Glacier FarmMedia — A new trade war front opened over the weekend as China announced stiff tariffs on Canadian canola oil, meal, peas, pork and other commodities late Friday. Canadian industry groups decried the move and are calling on the federal government to intervene.

China will apply a 100 per cent tariff to Canadian canola oil, meal and pea imports, and a 25 per cent duty on Canadian aquatic products and pork starting March 20, China’s Ministry of Commerce said in a statement.

The Chinese move was in response to Canada’s 100 per cent tariff on Chinese EVs and 25 per cent levy on its aluminium and steel products that China says, “seriously violate World Trade Organization rules, constitute a typical act of protectionism and are discriminatory measures that severely harm China’s legitimate rights and interests.”

CANOLA HIT HARD

“New tariffs from China on Canadian canola oil and meal will have a devastating impact on canola farmers and the broader value chain at a time of increased trade and geopolitical uncertainty,” said Chris Davison, Canola Council of Canada (CCC) president and CEO in a statement. “We urge the federal government to immediately engage with China, with a view to resolving this issue.”

In 2024, total exports of Canadian canola seed and products to China were valued at almost $5 billion and included two million tonnes of canola meal, valued at $918 million and tonnes of canola oil, valued at $20.6 million. The tariff rates announced by the State Council Tariff Commission will be prohibitive to the export of Canadian canola oil and meal to China.

“With this announcement Canadian canola farmers are facing an unprecedented situation of trade uncertainty from our two largest export markets only weeks before planting begins,” said Rick White, president and CEO of the Canadian Canola Growers Association. “The impact of the federal government’s trade policy decisions is now playing out at the farmgate, making it imperative that government respond with a plan for financial compensation commensurate with the losses incurred.”

The nearby May canola futures contract on the ICE platform was down its daily $40 per tonne limit in immediate response to the Chinese tariff news on Monday morning, March 10.

CHINA LARGE MARKET FOR CANADIAN PEAS

China is also one of Canada’s largest markets for yellow peas, importing about half a million tonnes of the legume valued at $306 million in 2024, said Pulse Canada. “The Canadian industry values this long-standing and mutually beneficial partnership. We know Chinese customers prefer Canadian peas and want to continue to deal with Canadian suppliers,” said Terry Youzwa, chair of Pulse Canada.

“We believe that the tariffs announced (March 7) on Canadian peas, canola, pork and seafood represent an invitation to negotiate, not a retaliation nor the start of the trade war,” said Greg Cherewyk, president of Pulse Canada in a statement. “Pulse Canada calls on the Canadian Government to immediately engage with China to bring about a swift resolution to these matters. It’s in the best interest of both nations to recognize the positive contributions of agriculture and food to our economic wellbeing.”

Pulse Canada is working with government and industry partners in Canada and China to encourage an urgent meeting of officials and ultimately a successful resolution of issues before there’s an impact on pulse trade.

CHINA TARIFFS ON TOP OF U.S. TRADE UNCERTAINTY

The Grain Growers of Canada (GGC) echoed the concerns raised by the canola and pulse organizations, noting that the mounting pressures could cause a net loss for many farmers.

“With uncertainty mounting with the United States, our largest export market, the last thing grain farmers needed was a trade war with China, our second largest export market,” said Kyle Larkin, executive director of GGC in a release. “Together, the U.S. and China account for over half of all Canadian grain exports — losing access or facing exorbitant tariffs in both markets at once is a threat farmers cannot afford to absorb,” sad Larkin.

The Canadian Federation of Agriculture (CFA) expressed similar sentiments in a statement. “These Chinese tariffs could not have come at a worse time as Canadian producers already combat unfair and unjustified trade actions from the United States,” said Keith Currie, president of the CFA. “It is crucial that the Government of Canada stand firmly with Canadian canola, pork and seafood producers. We urge the Government of Canada to engage in immediate and robust diplomatic efforts with China to address these tariffs and to work closely with affected industries to provide financial compensation commensurate with the losses incurred by farmers who are paying the price.”

China is an important market for agri-food exports and new Chinese tariffs will hurt Canadian farmers and the broader value chain, said the Canadian Agri-Food Trade Alliance (CAFTA). “Given current trade and geopolitical uncertainty for Canada’s agri-food exports, it is imperative that the Government of Canada engage with China as quickly as possible to find a resolution to this issue,” said CAFTA executive director Michael Harvey.

WHEAT GROWERS WEIGH IN

The Wheat Growers of Canada expressed “outrage” over the Chinese tariffs and blamed the trade sanctions on the federal Liberal government while calling for immediate action.

“Instead of standing up for Canadian agriculture and securing stable trade relationships, this government has been asleep at the wheel, too distracted with political games and virtue signaling to notice the economic disaster unfolding before them,” said the Wheat Growers in a news release, adding “farmers and business owners warned the government that its approach to China, including ill-conceived tariffs on electric vehicles and metals, would provoke retaliation.”

The Wheat Growers released a list of demands to the federal government: including calls for financial compensation commensurate with the losses incurred; an end to interprovincial trade barriers so Canadian producers can operate freely and competitively within their own country; investment in critical infrastructure to ensure agricultural exports move efficiently to global markets; leverage trade agreements that diversify Canada’s markets and build credibility with global partners; and

regulatory reform to attract investment, build confidence and ensure a predictable, science-based trade policy.

“This crisis is entirely self-inflicted,” said Gunter Jochum, president of the Wheat Growers. “The Liberal government has made Canada an unreliable trading partner, allowed our international reputation to erode, and now, they’ve put farmers in the crosshairs of a global trade war. While other nations secure new trade deals and expand market access, Canada is losing ground, losing allies and losing business.”

With files from Reuters

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Currently, the largest threats emanating out of the U.S. are the recent changes to the biofuel tax credits and the possibility of the Trump administration imposing a 25 per cent tariff on all goods the U.S. imports from Canada. Besides those, Vervaet warned that China has often been overlooked as a threat to Canada’s biofuel industry.

As for the most immediate challenge, Vervaet stressed that in recent years the U.S. has become Canada’s most important foreign customer for canola oil and meal.

The latest data from the Canadian International Merchandise Trade Database shows the U.S. accounting for 96.2 per cent of Canada’s canola exports at 3.14 million tonnes during the first 11 months of 2024. The December figures are not yet available.

For canola meal, the U.S. is also Canada’s top foreign customer at 3.44 million tonnes during the same period, which are 65.5 per cent of 2024 exports. In terms of canola seed, the U.S. is fifth at more than 271,000 tonnes.

“A tariff is going to have a significant impact on our industry,” he stated. “There are some interesting dynamics for sure in the United States. All (COPA) can really comment on is we will wait to see what approach the new administration takes towards biofuels.”

“In recent years almost all of the canola oil exports have gone to the United States. That’s primarily driven by the growth of the renewable fuels market in the United States, most notably that canola, was after many years, finally able to be an approved feedstock for renewable diesel production,” he continued.

That important change to Section 45Z of the Inflation Reduction Act was made by the U.S. government in 2023. However, earlier this January revisions to 45Z made by the U.S. agriculture and treasury departments excluded canola when a new carbon intensity score was added.

While canola’s inclusion has been good news, Vervaet added, “the not so good news story is that to qualify and to actually take advantage of (45Z) you have to have as a feedstock provider a carbon intensity score below a certain threshold. That threshold is going to be a challenge for canola to meet. Our carbon intensity based on the assumptions and the model being used puts us at a score that’s simply too high.”

Vervaet added that U.S. President Donald Trump is likely have some kind of new tax policy when it comes to biofuels. However, reports indicated there’s the chance of the biofuel tax credits being eliminated. The incoming Secretary of Agriculture, Brooke Rollins, along with the next Secretary of Energy, Chris Wright, and the new head of the Environmental Protection Agency, Lee Zeldin, have notable track records favouring fossil fuels over biofuels.

However, Vervaet said there are domestic opportunities for canola and its oil – something which the industry has been wanting to expand.

Reports indicated the domestic crush could be expanded to as much as 17 million tonnes per year from the current capacity of 11 million.

While the Trump tariff threat led Federated Co-op to put its canola expansion plans with AGT for Regina on hold, Vervaet pointed to another problem.

“There’s potentially a lot of Chinese used cooking oil that is finding its way into the Canadian biofuel market indirectly. That’s another big factor that’s sometimes gets lost in the shuffle in terms of demand erosion for canola over the short and medium term,” he stated.

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A total of 10.523 million tonnes of canola were crushed in the country in 2023, which was up by 20.0 per cent from the previous year and above the previous record of 10.290 million tonnes set in 2020.

Meanwhile, Canada’s soybean crush decreased by 5.7 per cent in 2023 to 1.763 million tonnes. Oil production totalled 4.422 million tonnes for canola and 329,856 tonnes for soybeans. Meal production totalled 6.200 million tonnes for canola and 1.371 million tonnes for soybeans.

High prices and increased exports of canola oil were behind the strong canola crush pace, according to StatCan. In 2021, the price of canola oil increased by 65.2 per cent over the previous year, and it has remained elevated ever since. In 2023, Canadian exports of canola oil increased 20.3 per cent from 2022, totalling 3.150 million tonnes. This trend was underpinned by higher supplies of canola, as production of canola was 31.2 per cent higher leading into 2023 than in the previous year.

In the United States, over the 2023 calendar year, oilseed processors crushed 61.268 million tonnes of soybeans which was up by 2.6 per cent from the previous year. A total of 2.059 million tonnes of canola was crushed in the U.S, marking a 19.2 per cent increase from 2022. Oil production totalled 12.052 million tonnes for soybeans and 825,227 tonnes for canola, while meal production totalled 45.241 million tonnes for soybeans and 1.198 million tonnes for canola.

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Meanwhile, StatCan found the July soybean crush was slightly lower than in July 2022.

The federal agency pegged the canola crush for last month at 961,683 tonnes, up 24.25 per cent from the previous July. The previous July record was 854,510 tonnes in 2019; the overall record of 957,952 tonnes was in March 2021.

The amount of oil produced this past July rose 24.2 per cent at 402,886 tonnes, but well short of the record of 416,849 tonnes in March 2021.

Canola meal produced increased 22.5 per cent July over July at 567,153 tonnes. That as well made for a new record, besting the 545,992 tonnes in March 2023.

At 151,621 tonnes, StatCan found a 5.3 per cent decline in the country’s soybean crush. That resulted in a 6.5 per cent drop in oil produced at 28,497 tonnes and meal produced was down 5.4 per cent at 118,483 tonnes.

Table: Canada’s July crush, in metric tonnes. Source: StatCan.

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In a ‘proposed decision’ released in April the U.S. Environmental Protection Agency (EPA) recognized canola oil’s value as an environment-friendly alternative to fossil-based fuel — a move that’s expected to add new demand for the crop.

“This is a positive step forward in securing a canola oil pathway in the growing U.S. renewable diesel and sustainable aviation fuel markets, putting canola on a level playing field with other oilseed crops,” Jim Everson, Canola Council of Canada (CCC) president, said in a news release April 18 after EPA said canola oil-based renewable diesel, jet fuel and other biofuels qualify as “advanced biofuels” under the Renewable Fuel Standard (RFS) program.

“In addition to the environmental benefits, this will also help diversify markets and support value added processing, creating opportunities for the entire canola sector.”

The CCC is optimistic EPA will come to the same conclusion this summer when it releases its final decision, Everson said in an interview April 19.

“The fact that EPA has come to the position that it has, after all its analysis, I think bodes very well for the industry,” he said.

Why it matters: Canola, already one of Canada’s most economically important crops, could see even stronger demand as the world seeks lower carbon fuels in the fight to slow climate change.

A statement from The White House said: “This action demonstrates EPA’s commitment to approving new petitions for renewable fuels that can provide greenhouse gas benefits as well as reduce reliance on petroleum fuels.”

The CCC worked with the Canadian Oilseed Processors Association on a U.S. Canola Association petition to the EPA in 2020 to approve canola oil as a feedstock for renewable diesel, jet fuel and other biofuels, Everson said. Renewable diesel and renewable jet fuel are chemically similar to petroleum and are increasingly used in existing vehicles and aircraft to help decarbonize the transportation sector.

The EPA found canola-based renewable diesel, jet fuel and other fuels were 60 to 69 per cent lower in carbon emissions than petroleum-based fuels, Everson said. The EPA’s threshold for sustainable fuels is a 50 per cent cut in emissions, he added.

“We have some analysis that the canola council has done a little while ago that shows canola as a feedstock in biofuels can reduce GHG’s (greenhouse gases) by up to 90 per cent relative to regular fossil petroleum diesel,” he added.

Part of canola’s advantage is its high proportion of oil to meal. But because of production practices, including minimum- and no-till, Canadian canola production sequesters more carbon than some other producers.

Canola oil is increasing being used in biodiesel and renewable fuels, but it remains one of the healthiest food oils in the world, Everson said.

“It’s low in sat (saturated) fats, no-trans fats and all the right fats and oils.” he said. “It’s an attractive and very flexible oil. And demand for vegetable oil generally continues to increase globally as well so there’s going to be a lot of continued demand for canola.”

In fact, some observers might conclude canola oil demand is exceeding supply, following months of prices almost double what they often have been.

How much demand for canola-based fuel will increase, especially in the U.S., is difficult to predict, Everson said. The same is true when it comes to forecasting American canola production. Last year the U.S. planted just 2.152 million acres of canola. Most of that — 1.75 million acres — was seeded in North Dakota.

In January the U.S. Department of Agriculture predicted U.S. canola acres would remain unchanged in 2022, providing an opportunity for Canadian canola farmers.

However, despite very high new-crop prices, Statistics Canada estimated April 26 that Canadian farmers would seed 20.9 million acres this spring, down seven per cent from last year.

While canola prices are high, so are production costs, StatCan said. Some of the decline might be due to concerns about the drought continuing.

The CCC’s target is for Canada to produce 26 million tonnes of canola by 2025. Given annual plantings shouldn’t go much higher so land can be properly rotated to reduce canola pests, the CCC is focused on boosting canola yields to 52 bushels an acre, from the current 40.

Last year, despite 22.5 million acres of Canadian canola, drought cut average yields to 25 bushels, with production hitting just 12.6 million tonnes.

Canola yields typically bounce back following a poor yield, Everson said.

While the 26 million-tonne canola production goal might not be achieved in just three years, setting production targets has worked before, Everson said. Certainly strong canola prices and announcements for expanded and new Canadian crushing plants send a strong market signal for increased production, he added.

“So it’s all about trying to work with the producer to make sure they have the crop inputs that are necessary and we have the research going on in the private sector and the public sector to focus on increased yields,” Everson said.

— Allan Dawson is a reporter for the Manitoba Co-operator at Miami, Man.

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Federated Co-op (FCL) on Monday announced a memo of understanding has been signed with Regina grain and pulse crop processor AGT Foods on a joint venture that will “look to construct” a canola crush plant.

The joint venture, to be majority-owned by FCL in a 51-49 split, will see a $360 million plant built to supply about 50 per cent of the feedstock for a one billion litre-per-year renewable diesel operation, the companies said.

The j.v. crush plant facility is expected to use about 1.1 million tonnes of canola seed to produce 450,000 tonnes of oil, the Saskatchewan government said in a separate release. The balance of the feedstock would be contracted from other canola crushers.

FCL on Monday described the joint-venture plant as part of a bigger $2 billion investment it plans to make in building what it called an integrated agriculture complex (IAC) at its chosen Regina site, just north of the Co-op Refinery Complex (CRC).

The IAC would include both the crush plant and the renewable diesel plant, the latter of which has been on FCL’s drawing board since before April 2021, when it bought the assets of Calgary-based True North Renewable Fuels.

Before the sale, True North had been doing preliminary work toward development of a biofuel plant in Regina and its assets are expected to allow FCL to speed up its own planning timeline.

FCL in November 2021 locked in an option to buy the land north of the CRC and said it would begin “formally assessing” the feasibility of a renewable diesel project. If approved, the renewable diesel plant would be scheduled to start operating by 2027, FCL said at the time.

FLC said Monday that both IAC investments remain “subject to continued due diligence” as well as environmental, regulatory and board approvals.

Monday’s announcement also doesn’t include a timeline for construction or the start-up of the j.v. crush plant — but it’s expected that a renewable diesel facility in Regina in 2027 wouldn’t need to look far for canola oil either way.

Cargill and Viterra last April separately announced plans to build their own canola crushing plants in the Regina area, and Ceres Global Ag in May announced plans for a crush plant near its grain terminal at Northgate, Sask., about 60 km southeast of Estevan near the U.S. border. Also, Winnipeg-based Richardson International in March announced plans for a major expansion of its existing canola plant at Yorkton, about 185 km northeast of Regina.

The FCL/AGT venture “demonstrates Saskatchewan’s leadership in plant-based foods, fuels and feeds and brings together two Saskatchewan companies with the shared goals of decarbonizing our economy and adding value to western Canadian crop production,” AGT CEO Murad Al-Katib said Monday in FCL’s release.

“We believe that AGT’s capabilities in grain logistics and plant protein ingredients combined with FCL’s strong history in energy and farm inputs creates a powerful partnership that will benefit the communities in which we operate.”

FCL’s Co-op Retailing System is believed to be “well-positioned to integrate and capture the full agricultural value chain in the production of fuel and value-added products,” FCL CEO Scott Banda said in the same release.

An FCL-AGT crush plant would “ensure” Saskatchewan beats the target laid out in its 2030 Growth Plan of processing 75 per cent of the canola grown there, the province said in its release Monday.

With an estimated gross economic output of $4.5 billion across “all economic realizations” connected with the facility, the proposed IAC also “supports the Growth Plan goal of increasing agriculture value-added revenue to $10 billion,” the province said. — Glacier FarmMedia Network

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Preliminary sample data compiled by the Canadian Grain Commission shows average oil content for number one quality canola in 2021/22 at 41.9 per cent. That compares with the 44.1 per cent recorded the previous year and the five-year average of 44.4 per cent. The last time the oil content dipped below 42 per cent was the 2003/04 crop that saw oil levels at only 41.8 per cent.

Of the 1,703 number one quality samples studied to date, canola oil content across all grades ranged anywhere from 33.9 per cent to 49.4 per cent in Western Canada. On a provincial basis, Manitoba and Saskatchewan both reported average oil content at 41.7 per cent and 41.8 per cent respectively, while Alberta was slightly higher at 42.3 per cent.

While oil levels were down, protein was higher on the year with average protein levels for number one canola in Western Canada hitting 23.7 per cent. That marked the highest average protein level of the past two decades of Canadian Grain Commission data. The high average protein level compares with 20.8 per cent the previous year and the five-year average of 20.5 per cent.

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Winnipeg grain firm Richardson International announced last Tuesday it has bought full ownership of Control Chemical Corp. for an undisclosed amount.

Control Chemical is billed as a specialized manufacturer of environmentally safe drilling fluids and proprietary vegetable oil-based lubricants, used in mining and resource extraction processes such as diamond drilling, horizontal directional drilling and rotary and percussive drilling.

The company’s Matex products include downhole lubricants, specialty polymers, foams, tool lubricants, blast hole stabilizers, thread compounds and non-alcohol freeze control fluids.

Given their capacity to withstand high temperatures, canola oil-based lubricants are “recognized for extending tool lifespan, optimizing production processes, and improving drilling core recovery and pathway stabilization,” Richardson said.

“This partnership will be beneficial to both companies, as historically speaking, Richardson is our largest supplier of crude canola oil,” John MacPhail, Control Chemical’s retiring principal, said in Richardson’s release.

“With petroleum oil prices increasing, we are in a unique position to reach new and more expansive markets for environmentally safe downhole, torque-reducing lubricants.”

For Richardson, which has been a minority shareholder in the company and supplied it with raw ingredients for “over 30” years, the deal marks “a unique opportunity to diversify our business and expand into innovative products derived from the core commodities we handle,” Darrell Sobkow, Richardson’s senior vice-president for processing, food and ingredients said in the same release.

Richardson’s oilseed crush plant at Lethbridge, Alta. will keep on supplying crude canola oil stock for Control Chemical products, which it makes at a 50,000-square foot plant in southeast Calgary and sells worldwide. — Glacier FarmMedia Network

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The North American arm of Rotterdam-based Viterra said Monday it’s in the “feasibility” stage of designing and finalizing plans for what it bills as the “world’s largest integrated canola crush facility” in the northeast of Regina, about seven km from its downtown head office.

Construction would begin in early 2022, toward a late 2024 startup producing fully-refined vegetable oils for food-grade and biodiesel-grade end-users, the company said.

The Viterra plant’s targeted crush capacity, initially, would be 2.5 million tonnes of canola per year.

That figure would put it ahead of Winnipeg rival Richardson International’s plans for its existing canola plant at Yorkton, Sask., about 185 km northeast of Regina. Richardson last month announced a major expansion to be completed by early 2024, bringing the Yorkton plant’s annual capacity to about 2.2 million tonnes.

Asked Monday about the total cost of the project as proposed, Kyle Jeworski, Viterra’s CEO for North America, said the company is “continuing to refine” that figure, but added it would be the company’s “largest single investment in a site in Canada ever.”

“Oilseed crush demand is expected to continue strengthening in the long term, given continued demand growth for canola oil in food usage, as well as increases in meal consumption in animal feed markets,” Viterra said Monday in a release.

The Regina plant also “will play a key role in supplying the feedstock required for renewable fuel production,” which the company said would support the federal government’s planned Clean Fuel Standard.

Viterra already operates three North American oilseed crush plants — at Becancour, Que., Ste. Agathe, Man. and Warden, Washington — all of which were built by previous owners. The Regina plant would mark “the first time that we are constructing a greenfield facility” for canola crushing, Jeworski said.

Putting the Regina plant’s scope and size in perspective, Jeworski said, “if this facility was an export destination, it would be larger than our Japanese market for seed, larger than our Mexican market for seed… in an average year it would be our second-largest destination.”

The new plant would also feature “the latest technology,” he said, in terms of handling efficiency and limting emissions.

Unlike the Ste. Agathe and Warden plants, which specialize in expeller-pressed canola oil, the Regina plant would be a “traditional” hexane-extraction canola plant, he said.

Asked about Viterra’s plans against the current market picture for canola, Jeworski said that “anytime you continue to add demand, I think that’s good for the farmer; I think it’s good for Canada, in terms of continuing to diversify our markets — and we’re diversifying markets with the safest market in the world, which is our own.”

‘All directions’

Saskatchewan Premier Scott Moe, in a separate release, hailed Viterra’s announcement as “align(ing) with our Growth Plan goals, bringing us to our target to crush 75 per cent of the canola produced in our province at home in Saskatchewan.”

Completion of the project depends on “successful negotiation and finalization of various permits, licensing, agreements with third parties and final approvals both internally and externally,” Viterra said.

The project site, Jeworski said, is on a parcel on the edge of Regina for which the company has been working with city officials for “a considerable amount of time.”

For this kind of project, the company is looking at “access to sufficient labour, which Regina has, but on top of that (the site) has excellent access for both road and rail,” Jeworski said, noting the province’s recent investments in bypass infrastructure, which would allow the plant to “access canola seed from all directions very effectively.”

Viterra’s announcement comes just days after the Canadian arm of agrifood firm Cargill announced plans for its own smaller canola crush plant at a not-yet-decided location in the Regina area, for completion in early 2024. Cargill on Thursday also pledged upgrades for its own existing crush plants at Camrose, Alta. and Clavet, Sask.

Those oilseed sector announcements also follow Federated Co-operatives’ (FCL) decision earlier this month to buy the assets of biodiesel processor True North Renewable Fuels.

The co-operative, however, has objected to Regina city council’s $4 million land sale for what turns out to be the Viterra plant — just to the north of FCL’s existing fuel refinery complex.

Writing April 11 to Regina Mayor Sandra Masters, FCL vice-president Pam Skotnitsky said that land sale “jeopardizes our planned investments and would force us to select a location apart from the city of Regina.”

FCL’s April 9 announcement, Skotnitsky said, had “highlighted our interest in locating a renewable diesel facility adjacent to the Co-op Refinery Complex.” — Glacier FarmMedia Network

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And by diversifying exports, farmers will become less dependent on current major markets, reducing their financial risk.

“When borders close for any number of reasons due to trade tensions or shock caused by disease or weather having a broader range of export markets allows Canadian exports to be re-allocated, rather than reduced,” FCC said in a news release Tuesday along with the release of its 2020 trade report, “Opportunities and Challenges to Diversify Canada’s Food Exports.”

After identifying the world’s biggest and fastest growing food import markets — including those where Canada has a small existing market share — FCC identified opportunities to expand five Canadian food exports: canola oil, prepared or preserved pork, potato products, prepared crab and prepared or preserved beef.

In 2019 Canada ranked fifth and 11th in global agricultural and food exports, respectively, with sales earning $67 billion — a 10 per cent increase from 2015.

Of those sales, $29 billion were for food, accounting for 45.5 per cent of the total.

Food exports are up 28 per cent since 2015.

But 79 per cent of the increase was due to exports to just one market — the United States.

That’s a lot of eggs in one basket.

“Combined with our competitive advantages in natural resources and innovation, and a stellar food safety reputation, Canada has an opportunity to improve its world standing as a major food exporter, as well as to diversify its export markets,” J.P. Gervais, FCC’s chief agricultural economist, said in the release.

“World population growth, higher purchasing power in emerging markets and new trade agreements are key factors in potentially creating more opportunities for Canada to increase exports.”

Why it matters: Canadian farmers rely heavily on exports of unprocessed agricultural goods because they grow so much more than the domestic market consumes.

Canada’s agri-food industry has so far been able to fill domestic and export demands, despite COVID-19, Gervais told reporters via telephone Friday ahead of the report’s release.

“I would say there is a huge opportunity for us as an exporter in this world where a lot of food importers are not food secure… to say ‘here we are in Canada with quality and safety… we have all that to offer…'” Gervais said. “I think that’s a huge opportunity for us in 2021… we can be a leading supplier.”

Canola oil

Canola oil is the fastest growing vegetable oil behind coconut, FCC says. Canola oil is used mostly for food rather than biofuel. Importers in Asia and the West prefer it because of its more environmentally friendly than some other oils. FCC says there is more potential to export more Canadian canola oil to Asia and Europe.

Pork

Beyond China, most Canadian pork has an advantage in small countries with slow recent growth. Excluding China, the markets that show the greatest potential for Canadian pork are in Europe — Italy, France, Germany, Belgium and Poland. There are hurdles, including a European Union requirement that meat imports be certified free of antimicrobials, Gervais said.

“If you break down all the barriers we have a very competitive pork product in Europe,” he said.

Potato products

In 2019, Canada was the fourth largest exporter of potato products, worth just over $1 billion. The expanding Western diet has increased demand for French fries and potato products. While the United Kingdom is the largest and fastest growing importer, there is opportunity for expansion in Europe and China.

Crab meat

From 2009 to 2019, Canada has been the world’s largest exporter of prepared crab, capturing 33 per cent of total global exports last year. China, along with South Korea, Indonesia, Vietnam, Thailand and Hong Kong, represent a third of the global import growth. However, Russia is threatening to overtake Canada in crab meat exports.

Beef

Global prepared and preserved beef imports grew by 58 per cent between 2009 and 2019 and China accounted for almost 40 per cent of it. Over the same period, Canadian exports grew by almost 125 per cent. Last year China surpassed the U.S. as the largest beef importer, including prepared and preserved beef. There are opportunities for Canadian beef in Europe and other Asian countries..

While FCC’s report extolls the benefits of increasing food exports and diversifying markets, it acknowledges it’s not easy. That’s why FCC is helping smaller and medium sized companies to first grow exports to existing customers, Gervais said.

“Then afterwards I am convinced we can see some diversification given the efforts,” he said.

“Diversification almost always entails seeking markets that are further away and more expensive to develop,” the report says.

Some potential markets are price-sensitive, especially for high-quality Canadian products, the report says.

China can also be as influential in world food markets as the U.S.

“It (China) can engage in the protracted tensions that have shaped much of global trade since 2019 and lead to shifts in trade flows that do not truly reflect diversification,” the report says.

“A slower pace of economic expansion worldwide can mean more timid growth in food demand, impeding diversifying efforts. The pandemic has reminded us of the importance of a robust food supply chain and economic consequences for some countries may last years.”

— Allan Dawson reports for the Manitoba Co-operator from Miami, Man.

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