Canada Settles Chinese Canola Dispute to 2020

Chinese Premier Li Keqiang and Canadian Prime Minister Justin Trudeau conduct a press conference on Parliament Hill in Ottawa, Ontario, Sept. 22, 2016. Image: Lars Hagberg/AFP via Getty Images

OTTAWA - Canada and China settled a dispute over canola seed that previously threatened to halt exports from the world’s top grower.

Also read, China does not want canola dispute on agenda during Trudeau’s visit.

Canada secured access for its canola to the Chinese market through 2020, Canadian Prime Minister Justin Trudeau said Thursday at a joint press conference in Ottawa with Chinese Premier Li Keqiang.

China had been poised to toughen restrictions on imports of canola seed from Canada, which were valued last year at C$2 billion ($1.5 billion), by requiring that foreign material in shipments not exceed 1 percent. The move, it said at the time, would have limited the risk of spreading blackleg fungus to domestic crops.

Canadian officials had argued in response that the additional cleaning needed for shipments was costly, unnecessary and wouldn’t have made cargoes any safer, as seeds would still be exposed to other kinds of contamination.

Canada’s canola growers have become increasingly reliant on export sales to China and the Asian country now accounts for 40 percent of all canola-seed shipments. China imported $5.6 billion of Canadian agricultural and food goods last year, according to the Canadian Agri-Food Trade Alliance.

“We’ve found a predictable, science-based and stable solution to ensure access to the Chinese market by Canadian canola exporter through early 2020,” Trudeau said Thursday. “This is great news for our Canadian canola farmers.”

Canola futures for November settlement rose 1.5 percent to C$471 a ton on ICE Futures Canada in Winnipeg, Manitoba.

The deal will bring stability to Canada’s canola market, Patti Miller, president of the Winnipeg-based Canola Council of Canada, said in a telephone interview. Canada had shipped 4 million tons to China, and sales may exceed that amount in the future, she said.

Canada raised its forecast for canola production to 18.3 million metric tons in 2016, Statistics Canada said this week in a report.

“Canadian exporters and processors in China will be able to enter agreements with a lot of confidence, and the market should pick up again,” Miller said. “The harvest is coming in, and farmers will be needing to move a lot of canola.”

Source Jen Skerritt, Theophilos Argitis , Bloomberg