Trade Tensions Leave Canadian Canola Farmers Struggling with Surplus Stocks
Western farmers are storing mountains of canola seed in a bet Ottawa will resolve the trade dispute with China before they run out of cash or prices drop further.
The amount of seed stored on farms is likely to surpass 19 million tonnes, the equivalent of around 76 fully loaded, mega container ships, according to data from the Canadian Grain Commission.
Alberta farmer Roger Chevraux is sitting on thousands of tonnes of canola and, like many of the 40,000 producers across Saskatchewan, Manitoba and Alberta, he feels like he has no choice.
In August, Beijing announced 75.8-per-cent tariffs on canola seed. Losing the Chinese market was a blow to Western agriculture. Canola is the No. 1 crop across the Prairies, and China imported 5.8 million tonnes of the seed in 2024 – more than any other country. In the aftermath of the announcement, canola prices fell and wiped out around $1-billion in value for the sector. This equates to tens of thousands of dollars lost for a single farm, at current prices.
But the move by Canadian farmers is risky. Stored canola can spoil. Prices could fall further. This is also the time of year when the bill for fertilizer, fuel and seed comes due. Farmers need cash.
Mr. Nagy shows canola grain stored at his farm. He says many farmers will have to start selling ‘at low prices soon.’Heywood Yu/The Globe and Mail
This ticking clock raises questions about when Ottawa will resolve the dispute with China, and whether a resolution will happen before Western farmers are forced to capitulate and sell at low prices or suffer even costlier consequences.
“There could be a lot of family farms in trouble,” Mr. Chevraux said.
Beijing levied tariffs on Canadian canola seed in mid-August, a retaliation for Ottawa’s 100-per-cent tariffs on Chinese-made electric vehicles in October, 2024.
The timing was unfortunate. Yields were good this year. A record 21 million tonnes will be harvested, according to industry estimates.
Some new buyers have come online. Canola exports have increased to Japan, Mexico and Bangladesh this year, largely because of lower prices. However, this has done little to mitigate the loss of the mammoth Chinese market.
Total canola exports from Aug. 1 to Oct. 12 were 955,000 tonnes. For the same period last year, 2.3 million tonnes of canola shipped out of Canadian ports.
Instead, canola seed is sitting in bins on farmer fields, suggests Grain Statistics Weekly, a report from the Canadian Grain Commission.
It is normal for canola farmers to sit on seed at this point in the year, said Tracy Broughton, executive director of SaskOilseeds. Typically, canola prices are lowest during harvest because supplies of the crop are abundant. However, this year the volumes of seed stored are higher than normal.
Farmers delivered 3.5 million tonnes of canola to elevators from Aug. 1 to Oct. 12, significantly less than the 4.3 million tonnes delivered in the same period last year.
This is the opposite of what would be expected under normal circumstances, said Tony Tryhuk, a commodities branch director at RBC Dominion Securities. The 2025 harvest is larger than 2024. This year, each acre of canola field yielded at least 41.2 bushels. In 2024, each acre yielded 38.8 bushels.
Canadian oil sitting in storage bins is risky business, said Andre Harpe, Alberta farmer and chair of the Canadian Canola Growers Association. As a seed oil, canola can spoil. Storage conditions need to be perfect. And this is hard to ensure. Mr. Harpe has heard stories of farmers opening bins in the spring to find naught but ash. And this is a devastating loss. A 10,000-bushel storage bin (relatively small) contains around $150,000 of canola. Crop insurance won’t cover the costs. These protective measures only kick in if there are low yields.
Mr. Chevraux’s canola went into the bin in perfect condition (dry and with few green seeds) so he’s fairly confident it’ll keep. His concern is prices.
Domestic processors are paying the most for canola. This canola is crushed in 14 facilities across the country, mostly refined into biofuels.
However, the total crush capacity of all Canadian plants is 13 million tonnes, according to the Canadian Oilseed Processors Association. Domestic crush might not be able to absorb the more than five million tonnes normally sent to China. Mr. Chevraux is worried crush plants will reach capacity and this will drive prices lower.
Mr. Chevraux is betting on Ottawa resolving the trade dispute before this happens.
“There are lots of us holding on, hoping for some change in the market.”
Other farmers will not be able to wait, said Codie Nagy, a canola farmer around one hour outside Regina. Input costs are up. Fertilizer costs are more than $100 an acre, and they haven’t dropped. Urea (a nitrogen fertilizer) has climbed 20 to 25 per cent this year, he said. Fuel costs from running equipment during harvest can also reach $50,000, Mr. Chevraux said. And that’s before factoring in the cost of seed for next year’s harvest, which equals around $80 to $100 an acre.
Margins are squeezed more than Mr. Nagy has seen in 15 years of farming, however, when farmers need cash, they need cash. And many will have to sell at low prices soon, he said.
“It’s always a big risk, whatever way you look at it.”
Last week, Minister of Foreign Affairs Anita Anand visited China in a bid to thaw the icy trade relations. The two countries have agreed to revive a “strategic partnership” – a hotline to work through trade disputes.
However, removing Chinese canola tariffs are likely to come at a cost to another Canadian industry. On Oct. 10, Chinese ambassador Wang Di said Beijing was prepared to drop its agricultural tariffs should Ottawa remove its levies on electric vehicles.
The announcement ignited sparring between premiers and raised questions of Canadian unity. Manitoba and Saskatchewan’s leaders demanded an end to the protectionist policies and Ontario’s Doug Ford said there was no way Ottawa should drop the EV tariffs.
Meanwhile, farmers are hoping an end will be in sight soon.
“The longer you keep the canola, the more risk there is,” Mr. Harpe said. “And that risk is borne strictly by the farmer.”
This article was first reported by The Globe and Mail
