Canola trade fight with China has Alberta farmers facing big decisions

The federal government laid out a plan on Wednesday to help canola farmers caught in the middle of a diplomatic dispute between Canada and China just as producers in Alberta try to decide how much of the once-lucrative crop to plant.

Agriculture Minister Marie-Claude Bibeau and International Trade Diversification Minister Jim Carr announced that the government will more than double the maximum amount of money available to individual producers under the Advance Payments Program (APP), from $400,000 per year to $1 million.

Ottawa is changing the APP rules in response to market turmoil in the canola sector. China has blocked Canadian canola seed from Richardson International and Viterra, two of Canada's biggest exporters, saying that shipments were contaminated with pests.

Other China-bound shipments of Canadian canola have been cancelled, forcing exporters to sell the seed elsewhere at a discount.

In the meantime, as farmers in southern Alberta prepare to start seeding, some are facing big decisions on how much to plant this season.

Madden-area farmer Greg Hawkwood believes many Alberta canola producers are concerned about the trade impasse but are still hopeful it can be sorted out as they prepare for seeding.

But he says most of them are also mindful of their break-even point for an important cash crop that comes with high input costs, especially with the price of canola dipping recently.

"It's crunch time, and in the next three weeks, we'll know exactly what happens with how many acres will be going in."

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Farmers are urging the federal government to find a trade solution and they hope to see help for producers, who could face serious cash flow challenges if the problem persists.

Industry analysts expect some canola producers to cut back on how much they plant this season, partly because of the dispute.

Alberta farmer Humphrey Banack, who sits on the board of the Alberta Federation of Agriculture, is making adjustments at his operation.

Switching crops

"We're going to see more flax this year than we have in the past and we're kind of banking on malt barley. So we moved some acres out of canola into that, but, you know, it's not huge amounts," he said.

He says it's crucial that Canada resolve the dispute with China.

"They are, by far, the biggest canola user in the world, and we need access to that market," he said.

About 40 per cent of Canada's canola seed exports went to China last year.

Canadian politicians have insisted there is no basis for China's pest claim. China's move is widely seen as an act of retaliation over Canada's decision to arrest Meng Wanzhou, an executive with the Chinese telecommunications giant Huawei, for extradition to the United States.

While the changes to the loan guarantees are driven by the plight of canola growers, the revised APP program is available to all farmers. For canola farmers, however, the federal government is increasing the interest-free portion of the cash advances to $500,000.