Background:

In November, 2009, China imposed an emergency quarantine order to block the importation of Canadian and Australian canola testing positive for the presence of "Leptosphaeria maculans" (commonly referred to as 'blackleg'). Blackleg is a fungal disease which can reduce canola yields. It is present throughout Canada's crop although we have resistant canola varieties. Because blackleg is a common disease in Canada, it is very unlikely that exports from Canada will test "blackleg-free" which threatens Canadian canola's access to China. China's rationale for this order was to stop the spread of blackleg to the their rapeseed crop which they say is susceptible to blackleg.

This is a major market access issue for the canola sector. China was Canada's largest canola seed market in 2008-09 at 2.8 million tonnes with a value of $1.3 billion.

For the marketing of the 2009 Canadian canola crop, China implemented a "transition year" during which Canadian canola testing positive for blackleg can only be delivered to two facilities in China. These locations are in areas where Chinese rapeseed is not grown and is meant to reduce the chances of blackleg being transferred to the domestic rapeseed crop.

Update on Canola Delivery to China:

Since November 15, 2009, limited deliveries have resumed, utilizing the two crushing locations approved by China to receive blackleg-positive canola.

For the 2009-10, crop year to date (August 1, 2009 - January 31, 2010), Canada shipped 1.2 million tonnes of canola to China. Of this amount, over 1 million tonnes was delivered prior to the November 15 quarantine order.

Since November 15, exporters have delivered volumes which were delayed when the quarantine order was put in place. This volume was contracted prior to November 15th As the remaining deferred volumes are delivered, exporters will look to conduct new business with China.

Continued Uncertainty

While Canadian exports appear to be robust for the crop year, this volume was contracted prior to the quarantine order and does not reflect Canada's current market access.

To date, only two crushing facilities are approved for blackleg-positive canola.

China has allowed for a 'transition year' allowing Canada limited access for the 2009 crop. For the 2010 crop, China has indicated it will accept no canola unless it is deemed free of blackleg. This would severely limited or close Canada's access to the Chinese market.

Media may contact:

Jim Everson

V-P Corporate Affairs

613-853-9916