With all the talk of trade wars and the uncertainty it creates in commodity markets, Canada mostly remains in a special spot, an agricultural exporter with a reputation for high quality products and reputable trading practices.
The trouble is that changing trade patterns, contracts and markets takes time, so despite opportunities in the marketplace, Canadian producers might not be able to profit from them in the short term.
An American squabble with China could create some additional Asian demand for Canada’s processed pork and swine offal. But Canadian export production will remain mostly focused on American imports of weanlings destined for feeder barns in the U.S. Midwest and domestic demand.
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At the same time, American trade negotiations with Canada will remain a challenge as North American Free Trade Agreement talks grind along.
Open trade is often described as modernization, but global trends appear to be headed for greater protectionism. The U.S. federal administration has done exactly what its leadership told its voters it would, protect domestic production of traditional products.
China and India have long protected domestic agricultural markets from trade whenever it suited them, both politically or when supplies didn’t require supplementation.
The European Union has negotiated some food commodity tariff reductions with Canada, but still protects against competitive imports and provides extensive subsidies for producers, ensuring that land use meets non production-focused priorities.
American producers, including dairy farmers, receive subsidy protection from a variety government programs ranging from lending to price and yield.
The idea of open global markets works in principle, and for as long as politicians choose to embrace them. But not all farm types can finance their operations based on the short-term electoral whims of the world’s politicians and neither should they have to rely on Canadian taxpayers.
The calls on Canada’s supply-managed industries to “modernize” might be missing the mark. While it won’t work for all commodities, maybe these were ahead of their time.
