By Sarah Pittman
Published in the Leader Post and Star-Phoenix
November 19, 2019
Prime Minister Justin Trudeau called the announcement that Canadian pork and beef exports to China would resume “good news for Canadian farmers” — and it is indeed good news, for at least some Canadian farmers.
But as the good folks in Letterkenny would say, it “ain’t no reason to get excited.”
This does not indicate a thaw in Canada-China relations; indeed, the Chinese government has said that Canada-China relations “will only improve” once Huawei CFO Meng Wanzhou has been released, and denied that allowing the import of meat from Canada into China had anything to do with an improvement in the relationship.
Meanwhile, two massive Canadian agriculture industries, canola and soybeans — which rely much more on the Chinese market than Canadian pork and beef do — are still in China’s vise-grip.
So while pork and beef producers can breathe a sigh of relief, as long as Canadian agriculture continues to be used by the Chinese government to pressure the Canadian government, industry can expect little relief from the economic harm that entails.
Since it was announced at the end of June, the Chinese ban took a toll on Canadian beef and pork industries. The meat industry said in September that the damage caused by the closing of this market neared $100 million. It’s hard to understate the potential damage the ban could have done had it not been lifted: in 2018, beef exports to China hit $267 million, 11 per cent of total exports; in the same year pork exports to China were $511 million, 15 per cent of Canada’s total export of the product.
Reversing the decision is certainly no indication of good will on China’s part, but far more likely because of its own serious meat shortage brought on by African Swine Fever (ASF). ASF has caused the death of hundreds of millions of pigs in China, skyrocketing China’s global demand for meat. China has begun to look globally for meat sources, including signing deals with Brazil and a major European pork processor, as well as signalling it would remove a ban on American poultry products — all within a week.
But the bad news continues for the canola and soybean industries in Canada — two of Canada’s largest agricultural exports — and farmers across the country will continue to feel the consequences.
China is the largest market — by far — for Canadian canola and soybeans. In 2018, 53 per cent of Canadian soybean exports and 40 per cent of canola exports went to China — together worth more than $6 billion. Both industries have been cut off from the Chinese market (officially or unofficially) for months now. For these Canadian farms — in 2016, this was nearly 21,000 farms — there appears to be little “good news” on the horizon.
China is the biggest consumer of canola seeds and soybeans in the world. A lucrative market, China can find replacements from other suppliers or replace these products with palm oil, for example. There is little reason to suspect China would reach a critical shortage like it did with meat because of the ASF outbreak.
Meanwhile, Canadian canola and soybean exports will likely continue to hurt for the foreseeable future. Prices for both commodities are depressed, and some farmers are holding onto their product in the hopes of prices rising. That’s all parts of the agriculture industry — including processors, shippers, and those who sell seed and fertilizer — not just farmers. Simply switching to another crop is not as easy as it sounds. Canola and soybeans are hard to replace as they are (in normal times) lucrative crops and finding replacement markets is not easy. In addition, they have become regulars in farmers’ crop rotation to maintain plant and soil health.
So while the relief for Canadian pork and beef producers is undeniable, there’s little reason for Canadian agriculture as a whole to jump for joy. And the Canadian government’s efforts in China on the part of farmers should certainly not ease — because this fight is far from over yet.
Sarah Pittman is a policy analyst at the Canada West Foundation