Ottawa pushed to aid producers in canola dispute

Province says cash advances would help farmers getting ready for spring seeding

Saskatchewan’s agriculture minister is asking Ottawa to help bankroll farmers hit by China’s canola blockade, through a boost to a cash advance program that could help pay for inputs as spring seeding looms.

In a meeting in Saskatoon with the federal ministers of trade and agriculture on Friday, David Marit plans to lay out a proposal to free up more capital for farmers facing tumbling canola prices. China has halted canola shipments from Richardson International and Viterra Inc., prompting Chinese importers to cease buying any Canadian canola, apparently in anticipation of a wider crackdown.

“Farmers are caught up in a trade situation, where China has just said no more canola, and there’s a lot of farmers with canola in the bin,” Marit said. “We said, look, this is a trade issue, it’s not the fault of a farmer.

“This was a means for us to say, OK, we didn’t want farmers having to sell their canola at a huge discounted price as a result of something that’s got no control with them.”

His request will focus on the Advance Payments Program (APP), which is administered through the Canadian Canola Growers Association but funded by the federal government. Currently, the program opens up a maximum of $400,000 to farmers, with the first $100,000 interest free. But Marit said the current canola crisis is reason to increase those ceilings.

“What we’ve asked the federal government is of the federal government is to increase that to a million dollars and interest-free on the full million,” Marit explained.

“Hopefully that will help alleviate the pressure of spring seeding and the expense around that side of it.”

He’s also calling for an extension to the deadline for applications for the 2018-19 year, from March 31 to April 30.

The stakes are high. Saskatchewan’s canola seed exports to China totalled $1.4 billion in 2017.

Marit said he isn’t yet sure precisely how much his proposed changes would cost the federal government. But the idea is simply to tide farmers over until prices recover. Once the crisis subsides, they’ll be able to sell their canola without taking a heavy loss and repay the advance. In that case, the feds would only be out the interest payments on the capital.

“There’s a lot of farmers right now that are holding canola because the price is depressed on it. This gives them an opportunity to hang on to it while we get through this China crisis,” said Marit. “It’s all guaranteed payback.” Keith Fournier, one of the directors of Saskcanola, said cash advances through APP are an important safety net for farmers.

“That is an excellent option,” he said. “Cash advance is probably your best tool that will help us, just to have cash flow go to pay for the spring inputs and take us into having another crop to sell.”

He said he has canola in the bin on his own farm just south of Lloydminster, where he grows on 2,000 acres. He’s not planning on marketing an existing canola stockpile until May or June, and will start worrying if the Chinese impasse continues until then.

“The longer it drags on, the more impact it will have on cash flow and on profits for the farmers,” said Fournier.

He said he’s especially concerned for younger farmers who aren’t yet established enough to weather the trade storm.

Fournier said the Chinese blockade hasn’t prompted him to change his seeding plans. Two other Saskcanola directors said the same thing.

Lane Stockbrugger plans to grow about 1,800 acres of canola on his farm near Humboldt. China’s move didn’t change that, and he doesn’t expect to see much of a drop in canola acreage provincewide. He explained that many farmers have already bought their seed for the growing season.

This gives them an opportunity to hang on to it while we get through this China crisis.

He agreed with Marit that there are “definitely concerns” for some farmers, who fear the price drop could compromise their cash flow for needed inputs.

“Where we are right now, there are a vast majority of farmers that have some canola left in the bin. I fall into that category,” he said. “And you know, you do some quick math, and you can understand the kind of numbers that we’re talking about, what we’ve lost with the price drop.”

Katelyn Duncan, another Saskcanola director who farms just south of Regina, said farmers need to know what options they’ll have, and soon.

“Growers do feel a lot of uncertainty right now and we are hoping to provide more clarity over the next few weeks, before seeding starts,” she said.

“We’re hoping to have answers.”] Marit said he’s staying optimistic the federal government will jump on board with his proposal.