Canadian farmers breathed a sigh of relief after China's decision on tariffs
Canola and pea producers in Saskatchewan have received much-needed certainty ahead of the planting season.
Saskatchewan farmers got some much-needed relief after the announcement that China plans to reduce punitive tariffs on Canadian canola and peas. In an industry known for uncertainty, this news has provided a rare source of stability for local producers.
Dean Roberts, who chairs the Sask Oilseeds board of directors and farms near Coleville (about 215 kilometers southwest of Saskatoon), was so eager for news that he got up at three in the morning to find out the results of the Prime Minister's meeting with the Chinese president. Canola typically takes up about a quarter of his acreage.
Under the agreement, Beijing plans to cut tariffs on canola seed to 15 percent by early March. As for Canadian canola meal and peas, Chinese "anti-discrimination" tariffs on these products will be lifted in March at least through the end of this year.
Impact of Trade Restrictions
The Chinese tariffs imposed last March hit the industry hard. Prices for canola, usually considered a profitable crop, plummeted and trade virtually ground to a halt. Experts estimate the losses totaled billions of dollars.
Roberts noted that despite a good harvest this year, selling grain on the world market proved extremely difficult. Under these trade conditions, canola was no longer a reliable crop for farmers.
Some producers decided to hold off selling their harvest in hopes the tariffs would be lifted and prices would improve, while others were forced to sell to cover their operating costs.
Market Outlook
Stuart Smyth, a professor of agriculture and bioresources at the University of Saskatchewan, noted that current canola prices are slightly lower than last year's, but they've recovered from the March crash. He predicts canola acreage this year will be around the ten-year average.
The expert believes the potential for canola prices to rise is much greater than the possibility of them falling further.
Seeding Plans
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The agreement with China allows farmers to adjust their spring seeding plans before field work begins in April. Terry Yuzwa, who grows pulse crops near Nipawin (about three hours northeast of Saskatoon), emphasized how important this certainty is.
Yuzwa, like many producers, held back from selling peas, which faced a 100-percent tariff. He's already noticed a slight improvement in market prices since the agreement was announced and hopes the positive trend will continue until March 1, when most tariffs will be lifted.
It's worth noting that canola oil wasn't included in the agreement and still faces a 100-percent tariff. However, industry representatives point out that reducing tariffs on seed was the priority, since most Canadian oil is exported to the United States.
