COMMENTARY | Left off the list: Canada misses out on agricultural trade opportunities in China

By Sharon Zhengyang Sun

As a response to food shortage concerns and food security priorities addressed under the Central Economic Work Conference and Fifth Plenum, China has increased the number of agricultural items allowed to be imported. Just last month, China amended its “List of Countries/Regions Permitted to Export Grains and Raw Plant-based Fodder to China” (see our China Brief | Issue 61).

The list expanded and added 10 additional permitted grains and tubers from the 2018 list of 27. The list includes an expansion of countries to import from as well as the number of items. What should Canada and Western Canada be concerned about from China’s new list? Here is a first look at comparing China’s new 2020 list from its 2018 list and what that could mean for western Canadian agricultural exporters (Table 1).

Under China’s new list, there appear to be more threats than opportunities for Canadian agricultural exports in China.

• Canada will see new levels of competition in soybeans – first from the threat of the two-year purchase commitments under the U.S.-China Phase One trade agreement, and now from the countries that are newly added to China’s list of approved countries such as Benin and Tanzania, which are countries are within China’s Belt and Road Initiative interest. Currently, the largest soybean suppliers to China are the U.S. and Brazil. Canada will see more competition in the short-term from the two-year purchase commitments under the U.S.-China Phase One, and in the long-term once the supply chain and market structure between China and the U.S. – or other competitors – are in place, if Canada does not make efforts for more presence.
• Canada sees new competition for wheat – from the threat of the two-year purchase commitments under the U.S.-China Phase One trade agreement, and Lithuania, one of the Eastern European countries with which China has special relations. While the purchase commitments under the Phase One agreement are only two years, China has not yet been observed to remove any countries from its approved list.
• Barley – new competition from the U.S. and Russia.
• Canola seed meal – new competition from Russia and Argentina.
• Timothy Hay – new competition from the U.S. (although Canada currently exports extremely small amount of timothy to the world (less than a few hundred thousand).
• Canada is not on China’s list for a number of items it exports: Corn (Mexico was newly added, U.S. already there), feed oats (U.S. already there), sweet potatoes (new item added that only has Laos), soybean meal (Russia and Argentina were newly added), Corn distiller (Bulgaria was newly added), wheat bran, wheat flour for feed (Kazakhstan was newly added), other plant-derived feed materials products such as soy protein and tumor protection protein (Denmark and U.S. were already there). The U.S. is present and has a clear advantage over Canada for products such as corn, sorghum for feed, and feed oats where Canada exports globally but is not permitted to export to the Chinese market.
• Finally, Canada is not on China’s list of other plant-derived feed material products and instead, listed Denmark (for soy protein) and the United States (for tumor protection protein). As part of Canada’s key superclusters, plant protein products have been identified by the Canada West Foundation as having significant opportunities for growth for Western Canada’s agricultural sector. Taking into consideration of the time needed and the complexity for new product application processes, particularly when Canada and China do not have any structural agreements in place for agriculture, not being
• Potatoes have been added to the list and Canada is not there. While China has only permitted import from the U.S., Canada may be able to see an increase in potato exports to the U.S. as the U.S. increases potato exports to China, particularly after the U.S.-China Phase One.

In conclusion, China did not add Canada to any of its previously existing items nor did it add Canada to any of its new items. Canada is clearly missing market opportunities with China. Additionally, new competitors were added to the products in which Canada is permitted to export to China creating new competition in the market. Benin and Tanzania can now export soybeans, Lithuania can export wheat, while Russia and the United States can now export barley. In the interest of economic growth – particularly in the COVID-19 environment as emphasized by the Minister of Agriculture and Agri-Food’s mandate (in 2021 and 2019) to facilitate global export growth for the agricultural sector, Canada needs to push for and be on the list of some of the aforementioned items. Finally, coupled with China’s approval of new genetically modified products including soybeans and corn, there is a further urgency for Canada to push to enter markets such as corn. This is particularly important as the federal government announced a $4 billion irrigation project to dramatically increase production of cereals, oilseeds and other crops for which China is currently a top export market.

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Table 1: Comparing China’s Lists of Countries/Regions Permitted to Export Grains and Raw Plant-based Fodder to China

*Note: The green squares show where Canada is permitted and where Canada has new opportunities; yellow highlights show the countries that are new add-ons; blue squares are opportunities that Canada doesn’t have with China that Canada should push for

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2020 List of Countries/Regions Permitted to Export Grains and Raw Plant-based Fodder to China [1]			2018 List of Countries/Regions Permitted to Export Grains and Raw Plant-based Fodder to China [2]
Types of	Species	Accessed countries or regions	Accessed countries or regions
Grain and oilseeds	Soybeans	Canada, Uruguay, Russia, Ukraine, Ethiopia, Kazakhstan, United States, Brazil, Argentina, Bolivia, Benin, Tanzania	Canada, Uruguay, Russia, Ukraine, Ethiopia, Kazakhstan, United States, Brazil, Argentina, Bolivia
	Rapeseed	Canada, Australia, Mongolia, Russia	Canada, Australia, Mongolia, Russia
	Wheat	Australia, Canada, Kazakhstan, Hungary, Serbia, Mongolia, Russia, France, United Kingdom, United States, Lithuania	Australia, Canada, Kazakhstan, Hungary, Serbia, Mongolia, Russia, France, United Kingdom, United States
	Corn	Thailand, Laos, Argentina, Russia, Ukraine, Bulgaria, Brazil, Cambodia, South Africa, Hungary, United States, Peru (limited to large corn), Kazakhstan, Mexico, Uruguay	Thailand, Laos, Argentina, Russia, Ukraine, Bulgaria, Brazil, Cambodia, South Africa, Hungary, the United States, Peru (large corn only), Kazakhstan, Uruguay
	Barley	Australia, Canada, Denmark, Argentina, Mongolia, Ukraine, Finland, Uruguay, United Kingdom, France, Kazakhstan, Russia, United States	Australia, Canada, Denmark, Argentina, Mongolia, Ukraine, Finland, Uruguay, United Kingdom, France, Kazakhstan
	Paddy	Russia	Russia
	Sorghum for feed	Argentina, Myanmar, United States, Australia, Nigeria, Mexico	Argentina, Myanmar, United States, Australia
	Feed peas	Belgium, Poland, France, Netherlands, Hungary, United Kingdom, Myanmar, Japan, India, Vietnam, South Africa, Malawi, Argentina, Canada, United States, New Zealand	Belgium, Poland, France, Netherlands, Hungary, United Kingdom, Myanmar, Japan, India, Vietnam, South Africa, Malawi, Argentina, Canada, United States, New Zealand
	Feed oats	Russia, Finland, United States, Australia, Malaysia, United Kingdom	Russia, Finland, United States, Australia, Malaysia, United Kingdom
Tuber grains	Dried cassava (slice)	Cambodia, Laos, Tanzania, Ghana, Madagascar, Nigeria, Thailand, Indonesia, Vietnam	Cambodia, Laos, Tanzania, Ghana, Madagascar, Nigeria, Thailand, Indonesia, Vietnam
	Potato	United States
	Sweet potato	Laos
Plant-derived feed materials (dregs, bran and bran)	Soybean meal	South Korea (fermented soybean meal), Taiwan, China (fermented and expanded soybean meal), Russia (meal / cake), Argentina	South Korea (fermented soybean meal), Taiwan, China (fermented and expanded soybean meal)
	Rapeseed meal	Kazakhstan, Pakistan, UAE, Japan, Ethiopia, Australia, Canada, India, Russia (meal/cake), Ukraine (meal/cake)	Kazakhstan, Pakistan, UAE, Japan, Ethiopia, Australia, Canada, India
	Corn distillers	United States, Bulgaria	United States
	Sunflower seed meal	Ukraine, Bulgaria, Russia (meal/cake)	Ukraine
	Peanut meal	Sudan	Sudan
	Beet meal	Ukraine, United States, Egypt, Russia, Belarus, Germany	Ukraine, United States, Egypt
	Rice bran meal (cake)	Thailand	Vietnam, United States
	Palm kernel meal	Thailand (meal/cake), Indonesia, Malaysia	Indonesia, Malaysia
	Palm fat powder	Indonesia, Malaysia	Indonesia, Malaysia
	Cottonseed meal	Tanzania (meal/shell), Brazil	Tanzania
	Coconut meal	Indonesia, Philippines	Indonesia, Philippines
	Chili meal	India
	Olive meal	Spain
	Almond shell particles	United States
	Rice bran	Vietnam, United States, Spain
	Wheat bran	Kazakhstan, Mongolia, France, Serbia, Japan, Malaysia, Singapore, Australia, Indonesia	Kazakhstan, Mongolia, France, Serbia, Japan, Malaysia, Singapore, Australia, Indonesia
	Cassava residue	Laos, Cambodia, Thailand	Laos, Cambodia, Thailand
	Wheat flour for feed	Kazakhstan
	Other products (deep processing)	Denmark (soy protein), [SM1] [SL2] the United States (tumor protection protein), the United Kingdom (palm oil), France (palm oil)	Denmark (soy protein), the United States (tumor protection protein), the United Kingdom (palm oil), France (palm oil)
Forage grass	Alfalfa	Bulgaria, Romania, Spain (including particulate), Hasa Kesi Tan (including particulate), Sudan, Argentina, Canada, USA, South Africa, Italy (including particulate)	Bulgaria, Romania, Spain, Kazakhstan, Sudan, Argentina, Canada, United States, South Africa, Italy
	Alfalfa hay blocks and pellets	United States
	Oat grass	Australia	Australia
	Timothy	Canada, United States	Canada
	Natural forage	Mongolia, Lithuania (silage)	Mongolia
Other	Jelly grass	Vietnam