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Global Ag View: Canadian exports ebb and flow as tensions escalate

During a trip to Ontario, Canada, Ben Briggs heard first-hand how global trade tensions are impacting the country’s ability to export soyabeans and maize.

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Global Ag View: Canadian exports ebb and flow as tensions escalate

THESE are strange times for world trade. Fractious relations between the USA and China have been well documented, with US President Donald Trump’s provocative use of social media enflaming an already tense situation.

 

But the United States is not the only North American country to find itself at loggerheads with China and paying the price for the Asian superpower’s reluctance to trade.

 

Canada’s relationship with China is fraught due to its arrest of Chinese telecoms executive Meng Wanzhou, and China’s subsequent detention of two Canadians, businessman Michael Spavor and former diplomat Michael Kovrig, allegedly for national security reasons.

 

And the potential implications for Canadian farmers’ export prospects this harvest could be dire.

 

With more than 50 per cent of the Canadian soyabean crop coming out of the province of Ontario, in eastern Canada, the ongoing trade spat led to China largely exiting the market for some Canadian products and this was causing real concern.


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Problems

 

And it is clear why it would cause problems. With almost all of last year’s exportable soyabean crop, which is about 59 per cent of the total domestic crop, going to China (see table), future prices for the crop are uncertain.

 

Nicole McKellar, market development manager at Grain Farmers of Ontario (GFO), a levy board and lobbying organisation funded by Ontario’s 28,000 grain producers, claimed markets were being watched closely.

 

She said: “Ontario grain and oilseeds have been directly impacted by the ongoing disputes with China.

 

“In the 2018/2019 marketing year, Ontario exported 1.4 million metric tonnes of soyabeans to China. This is the largest volume of soyabeans Ontario has ever exported.

 

“Currently, Ontario soyabeans are being unofficially shut out of China due to increases in inspections and waiting times at ports. It has forced exporters to abandon China and look to other markets due to the increased risk.

 

“The export market is incredibly important for Ontario grains and oilseeds. As production continues to increase year-on-year and our domestic markets become fairly saturated, international trade is becoming even more important.

 

“For soyabeans, [about] 60 per cent of our production is exported. The growth of our sector is dependent on international market opportunities.”

 

Thankfully for Ontario farmers and the GFO, the picture when it comes to maize stocks is a healthier one.

With the bulk of this crop also genetically modified, the trade in Ontario has undergone a shift away from the US market, with greater quantities now heading across the Atlantic to Europe for livestock feed.

 

Destination

 

Ireland has taken the mantle as the number one export destination, with 593,000t shipped there in the 2018/2019 season, while Spain and the UK have also seen significant amounts arrive.

 

With the bulk of Canadian wheat exports going to the US or Mexico, the shift when it comes to maize is unrelated to the presence of Mr Trump.

 

Ms McKellar added: “The UK is [also] an important export destination for Ontario grain. Logistically, it is one of the closest international markets outside of the US for Ontario grain to reach.

 

"To date for the 2018/2019 marketing year, Ontario has exported 223,000t of corn [maize] into the UK and this is the highest volume of exports we have seen to the UK.

 

“Currently, we do not export any soyabeans directly into the UK, however we believe some are arriving there through transloading.”

 

Talk of trade wars and posturing superpowers can sometimes seem unreal and part of the rolling cycle of news. Yet the challenge facing Canada’s farmers, and bodies such as the GFO, shows it is real and the need for them to be adaptable is paramount when it comes to seeking new trading partners.

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