Sask. asks Ottawa for financial help to tide over canola producers facing China trade uncertainty

The Saskatchewan government is asking Ottawa to give financial aid to the province's canola farmers affected by recent import restrictions imposed by China, the world's largest consumer of the product.

The province wants the federal government to increase the amount of interest-free money available to producers under a loan program to help tide them over during a time of trade uncertainty.

Some 43,000 canola producers across Canada currently face market challenges and dropping prices after China, their largest seed buyer, barred shipments from two major Canadian canola companies Richardson International and Viterra saying they had found pests in some shipments.

Viterra is based in Regina.

Under the terms of a proposal the Saskatchewan government has made to Ottawa, the federal government would increase the amount of money available under theAdvance Payments Program a federalprogram that provides agricultural businesses with easy access to low-interest cash advances.

The provincewants the federal government tolift the ceiling for interest-free cash advances under the program to $1 million, at least until the trade conflagration is resolved. The current interest-free limit is $100,000.

The proposal would also give businesses more time to pay off their arrears.

Federal Agriculture MinisterMarie-Claude Bibeausaid after meeting with Saskatchewan ministersFriday that her government will have to take time to evaluate whether Saskatchewan's proposal is the best option.

"I'm very open to this request but I want to take the time to look at the various risk management programs that we have , including this advance payment mechanism," said Bibeau."So I'm really looking into reviewing all these mechanisms to see which one would be the most appropriate because our intention is to support our farmers."

Saskatchewan's own agriculture minister, Dave Marit, said he hopes to hear back within a few weeks.

"We think it's a good one and something that is doable," Marit said of Saskatchewan's suggestion."Obviously she [Bibeau]has to look at the cost implications and look at the program and deliver itback to us so we can get it out to the producers as quick as possible. She fully understands that it is an urgency thing."

What led to this

The unexpected trade complication comes against the backdrop of a roiling diplomatic dispute between China and Canada, sparked by the arrest of Huawei executive Meng Wanzhou in Vancouver last yearat the request of American authorities.

China has strongly objected to Meng's arrest, and ratcheted up pressure on Canada to undo that move. The country has detained two Canadian businessmen, alleging espionage, and now seems to be picking a fight over canola a crop literally named after Canada.

Canola is a type of rapeseed that has a distinctive yellow flower and was invented by Canadian researchers in the 1970s. The seeds can be crushed into an edible oil, and discarded husks also make forexcellent animal feed.

Canada exports more canola than anyone else in the world. Last year, about 40 per cent of its seed exports went to China, worth roughly $2.7 billion.