Synthesis Agri-Food Insights
January 29, 2010 Volume 2, Issue 1
Helping you understand agri-food's challenges and
opportunities by analyzing the issues and sharing their insights - the Synthesis consulting team Rob Hannam, Mary Lou McCutcheon, Julien DenTandt, and Peter Hannam.
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Building global trade
partnerships
The backbone of many Canadian agriculture commodities is
trade. It's what has allowed several sectors to expand and has given us our
reputation as a global breadbasket. The last year was an active one on the
Canadian trade front with some new bilateral agreements being signed and
negotiations continuing on others, including a free trade deal with the
European Union.
What lies ahead for 2010? Plenty of opportunities but also
some potential pitfalls to be mindful of, predicts Mary Lou McCutcheon, an
economist and consultant with Guelph-based Synthesis Agri-Food Consulting.
According to
statistics from Agriculture and Agri-Food Canada, Canada's agri-food exports in
2008 totaled more than 38 billion dollars. Canadian agri-food products went to
195 different countries around the world.
In the last two
years, Canada has signed new bilateral trade agreements with Jordan, Columbia,
Peru and the European Free Trade Association (Norway, Switzerland, Lichtenstein
and Iceland) and is actively involved in negotiations on 12 others.
"Exports are
vitally important to Canada, especially for agriculture so the opening of new
trading relationships is critical," says McCutcheon. "And although Canada is
really supportive of the WTO process, we can't rely solely on it to open doors
for us. That's why we have to move ahead with bilateral agreements."
The current round
of global trade negotiations at the World Trade Organization (WTO) began in
2001 in Doha, Qatar with the goal of helping poorer countries prosper through
trade and is still ongoing. US President Barack Obama and other G-20 leaders
have set a goal of finishing the almost ten year old WTO negotiations this
year, but talks have stalled over demands for more market access in exchange
for cuts in farm subsidies. For Canada, the WTO talks are a complex issue due
to the parallel nature of Canadian agriculture.
"We produce a very diverse group of commodities in Canada
and not all are looking for the same outcomes to the WTO talks," explains
McCutcheon. "This makes Canada's position very challenging."
A free trade
agreement between Canada and the European Union would give this country access
to a collective market of approximately 500 million people across 27 member
states. Canadian agricultural trade is also growing on a commodity-specific
basis, including an expansion of meat exports into Russia. In the fall of 2009,
Russia announced it would expand access for Canadian beef to include all beef
from cattle under thirty months of age and boneless beef from cattle over
thirty months of age.
Canada has to continue to aggressively pursue trade
opportunities if it wants a healthy and competitive farming sector, says
McCutcheon.
"If we don't work to get bilateral agreements - like free
trade with the EU - in place while the WTO talks are ongoing, we will lose out" she
explains, adding that the United
States in particular has been aggressively pursuing free trade agreements over
the last number of years, with 17 currently in place and another three are awaiting
Congressional approval.
However, Canada's
global agricultural trade prospects come with some cautions as well. According
to McCutcheon, there is risk in further developing a market based largely on
export opportunities. Both Canadian beef and pork have seen markets shut down
or their access limited - H1N1, Country of Origin Labelling and BSE are recent
examples - that have had devastating impacts on their sectors.
Insights - so what does it all mean?
Maintenance is as
important as expansion: The size and strength of Canadian agriculture is
already heavily based on export opportunities. We need to work proactively to maintain
those markets and ensure we have strong relationships with our trading
partners.
Pursuing global
opportunities: We must pursue global agreements to make sure we have market
access for many of our export-based commodities. Meeting the diverse needs of
consumers in different markets will be important to future growth for Canadian
agri-food exports.
Alternative
strategies: There are risks attached to developing an industry based on
market access to another country. Canadian pork, beef, canola and flax
producers have experienced this first-hand. Diversity in products and markets
is important and it should be part of agriculture's long term outlook to have
alternative strategies in place should product be unable to move to an export
country.
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