Canadian canola could face $1-billion loss from China, new report says

This article was written by Amanda Stephenson and was published in the Globe & Mail on September 6, 2024.

China, historically the biggest buyer of Canadian canola seed, was expected to purchase about 70 per cent of Canada’s canola shipments this year, according to Statistics Canada.

Canada’s canola industry could take a $1-billion hit in the wake of Chinese trade actions, according to a new report from an international credit-rating agency.

The report from Morningstar DBRS estimates the potential losses Canada could incur if China’s recently announced plan to launch an anti-dumping investigation into canola seed imports from Canada results in China levying tariffs on the crop.

“While there is no certainty on when [or even if] China will levy tariffs, how meaningful they could be, and for how long they would remain in place, the tariffs could have a meaningful impact,” the report stated, warning both global canola trade flows and Canadian grain handling companies could be affected.

China has historically been the biggest buyer of Canadian canola seed and was expected to purchase about 70 per cent of Canada’s canola shipments this year, according to Statistics Canada.

The move to target canola came days after Canada announced a plan to impose tariffs on Chinese-made electric vehicles, steel and aluminum.

In its report, Morningstar DBRS warned the economic impact could be similar to the last time China took a canola-related trade action against Canada. At that time, China blocked shipments of canola seed from two major Canadian companies.

Industry estimates peg the cost to the Canadian canola sector of that action at $1.5-billion to $2.4-billion between 2019 and 2020.

When it comes to China’s current probe into Canadian canola seeds, a wide range of outcomes is possible, Morningstar said. There could be no tariffs, or China could levy extremely high tariffs that effectively stop canola trade between Canada and China.

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Author: Ray Nakano

Ray is a retired, third generation Japanese Canadian born and raised in Hamilton, Ontario. He resides in Toronto where he worked for the Ontario Government for 28 years. Ray was ordained by Thich Nhat Hanh in 2011 and practises in the Plum Village tradition, supporting sanghas in their mindfulness practice. Ray is very concerned about our climate crisis. He has been actively involved with the ClimateFast group (https://climatefast.ca) for the past 7 years. He works to bring awareness of our climate crisis to others and motivate them to take action. He has taken the Climate Reality leadership training with Al Gore. He has created the myclimatechange.home.blog website, for tracking climate-related news articles, reports, and organizations. He has created mobilizecanada.ca to focus on what you can do to address the climate crisis. He is always looking for opportunities to reach out to communities, politicians, and governments to communicate about our climate crisis and what we need to do. He says: “Our world is in dire straits. We have to bend the curve on our heat-trapping pollutants in the next few years if we hope to avoid the most serious impacts of human-caused global warming. Doing nothing is not an option. We must do everything we can to create a livable future for our children, our grandchildren, and all future generations.”