Chinese canola restrictions create uncertainty for Peace Region grain farmers

02.09.2016

Peace canola crop less than one per cent of national harvest, remains major economic driver.

Peace Region grain producers are worried about declining prices and market uncertainty as China brings in new restrictions on the quality of canola it will accept into the country.

China, which purchased 40 per cent of Canada's canola exports last year, is reducing the amount of "dockage" it will accept in Canadian canola shipments—a potential $2 billion hit to one of Canada's largest grain industries.

Producers had until Sept. 1 to reduce the amount of dockage—an industry term for foreign matter and other plant debris in canola cargoes. The Chinese government says cutting its dockage rate from 2.5 to 1 per cent will screen against blackleg, a disease which affects crops. On Tuesday, however, Chinese officials agreed to extend the existing canola regulations for an indefinite amount of time.   

"They want insanely clean, pure canola," said Irmi Critcher, a grain farmer near Tower Lake, north of Dawson Creek. "One per cent is almost unachievable, because canola is a small seed and you'll always get a little bit of other stuff in there. We're trying our best to keep our fields clean already and reduce the amount of dockage, because it obviously hits you in the pocketbook."

B.C.'s share of the canola crop is relatively tiny in the Canadian context, but it remains an important economic driver in the Peace Region. Last harvest, the Peace Region produced around 111,000 tonnes of canola—less than 1 per cent of the 11.4 million processed in Canada.

Karen Goodings, a rural representative at the Peace River Regional District, said she hasn't heard directly from her constituents about the potential hit to the canola market.

However, "certainly any time you're losing a possible contract, you're going to be very concerned," Goodings said. "Canola is huge up in this area."

Don Biegel, manager of Agro Source, a Dawson Creek grain elevator, said the hit to local farmers could be up to ten per cent.

"It's going to drop the price to farmers, because now the terminals have to clean it to that one per cent spec," he said. "China's the biggest buyer out there. People are looking at selling more into the Japan market or Mexico, but China's still the big player. It's going to drive the price down because it costs more to clean, and that's going to come out of the producer's pocket."
 

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