May 1, 2012 / 5:30 PM / 5 years ago

Canola sector aims for China breakthrough

WINNIPEG, Manitoba (Reuters) - The Canola Council of Canada is working to convince China to scrap its trade restrictions against the oilseed, Canada’s most profitable crop, and is hoping for a breakthrough this year, the organization’s new head said on Tuesday.

Canadian government and trade officials have made frequent visits to China, and the Canola Council is wrapping up a joint research program to address China’s concerns about the spread of the fungal disease blackleg in its domestic growing areas.

“We really hope those results will have an impact and will encourage China to open up their borders again,” said Patti Miller, president of Canada’s leading canola trade group, in an interview with Reuters on her second day on the job.

China, the No. 2 canola/rapeseed grower just behind Canada, has restricted imports of Canadian canola with blackleg to a handful of crushing plants since late 2009. Those limited concessions are temporary exceptions to an outright ban, and are up for annual renewal.

Oilseed traders in China said in March that they expect Chinese quarantine authorities to partly lift restrictions and allow imports of Canadian canola by crushers in major rapeseed growing areas.

China’s appetite for North American oilseeds has grown in the wake of weather-related damage to South America’s soybeans and European rapeseed.

Despite the trade restrictions, China bought 1.5 million tons of Canadian canola from August through February, nearly tripling the volume from a year earlier and making it Canada’s biggest export market for canola seed this year.

Canada controls more than two-thirds of global trade in canola, or rapeseed.

China has also aggressively bought U.S. soybeans, which compete with canola in the vegetable oil market, to cover supplies not available from South America.

The Canola Council, led by canola crushers, exporters, farmers and seed developers, will likely see production this year surpass the industry’s long-held goal of harvesting 15 million tons annually by 2015.

A new set of goals is in the works, but Miller, who previously worked for the Canadian agriculture department and Cargill Inc, admits canola’s rapid growth has raised some red flags.

To cash in on high prices, farmers are alternating canola plantings with other crops less often than recommended, raising the risk of spreading crop disease.

”How much bigger can we get? That is one of the questions we’ll have to look at,“ Miller said. ”There’s a balance we have to have -- the acreage, the rotations and the disease pressures.

“Obviously, it’s an extremely profitable crop for farmers to grow and that’s why we’ve been expanding it the way we have.”

The canola industry will be retooling in the biggest year of change for Western Canada’s farm industry since World War 2.

The Wheat Board gives up its marketing monopoly over wheat and barley on August 1, and the world’s biggest diversified commodities trader, Glencore International PLC, is on track to take over top Canadian grain handler Viterra Inc by mid-summer.

Part of canola’s appeal to farmers has been that they can sell it on their own timetable, unlike the monopoly system for wheat.

“I certainly don’t view (the marketing change) as a threat or competition, it’s just part of a portfolio of choices farmers will be making,” Miller said.

Reporting by Rod Nickel in Winnipeg; editing by Jim Marshall

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