China halts Richardson canola shipments By: Bill Redekop  Posted: 7:00 PM CST Tuesday, Mar. 5, 2019

Hey there, time traveller!
This article was published 04/03/2019 (2026 days ago), so information in it may no longer be current.

China has ramped up its diplomatic dispute with Canada by targeting Western Canada’s largest crop and Winnipeg-based canola exporter Richardson International.

Richardson confirmed China has revoked its registration to export canola to that country as of Mar. 1, without saying why. The Canadian government said China is citing non-compliance, but Canadian food inspectors haven’t identified any pests or bacteria of concern.

The move is regarded by the grain sector as a surgical strike. Not only is canola Western Canada’s most important crop but Richardson International is the largest wholly-owned Canadian grain company.

Other Canadian canola exporters like Viterra and Cargill have not had similar actions taken against them, at least not yet. China buys about 40 per cent of Canada’s canola exports, worth about $2.5 billion.

Grain analysts say trade actions by China against Canadian canola exporters started last Christmas with China “dragging its feet” with unloading vessels and ordering more inspections.

“The ship loads get inspected five times instead of once or twice. They lose the paperwork for a week,” said market analyst Ed Baldwin, manager of AgChieve Grain Marketing.

“That’s the game. It’s just like these two Canadians they’ve arrested and accused of spying.”

Canadians Michael Kovrig and Michael Spavor are being held in China on accusations of stealing state secrets.

China’s actions are viewed as retaliation for Ottawa’s arrest last fall of Huawei Technologies Co. Ltd. executive Meng Wanzhou at the request of U.S. tax authorities.

“We’ve got ourselves in the middle of a dispute between two big guys (China and the U.S.) so we’re going to get hurt,” Baldwin said. “If we give into China, then the U.S. is going to be pressuring us and the U.S. is our biggest trading partner.”

The latest actions only create uncertainty and that’s bad for markets, said Brian Innes, Canola Council of Canada vice-president.

“Exporters are facing more risk and are more reluctant to demand canola at high values from growers,” Innes said.

‘We’ve got ourselves in the middle of a dispute between two big guys (China and the U.S.) so we’re going to get hurt. If we give into China, then the U.S. is going to be pressuring us and the U.S. is our biggest trading partner’
– Ed Baldwin, manager of AgChieve Grain Marketing

Export data shows China bought 33 percent less Canadian canola in January than a year ago, according to Bloomberg. On Tuesday, canola on ICE Futures U.S. in New York fell 1.1 percent to close at C$457.80 a tonne, the lowest settlement for a most-active contract since mid September 2016. Canola oil is used in everything from salad dressings to deep-frying.

On the optimistic side, the two governments were talking as recently as last November about doubling agrifood trade between Canada and China. “The fundamentals of our relationship haven’t changed,” said Innes.

Federal Agriculture Minister Marie-Calude Bibeau said her department is monitoring the situation and any potential impact on Canada’s agricultural trade relationship with China.

“We continue to be a supplier of high-quality canola to China and will work with China to resolve this issue as quickly as possible,” she said.

And Foreign Minister Chrystia Freeland said she was “very concerned” by the blocked shipment.

“We do not believe there is any scientific basis for this … we are working very very hard with the Chinese government on this issue,” she told reporters in Longueuil, Quebec, saying the matter was of the utmost priority for Ottawa, according to Reuters

China’s suspension of Richardson’s trading license for canola “was a surprise to us,” said Jean-Marc Ruest, Richardson senior vice-president of corporate affairs.

“We’ve been in discussions with the Canadian government who have been in discussions with China,” he said.

Ruest said the Chinese government complained to its Canadian counterparts a couple of months ago that canola shipments from Canada contained weed seeds and pests.

“We looked into the matter and those allegations were unfounded. Some pests they listed don’t even exist in Canada,” he said.

It’s expected Richardson will find another market for the canola seed, possibly Japan.

Farmers shouldn’t be affected yet but may want to hold off selling canola to see where the trade dispute goes, said Baldwin.

A saving grace for farmers is the Canadian dollar is under 75 cents against U.S. currency. “A low dollar does help us sell canola,” Baldwin said.

bill.redekop@freepress.mb.ca