Sask. farmer says canola export situation is 'critical'

Canola farmers are grappling with an uncertain market, something one Sask. farmer says will impact the bottom line.

Richardson International says the ban of their exports is a bigger issue than just one company

Farmer Gerry Hertz said the issue of canola exports to China needs to be resolved. Hertz already is planning to grow more canola seed this year. (Matt Howard/CBC)

Even though there's snow on the ground, Gerry Hertz already has his seeding plans figured out.

He is one of 43,000 canola farmers in Western Canada grappling with an uncertain canola market. Hertz, who farms near Edenwold east of Regina, has invested in canola for the 2019 crop but hasn't sold most of last year's harvest.

"I've got lots of canola in my bins. The price has been going down. It's not just from this one issue but it's costing me lots of dollars in the short term here," he said.

On March 1, China decided to ban imports of canola seed and other products from Winnipeg-based Richardson International, Canada's largest exporter. China said the decision was due to fears of pests and bacteria.

But Canadian officials disagree, saying there was no evidence of pests or bacteria when the products were inspected in Canada.

China buys about five million tonnes of Canadian canola. It's the largest importer of canola seed, importing about 40 per cent of the market. Richardson International provided about two million tonnes of the imports.

Gerry Hertz said he has most of his canola seed still in his bins. (Matt Howard/CBC)

Hertz, a member of the SaskCanola, said farmers grow their crops under stringent conditions.

"We have the best quality control system in the world through our CFIA monitoring and all of our regulatory processes," Hertz said. "I'm very comfortable in what we produce."

Ed Baldwin is a canola market analyst with AgChieve Grain Marketing who advises farmers about selling. He said he's been fielding calls from farmers worried about whether to sell their canola in storage or scale back how much they seed this year.

Baldwin said since the Chief Executive of Huawei Meng Wanzhou was arrested in Vancouver, the Chinese government has been trying to pressure the Canadian government.

China started to slow down deliveries of canola since before Christmas, he said, and this affects the overall exports into China.

"We're kind of caught between the two largest economies in the world," he said. "We have the US who is our biggest trading partner. We have China, [who] is a market that we were expanding into."

'Difficult times'

"It's a delicate situation," Baldwin said. "I think we have to rely on the government to proceed as cautiously as they can."

Richardson International spokesperson Jean-Marc Ruest said this issue goes far beyond just one company.

"These are obviously difficult times," he said.

Ruest said they have been exporting canola seed to China for decades and has never come across this situation. He said if it is a quality issue they can address those issues.

"If it's something that is wider than a quality issue, Richardson is a wholly-owned Canadian corporation," Ruest said. "So there's a number of reasons potentially why Richardson was targeted."

CBC approached five of Richardson's competitors—Paterson Grain, Viterra, Louis Dreyfus Company, G3 Canada Limited and Cargill. All five declined recorded interviews but one company said shipping to China would be risky for all of them.

Ed Baldwin, a canola market analyst with AgChieve Grain Marketing, said there isn't an easy answer to the canola market situation. (Matt Howard/CBC )

Baldwin said he doesn't think there's an easy answer right now to the situation.

"It's very diplomatic and we have to allow the governments to do that negotiation that they're going to do," Baldwin said.

"I don't think it's a time to panic sell your canola...or 'It's going down and it's never coming back,' that's not how markets work."

SARM concern on canola

Canola is one of the topics being discussed at the Saskatchewan Association of Rural Municipalities annual convention this week in Saskatoon.

"Our delegates are really concerned about that," SARM president, Ray Orb, said.

Orb said they will be speaking to Minister of International Trade Diversification James Carr, directly asking what the federal government's plan is to have this issue be resolved.

"We hope that this issue can be quickly resolved so that the markets can correct themselves as far as the the issue of canola," Orb said.

"We would hope that they would normally have some kind of a delegation that would be able to go to China," Orb said.

He wants to see action on this immediately, Orb said.

Gerry Hertz said if the canola situation doesn't get resolved by the fall harvest, it will hurt the bottom line for all canola farmers. (Matt Howard/CBC)

If this continues into the fall though, Hertz said it will impact the bottom line.

"Canola may not be the most profitable crop anymore and at 26 billion dollars a year contribution to our industry, it impacts farmers. It impacts the people that work in our industry. It impacts on a tax basis all of Canada," he said.

Hertz is staying optimistic but said that it's an important issue.

"It's critical that we get this resolved right away."

With files from Bonnie Allen