Some of Canada’s most important wheat and durum markets are at risk from a series of bilateral free trade deals between grain-buying countries and the United States.
Agreements with countries like Morocco, Colombia, Peru, Ecuador and Malaysia will give American exporters preferential access and could freeze Canada out of those markets.
“Our salespeople consider this to be the top issue we’re facing right now,” said Canadian Wheat Board spokesperson Maureen Fitzhenry.
Efforts to establish new agriculture trade rules through World Trade Organization talks are also important, but there’s no guarantee that will be resolved soon, she said.
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“In the meantime the U.S. is aggressively pursuing these bilaterals all around the world in countries that represent 30 percent of Canadian wheat imports and over 45 percent of barley exports,” said Fitzhenry.
The board, along with several other Canadian farm groups, last week sent a letter to international trade minister David Emerson asking Canada to respond to the U.S. with aggressive action of its own.
They urged the Canadian government to move quickly and devote more resources to negotiating free trade deals with important customers like China, Japan, India, Morocco and several South American countries.
“Canada’s competitiveness in these markets is being eroded and a substantial portion of Canadian agricultural exports will be negatively impacted,” said the letter signed by representatives from the pork, pulse and canola industries, as well as the CWB and the Canadian Federation of Agriculture.
The same groups sent a similar letter last autumn to the trade minister in the former Liberal government.
Fitzhenry said western Canadian farmers could fall into a severe competitive disadvantage if the government doesn’t respond more aggressively to the U.S. actions.
“We work very hard to develop and retain overseas markets and it’s pretty frustrating to see those efforts thwarted by not enough attention being paid to trade deals negotiated at the government level.”
For example, the U.S. is finalizing a series of bilateral deals with Peru, Colombia and Ecuador that will give it tariff-free access for wheat while Canadian sales are subject to a duty of about 15 percent.
Those three countries together buy about one million tonnes of wheat a year from Canada, worth some $250 million, but that could change as a result of the new agreements.
While quality, consistency, customer service and loyalty all play a role in customers’ grain buying decisions, price is a crucial factor.
“You can lose sales over a difference of a dollar a tonne,” said Fitzhenry.
Sales to Morocco, one of Canada’s biggest durum markets, are also threatened by a U.S. trade deal negotiated last year to be phased in over the next five years.
While the details of Morocco’s tariff structure are complex, the bottom line is the U.S. will gain a significant competitive advantage over Canada and other suppliers.
Canada has traditionally provided that country with 75 to 90 percent of its durum imports, but U.S. officials estimate the free trade deal will increase their sales fivefold, something CWB officials don’t dispute.
“This is a major market that we’ve almost exclusively supplied in the past and that’s no longer going to be the case,” said Fitzhenry. “There’s not many durum markets out there so this is a huge concern for us.”
In addition to wheat and barley, lentil and pea sales to South American countries could also be affected by U.S. deals.
While the CWB complained, U.S. wheat growers were predictably happy about the new trade deal with Colombia.
“Following on the very successful completion of the Peru (trade agreement), the Colombian agreement provides improved sales opportunities in another important wheat market in the hemisphere,” said Randy Wilks, chair of the U.S. Wheat Export Trade Education Committee.
So far this marketing year Colombia has bought 660,000 tonnes of wheat from the U.S., including 375,000 tonnes of hard red spring wheat.
