Trade Challenges: Sorting Out Agriculture’s New Reality

Everyone wants a crystal ball to see into the future. At best, today we are looking into a cracked crystal ball, and the future is not very clear. Canada is sitting in unfamiliar territory when it comes to agricultural trade. We are seeing a lot of uncertainty, both at home and internationally. This uncertainty is a result of both political factors (such as trade agreements) and major disruptions (such as disease).

 

Canada is a net exporter of raw farm products and food products and has the potential to feed many areas of the world. However, as we have seen in the last two years, intentional interruptions and unforeseen challenges can quickly prohibit the movement of our agricultural products.

 

According to the Canadian Federation of Independent Business, the agriculture industry is ahead of the economy as a whole. Farm Credit Canada indicates that most deferred loan payments are now being made again. This is encouraging for our farmers, although some sectors have and may continue to see poor revenues.

 

In the past 24 months, we have seen China challenged by African swine fever (ASF) in their swine herd. The Chinese protein gap caused by ASF was expected to open opportunities for Canadian products moving into this large market, but political tensions rose last year when Canadian product was refused by China, which cited technical issues.

 

In the past few weeks, Germany has also found ASF within its borders. This time, the disease was found in wild boar populations. The presence of the disease has resulted in lost German exports to China, and suddenly North American pork prices have increased sharply.

 

An article from Agri-Food Economic Systems suggests that Canada has gone from strong international alliances to suddenly finding itself without recourse in trade disputes. Canada now needs to develop a new strategy for international trade for its food products. Canada is a net exporter of agri-food products and the industry, other than supply managed commodities, depends on the export market.

 

In 2020, we have faced a pandemic that has affected the global population and halted a lot of production, resulting in an unexpected economic downturn. This has left government, at both federal and provincial levels, uncertain as to how to move forward. With geo-politics in flux and the current lack of rules-based trade, it is difficult to bring many Canadian products to market. Some will require different routes to move their products.

 

Canada as an exporting nation is finding it more and more perilous to secure markets for its products. Our food industry still relies on exports for profitability, and it will require strong leadership to manage the new economic environment we are in today.

 

Source: CFFO