Market growth, not world trade rules, is the key to future prosperity for oilseed producers, says a U.S. agricultural policy think-tank.
Canola industry groups have lobbied hard in recent years for an agreement that would reduce tariffs, increase market access and eliminate trade-distorting subsidies.
In fact canola organizations – the Canola Council of Canada, the Canadian Canola Growers Association and the Canadian Oilseed Processors Association – make up 20 percent of the membership of the 15-member Canadian Agri-Food Trade Alliance, or CAFTA, which has pushed for a trade-friendly deal.
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However the study by three researchers at the Washington-based International Food and Agricultural Trade Policy Council suggests that a failure to reach a new world trade agreement wouldn’t be that big a deal for the oilseed sector.
It says positive fundamental growth trends are much more important than rewritten trade rules.
“It is clear from the analysis that the impact of the Doha Round on oilseed production, consumption and trade will be far less than either long-term demand or biodiesel policies,” the authors said.
The study projected demand for oilseeds will increase by 83 million tonnes between 2005 and 2010.
Of that total, 58 million tonnes (68 percent) will come from growth in feed and food markets, 19 million tonnes (25 percent) will be generated by the growth in biodiesel demand, and just six million tonnes (seven percent) will be the result of trade reform.
The study assumes a WTO agreement that provides a 50 percent reduction in tariffs, the elimination of export subsidies by 2015, some adjustment and caps on domestic support, some protection for sensitive products and special treatment for India and China.
Rick White, a Manitoba farmer who represents the Canadian canola growers on CAFTA, said that while he can’t argue with the numbers in the study, he still believes a successful conclusion to the WTO negotiations is crucial for the future of the prairie canola industry.
“I wouldn’t say growth in biodiesel or the general increase in demand offsets the negative consequences that we’re experiencing now with market distortions in the international market,” he said.
The association’s policy calls for the elimination of export subsidies, an end to trade-distorting domestic support, unrestricted access into export markets for Canadian oilseeds and processed products and the elimination of unfair tariff barriers.
White said studies done by various organizations have concluded that trade distortions in the world market cost the Canadian canola industry around $800 million a year. If those distortions aren’t removed, then those losses will continue no matter how much demand increases, he said.
“Growth in the world market doesn’t do you any good if you’re denied access,” he said, adding the association hopes the stalemate in the WTO negotiations can be resolved quickly.
