"China Trade War May Severely Hit Canadian Canola Farmers"
Thousands of Alberta canola farmers are prepared for a significant effect on their bottom line just as harvest begins. China has implemented a 75.8% tariff on canola seed beginning August 14th. According to Quinn Ohler, analysts believe it might essentially end Chinese grain shipments.
"Here we go, again. If it's not one thing, it's another, particularly in China. They're continually thinking of methods to lower our prices."
That's how John Guelly, a canola producer in Westlock, Alta., reacted to Tuesday's announcement that China will impose a 75.8 percent tariff on Canadian canola imports.
Guelly, a former chair of Canola Alberta, an advocacy group for the province's 14,000 canola farmers, estimates that the value of Canadian canola production is $12 billion per year, or roughly 15% of the total income Canadian farmers receive from agricultural commodity sales.
China is the world's largest importer of canola, importing nearly all of it from Canada and largely using it to produce animal feed for its aquaculture industry.
In March, China levied a 100% tariff on Canadian canola oil and meal, as well as peas, and a 25% tariff on Canadian seafood and pig products.
China maintains that the severe new tariffs are necessary to avoid "dumping" of Canadian canola into the Chinese market, which would harm domestic canola growers.
However, the duties on raw canola are largely assumed to be China's response to Canada's imposition of a 100% tariff on Chinese electric vehicles in October 2024.
Chinese EVs are much less expensive than North American-made EVs, thanks in part to weaker labor and environmental requirements, as well as government subsidies.
Then-Prime Minister Justin Trudeau stated that the duties, which are comparable to American taxes on Chinese EVs, were necessary to defend Canada's car industry.
"We appear to be assisting Eastern Canada, while Western Canada suffers once again. Unfortunately, our southern neighbour appears to be providing them with some further ammo," added Guelly.
Ryan Hofford, who farms around 480 hectares (1,200 acres) near Swan River, Man., said that almost immediately after the new tariffs were announced, the price he expects to receive for his crop this fall decreased by roughly $30 per tonne, or $50 per acre.
"It's also vital to note that the $50 per acre comes from profits. Fertilizer, seed, chemicals—everything has been paid for. So all we have left is the earnings. If we didn't have any production pre-priced in my situation, this hit would be around $30,000," Hofford stated.
Ryan Hofford, who farms canola near Swan River, Manitoba, reported that the price he can get for his canola plummeted by around $50 per acre overnight, resulting in a $30,000 loss after expenses. Courtesy of Ryan Hofford.
Saskatchewan Premier Scott Moe responded to the tariffs, which came just as this year's harvest is set to begin, saying they "will have a devastating impact" on the country's agricultural business.
"This $43 to $45 billion Canadian canola industry that we have (is employing just over 200,000 people," Moe remarked.
"To put this in perspective, it is substantially larger than the steel, aluminum, and automobile production industries combined. It is roughly the same size as the Canadian forestry industry, which received considerable help only this week.
"Each of those industries, the steel, the aluminum, and the EV industry, has been hit hard by U.S. tariffs, as has our forest industry."
Moe believes canola producers need the same level of attention and support from the federal government as other businesses affected hard by tariffs.
"We are asking that this be dealt with immediately, and I've reached out to the prime minister this morning, and I suspect I will be speaking with him at some point later today," according to Moe.
Tariffs on canola aren't the only bad news for Canadian farmers. The Chinese government also said on Tuesday that it has launched an anti-dumping inquiry against Canadian pea starch imports, which are used as a culinary ingredient as well as in paper manufacturing, pharmaceuticals, and textiles.
While Moe stated that the new canola tariffs are expected to "stop a significant amount of trade that is flowing into China today," "finding a replacement for the millions of tonnes of canola (that China purchases from Canada) will be very difficult unless import demand drops sharply," said Donatas Jankauskas, an analyst with commodity data firm CM Navigator.
Australia, the world's second-largest canola exporter, has been barred from the Chinese market since 2020, owing mostly to Chinese fears over the spread of a fungal plant disease.
The final solution to the trade issue, according to Canadian canola growers, is to find new markets.
"We've been doing our own on this end, trying to get more domestic crush capacity and more use for our oil domestically so that we don't have to rely on some of these international countries that we sell to," Guelly told me.
But, sadly, in the near term, while Ottawa and Beijing try to resolve their disagreements, Guelly believes farmers will have to "ride it out."