Diplomatic dispute emerges as China slows Canada’s exports of agricultural products

Canada’s exports of agricultural products to China have been repeatedly stonewalled.
calendar icon 29 April 2019
clock icon 5 minute read

But since January, port soybean inspections that routinely take a few days now require three weeks, causing Chinese buyers to avoid Canadian products, said Dwight Gerling, president of Canadian exporter DG Global.

"They're basically sending out the signal, 'You buy from Canada, we're going to make your life difficult,'" Gerling said.

Earlier this year, a Chinese buyer told Gerling that a government inspector had found ants in 34 containers (roughly 680 tonnes) of the Canadian soybeans he shipped there. Such a finding would be rare, since the soybeans were stored in concrete silos in Canada and shipped in sealed containers in late autumn, said Gerling, who concluded the buyer was trying to avoid the new hassles of buying from Canada.

"It's just them playing games. (Beijing) is just going to keep putting the screws to us."

China's General Administration of Customs did not reply to a fax seeking comment. Government officials have said their canola ban is a regular inspection and quarantine measure to protect China's farm production and ecological safety.

Canadian Prime Minister Justin Trudeau, speaking in Cambridge, Ontario, promised action, although he gave no details.

"We are absolutely going to be doing more on the canola file. We'll have an announcement in the coming days," Trudeau said. "We're in the process of solving this. It is not an easy situation. It is one we've taken very seriously."

In a statement, the Canadian agriculture department said it could not confirm that China had imposed stricter measures against farm goods other than canola. Ottawa said this month it hoped to send a delegation to China to discuss the issue.

Gerling's company has halted soybean sales to China and found other buyers in Southeast Asia.

An official at a state-owned crusher in Southern China confirmed that port inspections have tightened on Canadian soybean cargoes.

"We don't have Canadian cargoes coming in as we can't blatantly commit such wrongdoing when the atmosphere is so intense," the official said on condition of anonymity.

Another official in Northern China said his crushing plant scrapped plans to buy Canadian soybeans when the trade dispute flared.

Canada shipped C$1.7 billion worth of soybeans to China in 2018, up sharply year over year, according to the Soy Canada industry group, as China and the United States fought a trade war. But sales have now slowed to a trickle.

Canola has taken the brunt of China's measures.

Chinese buyers have cancelled at least 10 cargoes of Canadian canola in the last few weeks, said a Singapore-based trader at a company that runs crushing facilities in China. Some cargoes, around 60,000 tonnes each, have been resold to buyers in Pakistan and Bangladesh at deep discounts, the trader said.

"It is devastating for exporters," the trader said.

ICE canola futures fell to a more than four-year low on Tuesday (30 April) as supplies piled up. Growers intend to sow the smallest crop in three years.

On Monday of last week (22 April), Ottawa said some Canadian pork exporters used an outdated form to certify shipments to China, causing delays. Such issues arise regularly in commodity trading, but rarely with damaging consequences, said Canadian Pork Council spokesman Gary Stordy.

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"You buy from Canada, we're going to make your life difficult."

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