When farmers pay the price for trade disputes, Canada bears the cost

I was struck by something Tyler Fulton, the director of risk management for Hams Marketing, said to me the other day.

“We’re just in a new time, I guess.”

He said that after apologizing for always in recent interviews noting that its hard to assess the market outlook these days because there are so many random factors in the markets, especially the myriad trade disruptions that are bedevilling the market’s usual focus on supply and demand fundamentals.

Is that the case? Are we really in a new time?

Most of us have been living with the hope that the present period of trade wars, political volatility and crazy-stuff-coming-out-of-the-White-House is just an aberration, a temporary disruption of the relatively sane, rational and predictable world of international trade that has held sway for decades.

But as these disputes and disruptions – between the U.S. and China, between Canada and China, between the U.K. and the European Union, etc. – continue and seem to worsen, with little reason to believe in any nearby solutions, maybe it’s time to start considering the reality that the “rules-based international order” is retreating into the past, and a “My nation first” ethos has begun supplanting it.

What does that mean for the farmer? What would that mean for the farmer?

Most of us still believe the old order will return, somehow and sometime.

But if it doesn’t, we don’t – in Canada – seem to be preparing well for the new post-rules age.

That’s something that’s exasperating Bill Campbell, the president of Keystone Agricultural Producers, who sees Canada’s trade partners and competitors helping protect their farmers from the impact of politically-inspired trade disruptions, but sees the Canadian government do little so far.

“We are almost standing alone,” he said to me during last week’s Manitoba Protein Summit.

China’s trade assault on Canada’s farmers is stretching towards a year, with no signs of any progress in reopening that important market to canola. The NAFTA2 agreement has been signed, after much belligerence and many threats by the U.S. president, but it hasn’t yet been passed by the U.S. Congress. Even now some U.S. farm voices are calling for a re-imposition of mandatory Country Of Origin Labelling (COOL), which is partially designed to keep Canadian pork and beef out of the U.S. market. Canada’s trade deal with the EU has been a disappointment, with that entity’s regulatory system seeming to function as an import-blocking machine. And the EU has done little to curb anti-Canadian actions indulged in Italy, which has found clever ways to block Canadian durum. Let’s not talk about India and pulse imports . . .

Farmers are facing more trade challenges now than at most times in the past. That’s hurting them. While the U.S. has been compensating its farmers at least partially for trade war losses, all the Canadian government has done so far is to offer loans. Loans are OK for short term disruptions. They are utterly inadequate for ongoing situations. The latter is what we might be in for, if we’ve moved into a new age.

Supporting Canadian farmers might seem like some form of charity to urbanites, regardless of the justice of offering support. That’s a misunderstanding of what letting farmers unfairly bear the cost of trade conflicts, which generally have nothing to do with farmers, actually does to the nation.

Farming is one of Canada’s industries that actually pays-in to the national coffers, providing export earnings to the economy at large and taxes to the federal and provincial pots. Its health and growth is vital for the future of all Canadians.

But what happens when farmers are left to suffer unfair losses, like those imposed by trade politics?

“As a primary producer, am I going to be taking risk to be venturing into a new enterprise?” Campbell pondered, already knowing the answer to his question.

“I would be very cautious about exposing myself to international trade.”

Farmers will hold back from investing in their farms. They won’t launch new businesses. They won’t enter new industries. Opportunities will be spurned. The farm economy will stagnate.

And Canada, as a whole, will pay that price, as one of its dynamic driving forces goes into stagnation and decline.

That’s why now, during a federal election campaign, our politicians should be addressing how they would ensure Canada’s farmers don’t pay the price for geopolitical disputes and law-breaching foreign actions that are confronting them today and will likely to continue to do so in the future.

Farmers pay the price in the short run, but it’s the nation that will carry the cost in the end, one way or the other.

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