Federal election 2019: international markets

 

The next Canadian federal election will take place on Monday, October 21, 2019. For producers, the next election is an opportunity for the interests of agriculture to reinforced by voting for a candidate with the strongest background and most favourable policy positions.

 

One issue that pork producers will be keeping their eye on is the effort to establish and maintain healthy international trade relationships, which are vital to the long- and short-term sustainability of all aspects of the Canadian pork industry.

 

The industry contributes nearly $24 billion to the Canadian economy and employs more 100,000 workers. Nearly 70 per cent of Canadian pork is exported, which makes international trade a top priority on the business side.

 

In June 2019, China banned all imports of Canadian pork products after the discovery of a fraudulent veterinarian’s certificate that indicated a product of supposedly Canadian origin contained ractopamine—a feed additive that is legal in many countries, including Canada, but banned in China.

 

In 2013, Canadian pork producers voluntarily removed ractopamine from production, which satisfies requirements under the Canadian Quality Assurance (CQA) program. Federally inspected processing facilities use the CQA program to create enhanced value for our high-quality pork products, which is backed up with certificated producer documentation. Unfortunately, the fraudulent certificate received by China was not accurate for the product, which was misidentified as Canadian in origin.

 

The situation with China has proven difficult, and seemingly little is being done to encourage the reopening of the Chinese market. On the federal level, certain political conditions have strained relations with our long-time Chinese partners, and this has a direct impact on Canadian processors and their producer-suppliers. Alberta Pork urges the next federal government to take swift and immediate action to mend this critical relationship.

 

Exacerbating trade concerns for Canadian producers is the lingering issue of competitiveness versus our U.S. counterparts. For the last two years, trade disputes between our southern neighbour and China have inadvertently entangled Canadians in the fight, because Canadian hog prices are based off U.S. hog prices. As such, Canadian hog prices have fluctuated in step with this third-party dispute.

 

Since the start of the U.S. trade war with China, the U.S. Government has allocated significant funding supports totaling $28 billion to counter the effects of China’s tariffs on U.S. exports. In 2018, hog producers in the U.S. received $8 USD per pig, and in 2019, they received $11 USD per pig.

 

In response to the supports offered to U.S. producers in 2018, Alberta Pork requested to the former Minister of Agriculture and Agri-Food Canada (AAFC) compensation of $10.50 CAD per pig as a roughly equivalent level of support, to offset the disadvantage to our producers versus U.S. producers. That request was swiftly denied.

 

Again, in August 2019, Alberta Pork sent a letter to request compensation, this time $12 CAD per pig. In September 2019, representatives from Alberta’s pork industry met with Amarjeet Sohi, Minister, Natural Resources Canada, on behalf of Marie-Claude Bibeau, current Minister, AAFC to discuss topics relevant to the pork sector, including compensation for producers. Our request for compensation has not yet received formal response.

 

Requests for compensation are not the objective of the Canadian pork industry. In fact, they are a negative response to an even more negative trade condition. Compensation to producer will, however, help equalize the playing field, which has been tilted ever since the start of the U.S.-China trade war, evidenced by an increased supply of less costly U.S. pork entering our Canadian domestic market.

 

While the Canadian pork sector is facing ongoing losses, certain supply-managed commodity sectors have been pledged support. This appears to be a bit inconsistent and confusing, if freely marketed commodities like pork do not have the inherent support structures present for supply-managed commodities.  Taken together, the inaction on support for pork producers compared to support for producers in other sectors has left many people frustrated.

 

Alberta Pork is collaborating with the Canadian Pork Council (CPC) and other partners on pricing discussions, in negotiation with processors, to help alleviate some of the burden, but there remains a lack of political will for intervention, for the benefit of producers who are unfairly at the mercy of many factors beyond their control.

 

In June and July 2019, Minister Bibeau committed a combined $7 million in funding to the Canadian Meat Council (CMC) and Canada Pork International (CPI), which will go toward market development. In January and July 2019, the U.S. Government awarded a combined $28 million to the U.S. Meat Export Federation under that country’s Agricultural Trade Promotion Program. While market development, broadly speaking, is the crux of the issue, the funding does not specifically address resolving our disputes with China—an established, successful market—or trickle down to producers.

 

While issues with China have dominated the trade front recently, new free trade agreements are providing some hope. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), ratified in October 2018, has eased market access for Canadian pork in countries like Japan, where our exports continue to rise.

 

On the other hand, the Comprehensive Economic and Trade Agreement (CETA), ratified in May 2017, nearly doubled Canada’s pork export quota and eliminated 98 per cent of tariffs for with the European Union; however, the industry has not been able to take much advantage of this, due to regulatory disputes in that jurisdiction.

 

The United States-Mexico-Canada trade agreement (USMCA)—a modernized North American Free Trade Agreement (NAFTA)—was negotiated up until October 2018. The proposed deal should help pork move more freely between the three countries, but the deal has not yet been ratified by Canada or the U.S. The deal was ratified by Mexico in June 2019.