What China's one-year import extension means to the industry

Tuesday, July 13, 2010

The current situation

The Canadian canola industry received some encouraging news on June 15, when China agreed to extend access for canola seed imports for one year under the current restrictions. The extension keeps the door open to China, and means Canadian growers can count on some of the 2010 crop making its way to this key market.

China’s willingness to extend limited imports for another year signals that it is willing to explore solutions. However, this limited access to the Chinese market continues to be a serious concern. During the extension period, Canadian canola testing positive for blackleg can only be delivered to crushing facilities in areas where Chinese rapeseed is not grown, which severely restricts sales.

Working toward a solution

The Canola Council of Canada (CCC) and the Canadian government are working diligently to ensure that Canadian canola seed exports to China remain strong.

In April 2010, the Canadian government and the CCC announced $1.5 million in cost-shared programs to support continued canola seed sales to China. . Canada will undertake cooperative studies with China to analyse ways of mitigating the transfer of blackleg to China’s crop. The canola industry will also look at blackleg presence in Canada to determine a risk reduction strategy.

The funding will also support feeding trials in Chinese dairy cattle to demonstrate canola meal’s ability to increase milk production. Feeding trials in dairy cattle in other countries have shown that canola meal can increase milk production by an average of 1 litre per cow per day compared to soybean meal. The new feed trials will show the value of canola meal in China, leading to higher canola prices that benefit Canadian farmers. Increased use of canola meal in the Chinese dairy industry could deliver an additional $70 million to Canadian canola growers.

Background

On November 15, 2009, China imposed an emergency quarantine to block imports of Canadian and Australian canola testing positive for blackleg (leptosphaeria maculans), a fungal disease that can reduce canola yields. China said the move was necessary to protect its domestic rapeseed crop from blackleg.

Following discussions with the CCC and the Canadian government, China agreed to a transition period that would allow Canada limited marketing access for the 2009 crop. Delivery was restricted to crushing plants in areas where Chinese rapeseed is not grown. In June, China announced it would extend this limited market access for the 2010 crop.

Under the current restrictions, Canada’s exports of canola seed to China are greatly reduced. In 2008-09, China was Canada’s largest canola seed market and imported 2.87 million tonnes worth $1.3 billion. As of April 2010, Canada had shipped 1.62 million tonnes in 2009-10, including just over 1 million tonnes before November 15, 2009.