National Post (National Edition)
Huawei cloud now looms over Canada’s canola industry
China revokes shipping permit for Richardson. ‘Caught in the middle,’ says company VP
Richardson International, Canada’s largest exporter of canola, says it has become a target in the escalating political spat between Ottawa and Beijing after China revoked its authorization to export the crop to its vast market.
“I think that we are being caught in the middle of a much larger dispute,” JeanMarc Ruest, senior vicepresident of global affairs and general counsel for the Winnipeg based firm said in an interview. “As a large Canadian corporation, there is a certain motivation to target Richardson.”
China’s move to halt canola imports from Richardson, first reported by Reuters, comes amid rising tensions between Beijing and Ottawa following the arrest of Huawei chief financial officer Meng Wanzhou in Vancouver on Dec.1. The arrest, made on a U.S. extradition request, was followed by the detentions of Canadian citizens in China in apparent retaliation.
China has made no statement on why Richardson’s canola exports have been blocked. In December, Richardson and other Canadian exporters received non-compliance notices alleging that “prohibited pests” or weed seeds had been found in their shipments, Ruest said.
Richardson is Canada’s largest Canadian-owned canola exporter and the country’s biggest privately owned agribusiness.
“We reviewed those allegations along with the Canadian government and came to the conclusion that they were unfounded,” said Ruest. “We absolutely did not agree that there were quality issues with the shipment.”
In the following months, Canadian inspections of all shipments continued to confirm the absence of pests, he added.
“But then on Fr i d ay March 1 we were advised by the Canadian government that it had been advised that our status as an authorized Canadian exporter was being revoked by China,” Ruest said. “China is alleging, notwithstanding those Canadian inspections, that weed seeds continue to be present in our shipments.”
Since January, the Canadian Food Inspec tion Agency has received nine notifications of non-compli- ance regarding shipments of canola seed from Canada to China.
In a statement, Agriculture Minister Marie-claude Bibeau said the Canadian Food Inspection Agency conducted “further investigations” in response to the Chinese notices and that no pests or bacteria of concern were identified in the shipments.
“We continue to be a supplier of high-quality canola to China and will work with China to resolve this issue as quickly as possible,” she said. “We are closely monitoring the situation and any potential impact on Canada’s agricultural trading relationship with China.”
Though other Canadian companies also received the initial notifications in December, Ruest believes his is the only firm to have its authorization revoked. Canadian grain exporters — in- cluding Viterra, Cargill and Parrish and Heimbecker — declined to comment. The Canola Council of Canada said there was no clear evidence that the current challenges facing canola exporters are linked to “diplomatic frictions.”
Richardson sends several shipments to China annually, each carrying roughly 50,000 tonnes of canola, Ruest said. China is the world’s largest importer of canola.
“It’s a significant part of our business and obviously we’ll have to find other outlets for our product,” Ruest said. “This is an issue much larger than Richardson so we have to hope and expect that our government is going to take all the steps required to address the situation forcefully. These are early days and we’ll see how things progress but we are obviously very disappointed with the situation.”
Canola futures declined to their lowest level in more than two years, following several months of softening export volumes and prices.
“We haven’t seen a lot of energy in the Canadian market in a while and if Richardson is being blocked that could partly be why,” said Neil Townsend, a senior analyst at Farmlink Marketing Solutions. “Demand has been very slow and China as the biggest importer is obviously part of that.”
Several other factors have also contributed to lagging prices and exports. Prices soared to peak levels in the spring of 2018 after speculation that China’s trade war with the U.S. would push it to buy more Canadian canola. These high prices, combined with weather issues, eventually knocked both prices and export volumes down, said Ken Ball, senior commodities futures analyst with PI Financial in Winnipeg.
“The China incident has added to things but we were already on a downward path,” he said.
Prime Minister Justin Trudeau said this week that Canada would proceed with a U.S. extradition request for Meng, even as Chinese authorities issued new allegations of espionage against the two detained Canadians, Michael Kovrig and Michael Spavor.