Asian trade could be boon for farmers
Dairy, poultry quotas stand in Ottawa’s way
The Conservative government could help turn Canada’s agri-food sector into a powerful “growth engine” for the national economy by negotiating trade deals that would help farmers access booming Asian markets, according to a study to be released Monday.
But trade success will require Ottawa to take on politically powerful dairy and poultry producers, located primarily in Ontario and Quebec, that are shielded from competition with sky-high tariffs and an elaborate quota system, according to former chief agricultural trade negotiator Mike Gifford.
Canada is seeking to join the U.S. and other Asia-pacific nations now negotiating the socalled Trans-pacific Partnership (TPP), but other countries are demanding that Canada abandon the supply management system protecting the dairy and poultry sectors.
The federal government has insisted it will defend Canadian interests at the negotiating table, but hasn’t ruled out making concessions on these demands.
“Political sensitivities notwithstanding, the rest of the economy, including the 80 per cent of Canadian agriculture that is tied to world prices, cannot afford to be held hostage to demands by dairy and poultry producers to preserve the status quo,” Gifford writes in a report commissioned by the Canadian Council of Chief Executives, which represents major companies that deploy $4.5 trillion in assets and employ 1.4 million people.
The report says the traditional boom-and-bust cycle in farming is being dramatically altered by income growth and urbanization across Asia and in particular China and India. That has resulted in an unprecedented expansion in middle class consumers with extra income to purchase meats, vegetable oils, dairy products, fruit, sugar, processed foods and restaurant meals.
“The rise of China, India and other emerging markets has dramatically changed the outlook for Canadian farmers and agricultural processors,” the author argues.
“Asia’s expanding appetite for imported food provides Canadian agricultural producers with golden opportunities to grow and prosper — provided that the federal and provincial governments and industry work together to identify and overcome a variety of external and internal challenges.”
The TPP agreement is currently being negotiated by the U.S., Australia, New Zealand, Chile, Peru, Singapore, Vietnam, Malaysia, and Brunei. Japan, which has a heavily protected rice sector that has been a major annoyance for Japan’s trade partners, has also signalled its desire to enter negotiations.
While countries like Australia, New Zealand and the U.S. have complained openly about Canada’s supply management system, Canadian officials have noted that other countries have protectionist agriculture measures they won’t want to abandon at the negotiating table.
Gifford said Ottawa doesn’t have to completely abandon the poultry and dairy farmers, a move both the New Democrat and Liberal parties are warning is about to happen.
Instead, he proposes that Canada consider a partial liberalization of both sectors to allow a modest increase in access to foreign producers in those areas.
But that would require immediate steps to help prepare Canadian producers for increased foreign competition, though Gifford acknowledges that adjustment measures could be costly. The value of the quotas in the dairy sector alone amount to an estimated $25 billion.