Free trade has been good for Canadian agriculture, but farmers cannot expect to win every battle, a government trade official said last week.
Mike Gifford, director general of trade policy for Agriculture Canada, told the Senate agriculture committee Dec. 4 that since the 1989 free trade deal took effect, Canada has moved from a food trade deficit with the U.S. to a multibillion dollar surplus.
Grain sales now total close to two million tonnes annually.
“That should be regarded as normal for the future and not the exception,” said Gifford.
Read Also
Russian wheat exports start to pick up the pace
Russia has had a slow start for its 2025-26 wheat export program, but the pace is starting to pick up and that is a bearish factor for prices.
He said the food processing industry has had to transform itself from a small, domestically oriented sector to large plants serving the North American market. Major investments in prairie hog and beef slaughter plants are evidence of the transformation.
“The experience over the last decade with the U.S. has been very positive with respect to agricultural trade,” said Gifford.
Some senators suggested the strong trade performance has been as much a result of the weak dollar as the trade deal.
Gifford said he thought Canada would do well even if the dollar increased in value, because what is lost on export prices would be gained on lower costs of American-sourced inputs.
But the senators’ main challenge was on the issue of ice cream manufacturers who are getting around high supply management tariffs on dairy product imports by importing a butteroil and sugar mixture. Revenue Canada has ruled it is not a product subject to the tariffs that would apply to either butteroil or sugar imports.
Dairy Farmers of Canada has been fighting this, demanding that the government change the classification of the product to make it subject to tariffs. They say the loss of a market for cream or a Canadian-produced product could cost their industry $50 million annually.
Revenue Canada says it is reviewing the classification decision, but government officials have warned that moving the product into a category subject to tariff could lead to a challenge under trade agreements.
Not helping farmers
Several senators asked Gifford why in this case, the trade deals seem to be working against farmer interests, rather than for them.
Gifford said world and North American trade rules and agreements have protected farmers from American challenges.
Now, the rules may make it impossible to stop the import of a product created to get around tariffs.
“The rule of law protected us in terms of the U.S. NAFTA (North American Free Trade Agreement) challenge,” he said.
“It will protect us against any U.S. challenge of dairy export pricing … . We, like everyone else, can’t pick and choose which parts of an agreement we accept, and when.”
Meanwhile, agriculture minister Lyle Vanclief last week told the annual meeting of the Quebec farm lobby l’Union des Producteurs Agricoles that the government continues to try to resolve the issue.
“I was not able to promise them protection,” he said Dec. 5. “I was able to promise them that along with the industry, we will do the best we possibly can to get the interpretation of their concern and address it as fairly as we can under the rules-based international trade that we participate in.”
