‘We’re in a Perfect Storm’: Canola Farmers Warn of Economic Losses Due to Tariffs and Market Uncertainty

By Irene Chuang

The Canadian canola industry, a second largest crop of the national agricultural sector, is facing an unprecedented crisis that threatens its viability and the livelihoods of thousands of farmers.

With an economic footprint of approximately $19.8 billion and supporting around 206,000 jobs, canola is not just a crop; it is integral to the Canadian economy. Major companies like McDonald's rely heavily on canola oil for their operations, indicating the crop's importance in everyday life.

However, farmers are now grappling with a perfect storm of challenges, including China's imposition of 100 per cent tariffs on Canadian canola oil and meal, uncertainty in the U.S. market, and a problematic support system that many farmers say fails to address their needs.

"Farmers right now are facing significant challenges with uncertainty surrounding our two largest markets, the United States and China. If this trade issue drags on for 12 to 24 months, we could see economic losses range from $1.5 billion to $4 billion," said Dean Roberts, Chair of the SaskCanola Association.

The imposition of tariffs by China has been particularly damaging. As Roberts said, "When the Chinese announced tariffs against canola oil and meal, the market reacted swiftly, leading to a drop of about $2 per bushel." This price drop has created a ripple effect, impacting farmers' margins and overall profitability.

Kyle Korneychuk, a canola farmer in Saskatchewan, shared his frustrations regarding the lack of governmental support. "The programs that are in place are two years behind the damage done. If I punched you in the nose today and brought you a band-aid in two years, would that be of much help?" he said, emphasizing the inadequacy of current assistance measures.

While the Canadian government recently announced a raise in compensation rates from 80% to 90% through the AgriStability program, many farmers remain skeptical. "Less than 1/3 of farmers use the program. It has a high cost to participate, so only the largest farms enroll," said Cathy Holtslander, the NFU's Director of Research and Policy. "If you need long-term aid, it probably means your farm's not profitable," Korneychuk said, underlining the ineffectiveness of financial solutions that merely serve as temporary fixes.

Government-backed loans have also been met with skepticism. "I'm not sure farmers need more debt," said Roberts. "More debt doesn't fix the value of the crop. Paying back a loan or paying back interest almost makes it worse". Korneychuk added, "Financial solutions are a band-aid. They're not fixing the problem. We need to be profitable."

The consolidation within the canola industry has also exacerbated these issues. Roberts pointed out that "the industry is becoming increasingly dominated by just a few players, which limits competition and increases prices for farmers." This consolidation means that when tariffs are imposed, farmers bear the brunt of the financial burden. "The seed price dropped in response to tariffs that shouldn't have affected it. This is a clear example of how the system is failing farmers," he added.

As the crisis deepens, the implications extend beyond individual farmers. The canola industry supports numerous jobs across Canada, and a downturn could lead to significant job losses in processing, transportation, and retail sectors. Roberts warned, "If we lose our oil market or our canola market in the U.S., we risk closing crushing facilities and losing good-paying jobs across the supply chain."

The looming uncertainty in the U.S. market adds another layer of complexity. With potential trade disputes arising and tariffs still on the table, farmers are left in a precarious position. "Political uncertainty creates market uncertainty, and that always finds its way back to the farm gate. It's the farmers who lose in these situations," Roberts said.

The urgent need for effective governmental intervention has never been clearer. Farmers are calling for a comprehensive support system that not only addresses immediate financial losses but also fosters long-term stability in the industry. "We need to negotiate better trade deals with China and the U.S.," said Roberts. "Without those, we are left with a fragmented market and a bleak future."

The stakes are high, not just for the farmers but for the entire Canadian agricultural landscape. As Korneychuk poignantly put it, "If they don't support farmers, we're not going to have a Canadian agricultural industry. It's going to be all owned by foreigners."

As the canola crisis unfolds, the future of this vital industry hangs in the balance, and the call for action has never been more pressing.