Pea protein war upgrade! Chinese pea protein is blocked from going to sea, and the United States and Canada have launched countervailing investigations into Chinese pea protein.

China, the United States, Canada pea protein trade friction is increasing, China's pea protein industry is facing unprecedented challenges in the international market. After PURIS, the largest pea protein producer in the United States, filed an application with the U.S. government in July last year to impose anti-dumping and countervailing duties on pea protein imported from China, Canada also announced on April 22 that it would initiate a countervailing investigation against Chinese pea protein.

Last July, PURIS, the largest pea protein producer in North America, filed an application for new US anti-dumping (AD) and countervailing (CVD) duties on imports of certain pea protein from China, requesting the imposition of duties and other taxes on Chinese imports of pea protein. In December last year, the US Department of Commerce initially ruled that countervailing duties should be imposed on China's imports of pea protein concentrates with protein content higher than 65%. The preliminary ruling showed that Chinese pea protein producers enjoyed government subsidies ranging from 15 to 342 per cent.

In February this year, the U.S. Department of Commerce announced a preliminary affirmative ruling on the anti-dumping duty investigation of some pea protein from China and conducted a countervailing duty investigation on some pea protein imported from China. The U.S. Department of Commerce said it found that the selling price of Chinese pea protein in the United States was "lower than fair value" and said it would impose a preliminary tariff of 112 to 270 percent on dumped imported high protein content (HPC) pea protein.

On April 22, the Canada Border Services Agency (CBSA) also announced that it was launching an investigation to determine whether certain pea proteins from China were being sold in Canada at unfair prices and whether the goods were being subsidized.

The investigation was the result of a complaint filed with the CBSA by Nutri-Pea GP Inc. and Roquette Canada Ltd. (collectively, the "Complainants")( Portage La Prairie, MB). The complainants allege that they have suffered material injury as a result of the increased volume of dumped and subsidized imports from China in the form of lost market share, lost sales, weak growth, depressed prices, price suppression, reduced profitability, reduced return on investment, negative impact on inventories, cash flow and financing capacity, reduced capacity utilization and negative impact on employment.

Image source: Twin Towers Foods

Last September, James P. Bozikis, Roquette's head of communications and public affairs for the Americas, revealed that the slowdown in the pea protein market in recent months has forced the company to take flexible measures and adjust its production plan to meet current demand. The company has adjusted production plans for what it claims to be the world's largest pea protein plant in Prairie Portage, Canada, to open in 2021 in response to a decline in market demand. This change does not mean layoffs, and the company remains committed to supporting the pea protein plant and the exceptional, skilled team of Canadian employees, which is the practice of Rogate's forward-looking values. Although the market faces some uncertainties, Roquette companies remain optimistic about the prospects of the pea protein market. "We believe that the pea protein market will continue to grow in the long run. Our production plan is adjusted to meet current market challenges and ensure that we can respond flexibly to future opportunities," said Bozikis."

The investigation was conducted jointly by the CBSA and the Canadian International Trade Tribunal (CITT). CITT will be responsible for conducting a preliminary injury investigation to determine whether there is sufficient evidence that these imported products have caused or threatened to cause injury to local Canadian producers. A ruling is expected by June 21, 2024. At the same time, the CBSA will be responsible for determining whether these imports have been dumped and/or improperly subsidized, and plans to issue a preliminary ruling by July 22, 2024.

The 150 special import measures currently being implemented by Canada cover a wide range of industries and consumer goods, from steel to refined sugar. These measures directly safeguard the employment of about 30000 Canadians and domestic production worth about US $11 billion.

The CBSA has said it will publish a detailed explanation of the reasons on its website within 15 days from the start of the investigation and further elaborate on the specific details of the investigation.

Earlier, in response to the U.S. Department of Commerce's announcement of a positive preliminary countervailing ruling on pea protein imported from the company, Shuangta Foods, the world's largest pea protein producer, said it had little impact on the company at present. Among them, Shuangta Foods' pea protein business achieved operating income of 0.823 billion yuan in 2023, accounting for 33.53 of the company's total operating income, and it is still the company's largest main business product.

However, according to Nicole Atchison, CEO of PURIS, the amount of pea protein imported from China tripled following Puris's application, further dragging down the market. China buys peas from Canada and Russia, but from 2023, an increasing number of Russian peas will be used. After these peas are processed into starch, the protein is shipped to North America.

According to the data, Russian pea exports increased by 2.6 times to 2.9 million tons in 2023, and China, Spain and Turkey became the three major importers of Russian peas.

Industry insiders pointed out that in recent years, the tendency of trade protectionism in developed countries in Europe and the United States has become increasingly serious, and various anti-dumping and countervailing cases have occurred frequently. Canada, for example, is currently implementing 150 special import measures covering steel, refined sugar and other industries.

A Chinese pea protein industry insider said, "The development of China's pea protein industry is inseparable from the global market. We are committed to providing high-quality products and establishing long-term cooperative relations with global customers. Our goal is to gain market share through quality and innovation, not to gain an unfair competitive advantage through dumping and subsidies. We are also aware of the importance of anti-dumping and countervailing investigations to ensure a level playing field in the market. We support the investigation to ensure the normal operation of the market order. At the same time, we also hope that the investigation can be conducted in a fair and transparent manner to ensure that our rights and interests are fully respected and protected."

The direction of the trade friction between China, the United States and Canada will depend on the final results of the relevant investigations and negotiations between the parties. As a major producer and exporter of pea protein, China has a competitive advantage in the global market. In the future, China's pea protein industry needs to continue to provide high-quality products, and respond to global competition challenges through technological innovation and continuous improvement of production efficiency.