The disruption in trade between Canadian canola exporters and China rolled from one crop year into the next on August 1 with no end in sight.
That said, small quantities of canola seeds continue to move into China, even though the volumes fall far short of what the industry has come to think of as normal.
Despite the rhetoric around the dispute, namely that the Chinese blocked Canadian canola shipments in retaliation to the arrest and possible extradition of Meng Wanzhou, Senior Executive of China’s largest private telecom giant Huawei some niggling questions are starting to surface.
A recently released Canadian Agri-Food Policy Institute (CAPI) analysis of trade between the two countries not only says there is much more to this than that, it goes on to suggest the Canadian industry should have seen this coming.
Perhaps it’s because the report’s authors, Zhiduo Wang and Patrick Leblond, don’t come from the agricultural sector and so are not immersed in the “if we grow it, they will buy it” culture. They are based at the Centre of International Policy Studies at the University of Ottawa.
Whatever the reason, they reached very different conclusions when they delved into the history and context of Chinese trade policy in their analysis called Canola Disputes in Canada-China Agricultural Trade: A Chinese Policy Perspective.
Wang and Leblond found evidence to suggest China has been lukewarm about being so dependent on Canada for canola for a while.
“Tracking the evolution of China’s agricultural policy, it is clear that China planned to limit canola imports, due to its concerns over food security and self-sufficiency, long before the unexpected ongoing Canada-China tensions,” they write.
“The analysis indicates that China has not only been adjusting its agricultural structure to enhance its food security, but has also been advancing the ‘Belt & Road Initiative’ (BRI) to diversify its imported food supply.”
The BRI is a long-term strategy by China to invest in infrastructure and development regionally and globally. Self-sufficiency may be next to impossible to achieve for a country such as China; the next best thing is to have an efficient and diversified supply network, which is what this initiative is designed to accomplish.
The authors aren’t suggesting that Wanzhou’s arrest had no role at all in China’s abrupt cancellation of sales from two of Canada’s largest canola exporters in March, only that the “dispute reflects deeper structural trends in China’s agricultural policy.”
These researchers point to a fundamental flaw in the logic used by first-world exporters such as Canada that agriculture and trade policy should only be about economic efficiency: competitive advantage should flow to the regions that can produce a commodity most efficiently.
That makes total sense if you live in a part of the world that has never known famine or lived through a war.
For a country such as China, agricultural and food trade policy is about food security, which is directly correlated with political stability.
The report quotes a 2013 speech by current leader Xi Jinping that emphasises, “Chinese rice bowls… should be mainly loaded with Chinese food.
“Historical experience tells us that once there is a great famine, it is useless to have money. To solve the problem of feeding 1.3 billion people, we must rely on the domestic market,” he said.
These authors conclude that the current crisis could have been mitigated if the Canadian canola industry had paid closer attention to long-term agricultural policy developments in China. The authors suggest that more work is needed to better understand that country’s actions in the context of its long-term policy objectives.
The report also implies that just as China is attempting to diversify its sources of supply, more work is needed to diversify Canada’s markets.
These viewpoints run counter to the common perception that with some diplomatic arm wrestling, things will get “back to normal” with canola sales. If they are right, this is the new normal.
“This means that canola trade between Canada & China is unlikely to resume its previously long term growth path once the current dispute is resolved,” they said.