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Trade Barriers Shave $1 Off Canola Price

Canada should put more emphasis on bilateral — country to country — trade negotations and less on multilateral negotiations through the World Trade Organization. That’s the word from Larry Weber, a regular market-analysis speaker at Crop Week events.

“To think the WTO is going to improve any of our problems is misguided,” Weber said at the Saskatchewan Canola Development Commission meeting in Saskatoon. Weber was invited to speak about policy issues, and trade negotiation was top of his list.

Getting specific about “our problems,” he says the three big issues facing canola trade today — blackleg testing for shipments to China, China’s list of banned weed seeds in imports, and salmonella testing for meal shipments to the U. S. — are all “blatant protectionism.”

The U. S. zero-tolerance policy on salmonella in Canadian canola meal imports is “unfair,” he says. As for China’s blackleg watch, Weber says, “I do believe it will be resolved, but not until June or July.

“China grew two million tonnes more canola in 2009 and will not need our canola until then. They will protect their domestic market until that time.”

His thinking is that some of these barriers might have been resolved faster or not implemented at all if Canada spent more time trying to massage trade relationships with key partners — as the U. S. has done — rather than concentrate on a WTO trade access deal.

The U. S. has had its best trade negotiators working on bilateral deals since 2007, he says.

SLOW TRADE DROPS PRICE

“These trade issues are costing growers $1 per bushel,” Weber says. With U. S. soybeans at around $10, canola is only $9 — “for a better product.”

On top of that, because trade is slow, basis is high. “Basis across the Prairies is plus $5 to minus $45. If we had a healthy market, it should be plus $10 to minus $20.”

Exports for 2009-10 were forecast at six million tonnes, down from 7.9 million in 2009-09. Weber doesn’t think we’ll hit six.

“What China’s not going to take may end up in price-sensitive markets: India, Pakistan, Mexico,” he says.

Weber encourages farmers to follow policy issues more closely and get involved. “Farmers don’t like policy, but if policy reduces my price by $1 a bushel, I’d frickin’ find out why.”

Jay Whetter is the editor of Grainews.

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