INCREASING AGRICULTURAL SALES IS FRAUGHT WITH DIFFICULTIES

Canadian agriculture is facing more trade issues than you can shake a stick at. These numerous barriers will make it tough to reach the ambitious goals established for export growth.

The 2017 federal budget set the target of growing Canada’s agri-food exports to $75 billion by 2025 from $55 billion in 2015. This was based on a report by Dominic Barton, and ever since then “The Barton Report” has been a topic of conversation in agricultural circles.

While agriculture was all but forgotten in the 2018 budget, the goal of increasing exports and moving from the world’s No. 5 agricultural exporter to No. 2 has taken on a life of its own.

Unfortunately, a look at current conditions offers a sobering reality check.

Our grain transportation system has underperformed once again. While nothing like the horrendous grain backlog suffered in 2013-14, there are again big demurrage charges for ships waiting to load in Vancouver and there are disappointed customers around the world. We’ve become rather famous internationally for not supplying grain, oilseeds and pulse crops on time.

The two major railways are saying the right things about new investment and better co-ordination in the future. Big investments are being made in new terminal capacity on the West Coast as well. Hopefully, transportation won’t be a major restraint to increasing future exports, but it would certainly be helpful to have more capacity to move oil by pipeline rather than rail.

Beyond internal problems is the question of whether the world actually wants what we have to sell. The world’s capacity to produce food has matched and in many years surpassed the increase in consumption.

The past decade has been a prosperous time for the grain industry in Western Canada, but the market signals going into spring seeding this year are not as buoyant. On many crops, it will be difficult to generate a profit.

Back in the ’70s and ’80s, the former Soviet Union was our top customer for wheat. These days, Russia and other Black Sea nations have emerged as the world’s leading wheat exporters.

Meanwhile, some of our customers have erected trade barriers. Of particular note are the tariffs established by India on peas and lentils. Pulse crop exports had practically stalled before the tariffs were applied last fall due to the much larger than normal crop produced by Indian farmers.

With India typically buying $1 billion a year worth of Canadian pulse crops, this has been a major blow to the industry.

Sooner or later, Indian pulse production will drop due to a reduction in planted acres and/ or weather concerns. Tariffs will disappear and trade will resume. The question is when.

Then there’s Italy. That country typically imports about two million tonnes per year of durum to augment its domestic production. About one million tonnes of high-protein, high-quality durum usually comes from Canada.

The Comprehensive Economic Trade Agreement with the European Union came into force last fall. Despite CETA, Italy has initiated country-of-origin labelling. Segregation of durum and labelling of pasta products has added significant cost to imported durum.

Beyond labelling, Canadian durum has been vilified by Italian farmers over residues of glyphosate herbicide. Despite being the world’s No. 1 exporter of durum, we’re not doing any business with the world’s No. 1 durum importer.

Meanwhile, the future of NAFTA remains uncertain and the Trump administration seems to be inciting a trade war with China that may side-swipe many sectors of Canadian agriculture.

Amid the gloom, there are bright spots. New pea protein fractionation facilities are being established on the Prairies. This secondary processing will add value to our exports.

The newly signed Comprehensive and Progressive transPacific Partnership agreement should also give us preferential trade access in the years ahead to markets in countries like Japan.

However, many aspects of agricultural trade remain beyond our control. If we do reach $75 billion in exports by 2025, it will be due largely to events outside our borders.

If we do reach $75 billion in exports by 2025, it will be due largely to events outside our borders.