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Canada to boost aid for canola exporters as China dispute drags on -sources

By Kelsey Johnson

OTTAWA, June 12 (Reuters) - The Canadian government will boost an insurance program for canola exporters looking to find new buyers in light of trade tensions between Canada and China, sources with direct knowledge of the situation said on Wednesday.

China, locked in a deepening dispute with Canada, has blocked imports of Canadian canola seed, depriving producers of their largest export market.

Senior officials will announce on Thursday that Ottawa is providing additional credit insurance for grain companies selling canola abroad, said the sources, who requested anonymity because they were not authorized to speak to the media.

The additional insurance would be provided by Export Development Canada.

A working group set up to aid the canola industry has been asking Ottawa for additional insurance to help alleviate risks such as non-payment that exporters looking for alternative markets might face, the sources said.

Trade Minister Jim Carr and Agriculture Minister Marie Claude Bibeau are due to announce additional support for canola producers on Thursday, a spokeswoman for Carr said. She declined to give more details.

Ottawa has already bolstered a federally-backed loan program for canola farmers.

Last week, a Canadian trade delegation, led by Carr, traveled to Japan and South Korea to encourage more canola seed purchases. The trip coincided with the G20 trade ministers meeting in Japan.

China has also temporarily suspended export permits from two Canadian pork plants and boosted inspections of pork shipments. Beijing is demanding Ottawa return a Chinese tech executive who is facing extradition to the United States.

Traditionally, Export Development Canada has not operated in the canola business because Canadian grain companies typically have strong and stable relations with their buyers, sources said. Canada is the world's biggest canola producer. (Reporting by Kelsey Johnson, editing by David Ljunggren and Chris Reese)

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