Knocking on the China Door: The Silence is Deafening

First things first, I got planted this past week. Radical management was at work all across the deep SW of Ontario as farmers scrambled to get crops in the ground before the July 5th deadline. As of today, farmers are still at it, planting into the now dust as Mother Nature has finally put the sun out and the heat on. Nobody knows the future, but we surely don’t want to look back at this past spring. For most in this area and much of the Eastern corn belt, it was the worst ever.

It is also the eve of one of the biggest USDA reports of the year. You will know that I categorize the end of March, end of June and first USDA report in January as the big three that set the stage for market prices. The report tomorrow is big, partly because of all the problems that the Eastern Corn Belt saw over the last 8 weeks. How many corn acres did actually get planted in the United States? Ditto for Ontario and Quebec.

Within the scramble to get planted in late June, Ontario producers can be forgiven for not giving a darn about anything else. Unfortunately, in Canada the bad news continued to pile up last week as China doubled and tripled down on us again, by banning all Canadian meat exports. What’s next? This thing has grown so much bigger than I thought it would ever. Geopolitics can be brutal in agricultural trade. Anybody that thought Canada being the boy scout on the world stage might help us avoid problems, would have surely been wrong.

Officially, China has banned Canadian meat exports because their customs inspectors found residue for a feed additive (ractpamine) that is restricted in China on some Canadian pork products. Apparently, there was even a forged veterinary health document, which was attached to these products. The smoking gun was even warm from a Chinese perspective.

From a Canadian perspective it’s all about the retribution for the arrest of Meng Wanzhou, the Huawei executive who was arrested in Vancouver on the request of the American government. However, it is what it is. We got here with our eyes wide open. We picked our poison between making the Americans angry and the Chinese looking the other way. Unfortunately, the Chinese have been unrelenting in their pressure on Canada. Canola, pork, now all Canadian meat exports and two Canadian hostages don’t lie. We are in a heap of trouble with China and they just happen to be this huge growth market for Canadian agricultural products.

The meat export ban applies to beef too, which is puzzling, especially when there was a problem with pork. The money involved is about $63.6 million in beef and veal exports and $310.2 million according to the Canadian Meat Council. Then there is canola, and the two Canadians detained. Just think if Meng Wanzhou had slipped thru the Vancouver airport on her way to China? The toothpaste would still be in the tube.

I’m hoping this can’t get worse. The G20 is this week in Osaka Japan and of course, most farmers are hoping that there will be some type of breakthrough between the Americans and China. Then there is President Trump who said he might do something to help Canada. My bet is, that conference ends and we continue on this treadmill. The damage to the Canadian agricultural economy is substantial.

One of the problems is we’re at a party, where nobody is interested in making amends. Canada is just too much of a problem for China at the moment and maybe into the future. I travel to Asia often and when I’m there you can feel China everywhere. There are Chinese business people everywhere. Chinese products are everywhere and Asian products are going to China. Over a period of years, I’ve seen the standard of living rise and poverty decrease in Bangladesh. It’s largely because on the other side of the world, China, India, Bangladesh and others, are figuring it out for themselves. The inconvenient truth is, if the Western world doesn’t want to participate with them, they will find their own way.

Needless to say, the attitude in the United States and to some extent Canada is that they need us. The simple fact is they don’t. There is certain chauvinism in this. The unfortunate part for Canada is we stumbled into it. The hard part is stumbling out of it can take years. Let’s hope I’m wrong. The world keeps changing and hopefully Canadian agriculture will get their hard fought markets back.