Trade war has impact on Canada's soybean farmers

The US-China trade war could be a double-edged sword for Canadian farmers, especially those growing soybeans.

According to Canadian media, more Chinese ships are showing up at Canadian ports to buy soybeans. Several cargoes of soybeans have been sold off the West Coast to China, and much of that will be from Winnipeg in Manitoba, one of the top growers of Canadian soybeans.

China, the world's largest consumer of soybeans, is a crucial market for the US.

Soybeans are the US' top agricultural export to China, accounting for about 60 percent of a total $20 billion in agricultural products sent to China.

China, also the largest expert destination for Canadian producers, took nearly 40 percent of the 4.96 million tonnes shipped internationally last year.

China, however, has stopped buying the crop from the US after the Trump administration slapped tariffs on Chinese products. Instead, China is looking to source supplies elsewhere, such as South America and Canada.

Ontario is another beneficiary of the trade war between the two economic giants. The province grows nearly half of Canada's soy crop — 3.8 million tonnes out of 7.7 million. Of that, nearly 5 million is destined for export, in particular to China, which has grown from 800,000 tonnes in 2012 to almost 2 million in 2017. That figure is expected to increase continuously with the escalating trade war.

But according to Markus Haerle, chair of the Grain Farmers of Ontario (GFO), the infrastructure has limits shipping out of Pacific Coast terminals, which means Canadian farmers can't easily fill the gap left by US soybean exports to China.

The trade war also has led to a drop in US soybean prices. Soybeans on the Chicago futures market have dropped from $10.40 per bushel in May before US President Donald Trump launched the trade war with China to about $8.50 per bushel recently.

With Canadian prices driven by the country's southern neighbour, the fallout is being felt not just in Wisconsin and Iowa but in Manitoba and Ontario, too.

Meanwhile, the Trump administration is reportedly setting aside up to $12 billion in assistance to American farmers, while Ottawa hasn't offered any aid to the indirect victims of roiled global markets. Canadian producers are now competing against subsidized US farmers.

Haerle pointed out that if the government doesn't have a plan to aid the vulnerable farmers, the GFO would like to quickly ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the successor agreement to the trade pact the US abandoned early in Trump's tenure.

"Ratifying the CPTPP would let Canadian farmers start trying to develop new export markets," said Haerle. "That's where Canada has a chance. It gives us the foot in the door in those marketplaces where others will have to fight for it."

Contact the writer at renali@chinadailyusa.com