Canola growers say the expanded agriculture loan program the federal government announced Wednesday does nothing to resolve their greatest problem: the trade dispute with China that has closed the largest global market for Canada’s most valuable crop.
Agriculture Minister Marie-Claude Bibeau said Ottawa is more than doubling the amount of money farmers can borrow, to $1-million from $400,000, under a government-backed financing program, as grain traders look for new markets to replace China, which has ended purchases of Canadian canola amid a diplomatic dispute over the arrest of a Chinese executive.
“These measures will give canola producers the support they need to manage their cash flow,” Ms. Bibeau told reporters in Ottawa. “It will give them the flexibility to sell their canola at the best time, at the best price.”
But growers say the extra money does not address the root of the dispute, and taking on new debt at a time of low crop prices is a poor business decision.
“You’re talking about taking on more debt,” said Kenton Possberg, a farmer in Humboldt, Sask. “It doesn’t solve any problems. At the end of the day, we need this trade dispute resolved.”
He called the expanded loan program a “Band-Aid,” noting that Ottawa has taken bigger steps to help dairy farmers who lost market share in free-trade agreements. He said the federal government should take a tougher stand with China to end the trade impasse.
“Everybody in Saskatchewan grows canola,” Mr. Possberg said. “It’s the one that puts food on the table and everything else.”
For canola farmers, the new measures include an increase to the interest-free portion of the cash advances, to $500,000 from $100,000, and the promise of government efforts to find new global markets for the crop.
“I guess it’s a good first step,” said Charles Fossay, president of the Manitoba Canola Growers Association and a farmer west of Winnipeg. “I mean, it doesn’t solve the problem of China. But it will provide the farmers with a tool to assist them with their cash flow.”
Mr. Fossay said Manitoba farmers are getting about $9.80 for a bushel of canola, well below the $11 break-even price.
“We need markets to rally up and recover, whether that’s China coming in and starting to buy canola or other countries coming in. This is a loan – and you’re kind of digging yourself a hole,” Mr. Fossay said.
China said it withdrew the import licences for two major canola sellers because the crops contained unacceptable numbers of pests. The Canadian canola industry and the federal government have rejected the claims and are still awaiting approval from Beijing to send inspectors to China to verify the grounds for the ban.
“We haven’t had any evidence of the irregularities,” Ms. Bibeau said.
The trade action is believed to be further retaliation for Canada’s arrest of a Chinese telecom executive at the request of the United States. Shortly after Huawei Technologies Co. Ltd.'s Meng Wanzhou was arrested in Vancouver, two Canadians, Michael Kovrig and Michael Spavor, were seized by Chinese authorities and remain in custody.
Jim Carr, Minister for International Trade Diversification, said that while a complaint with the World Trade Organization is an option, the government and industry agree that the best way to tackle the dispute is by talking with the Chinese and verifying their grounds for rejecting the crop.
Canada is the world’s biggest grower of canola seeds, which are used to make cooking oil and animal feed. Until the Chinese restrictions, the crop accounted for 17 per cent of all Canadian exports to China, which buys about $2.7-billion worth of Canadian canola each year.
Canadian grain traders sell canola to 50 countries, but China remains the biggest customer for seeds.
Prices have fallen about 15 per cent in the past 12 months amid a China-U.S. oilseed dispute and an outbreak of African swine fever in China that has reduced hog numbers and demand for feed. China’s restrictions on Canadian canola have also weighed on world prices.
Canadian farmers are responding to the uncertainty and lower prices by reducing the acreage seeded with canola by about 6 per cent this season, according to Statistics Canada.
Rick White, chief executive of the Canadian Canola Growers Association, an administrator for the advance payment plan, said the demand for loans is higher this year – and was climbing even before much of the Chinese ban hit farmers.
Since April 1, the group has made $300-million in loans to 3,200 farmers. Mr. White expects many will seek more because the previous $400,000 cap does not go far on a large farm and much of the impact from the ban has yet to be felt.
“The longer it goes on, the worse it will get,” said Mr. White, a farmer in southeast Saskatchewan.
Mr. Possberg said agricultural trade disagreements, including recent ones with Italy over wheat and with India over pulses, are driving down prices for a range of crops. He predicted the move away from canola into other crops would boost those supplies and drive prices down.
“It seems the government is not taking it seriously enough,” he said. “This has been something that has been going on for two or three months now, and they still haven’t put a delegation together to go meet with them. They keep talking that they’re going to prove that there is no issue with disease or bug infestations. We all know that there isn’t, but they are still using that talk.”