High costs putting farming out of reach for young people, affecting all Canadians

Jacob Serebrin, The Canadian Press

When Myriam Landry started raising goats for their meat in 2018, she started small — because she had to.

She opened Chèvrerie aux Volets Verts, in St-Esprit, Que., with two goats; she couldn't afford a large herd and chose animals small enough that she could handle on her own while pregnant with her third child.

"I should have started bigger … but then I would have needed more money, which I didn't have," Landry, 33, said in a recent interview from her farm 50 kilometres north of Montreal. 

"It's really hard for young people to start … I don't even have land, I don't have tractors, even my goats (I paid for) on loans."

The rising cost of land is making it harder than ever for young farmers to enter the business. And those barriers come at a time when a growing number of older farmers are planning to leave the industry. Organizations promoting farm succession worry that if young people are unable to enter the industry, only the largest companies will endure, reducing the diversity of crops and livestock and widening the gap between Canadians and their sources of food.

"The main challenge right now is really the cost of agricultural land," said Benoît Curé, co-ordinator of ARTERRE, a program that pairs aspiring farmers with landowners and farmers planning to retire.

Curé said multiple factors are contributing to rising prices, including real estate speculation — especially near Montreal suburbs — and strong competition for the best soil in a province where only around two per cent of the land is suitable for farming.

Last year, the price of agricultural land rose by 10 per cent, which isn't unusual, he said in a recent interview. "Over the last 10 years, we've had annual increases of about six to 10 per cent." The average dairy farm in Quebec is now valued at almost $5 million, he said, almost double what it was in 2011. 

With 20 per cent down payments usually expected for farm purchases, "you have to almost be a millionaire before starting your agricultural business," Curé said. If young people can't afford to get into farming, then most rural communities risk being left with two or three large farms, he lamented.

Landry, like more than half of the aspiring farmers who have worked with ARTERRE, is renting her space. Her small operation is located on a former dairy farm that's now used for hay and cereal crops. Her farm has now grown to 40 female goats and a handful of males for breeding. There's enough space in her barn for 60 females, she said, but she has enough demand to support 100. 

And while starting small has allowed her to open a farm, it has also come with its own challenges. Goat meat, she said, is uncommon in Quebec, and financial institutions are hesitant to lend to money for an operation they aren't familiar with. 

Lenders, she said, "don't want to finance it, because they don't know it, and that makes it really hard."

Farming has always been a capital-intensive industry — with high costs for land, equipment and inputs — but prices across Canada have risen above the revenue that can be generated from that land, said Jean-Philippe Gervais, the chief economist of Farm Credit Canada, a Crown corporation that lends to farmers.

"The relationship between the price of the land and the revenue that can be expected from the land — that ratio is the highest we've ever seen," Gervais said in a recent interview. "So we're really at prices that are the highest we've ever seen, not just in absolute value in dollars per hectare, but also relative to what can be generated in income."

It's now rare for farmers to turn a profit from land they buy just by farming it, he said, adding that most farmers only make their money back when they sell. Large, established farms can fund the purchase of more land from the revenue generated on land that's already been paid for, he added.

But even large farms are challenged by high costs. A survey of more than 3,600 farmers released last month by Quebec's farmers association found that 11 per cent are thinking about closing over the coming year. The Union des producteurs agricoles found that costs on Quebec farms rose by an average of 17.3 per cent in 2022 while revenues rose by an average of 14.7 per cent.

A report released in early April by RBC found that 40 per cent of Canadian farm operators planned to retire over the next decade and that 66 per cent didn't have a succession plan. 

Julie Bissonnette, the president of an organization that represents young Quebec farmers and promotes farm succession, says there are many young people interested in agriculture.

"Sometimes you hear there's no one to take over, but it's not true, there are a lot, but we need to make sure they're able to set up," Bissonnette, with the Fédération de la relève agricole du Québec, said in a recent interview. "It's so much money."

Urban sprawl and the influx of people moving to rural areas to work remotely is putting increased pressure on Quebec's arable land, Bissonnette said.

Landry, meanwhile, said she'd like to see more small-time farmers because they tend to build close relationships with local residents. 

"We need to reconnect the public to what they do three times a day, which is eat," she said. "Know where your food is coming from. If you can't grow it yourself, find someone who does it the way you would do it." 

This report by The Canadian Press was first published May 7, 2023. 

Adidas to sell Yeezy shoes and donate proceeds months after Kanye West split

Wyatte Grantham-philips, The Associated Press

After months wrestling over the fate of millions of unsold Yeezy shoes, Adidas has decided to sell a portion of its remaining inventory and donate the proceeds to charitable organizations, CEO of the German sportbrand Bjørn Gulden said Thursday.

Adidas cut ties with Ye, the rapper formerly known as Kanye West, in late October, following his antisemitic comments on social media and in interviews. As a result, the fate of 1.2 billion euros (US$1.3 billion) worth of the unsold Yeezys, a lucrative sneaker line launched with Ye, was unknown.

At Adidas' annual shareholders meeting, Gulden said the company had spent months trying to find solutions. The CEO also added that Adidas spoke to NGOs and organizations that were harmed by Ye's comments and actions.

“Burning those shoes cannot be the solution,” Gulden said, noting that Adidas was going to try to sell part of the remaining Yeezy inventory and “donate money to the organizations that help us and were harmed by what Ye said.”

Exact details of this plan — including how many shoes will be sold and the timeline of selling them — remain unknown. Gulden said the company will provide updates as they moves forward.

The move comes as Adidas is trying to stage a comeback and move beyond the Yeezy partnership. Cutting ties with Ye has cost Adidas hundreds of millions of dollars — with the company taking a loss of 600 million euros (US$655 million) in sales for the last three months of 2022, helping drive the company to a quarterly net loss of 513 million euros.

Adidas reported 400 million euros (US$441 million) in lost sales at the start of 2023, the company announced last week.

Net sales declined 1 per cent in the first quarter, to 5.27 billion euros, and would have risen 9 per cent with the Yeezy line, the company said. It reported a net loss of 24 million euros, a plunge from a profit of 310 million euros in the same period a year ago.

Operating profit, which excludes some items like taxes, was down to 60 million euros from 437 million euros a year earlier.

Meanwhile, Adidas is also facing a class-action lawsuit from investors who allege the company knew about offensive remarks and harmful behavior from Ye, years before terminating its pact with him. Adidas has pushed back on the allegations made in the lawsuit.

Still, Gulden reminded investors that the nine-year partnership Adidas and Ye was “sensational."

While he noted that Ye is a difficult person, “he's the most creative person in our industry,” Gulden said. “He created a model with Adidas that was sought after around the world.” But he added, “We lost that in a month."

AP Business Writer David McHugh in Frankfurt, Germany, and AP Retail Writer Anne D'Innocenzio in New York contributed to this report.

Hudson's Bay cutting 250 corporate jobs amid efforts to 'flatten' company

Brett Bundale, The Canadian Press

Hudson's Bay is laying off another 250 workers, the second round of cutbacks this year, the company said Tuesday, bringing the total number of employees laid off this year to about 500.

The Canadian retail arm of Hudson's Bay Co. said the layoffs are in corporate roles. None of the 2023 job losses have affected retail workers at Hudson's Bay's 84 department stores across Canada.

"As the retail sector continues to face headwinds, we are taking additional steps to flatten the organization and streamline operations," Hudson's Bay spokeswoman Tiffany Bourre said in a statement.

Economic pressures in the retail industry have continued longer than expected, making the second round of job losses this year necessary, she said.

"In January, we worked hard to minimize the impacts to our associates with the lens that macro pressures would ease," Bourre said. "However, they have persisted longer than we had hoped, which has made these changes necessary."

The company is committed to fairness and respect as it supports employees impacted by the layoff, she added.

In late January, Hudson's Bay said it was laying off about 250 workers.

At the time, the retailer said the changes were needed as the retail sector navigated "significant external pressures."

In January 2021, Hudson's Bay permanently laid off about 600 workers in Canada due to extended lockdowns that shuttered many of the retailer’s stores across the country for several months. Some had been on had been on a temporary layoff since April 2020.

This report by The Canadian Press was first published May 9, 2023.

Canadians still pessimistic on economy, but outlook improving: Report

Holly McKenzie-Sutter, BNN Bloomberg

Canadians’ views on the economy and their personal finances are improving but still pessimistic overall, according to a monthly snapshot of consumer sentiment.

The Canadian Maru Household Outlook Index for May was at 85, up two points from April’s low of 83. Last month’s figure was the lowest since Maru’s monthly overview of Canadian consumers’ 60-day financial and economic outlook began tracking in April 2021.

“The question is whether the current upswing is a burst or just a bubble,” a report on the findings said, noting that sentiment until now had been increasingly negative since December.

The report noted that 12 of the 16 measures assessed for the index have moved upwards.

The index looks at topics related to the economy, personal finance, purchasing power and financial challenges. Slightly more positive views on the economy drove most of this month’s increase.

More surveyed Canadians said they believe the national economy will improve over the next 60 days, up to 41 per cent from 35 per cent a month earlier, though a majority still said they don’t believe the improvement will happen soon.

There was also a slight increase in sentiment that the local economy will improve, up six percentage points to 42 per cent, while 58 per cent of people remained pessimistic.

More Canadians also said they believe the economy is headed in the right direction, up five percentage points to 39 per cent. That was the highest level of positivity since May 2022, though a majority of people still felt the economy was headed the wrong way.

There was an increase in Canadians who said they plan to invest in the financial markets, up to 32 per cent from 27 per cent.

The biggest negative drag on the index was the larger cohort of people who said they are not able to put away money for retirement, up to 56 per cent from 53 a month earlier.

Other personal finance indicators fared better. Fewer Canadians reported worsening financial positions, with 10 per cent of people saying their position improved and 26 per cent said they were worse off.

Fewer people also reported being worried about losing their jobs, but more were concerned about the possibility of a loan or mortgage default.

METHODOLOGY

These are some of the findings from a study released by Maru Public Opinion undertaken by its sample and data collection experts at Maru/Blue on April 28 to May 1, 2023, among a random selection of 1,508 Canadian adults who are Maru Voice Canada online panelists.

The results have been weighted by education, age, gender, and region (and, in Quebec, language) to match the population according to Census data which ensures the sample is representative of the entire adult population of Canada. Discrepancies in or between totals when compared to the data tables are due to rounding.

Riverbank erosion prompts Wisconsin band to ask for emergency shutdown of Line 5

The Canadian Press

An Indigenous band is asking a Wisconsin judge to order an emergency shutdown of Line 5 pipeline. The Bad River Band of the Lake Superior Chippewa says ongoing spring flooding risks exposing and rupturing the pipeline on its territorial land. (THE CANADIAN PRESS/AP, Detroit News - Dale G Young)

Heavy spring flooding has made Line 5 an "imminent threat" to Lake Superior and a key Indigenous watershed, lawyers argued Tuesday in an emergency motion to shut down the controversial cross-border pipeline. 

Lawyers for the Bad River Band of the Lake Superior Chippewa filed their emergency motion Tuesday and asked District Court Judge William Conley to make a decision on it before the end of the week. 

The motion comes after a joint status report by both the band and the pipeline's owner, Enbridge Inc., acknowledged extensive erosion last month that has brought the edges of the Bad River ever closer to the pipeline. 

That erosion has only continued with "alarming rapidity" in recent days, the motion says, with the river less than five metres away in several spots — and just 3.5 metres away in one specific area.

"Erosion continues to progress … and important factors suggest that further bank loss could be significant, resulting in the exposure and rupture of the pipeline," it reads.

"These circumstances present an imminent threat to the Bad River watershed and Lake Superior, and hence to the rights of the band and the public, and they warrant immediate action by this court." 

The band has been in court with Alberta energy giant Enbridge since 2019 in an effort to compel the pipeline's owner and operator to reroute Line 5 around its traditional territory.

Enbridge has already agreed to do so, and that work is well underway. The dispute now revolves around whether the company should be required to shut down and purge the section of line on Bad River land in the meantime. 

Late last year, Conley — having already rejected calls to shut down the pipeline immediately — ordered both parties to submit contingency plans in the event the risk of a rupture grew too great.

Neither plan was triggered by the flooding, which began April 11 after an abrupt spring melt and persisted for days, worsened by heavy rains, until the floodwaters finally receded fully on April 23, the report says.

Conley has already indicated that he's reluctant to shut the pipeline down wholesale, citing the potential economic impact in both Canada and the U.S. 

The motion suggests Bad River's lawyers believe the current circumstances might change his mind. 

"The band is sensitive to the court's economic concerns about enjoining the pipeline," it reads. 

"The far graver threat at present is of a rupture that not only would shut down Line 5 but would devastate the Bad River watershed and Lake Superior in the process."

Environmental concerns about Line 5 have long been top of mind in Wisconsin, where the pipeline runs directly through the Bad River Reservation, more than 500 square kilometres of pristine wetlands, streams and wilderness.

Enbridge has plans for a 66-kilometre detour of Line 5 around the reservation, which are already more than two years along.

Late last month, the United Nations Permanent Forum on Indigenous Issues, a UN advisory body, recommended that Canada rescind its support for the pipeline, citing the potential risk of a disaster in the Great Lakes.

The forum called Line 5 "a real and credible threat to the treaty-protected fishing rights of Indigenous Peoples in the United States and Canada."

Line 5 is also under legal siege in neighbouring Michigan, where the state wants the line shut down for fear of a disaster in the Straits of Mackinac, the ecologically delicate area where it crosses beneath the Great Lakes.

Business groups and chambers of commerce on both sides of the border, provincial governments and Ottawa have all rallied behind Enbridge in its effort to portray Line 5's survival as a mission-critical matter of continental energy security.

Allies have argued in court filings as well as public forums that Line 5 is a vital source of energy for several Midwestern states and an essential link for Canadian refineries that fuel some of Canada's busiest airports.

This report by The Canadian Press was first published May 9, 2023.

Trudeau’s oil policy is too harsh for Alberta’s left-leaning contender

Brian Platt and Robert Tuttle, Bloomberg News

The woman who’s looking to reclaim power in Canada’s energy heartland is pushing back against Prime Minister Justin Trudeau’s targets for cleaning up the oil and gas industry.

Rachel Notley, who was the center-left premier of Alberta from 2015 to 2019 and is running for the job again, said Trudeau’s plan for cutting the sector’s emissions by more than 40 per cent by the end of decade is too onerous. Her stance mirrors that of the country’s largest crude producers — and it’s also one that may be a political necessity as her New Democratic Party battles for votes in a province where oil is king and the prime minister is deeply unpopular.

“I don’t believe that the current drafted emissions caps that we’ve seen are realistic,” Notley said in an interview with Bloomberg News. “If we don’t get down to work and come up with a more practical cap, we are not going to be successful in mapping out a process that will get us there.”

Trudeau’s government has promised to limit emissions in the energy sector to ensure Canada meets its climate targets, but hasn’t yet chosen a mechanism for doing so. His government published a plan last year that modeled a 42 per cent cut in oil and gas sector emissions by 2030, which oil executives have said isn’t possible without slashing output. More draft regulations are expected to be released within weeks.

Relations between the federal government and Alberta — whose nearly 4 million barrels of daily oil output makes Canada the world’s fourth-largest crude producer — are a perennial flashpoint in local politics. Notley’s 2015 victory was a rare win in a traditionally conservative province. She’s looking to defeat the United Conservative Party, currently led by Danielle Smith, in an election set for May 29.

Although Notley is generally much more aligned with Trudeau’s environmental agenda than Smith, she said the federal government is trying to move too fast on cutting oil-sector emissions. The vast majority of these emissions in Canada come from Alberta’s oil sands, which is among the world’s most carbon-intensive crude sources.

“Using aspirational numbers to drive practical policy is not a recipe for success,” Notley said. “The key is making sure that what we put in place is practical and achievable, and it doesn’t become so oppressive that we find ourselves shutting in production.”

Notley said she doesn’t oppose a cap in principle, but she declined to provide her own emissions target, saying she’d consult with experts and industry on the matter.

“We’re not going to be unambitious,” she said. “But we are going to be realistic, and we’re going to make sure that the industry is able to continue to flourish.”

Polls suggest the race between Notley and Smith is very tight. A recent Leger survey found the New Democrats had a two-point lead over the United Conservatives, while another poll by Ipsos found Smith’s party was up by four points.

Notley is expected to sweep much of Alberta’s capital city of Edmonton, while Smith is dominant in the smaller population centers and rural areas. The election will likely come down to who wins the most districts in Calgary — where many of Canada’s energy companies are headquartered.

Notley argued that in the bigger picture, Canada’s environmental policy needs input from Alberta, and that has been prevented by the hostility between Smith’s United Conservatives and Trudeau’s Liberal Party.

“Both Alberta and Canada do best when energy policy is crafted, quite frankly, by Alberta,” she said. “So we want to be at the table, we want to be driving the conversation, and we want to be coming up with solutions that ultimately drive investment and grow our markets.”

Another of Trudeau’s signature environmental policies is a carbon tax on consumer fuels, which kicks in if a province doesn’t have an equivalent carbon price of its own. Notley said she would leave that as a federal tax, instead of replacing it with a made-in-Alberta version.

‘GET MORE MONEY’

To help push the oil sector to decarbonize, Trudeau has also introduced tax credits to defray the capital costs of building carbon capture systems. The credits are worth up to $12.4 billion over the next 10 years, federal officials estimate.

Even more public money for carbon capture might be necessary to compete with the lucrative production tax credits in the US Inflation Reduction Act, Notley said. She declined to say if she would commit the provincial government to providing the funds.

“It really is a matter still for negotiations,” she said. “My first goal will be to get more money out of the federal government.”

Yet another federal policy that’s been the source of controversy in Alberta is an impending requirement that electricity grids be made net-zero emissions by 2035.

Notley said Alberta can achieve the milestone at a reasonable cost if she’s elected premier and that trillions of dollars of global investment in renewable energy projects are coming over the next decade.

“It would be utterly ridiculous for Alberta to not be at the table trying to attract some of that,” she said. “So that is going to require some smart government policy, that’s going to require some incentives.”

Bear attack injures worker at Suncor Oil site as producer faces safety scrutiny

Robert Tuttle, Bloomberg News

May 10,2023

A worker at a Suncor Energy Inc. oil-sands site in Canada was injured in a bear attack over the weekend, adding to concern about the company’s safety record after a string of fatalities in recent years. 

The person was transferred to a hospital and released hours after the encounter with the animal, which occurred at about 8 p.m. on May 6 at the Base Plant operation in northern Alberta, company spokesman Leithan Slade said in an email. A bear attack in 2014 resulted in the death of a Suncor oil-sands worker in the same area.

“A full investigation is underway, and it would be premature and inappropriate to speculate on the cause,” Slade said. “Suncor does provide personal deterrents such as bear spray, together with training, for workers who work within or close to wildlife habitat. We also have standards with respect to the use of wildlife fencing and an on-site professional wildlife contractor for bear surveillance and monitoring.”

The incident comes as Suncor’s new chief executive officer, Rich Kruger, has pledged to focus on improving worker safety. Alberta regulators laid five charges last month against Syncrude, a Suncor oil-sands joint venture, in the death of a worker who drowned at the facility in June 2021.

The fatality was one of several in recent years at Suncor-owned sites — a record that was a central theme of activist Elliott Investment Management LP’s campaign to shake up the company’s management. Suncor’s former CEO, Mark Little, stepped down in July after a death at Base Plant.

YOU CAN'T CUT COSTS AND BE HEALTH AND SAFETY DRIVEN

New Suncor CEO Kruger focused on cost-cutting, will 'play to win'

Amanda Stephenson, The Canadian Press

The new top boss at Suncor Energy Inc. says he will be sharply focused on cost-cutting as he embarks on the task of improving performance at the oilsands giant.

Rich Kruger, who took over as Suncor's new CEO on April 3, pledged Tuesday that the company will become a "simpler and more focused organization" under his leadership. 

On a conference call with analysts to discuss the company's first-quarter financial results, he promised to be candid, transparent, and operate with a "sense of urgency" as he seeks to fulfil his mandate to make changes at the Calgary-based company.

"I consider myself to be reasonably decisive, and very competitive," Kruger said. "I play to win."

A familiar face in the Canadian oilpatch, Kruger led Imperial Oil Ltd. as president and CEO from 2013 until his retirement in 2019. His time at the helm of Imperial Oil was the culmination of his 39-year career with parent company ExxonMobil Corp.

Kruger's appointment to the top job at Suncor — replacing interim CEO Kris Smith, who stepped in to fill the role after Mark Little resigned in July 2022 — came after months of investor pressure in the wake of a spate of workplace deaths and safety incidents, production challenges, and a lagging share price.

Kruger said Tuesday that in his first five weeks on the job, he has visited half of the company's major facilities and met with workers and management.

While he said Suncor is a proud company with excellent people and high-quality assets, he believes it has untapped potential.

"I see a gap between our current performance and what I would consider best-in-class in many, many areas," he said.

He also talked up the importance of "organizational efficiency" and suggested that there are ways to trim the company and reduce costs.

"I think we can eliminate work. I think we can do away with work that doesn't add value," he said, adding that all employees need to consider how their role helps to generate revenue for Suncor.

"I very much believe in making money. We are in the business to make money and as much of it as possible, and everybody starting with me needs to see how they do that," Kruger said.

In an interview later Tuesday, Kruger said he hasn't been with the company long enough to know whether its current workforce is the right size or not. But he said he isn't going in with any arbitrary staffing number or target in mind, adding that instead he sees his rule as "clearing the pathway for employees to perform at the top of their ability."

"I want to be sure that everything they're doing adds value to the bottom line," he said. "So I will look hard and long at the work people do."

Kruger's ability to turn around the flagging fortunes of one Canada's largest energy companies will be heavily scrutinized by many — including U.S.-based activist investor Elliott Investment Management, which had been pushing for change at the top of Suncor.

Two of the board directors serving on the CEO search committee that recruited Kruger were named to Suncor's board last summer, as part of a deal the company struck to appease Elliott Investment Management.

Elliott publicly expressed frustration last spring at what it called a recent decline in performance at the energy producer.

The activist investor also criticized Suncor for its safety record. At least 12 workers have died at the company's oilsands operations in northern Alberta since 2014, and former CEO Little resigned just one day after the most recent fatality.

In a note to clients Tuesday, RBC Capital Markets analyst Greg Pardy said with a recharged leadership team under the direction of Kruger, Suncor is "poised to re-establish operating and financial momentum in the months to come."

"We like what we heard on the call, and look forward to improved results in the coming quarters," Pardy wrote.

Interim CEO Smith will assume the role of chief financial officer and executive vice-president of corporate development later Tuesday after Suncor's annual general meeting.

Alister Cowan, the current CFO, is set to retire at the end of the year.

Suncor, which reported its first-quarter earnings after the close of markets on Monday, said it earned $2.05 billion in the first quarter of 2023, down from $2.95 billion in the same quarter of 2022.

The Calgary-based energy giant's net earnings included a $302-million gain on the sale of the company's wind and solar assets, which the company recently sold to Canadian Utilities Ltd. for $730 million.

On an adjusted basis, Suncor says its operating earnings for the first quarter were $1.81 billion, or $1.36 per common share, a 34-per-cent decrease year-over-year.

The company says the decrease in earnings was primarily due to decreased crude oil realizations, increased operating expenses, lower upstream production and refinery throughput and weakening crude oil prices.

This report by The Canadian Press was first published May 9, 2023.

Canada-China spat could sour business relations, experts say

The Canadian Press

Souring relations between Ottawa and Beijing could affect Canadian companies in China, potentially tarnishing the appeal of Canadian brands for some Chinese consumers, experts said on Tuesday. 

Companies like Canada Goose, Roots, Lululemon and Tim Hortons have expanded in China in recent years, leaning into Canada's reputation as a source of quality goods and often featuring the red maple leaf in store and product branding.

China is central to the growth plans of many Canadian companies eager to tap into the country's compelling consumer market, retail analyst Bruce Winder said.

"If you look at the drawing boards of those companies, China's a big factor in the growth strategy," he said. "It's a huge market. There are over 1.4 billion people and folks in China are getting rich, so you have a massive middle class."

But a diplomatic spat between Ottawa and Beijing could spur a "soft boycott" of Canadian brands in China, Winder said. 

"Canada's supply chain is very dependent on China, but consumer-facing Canadian brands in China could be at risk too," he said. "It's something that could potentially impact the future growth prospects of Canadian companies in China."

Beijing declared a Canadian diplomat as "persona non grata" on Tuesday in retaliation for Ottawa's expulsion of a Chinese consular official over allegations of foreign interference.

China's Foreign Ministry said in a statement posted to its English website that China was deploying a "reciprocal countermeasure to Canada's unscrupulous move,'' which it said it "strongly condemns and firmly opposes.''

Sarah Kutulakos, executive director of the Canada China Business Council, said diplomatic relations between the two countries have been strained for years but the economic relationship has remained.

"These sort of diplomatic issues happen and they're playing out right now," she said. "We are always hopeful that trade doesn't get thrown into the mix of other complications in the relationship."

The bilateral non-profit business council, which has seven offices in Canada and China, encourages both governments to resolve their differences "and where there are irreconcilable differences, understand the other side's perspective," Kutulakos said. 

She added that Canada's reputation in China remains strong, and hostilities between the two countries have not impacted the impression of Canada in the past.

"Tim Hortons in China looks more Canadian inside than any Tim Hortons in Canada," Kutulakos said, noting the abundant red maple leaves and other Canadian decor inside the coffee shops in China. 

Tims China chairman Peter Yu said in February that the coffee and doughnut chain had 600 locations in China, with plans to grow to a thousand by the end of 2023.

Lululemon had 117 stores in China as of the end of January, according to the company's most recent annual report.

Calvin McDonald, Lululemon CEO, said during the company's fourth-quarter earnings call last month that the retailer's potential in China is significant. 

The company is planning to open up to 35 new stores in international markets this year, with the majority planned for China, Lululemon's chief financial officer Meghan Frank said during the call. 

Meanwhile, Roots has more than 100 partner-operated stores in Asia, including many in China, the retailer said in its annual report in January. 

"Our focus on international expansion continues to remain in the U.S. and China, where we see long-term potential for the brand," Meghan Roach, Roots CEO, said during a recent earnings call. 

Canada Goose appointed Larry Li as president of its China operations last year, part of what it called a new phase of expansion in China.

This report by The Canadian Press was first published May 9, 2023

China's ban on Canadian beef still in place 

year-and-a-half later; industry in dark

Amanda Stephenson, The Canadian Press

A Chinese ban on Canadian beef that industry officials expected would be short-lived remains in place 17 months later, and industry representatives say they remain in the dark about the reasons.

China has been blocking beef shipments from Canadian processing plants ever since an atypical case of BSE, a rare variant of classical BSE (sometimes called mad cow disease), was found on an Alberta farm in December of 2021.

At the time, Canadian officials expressed little concern that the case would have lasting market impacts. Atypical BSE develops spontaneously in about one in every one million cattle and unlike the classic BSE strain — which has been linked to the fatal neurological disorder Creutzfeldt-Jakob disease — it poses no health risk to humans and is not transmissible.

While most of Canada's trading partners did not respond with any form of trade restrictions after the discovery of the case, South Korea and the Philippines joined China in suspending beef imports from this country.

However, both South Korea and the Philippines lifted the restrictions less than two months later, while China — which in 2021 was Canada's third-largest beef export market, importing $193 million worth of product — has still not resumed trade.

"Most countries do not close when you find an atypical case," said Dennis Laycraft, executive vice-president for the Canadian Cattle Association.

"It's just a few that did and you know, all those other countries opened up fairly quickly. So yeah, really the outlier here is China.”

Adding to the confusion, Laycraft said, is the fact that both Brazil and Ireland have also recently had their beef blocked by China due to cases of atypical BSE in those countries. But China has resumed beef trade with both of those countries, and it took only a short time — in the case of Brazil, only four weeks.

Laycraft said he doesn't know what the sticking point is when it comes to Canada, adding only that he doesn't believe there is a scientific explanation.

"We're pretty confident all of the technical requirements and information that was needed has been provided, to allow the decision to reopen," he said.

"We certainly don't believe there's, on that side, any reason for it not to be. They just, you know, haven’t responded.”

In 2019, China blocked canola shipments from two major Canadian companies, not long after Huawei executive Meng Wanzhou was arrested by Canadian authorities. That ban lasted for three years.

Tensions between Canada and China have recently ratcheted up again, with the Canadian government on Monday expelling Chinese diplomat Zhao Wei, alleging he was involved in a plot to intimidate Conservative MP Michael Chong and his relatives in Hong Kong.

The renewed tensions have even led the canola industry to express concern that China will retaliate to Canada's expulsion of its diplomat by blocking agricultural shipments.

But Gordon Houlden, director emeritus of the China Institute at the University of Alberta, said the beef industry's ongoing issue demonstrates that some of Ottawa's trade challenges with Beijing are pre-existing.

"Some people are jumping to the wrong conclusions and because of this latest exchange, the question of the diplomatic expulsions, they assume that it's going to immediately lead to a whole series of further restrictions," Houlden said. 

"But some of these problems go back a long way."

Houlden said it's not abnormal for China to move slowly on the regulatory front, due to a combination of "bureaucracy and lethargy." He added that China is not always keen to wield trade as a weapon because it is a major exporter itself and knows such tactics can backfire. 

However, he said the fact that China has lifted similar restrictions against beef imports from other countries suggests that at some level, politics is likely playing a role in the delay. Houlden added that while it's hard to know for certain what China's motivation is on any given issue, it's fair to say that Canada's current relationship with China is frosty enough that Beijing is unlikely to make an effort to fast-track the beef issue.

"I think we can surmise that right now politics is not in a position to help solve the problem, and in fact may be part of the problem," Houlden said.

Laycraft said during the year-and-a-half that the Chinese market has been closed, the Canadian beef industry has seen increasing sales into Japan, South Korea, Vietnam and other Asian countries. He said this has been due in large part to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a free-trade agreement between Canada and 10 other countries in the Asia-Pacific region.

"We'd like to see things get back on a more normal track with China. We had some really good customers there that we were starting to build relationships with," Laycraft said. 

“At the same time, we're doing very well in other markets in Asia ... So we’re not in the same vulnerable position that potentially other products from Canada are.”

Atypical BSE, just like classical BSE, is a progressive, fatal disease that affects the nervous system of cattle. However, classical BSE was responsible for the BSE epidemic that started in the United Kingdom in 1986

Classical BSE was also responsible for Canada's own BSE crisis, which began in 2003 with the discovery of a domestic case and led to international borders being closed to Canadian beef exports.

This report by The Canadian Press was first published May 11, 2023.

Canola industry concerned about export access to China after diplomatic spat

The Canadian Press

The canola industry is expressing concern that China will retaliate to Canada's expulsion of its diplomat by blocking agricultural shipments.

China blocked canola shipments from two major Canadian companies in 2019 not long after Huawei executive Meng Wanzhou was arrested by Canadian authorities, and the ban lasted for three years. 

The ban lasted for three years before being lifted in 2022.

On Monday, the Canadian government expelled Chinese diplomat Zhao Wei, alleging he was involved in a plot to intimidate Conservative MP Michael Chong and his relatives in Hong Kong.

Jim Everson, president of the Canola Council of Canada, said maintaining predictable market access is key for Canadian farmers and that although supportive steps have been taken by the federal government, nothing can replace access to an important market like China.

China's block on canola shipments took a toll on the industry as the value of Canadian canola exports dropped from $2.8 billion in 2018 to $1.8 billion in 2021, the last full year under the ban.

This report by The Canadian Press was first published May 9, 2023.

WORKERS CAPITAL

A $211B Canada pension manager hits pause on China deals

Laura Dhillon Kane, Bloomberg News

British Columbia’s public pension manager has paused direct investments in China, the latest institutional investor to rethink its exposure to the world’s second-largest economy due to geopolitical risks.

A senior executive from British Columbia Investment Management Corp. revealed the policy during testimony this week to a Canadian parliamentary committee. Ontario Teachers’ Pension Plan has made a similar move, suspending new investments in private assets in China, Bloomberg reported in January. 

BCI still has Chinese investments, mostly through public markets and index funds, amounting to less than 5 per cent of its holdings, the fund said in an emailed statement. “Across our portfolio, BCI has reduced its exposure in China and Hong Kong by approximately 15 per cent over the past two years, including pausing direct investments in China,” it said. BCI had $211 billion (US$158 billion) in net assets under management at the end of March 2022. 

The firm, which invests on behalf of public-sector pension plans and insurance funds in Canada’s third-largest province, said its remaining exposure to China is part of a broad diversification strategy that includes emerging markets.

Daniel Garant, BCI’s global head of public markets, faced tough questioning Monday from Conservative lawmaker Garnett Genuis, who alleged the fund has invested in a company involved in surveillance of Uyghurs in China. The company, Hangzhou Hikvision Digital Technology, has denied the surveillance claims.

Garant said he couldn’t speak about Hikvision specifically but that BCI was talking with index providers. “We’re not very happy with some of the components of the index and we’re doing something about it,” he said.

Ontario Teachers’ executive Stephen McLennan told the same committee his fund’s decision to cease private-asset deals was “driven by our assessment that the risk landscape in China has substantially changed over the last two to three years.” He cited the country’s difficult relations with the U.S. and Canada, as well as regulatory changes within China.

Canada’s largest pension fund, the Canada Pension Plan Investment Board, has stuck to its China strategy and has 9.8 per cent of its assets invested the country. That exposure gives the fund access to one of the world’s fastest-growing major economies, public affairs head Michel Leduc told lawmakers. CPPIB’s holdings include retail and industrial real estate, private equity funds and stakes in businesses including McDonald’s China and Adopt a Cow, a dairy operation.   

Relations between China and Canada have been frosty for years, particularly since Canadian authorities arrested a senior Huawei Technologies Co. executive at Vancouver’s airport in 2018 on a US extradition request. 

While that situation was resolved in 2021, recent reports that Chinese diplomats sought to meddle in elections, and targeted the Hong Kong-based family of a Canadian member of parliament, have sent tensions soaring again. This week, Canada expelled a Chinese diplomat over the latter allegations, spurring China to boot out a Canadian envoy in response. 

--With assistance from Kevin Orland.

Quebec energy shortfall hurts EV supply chain, says Lithium CEO

Jacob Lorinc, Bloomberg News

The top executive of Sayona Mining Ltd., which just restarted a lithium mine in Quebec, says there isn’t enough electricity in the Canadian province to power the region’s mining projects.

The province that produces North America’s cheapest power faces a looming energy shortfall after years of marketing its hydroelectric power to U.S. states and wooing industry with cut-rate prices. That poses a dilemma for the miners and manufacturers that have been lured to Quebec to build a domestic supply chain for electric vehicles.

“Only a few years ago, you wanted to build a mine, there wasn’t a question of whether you would get the power or not — it was guaranteed,” Sayona’s Chief Executive Officer Guy Belleau said Thursday in a presentation at a mining industry conference in Palm Springs, California. “Today, there’s not enough power for all the projects in the province.”

The Australian company restarted its Quebec lithium mine in March after jointly investing US$100 million into the project with Piedmont Lithium Inc. The project plans to ramp up production over the coming year before shipping lithium to South Korean battery maker LG Chem Ltd. and automaker Tesla Inc.