continued from previous story If Japan s purchasing moves by five per cent, that s a lot for them. Dave Hickling
Canola outlook
Japan is a big market for Canadian canola. Usually
sold in the form of seed for further processing
in Japan, canola exports to the country range from
1.9 to 2.1 million tonnes, year in and year out. It
really doesn t change much, says Dave Hickling,
vice-president, canola utilization for the Canola
Council of Canada.
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While it s true Japan s economy has suffered
recently, the level of demand for canola has stayed
relatively constant. That s not surprising, Hickling
says, as Japan has long been a very loyal customer.
Independent of pricing, Japan tends to purchase
within a very narrow range of tonnage. While in
most other canola markets, there s usually much
more change year over year, Hickling says, If
Japan s purchasing moves by five per cent that s a
lot for them.
The lack of volatility is a good thing for the
most part, adding stability to market demands. But
in no way does this steady purchasing breed complacency
within the canola industry. Hickling says
that two million tonnes is a significant portion of
Canada s canola crop (roughly 17 per cent of total
production), often making Japan the number one
importer of Canadian canola seed for crushing.
Canada s canola industry owes its success in
part to the Japanese market. Japan was there right
at the beginning and really helped grow the market,
Hickling says. That long-term support hasn t
been lost on the industry.
Hickling and the canola industry as a whole
strive to maintain a healthy relationship with
Japan, a unique feature to this trade partnership.
The Canola Council hosts Japanese buyers and
processors each summer to tour the fields and then
travels to Japan each November to have a dialogue
that covers issues ranging from production
and transport conditions to trade irritants. Tight
communication tends to head off potential trade
problems long before they have a chance to pick
up momentum, Hickling says. It is a risk-management
tool, for sure.
The value of compromise
When you mention Japan and food, most people
instantly think rice, sushi and soy. Canada can t
help with the first two, but our soybeans are noted
for being top-notch.
Thompsons Limited, based at Blenheim, Ont.,
contracts, processes and exports food-grade soybeans
to Japan. The level of exports and quality
standards of soy to Japan haven t changed significantly
in recent years, but the pressure is on to continue
supplies at a competitive price.
Japanese consumers are choosing cheaper
items in stores, which puts pressure on grocery
stores which puts pressure on wholesalers and
trading houses, who then pressure their suppliers,
says Sue Robert, head of sales and marketing for
Thompsons Japanese markets. We re starting to
feel pressure on prices to remain competitive.
That pressure can translate to reduced premiums
offered to growers, an unenviable position to be
in when contract demands are so high. Genetically
modified varieties are non-fliers, as are certain chemicals,
Robert says. Growers must keep detailed
records and provide them when they deliver the
beans, she says. It can be a lot of extra work with
no guarantees of meeting the quality specs required
to receive the maximum premium. Robert adds that
they do their best to get at least some premium to
contracted growers who don t make the maximum
quality because of weather problems.
It s still a fine balance between ensuring supply
to an exacting customer and over-contracting
when demand is variable. As a risk-management
tool, Robert says they prefer to have buyer support
before contracting all their needs. We also purchase
open-market soybeans throughout the year
as opportunities arise, she says.
Robert says that in addition to several meetings
with clients each year, Thompsons also makes a
point of attending and hosting grower meetings.
It s important to be up front with our growers
about what we re hearing from our clients. They re
good about understanding where we re coming
from, she says, referring to the decrease in premiums
for 2010 contracts.
Even in times of economic slowdown, Robert
racks up the frequent-flier miles. She s in Japan at
least twice a year and typically hosts customers
one to three times throughout the growing season.
I probably meet with each customer three to four
times a year, she says. That s no small feat considering
the miles between Ontario and Japan. It s
all part of determining the customer s wants and
ensuring growers are producing the right stuff.
It would seem that no matter the economic
climate, Japan is still a high-value market, one
that s well worth the extra time, effort and cost to
provide exactly what they need. Robert says that
Thompsons even considered its Japanese customers
when they built new offices not long ago.
The Japanese prefer to be comfortable when
conducting business. We have a room with couches
and chairs that, depending on who is visiting, is the
more typical location to sit and talk, instead of the
boardroom, Robert says. It s all about making
our customers feel welcome and comfortable. CG
*Lyndsey Smith has been appointed editor of
Country Guide s sister publication Grainews.
