Some markets more hassle than they’re worth

Some markets aren’t worth having. That’s a line I’ve heard hog market analyst and economist Steve Meyer use a couple of times in recent years about U.S. pork sales to Russia, which are often disrupted by cynical-seeming blockages.

However, I think it equally well applies to Canadian meat and crop sales to Russia.

Canada is a premium quality exporter of meat, crops and processed food and needs to focus on reliable, high-paying and strategic markets. Russia doesn’t fit those criteria well, certainly not for the future.

Some markets are worth having and some aren’t.

Russia has slapped bans on food imports from a number of Western nations, including Canada, that have sanctioned Russia for its aggression against Ukraine. It’s tit-for-tat trade retaliation.

That’s costing Canadian meat exporters and packers real money because the Russian ban applies both to future sales and for product already en route. As the Canadian Meat Council was telling me this week, that means containers on the high seas are being shifted to other markets, which tends to force a discount and causes a lot of work in issuing new certificates and reengineering all the paperwork.

It leaves the Canadian agriculture industry facing a question about how many eggs to put into the Russian basket in the future.

I’d suggest not many.

Lots of our markets are challenging and often disrupted by vexatious disputes. China regularly leaps into the news pages of this newspaper with stories about puzzling restrictions on Canadian canola and pork.

These restrictions are widely believed to be part of China’s kinder and gentler way of controlling domestic prices and production than during its cruder command-and-control days.

For China, Canadian exporters will swallow their bile, work through the complications and try to get full trade back online as quickly as possible.

China is a giant market with the biggest growth potential in the world, and for all its peculiarities, it seems dedicated to expanding its trading relationships with the rest of the world.

China is a market worth keeping, building, nurturing.

We also have chronic and frustrating trade snarls with Europe, as oceans of spilled ink across the pages of this newspaper have documented for decades. Whether it’s about genetically modified crops, growth-promoting hormones or a host of other issues, the European Union’s politicians and regulators have found many reasons to effectively shut down Canadian exports of crops, meats and food products.

Some of these seem to be based on trying to protect the domestic market from imports, some from intense European feelings about subjects like GMOs, and others just due to the complex, Byzantine nature of the 28-state polity.

But we’re always, as with China, working with EU officials to try to find ways around the complications.

Right now we’re in the final third of the tortuous process of completing a free trade deal with the EU, a deal that offers great promise and potential.

The EU is a huge market, a sophisticated market, a dependable market (if you can get in there) and Europe definitely believes in the rule of law and respecting the deals it makes.

The EU is a market definitely worth having.

But Russia is very different. Sometimes it’s a good market and sometimes it isn’t, but the Russians have played blatant games with trade in the past and are likely to do so again and again. It’s hard to look at Vladimir Putin’s Russia and see a reliable trading partner. It’s hard to blame Russia over these present bans on Canadian products because we started it with our actions against them, but as we’ve seen with Russia’s frequent games with natural gas supplies going to Ukraine and the EU, Russia sees trade as a handy foreign policy lever. As Putin’s Russia backs away from a western orientation, this is unlikely to change.

And Russia isn’t likely to be a growing economy. Its recent success has been due almost entirely to the high oil prices since the early 2000s, but those are subsiding as the commodity bull market fades.

So it’s an unreliable market with a bleak future that we’ll never be able to build any future trade or investment plans on. It can serve a useful function as a residual market for whatever we can’t sell to better markets, but not much more.

That’s not true with the EU and China, which have bright futures and with whom we can work.

Some markets are worth having and some aren’t.

Russia is the latter.

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