Roger Chevraux drives up to his canola field near Killam, Alta. on June 26, 2024.Amber Bracken/The Globe and Mail
Canada’s canola producers say they have been abandoned by the federal government as retaliatory tariffs from China push prices down to their lowest levels in years and threaten production slowdowns at canola crushing plants.
The 100-per-cent tariff on imports of canola oil and canola meal to China – the industry’s second-largest market – came into force last Thursday.
The new levy is a long-expected retaliation against Ottawa’s 100-per-cent tariff on Chinese-made electric vehicles and 25-per-cent tariff on Chinese steel and aluminum, both announced last August at the behest of the previous U.S. administration. Beijing also slapped 100-per-cent duties on peas and 25-per-cent tariffs on certain pork and seafood products at the time.
Canola farmers and others in the industry say the federal government has prioritized Ontario’s nascent electric vehicle sector above one of Canada’s most important agricultural products and a major economic driver in Western provinces.
“[The federal government] is quite willing to let the Canadian farmer be sacrificed like this and take a real hit,” said Roger Chevraux, an Albertan canola farmer and a director on the board of the Canadian Canola Growers Association. “I don’t think that’s fair.”
Government support for the auto industry was extended further on Wednesday when Prime Minister Mark Carney pledged $2-billion to protect the sector in the face of U.S. President Donald Trump’s 25-per-cent tariffs on all Canadian goods.
The latest levies feed grievances dating back to 2019 when China banned imports of Canadian canola from two major grain companies following the arrest of Huawei executive Meng Wanzhou. The ban lasted over two years and cost the sector between $1.54- and $2.35-billion from lost sales and lower prices. Foreign-owned electric vehicle and battery manufacturers, meanwhile, received tens of billions in government subsidies starting in 2020.
On Saturday the federal government announced a doubling of the payment cap for 2025 under the AgriStability program for food producers hit by Chinese tariffs and U.S. trade uncertainty. But this does little to help the canola farmer, Mr. Chevraux said. The majority are not enrolled in the program because it is cumbersome, takes a long time to get money and few get the payout needed, he said.
The government response to China’s tariffs is also weak considering it had months to prepare and pales in comparison to the money offered auto manufacturing, said Mr. Chevraux.
Across the country, around 40,000 farmers grow canola, which generated about one-quarter of all farm crop receipts. It is especially important to the economies of Western provinces. Saskatchewan accounts for nearly half of the $43.7-billion the crop contributes to the Canadian economy.
The canola value chain stretches from farmer fields to elevators, railroads and port infrastructure. It also extends into the manufacturing sector through sizable processing operations, said Jared Carlberg, agricultural economist at the University of Manitoba.
Starting in 2021, five major investments into canola crushing and additional processing plants were forecast to expand processing capacity by 60 per cent across four years. Some of the world’s largest grain companies, including U.S. giant Cargill Inc. and France-based Louis Dreyfus Co., alongside Canadian heavyweights like Winnipeg-based Richardson International, promised new canola crush plants.
The Richardson expansion came online last year. It is the largest in the world, according to the company.
Building crushing plants is part of Saskatchewan’s provincial strategy to boost value-added agriculture to $10-billion and crush 75 per cent of canola grown within the province by 2030. As of 2023, the industry supported 206,000 full time equivalent jobs, according to a 2024 report from GlobalData commissioned by the Canola Council of Canada.
But the plants will struggle without access to the Chinese market.
Canola meal, subject to Chinese tariffs, is a byproduct of crushing. It is also a high protein feed for livestock and accounts for around $918-million, or around one-fifth of the approximately $5-billion in canola products sent to China annually. The vast majority is canola seed.
Without the Chinese market for this production byproduct, it will build up at crush plants and could lead to a slow down, said Chris Vervaet, executive director of the Canadian Oilseed Processors Association. Replacing the Chinese market is different.
Given the stakes, it is hard to continue to justify Ottawa’s surtax on Chinese electric vehicles, Prof. Carlberg said. Electric vehicles are a nascent industry that has yet to deliver real economic impact, however the canola industry is critically important to Canadian agriculture, he said.
“This is a path of folly.”
Canada put tariffs on Chinese EVs as part of a broader, North-America wide push to develop an electric vehicle manufacturing industry. This was driven by the administration of former U.S. President Joe Biden, who promised hundreds of billions in subsidies to coax car and battery makers to locate their EV supply chains in the United States. Ottawa followed suit, promising tens of billions of dollars to a handful of foreign carmakers – Honda, Volkswagen, Stellantis and Northvolt – to build factories in Canada.
Having made massive investments in the sector, Washington became nervous about low cost and high-quality Chinese EVs, made by companies like BYD and Geely coming into North America and undercutting domestic production. Mr. Biden increased tariffs to 100 per cent for Chinese EVs early last year and Ottawa followed suit several months later.
The decision was bound to anger China, and likely to hurt Western provinces that export agricultural products and energy to Asia, said Brendan Sweeney, managing director at Trillium Network for Advanced Manufacturing, a non-profit that researches Ontario’s advanced manufacturing ecosystem.
The trade-off may have appeared worth it last August, when the North American auto sector operated tariff-free and electric vehicles were positioned as the future of auto manufacturing.
However, seven months later everything is different.
While some manufacturers have delivered on promises – Dodge Charger Daytonas started rolling off assembly lines at the Stellantis plant last year - Honda’s new battery plant in Alliston, Ont., and Volkswagen’s battery plant, in St. Thomas, Ont., are still under construction.
The political situation will not help matters. Mr. Trump has promised to “revoke the electric vehicle mandate” and undermined the integrated nature of North America’s auto manufacturing sector, claiming Canada “stole” auto manufacturing from the U.S. and has – through tariffs – threatened to “permanently shut down the automobile manufacturing business in Canada.”
This new reality should force Ottawa to think about whether it still wants to back a policy that was based upon free auto trade with the U.S., Mr. Sweeney said.
“If we’re doing things to keep the Americans happy and then they kick us in the teeth, maybe we should not do the things to make them happy.”
With files from Mark Rendell.
Editor’s note: (March 27, 2025): This article has been updated to correct information about the investments promised to expand canola processing capacity. Starting in 2021, five major investments were promised, including by the U.S.-based Cargill Inc., France's Louis Dreyfus Co. and Winnipeg-based Richardson International. The correction also notes that the Richardson International canola crush plant that opened last year was not the company's first, but part of the expansion that began in 2021.