There is a federal election coming this October. Members of Parliament and candidates are canvassing their constituents at barbeques, golf tournaments and eventually all-candidate debates. Now is the time for farmers to push for policies that will allow agriculture to deliver economic growth.
Agriculture is a driver of the Canadian economy. Agriculture and Agri-Food give more jobs to Canadians than the auto and aerospace industries combined. But our jobs are spread out across Canada and not concentrated in big centres. So we don’t see headlines about thousands of jobs being lost because of agriculture trade disputes. But that is exactly what is at risk if we don’t see a refocus of trade policy.
The last twenty years have seen a push for reduced tariffs and increased market access through broad trade agreements. Agricultural trade liberalization has been successful for Canada. During the last twenty years (1999-2018) earnings from farming have been on a steady upward trend. In fact, farming cash receipts in 2018 were more than double the level in 1999. At the same time, farmers’ utilization of agricultural safety net programs has been cut in half.
Much of agriculture’s steady economic growth has been fueled by increased trading opportunities. That growth has spawned investment in Canadian infrastructure. Opportunity and growth in agriculture has led to new processing in our rural communities. A growing agricultural economy has generated new jobs in every region of Canada. All this is under threat from protectionist policies and we need to quickly see new policy approaches and new partnerships between agriculture and governments.
What is the economic impact of growing world protectionism? Italy was once the largest market for Canadian durum, the wheat used to make pasta. But Italy has adopted protectionist country of origin labelling requirements that have reduced our durum exports by about sixty percent. This has happened after the agricultural provisions of the Comprehensive Economic Trade Agreement with Europe was negotiated. India was once our leading export market for pulse crops like lentils and peas. Non-tariff and tariff trade barriers have slashed these export opportunities. China is a potential alternative market for pulse producers, but this option comes with significant market risks. China, a market that has taken over four million metric tonnes of canola over the last several years, has effectively closed its doors to Canadian canola. Tenders for barley purchases from Saudi Arabia continue to specify any origin but Canada. Phytosanitary issues with Peru threaten over one million tonnes of wheat exports. Vietnamese concerns over weed seeds have closed that market, despite Vietnam being a partner in the Comprehensive and Progressive Trans-Pacific Partnership. The world has changed and we need to adjust our trade policies to counter these threats.
We need our political parties to present a comprehensive approach to protecting our trading interests. A start would be a basic acknowledgement that a new systematic approach is required to counter the new world of protectionism. We need to do more than sign trade agreements, we need to place a priority on making sure trade agreements actually work. Canada has been reluctant to call out our trading partners for their protectionist policies. For example, the value chain continues to call for a World Trade Organization (WTO) challenge of Italy’s country of origin labelling provisions. China is now a full Member of the WTO. Is either country living up to their trade obligations? We need to challenge our trading partners when trade agreements are not followed.
We also need political parties to articulate clear policies that will facilitate market diversification. This does not mean that governments should plan to hire a sales force to sell wheat or lentils or canola. Marketing is the job of industry and exporters. Government’s job is to create an international regulatory environment that will minimize commercial risks.
What can government do to minimize risks? Expanding the scientific and regulatory knowledge in our embassies and high commissions is a good way to start. It is important to have scientific expertise in-country to quickly respond to phytosanitary and regulatory issues before they develop into a crisis. The most recent budget allocated additional funds to the Trade Commissioner Service and this is a good first step.
Government also needs to develop a comprehensive approach to mitigating potential non-tariff trade barriers before they arise. This will require a significant policy pivot. Unlike some of our trading partners (e.g., U.S.) Canada does not have a systematic approach to building the science-based regulatory capacity of our trading partners. This is not currently part of the mandate of government departments or agencies. This needs to change. This is especially true as our marketing efforts continue to diversify exports into countries with less-developed regulatory systems (e.g., Nigeria, Bangladesh).
What does this have to do with the coming election? Farmers need to be challenging candidates and their parties to outline their plan to protect agriculture growth, investment and jobs. Here are three questions that every candidate should face in the upcoming campaign: