The Canadian government allows Canadian airlines to buy aircraft built by a Brazilian manufacturer that competes with a domestic aircraft manufacturer.
Meanwhile Brazilian millers aren’t allowed to buy Canadian wheat at fair prices because the Brazilian government favours Argentina. And the Canadian government does nothing about it.
“This is something I do not understand,” said Antenor Barros Leal, the president of Brazil’s second largest milling company.
“If we were free to buy from Canada, (Brazilian millers) could buy two million tonnes (per year),” he told the Canadian Wheat Board’s Grain World market outlook conference
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Leal said he was flabbergasted by the Canadian government’s weak response to the discriminatory Brazilian government policies. Brazil hits wheat imports from outside the Latin American trading block with a number of tariffs and other charges that raise its price to uncompetitive levels.
“I don’t pay any tax when I import from Argentina. Nothing,” said Leal in an interview.
“I am forbidden to import from Canada.”
Brazil is part of the Mercosur trade block, which includes most of South America. Because of various tariffs and charges, Brazil has become a captive market for Argentine wheat, taking half of that country’s wheat exports.
That’s bad for millers, Leal said, not just because they have fewer suppliers competing for their business, but also because Argentine wheat can’t meet demanding specifications. That wasn’t a problem in the days when Brazil could buy Canadian wheat on the world market.
“It’s very common to have a baker ask: is this Canadian flour? Canadian means high quality. But we are obliged to buy lousy wheat from Argentina, and we cannot buy from Canada,” said Leal.
At one time Argentina produced high quality wheat like Canada’s, but then the government began subsidizing farmers to grow large crops of wheat, paying for yield rather than quality.
“The government started to buy, and then quality was replaced by quantity,” said Leal.
The Argentine government has backed out of that sort of direct role, but the damage has been done. A few Argentine farmers try to produce high quality wheat, but most have poor seed stocks and rely on preferential access to markets like Brazil to move their crop, Leal said.
It is astounding that the Canadian government allows the Brazilian government to act this way, Leal said, when so many Canadians are flying on Brazilian-built jets that compete with Quebec’s Bombardier.
“If Canada buys high quality planes from Brazil, why can’t Brazil buy high quality wheat in Canada?”
Wheat board director Bill Toews said Leal had issued a wakeup call to farmers and the government.
“We’ve been asking our government to pay attention a lot more to bilateral trade agreements, as opposed to being totally focused on world trade negotiations,” said Toews.
“This would be one of those examples where we have a market that is there and is waiting for us but because of the trade issue and the trade agreements, we can’t access it.”
