Shunned by China and sitting on a record stock of unsold oilseeds, Canadian farmers will be watching closely as Prime Minister Justin Trudeau seeks a meeting with Chinese President Xi Jinping at the G20 summit in Japan later this month.
Yet it is a proposed tête-à-tête between Xi and U.S. President Donald Trump, who has threatened to slap additional tariffs on Chinese imports if Xi refuses an audience with him in Osaka, that will likely have the greatest impact on Canadian farmers, analysts say.
“Both meetings would be positive, but the quickest route to a solution for our farmers is probably through Washington,” said Gordon Houlden, a former Canadian diplomat and head of the University of Alberta’s China Institute. “Trump has put everything on the table in negotiations with Beijing and if certain issues are settled between them, it would lay the groundwork for things to normalize for us.”
Canada-China relations have deteriorated since December, when the RCMP arrested Huawei senior executive Meng Wanzhou in Vancouver on a U.S. extradition request. Soon after, Chinese buyers halted purchases of Canadian canola, citing the presence of pests in various shipments — though Ottawa says Canada’s inspections revealed no issues.
The loss of China as a market — the country normally buys 40 per cent of Canada’s canola — has left farmers holding a record 10 million tonnes of the unsold crop as of March 31, a 10.5 per cent increase compared with a year earlier.
Soybeans have piled up, too, after China’s purchases of the oilseed collapsed, falling from a record 3.2 million tonnes in the final few months of 2018 to 3,748 tonnes between January and April of this year. That’s left farmers stuck with 2.9 million tonnes of unsold soybeans, up from about 2.7 million tonnes at the same time last year.
With a new crop harvesting in the fall, the need to unload existing stocks is growing urgent, said Ron Davidson, executive director of Soy Canada.
“We’ve never had anything like this before and the big difference is we may not have China to come in and buy the way it did before,” he said. “Everyone is feeling uncertain because they don’t know where they can sell their beans.”
While China previously brought in vessels brimming with 50,000 tonnes of canola, it now takes containers of just 20 to 25 tonnes, Davidson said. And the introduction of new tests at Chinese ports, means shipments that were once cleared in a matter of hours now take two weeks.
“It’s not that nothing is entering China, it’s just that it’s moving in such small volumes and we need it to move in large volumes,” he said.
I don’t see a resolution on any of the issues…. Trump is seeking foundational changes to the Chinese economy and Xi won’t give him that.
William Reinsch, a senior adviser, Center for Strategic and International Studies
Trudeau has said he will pursue an opportunity to engage with Xi directly, both to discuss the detention of two imprisoned Canadians, Michael Kovrig and Michael Spavor, and the actions on canola and other products. For his part, Trump has suggested the Meng issue and more recently, the blacklisting of telecommunications giant Huawei, could be negotiated as part of a trade deal with Beijing.
“If a Xi-Trump meeting led to a grand bargain on Huawei and Meng, China may set aside its actions and things could improve for us over the next few months,” said Houlden. “I don’t think Trudeau can offer a solution like that and I don’t see the Chinese retreating with those issues unresolved.”
But while Canada has certainly become “collateral damage” in the U.S.-China trade war, quick relief in the form of a G-20 deal between Trump and Xi is unlikely, said William Reinsch, a senior adviser at the Center for Strategic and International Studies, who served as a senior trade official during the Clinton administration.
“I don’t see a resolution on any of the issues that divided us in this space,” said Reinsch. “Trump is seeking foundational changes to the Chinese economy and Xi won’t give him that.”
“It’s possible Trump will take a weak deal and celebrate it as a victory and maybe that will see them let go of some of the issues you in Canada are concerned about, but I sincerely doubt we’ll have any trade deal in the next few weeks.”
