A diplomatic dispute has spurred the country to stop buying wheat and barley from Canada
By Kate Ayers
Saudi Arabia’s wheat buying agency will no longer purchase Canadian wheat and barley in its international tenders.
On Tuesday, grain traders received an official notice from the Saudi Grains Organization, a Reuters article said. The agency will not accept milling wheat or feed barley cargoes from Canada, the notice said.
This decision could be a result of Canada’s refusal to back down on its defense of human rights. Following Global Affairs Canada’s request on Monday to free arrested Saudi civil activists, Saudi Arabia paused new trade and investment and expelled the Canadian ambassador, the article said.
The question remains as to whether Saudi Arabia’s call impacts only new purchases or delivery of previously agreed contracts as well.
“But I would not deliver Canadian grains to Saudi Arabia right now, even on previous contracts,” a European trader said to Reuters.
However, G3, a Winnipeg-based grain trader, said the decision has not impacted operations and is continuing with “business as usual,” Reuters reports.
G3 is a partnership of the Saudi Arabian Agriculture Company and U.S. grain handler Bunge Ltd., the article said. The Canadian Wheat Board is owned by G3.
Despite this halt in trade between Saudi Arabia and Canada, other markets could be available for Canadian grains.
In recent years, the Middle East has imported less wheat from Canada and the U.S., while China has become a larger barley buyer, the article said.
“There will be plenty of opportunities for Canada to sell barley and wheat elsewhere,” Chuck Penner, an analyst with LeftField Commodity Research, said in the article.
That said, the loss of any trade market is consequential.
“Every loss of a market is important,” Cam Dahl, Cereals Canada president, said to Farms.com today.
“It does seem that our market access issues are growing over time. … Saudi Arabia is on a growing list of countries where there are market access issues, which is a concern.”
The trade dispute may have a greater impact on barley trade compared to wheat.
“We export about 1.9 million tonnes of barley a year and 135,000 tonnes in the last crop year went to Saudi Arabia,” Dahl said.
“That is about 7 per cent of our barley exports, which is a significant amount.”
A whole government approach is needed to ensure continued access to our trade markets, Dahl added.
“It is important, in this era of rising protectionism, that all of our government departments and agencies have a very focused trade lens on everything they do,” he said.
“And that, for every policy that comes out, there’s an understanding of … how it will impact Canada’s trading relationships.”