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Canada is the third-largest exporter of agricultural products in the world


November 12, 2007
By Lisa McLean

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18aBecoming involved in the politics of international agricultural trade can seem
like a troublesome task when you are more interested in hearing how your counterparts
across the province fared in the latest bout of frost or soybean aphids. But
one look at the collapsing grains and oilseed prices last fall will tell even
growers who sell domestically that international trade issues will continue
to affect Canadian income.

Canada is the third-largest exporter of agricultural products in the world.
Prices for more than 90 percent of Canada's agricultural products are determined
on international markets. If the goals set by Canada's grains and oilseed and
cattle sector are achieved, it will mean an expansion of Canadian processing,
price increases for Canadian products, and increased market access.

“Realistically speaking, what happens at the WTO in the next year will
set Canada's agricultural business environment for the next 25 years,”
says Cam Dahl, executive director of Grain Growers of Canada. “We have
to get this right.”

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Recent studies estimate subsidies from the European Union and the US cost grains
and oilseed farmers more than $1.3 billion each year, and are responsible for
a $25 per tonne annual drop in grain prices. Dahl says the elimination of foreign
tariffs on Canada's export products over the next decade would bring another
$422 million annually to Canadian wheat producers, $236 million annually to
barley producers, almost $80 million to corn producers, and $63 million to soybean
producers. For Canada's 90,000 grain and oilseed producers, that money translates
into an average extra $14,000 annually per producer.

“Grains and oilseed prices are determined internationally, and producers
of those commodities need to have a presence at the bargaining table so their
interests are represented,” says Liam McCreery, president of the Canadian
Agri-Food Trade Alliance (CAFTA), an organization representing the more than
half a million jobs and the interests of Canadian cattle and grain producers
for Canadian negotiators at the WTO.

McCreery became involved in founding CAFTA during his time as a director at
the Ontario Soybean Growers (OSG), beginning in the late 1990s. As a soybean
farmer, he says he was concerned about the US subsidies that were artificially
driving Canadian prices down, and he was surprised to learn that the US was
only playing by the rules that were in place. OSG's Board of Directors decided
it was time to try to change those rules, and McCreery was selected to lead
the charge.

“The WTO puts the rules in place to define trade,” says McCreery.
“Government intervention through subsidies and tariffs affect price. Put
simply, we're trying to change the rules to take government influence out of
trade.”

But that is no easy task. Building a policy framework that 147 countries could
agree to took more than four years.

On July 31, the members of the WTO reached a framework agreement that outlines
the future direction of the talks and of the final agreement. “We believe
that the framework will allow us to accomplish many of our trade goals,”
says Dahl.

The framework finally agreed upon will allow for the negotiation of an end
to all forms of export subsidies, including the subsidy elements of export credits
and food aid. It also means substantial reductions in trade-distorting domestic
support with the assurances that the highest subsidizers will face the greatest
cuts. An increase in market access for grains, oilseeds and their value added
products, a curtailment of the practice of charging higher tariffs on processed
products (called tariff escalation) and better definitions and independent monitoring
of programs that are supposed to be non-distorting (called 'green' programs)
are also among the wins.

Now the real work begins. Canada's trade team meets on a regular basis with
representatives from the other 147 countries monthly in Geneva, Switzerland.
Before and after each of those meetings, the team meets with representatives
from Canada's agricultural industry.

“We commend the government trade team for the level of consultation and
feedback they provide,” says Dahl. “Canadian farmers stand to gain
significantly from real trade liberalization at the WTO. It's important that
Canadian farmers are at the table.”

Fred Brandenburg, government and industry relations manager for OSG, says changes
to the WTO could give Canada more opportunities to export value-added products
such as vegetable oil. “Some countries such as Japan have had high tariff
rate quotas in the past several years, meaning companies importing products
such as vegetable oil face tariffs of up to 60 percent,” says Brandenburg.
“If we didn't have that tariff barrier, it would open up new markets and
we could have another crush plant in Ontario, providing more jobs for rural
areas.”

If Canada decided not to participate in international markets for agriculture,
then half of the country's producers would have to find something else to do.
“Agriculture isn't the only thing at the WTO, but it's the linchpin,”
says Dahl. “This framework isn't perfect, but it presents a lot of opportunities
that will meet the fundamental needs of Canadian farmers who depend on the world
markets for price determination and for sales opportunities.” 

*Lisa McLean is communications co-ordinator
with the Ontario Soybean Growers at Guelph, Ontario.