also proposing to expand sales to Asian markets is to establish a government-industry export diversification office in the region to address market access issues and enhance promotion activities.
The CCC still welcomed the announcement of increased supports for canola producers. “Timely action to help producers deal with unprecedented uncertainty is good news,” adds Everson. “With our largest market for canola seed effectively closed, it’s important for everyone that producers can pay their bills while efforts are made to resolve the issue.”