Borders and international trade networks kept operating for agricultural trade even when other sectors were interrupted
Sometimes the biggest development is when little happens.
Even though there were many temporary and limited disruptions of Canada’s domestic and export food and agriculture industries during the first year of the pandemic, the most significant result has been a sector that is operating at close to normal, according to an analysis by William Kerr of the University of Saskatchewan.
“The net result has been that the Canadian agri-food sector appears to have returned to its prepandemic equilibrium, or near its prepandemic equilibrium,” writes Kerr in an article in the Canadian Journal of Agricultural Economics.
“This is not something that can be said of many other sectors of the economy.”
Kerr examines the factors that allowed Canada’s agriculture and food industries to skate through the pandemic with minimal disruptions, while other major industries, such as automobile manufacturing, shut down, were severely handicapped or were in states of chaos with unclear futures.
Agriculture and food managed to adjust quickly to temporary challenges and return to normal production, trade and business.
“The return to normal of the agri-food sector is striking and welcomed by a COVID-19-weary society when compared to many other sectors of the economy,” Kerr says.
That toughness in the face of the most severe economic disruption in a century arises in a number of factors:
- The ability of various supply chains to adjust.
- The necessity for farm production to continue, despite nearby challenges, because of the unalterable reality of the growing season and other cycles.
- The firmness of food prices, which created an incentive for unaffected production by producers.
- Borders and international trade networks that kept operating for food and agricultural trade, even when other sectors were interrupted.
- Co-operation between the Canadian and American governments to keep cross-border trade going.
“Canadian agri-food exports have not experienced significant disruptions due to the pandemic,” writes Kerr.
As good as international trade in food and agriculture has been, however, Kerr is skeptical that the pandemic will spur quick reforms to the moribund international trading order, despite Canada’s energetic leadership of the “Ottawa Group” initiative.
That alliance of like-minded trading nations, which wants to keep liberalized trade growing, including Brazil, Australia, Chile, the European Union, Japan, Kenya, South Korea, Mexico, New Zealand, Norway, Singapore and Switzerland, won’t find much success without the United States or China being involved.
But if they were involved, that might not help either.
“Of course, if the U.S. and China were to join the Ottawa Group, it would complicate the negotiations immensely,” Kerr says.
“Hence, meaningful reforms of interest to the Canadian agri-food industry will not likely be forthcoming in the near future.”
A loose coalition like the Ottawa Group has been tried before, leading up to the Doha Round of World Trade Organization negotiations, and its attempt to set the agenda for the talks backfired when a number of countries objected to being presented with a “fait accompli” framework for a trade deal.