WINNIPEG – It drives Ed Shaw crazy when a Canadian businessman arrives in Dubai expecting to sign a multimillion-dollar deal in a matter of days.
The forage producer in Didsbury, Alta., has travelled regularly to the Middle East over the last 25 years and learned much about Arab culture.
“If I’ve got a company across the street (in Canada), do I expect to make a sale on the first call?” said Shaw, who has been selling forage to customers in Abu Dhabi for 11 years. “But when we travel overseas … we expect to get a sale the first call.”
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
Instead, Canadians should plan to travel to the Middle East several times to establish relationships and build the trust needed to do business in places like the Arabian Peninsula.
Despite the cultural barriers and unrealistic expectations, Shaw remains convinced the Middle East represents a massive opportunity for Canadian forage exporters.
During a presentation at the Canadian Forage and Grassland Association here Dec. 14-15, Shaw said that opportunity exists now.
“This next year, (Abu Dhabi is) going to import 1.2 million tonnes (of forage). To put that into perspective, that’s about 50 percent of the Japanese imports of forage products,” said Shaw, CFGA chair. “Of that, 200,000 tonnes is going to pellets and cubes for the high fibre market…. The rest will be 600,000 tonnes of alfalfa and 400,000 tonnes of grass hay.”
About five years ago, the Abu Dhabi government decided its policy of subsidizing irrigated forage production was a mistake. Cost wasn’t a huge factor but the government was paying forage growers $400 per tonne for alfalfa and Rhodes grass.
“Then the government would sell it back to (livestock) farmers for $100 (per tonne). So they were subsidizing … $300 per tonne,” he said.
The more significant factor was water. Irrigating forage crops was draining Abu Dhabi’s aquifers at an alarming rate. Officials were also concerned about pesticides and herbicides leaching into the ground water, which is why they decided to import forage to feed the country’s herd of goats, camels and other livestock.
Earlier this year, Shaw led a group of exporters and government forage experts on a trade development trip to Abu Dhabi, to educate Canadians about the opportunities and challenges of doing business in the country.
“I’m also trying to bring (other) Canadians into it. Making people feel comfortable there,” he said.
Shaw said Canadian forage producers and exporters need to take this market seriously because Abu Dhabi is expected to import 2.5 million tonnes of forage by 2025.
Looking at other markets, Steve Lavergne, director of the Grains and Oilseeds Division at Agriculture Canada, provided an update on negotiations between Canada and China on forage crops.
Lavergne said the two countries have been working on a hay certification protocol. As of Dec. 13, the Canadian Food Inspection Agency had sent final amendments of that protocol to Chinese officials for review.
While others believe China will become a gigantic forage market, Shaw isn’t so sure.
“It’s going to be significant. It will equal Japan, but I don’t think it will be tenfold Japan,” he said. “They’ll find ways to use their rice straw and other forages, plus protein byproducts from crops like soy and canola.”
Another opportunity for Canadian forage may open up in Mexico, Shaw said.
At the moment, the Mexican livestock industry imports alfalfa from California, which is running out of water. That means farmers will likely abandon irrigation of forage crops.
On the topic of threats to Canadian forage exports, Shaw said entrepreneurs in Abu Dhabi are securing their own sources of forage. They have purchased farms that grow alfalfa and other forage crops in Egypt, Spain and California.
“I heard (recently) that one of the major companies has bought a 13,500 acre alfalfa operation in Blythe, Calif. They paid $187 million for this tract of land. In that county, they are (now) the second largest landowner.”
