Canada could become a global food export powerhouse – especially to Asia.
That’s the message the Conference Board of Canada is promoting with several recent reports, saying that with a focus on trade agreements and reforming supply-managed agricultural sectors, Canada could move from being within the top 20 food exporters to the top five.
“Having that [supply-managed] system in today’s markets where emerging market demand is so strong, it just doesn’t make any sense,” Mark Liew, a lecturer at the University of British Columbia who worked on the Conference Board report, told Business in Vancouver.
“What we tried to demonstrate in the report is how and why that system could be reformed, given the global food demand.”
But not so fast, say critics of the report, who fear that the Conference Board’s suggestions for reforming sectors like dairy could have dire consequences for farmers.
They also question whether Canada can compete with producers in countries like Australia, New Zealand and the United States. Those countries have already established markets in Asia and in many cases have lower production costs, in part because a temperate climate allows them to graze their cattle and not buy feed.
“Why would you want to enter a market where we’re not just a new player but we’re not well-established in terms of our market share and our market access to these countries?” said Dave Eto, chief executive officer of the BC Dairy Association.
“Don’t you think these other exporting nations would compete to maintain the business they’ve already established?”
Canada’s dairy industry operates under a nationally managed supply management system. It’s geared to ensure stable prices and production for the domestic market. Because the World Trade Organization classified supply management as a subsidy in 2002, Canada can export little of its food production.
The Conference Board claims that has resulted in Canadian consumers paying more for dairy products than their counterparts in other countries, such as the United States, and locked Canada out of export markets.
But the system has worked well to protect dairy farmers and consumers from price swings and market busts that have rocked other countries, said Maurice Doyon, a professor in the department of agricultural economics at Laval University.
He pointed out that many American dairy farmers lost their farms in 2008 and 2009 following a collapse of milk prices when consumption dropped due to the onset of the global recession.
Canadian farmers were protected by the supply management system.
But Doyon said Canada’s current system, which allocates quota to dairy farmers by province, could be improved.
That arrangement doesn’t match well with the national operations of major dairy processors or large grocery retailers, and it encourages Canadian dairy farms to stay small, a problem the Conference Board has also identified.
Doyon also believes more work could be done to develop value-added food production in Canada.
He is skeptical that Canada can compete in Asia and said it would be more realistic to focus on expanding exports to the United States.
“Can we compete on a commodity basis with those exporting countries right now?” Doyon asked. “I thought my colleagues from the Conference Board were extremely optimistic.”
