Soybean growers feel abandoned by Ottawa

Sector accuses the federal government of focusing on canola, beef and pork while turning a blind eye to soybeans

Soybean exports to China have plummeted to 2.5 per cent of normal since Canada arrested a Chinese business executive in 2018.
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Glacier FarmMedia – Ron Davidson was outraged when he read Prime Minister Justin Trudeau’s mandate letter to Agriculture Minister Marie-Claude Bibeau.

The prime minister had issued a series of mandate letters on Dec. 13 that serve as the marching orders for the ministers in his newly elected government.

Bibeau’s letter told her to “develop additional capacity” to respond to export barriers faced by canola, beef and pork producers.

Why it matters: Soybeans are Ontario’s largest acreage row crop, so a lack of market demand will drive down prices.

Davidson, who is executive director of Soy Canada, was appalled that the letter didn’t mention soybean growers, who are reeling from the fallout of Canada’s political spat with China.

“We’ve been saying from the beginning that soybeans have been by far the hardest impacted,” he said.

“We’ve been shut off for all intents and purposes. All they are letting in is a few containers.”

A market that once regularly imported two million tonnes of Canadian soybeans a year is on track to purchase 50,000 tonnes in 2019.

China is buying about 2.5 per cent of its normal volume of Canadian soybeans compared to 37 per cent of its typical canola purchases.

A lack of focus on the soybean trade issue was part of the reason that Grain Farmers of Ontario recently left Grain Growers of Canada.

Davidson wants to know why Ottawa appears to be turning a blind eye to the plight of the country’s soybean growers.

Bibeau said that is not the case.

“While there are no technical restrictions on Canadian soybean exports to China, we fully appreciate the difficulty farmers face with the decline in the Chinese market for soy, some of which is related to lower demand as a result of the impact of African swine fever on China’s hog sector,” she said.

“We are working with the sector to help them manage these challenges, including through efforts to help diversify to other markets.”

Davidson said Canada’s soybean shipments to China soared after China applied a 25 per cent retaliatory tariff on U.S. soybeans in July 2018.

Three million tonnes of Canadian soybeans were sent to China between October and December of that year.

“We had it really good until we decided to arrest somebody and that was the end of it,” he said.

Shipments plummeted to 46,157 tonnes for the first 11 months of 2019 following the Dec. 1, 2018, detention of Huawei executive Meng Wanzhou because of an extradition request from the United States.

Davidson said the plight of Canada’s soybean farmers worsened when the U.S. government announced on Aug. 27, 2018, that it was providing a US$1.65 per bushel subsidy for the country’s soybean farmers to offset the impact of its trade war with China.

That was followed by a July 19, 2019, announcement of an additional subsidy of up to $3.20 per bu.

He contends that the subsidies are allowing U.S. soybeans to displace Canadian soybeans in markets around the world, including Canada. Canada imported nearly one million tonnes of U.S. soybeans in 2018-19, which is more than triple the usual volume.

Ontario soybean prices have fallen from a high of $481.83 per tonne in May 2018 to $433.60 per tonne in November 2019.

Soy Canada has been asking Ottawa since September 2018 for a compensatory payment to offset the U.S. subsidies.

“Silence is the response,” said Davidson.

“Soybean producers in Canada are undefended against the U.S. treasury. We’re up against it all alone.”

Bibeau said that is not the case. The federal government is collaborating with provincial and territorial governments to improve cost-shared business risk management programs such as AgriStability.

“However, ministers also recognize more work needs to be done so that evolving risks, like climate change and international trade, are better factored into programming,” she said.

“This will be a focus for the coming year.”

Davidson has been told by government officials that what is happening to soybean prices is the result of world oversupply of the commodity.

However, he argues that growers are being battered by government policies, such as U.S. subsidies and Canada’s decision to detain Meng.

The result is they have been forced to relinquish their usual two million tonne share of the Chinese market to other exporters and develop markets elsewhere.

Bangladesh has become Canada’s top customer, buying 524,649 tonnes though the first 11 months of 2019, up from 71,874 tonnes for all of 2018.

Iran is the next largest market, purchasing 521,995 tonnes, up from 122,179 tonnes for all of 2018.

“That’s where we have been displaced to, the lowest possible priced markets,” said Davidson.

This article was originally published at The Western Producer

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