IN THIS EDITION: Canola crush capacity soars in Western Canada, China opens to some genetically modified crops, Prairie growing season off to dry start


Canola crush capacity soars in Western Canada 

Canola crush capacity is expected to see a massive increase, jumping by almost 42 per cent to 15.6 million tonnes by 2024, thanks to two new plants just announced and the expansion of a third — all in Saskatchewan. Canadian crushers are bringing in 30,000 tonnes of Ukrainian canola in August to ensure there are sufficient amounts to crush as domestic supplies from last year have dwindled. According to numbers from the Canola Council of Canada, China accounted for $3.1 billion of Canada’s canola export market in 2020 which broke down as: Seed: 2.6 MMT, valued at C$1.4 billion; Oil: 1.1 MMT, valued at C$1.1 billion; Meal: 1.5 MMT, valued at C$555 million. From those same numbers, China is also the number one consumer of vegetable oil. 

Agriculture and Agri-Food Canada oilseeds analyst Chris Beckman says the added capacity means that in the long term Canada will be decreasing the amount of its canola exports and crushing it instead. So we’re switching our industry from being export-oriented to domestic use, he told the Globe and Mail. What does this switch mean in the long term in terms of trade with China? Watch for the next edition of the China Brief as experts give their views. 

China opens to some genetically modified crops

Tmodernize the country’s seed industry and expedite major biotechnology projects, the Chinese government has introduced new guidelines for agricultural and rural development. One significant shift is an openness to genetically modified technologies to address rising food security concerns. This change presents new opportunities for Canadian GM productsincluding corn, canola and alfalfa which were previously waiting on Chinese approval. 

In China’s latest Five-Year Plan, there may be additional opportunities for Canada and China on the agricultural front. Canada West Foundation’s Carlo Dade and Sharon Sun were on RealTalk Ag with Shaun Haney to talk about those opportunities as well as what the broader five-year plan means for Western Canadian trade with China. 

Prairie growing season off to dry start 

In other news affecting Canada-China trade, Western Canadian farmers face a tense start as forecasts predict a weakened germinating season due to lack of moisture in soil. This may impact exports to China such ascanola, wheat, and soybean. Canola is particularly drought sensitive so farmers will most likely scale back their seeding efforts for that crop. 

In terms of wheat, poor soil moisture in tandem with Chinese wheat demand will be something to watch as the season unfolds. Non-durum wheat and wheat product exports have increased nearly 35 per cent since last year, with a 1.6 MMT1 increase in non-durum wheat exports to China. Barley export demands, particularly from China, are high. Overall barleyexports haveincreased 50 per cent since last year primarily because of Chinese tariffs on Australian barley. Oat exports increased 21 per cent since the past year, also due to Chinese demand. 

Chinese tensions push Canada to look at Japan and India 

Canada has recently deepened its relationship with Japan, which expands cooperation between the two countries on security matters in the Indo-Pacific Region. Both nations face increasingly assertive Chinese and North Korean governments. In a G7 London meeting, Canada and Japan outlined and agreed on six areas of bilateral cooperation to aid in maintaining security in the Indo-Pacific region.  

Tensions between China and Canada may be a catalyst for improved trade relations between India and Canada. The EU recently announced it would return to the negotiating table with India after stalled talks in 2013. Trade agreements with India have historically been difficult, if not impossible, to negotiate. Canada West Foundation contributor Dr. Deborah Elms, President of the Asian Trade Centre in Singapore, shared her thoughts on this challenge during our recent Trade Ahead series event, The Rest of Asia: From ASEAN, to CPTPP and RCEP. 

In terms of provincial agreements with China, eyes are on B.C. this week as the province’s Memorandum of Understanding with Guangdong province, part of the Belt and Road Initiative, is set to expire. The B.C. government has largely stayed silent on current issues and observers are not sure if they will renew the MOU or not. 

Iron ore prices jump 

Canadian iron ore producers, such as British Columbia’s Rio Tinto, should see a strong cash flow as prices jumped to $200 US a tonne this week. Tensions between Australia and China this week, which result in a suspension of economic dialogue between the two nations, as well as the dire COVID-19 situation in India, are behind the jump. 

In Other News 

  • The 2021 Canadian Census includes Hong Konger as a new identification option and Cantonese as a language option. Previous censuses had included Cantonesespeaking Hong Kongers under Chinese ethnicity. 
  • Upholstery from China and Vietnam will be subject to 295.5 per cent and 101.5 per cent duties respectively. The duties come after the Canadian Border Services Agency found the countries were “dumping and subsidizing with respect to certain upholstered domestic seating.” 
  • An undercover journalist alleges Chinese restaurant chain Haidilao Hot Pot is sending surveillance footage from its four Canadian locations back to China. The chain has locations in Vancouver and Richmond, B.C., and Scarborough and Markham, Ontario. 
  • Latest trade data from Statistics Canada shows that “[i]mports from countries other than the United States rose 5.9% in March, mainly on a sharp increase in imports from China (+27.1%). Imports of electronics, furniture and appliances, among others, contributed to the widespread growth in imports from China in March.” 
  • Strong Chinese e-commerce sales have largely driven Canada Goose Holdings Inc. forecast annual revenue above $1 billion for the first time. While the company is located in Ontario, the company’s strategy to target wealthy Chinese customers who cannot travel will be of interest to Western Canadian retailers who rely on Chinese tourism dollars. 
  • Chinese-based Chaoyin Education Group, which operates eight private schools in China, is opening a new private school in Richmond, B.C. The school will give B.C. students a credited education in the B.C. curriculum but is expected to “tread lightly” on issues sensitive to the Chinese government according to Greg Corry, the school’s head. 

– Stephany Laverty, policy analyst and Mehera Salah, research intern

The China Brief is a compilation of stories and links related to China and its relationship with Canada’s West. The opinions expressed in the links are those of the articles’ authors and don’t necessarily reflect the views of the Canada West Foundation and our affiliates.