Ottawa increased the insurance coverage available for canola exporters, a government corporation said on Thursday, as it seeks to reduce trade risks amid a dispute with China.
China halted purchases of Canadian canola in March, citing pests in shipments by Richardson International Ltd. and Viterra Inc. The move, coming as Beijing has also expressed anger that Canadian police had arrested a Huawei Technologies Co. Ltd. executive in December, has pressured canola prices.
China was the biggest canola export market for Canada, which is the world’s biggest producer of the crop used to make cooking oil.
Export Development Canada (EDC), a government corporation, will increase the credit insurance available to exporters by an additional C$150 million ($112.59 million) worth of sales, EDC Executive Vice President Carl Burlock said at a news conference announcing the change.
The insurance will be available for commercially viable sales contracts of canola seed, oil and meal, and will cover potential non-payment.
Burlock could not identify the total amount of credit insurance available for canola sales.
Reuters reported on Wednesday that Ottawa would boost its insurance program for canola exporters.
Pakistan and Bangladesh are two markets that canola exporters have expressed an interest in, Burlock said.
Dwayne Couldwell, senior merchandiser of oilseeds for Winnipeg-based Paterson Grain, said he had never used EDC insurance for canola sales because the premium exceeds the usual profit on a shipment.
“I’m fully supportive of the concept but unless it’s considerably different than the former EDC financing, it’s just too expensive for the profits we can generate on the export market,” he said.
EDC prices its insurance relative to the risk, Burlock said.
Spokespersons for Richardson and Viterra did not respond to requests for comment.
Canadian pork, soybean and pea exporters have also run into problems shipping to China. Agriculture Minister Marie-Claude Bibeau said at the news conference she was open to boosting credit insurance to commodities other than canola if needed. ($1 = 1.3323 Canadian dollars)
(Reporting by Kelsey Johnson in Ottawa and Rod Nickel in Winnipeg, Manitoba; Editing by Richard Chang)