Winnipeg Free Press - PRINT EDITION

Our farmers get more sizzle than steak in EU trade deal

Winners and losers are apparent in CETA

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Ever since the concept of multilateral comprehensive trade talks under the World Trade Organization unofficially collapsed under the weight of the Doha Round, trade negotiators have been criss-crossing the globe in search of bilateral deals to boost the flow of goods -- and national economies.

In that vein, Canada's recent agreement in principle for the Comprehensive Economic and Trade Agreement (CETA) is presented as a coup for this country, putting it a step ahead of the U.S., which currently does double duty as Canada's biggest trading partner and biggest competitor in world markets.

As with any deal, there are winners and losers and nowhere is that more apparent than in the agricultural sector, where commodity groups currently counting on exports for their prosperity were pitted against supply management, which depends on keeping most import competition out. For major exporters such as the grains and oilseeds, beef and pork sectors, the deal is a clear victory, philosophically at least. The Canadian Agri-Food Trade Alliance (CAFTA), which represents grain and red meat producers, hailed the deal.

"CAFTA fully supports this deal, which we expect will expand agriculture and food exports to the EU by an incredible $1.5 billion dollars a year," president Lisa Skierka said in a news release.

Canada exports $2.4 billion in agriculture and food products to the EU each year. CAFTA says CETA will drive additional exports of $1.5 billion, including $600 million in beef, $400 million in pork, $100 million in grains and oilseeds, $100 million in sugar-containing products, and a further $300 million in processed foods, fruits and vegetables.

Those projections are based on Canadian producers fully exercising increased market access negotiated under the agreement. But there's a catch.

Despite losing a WTO complaint lodged by Canada and the U.S. and being sanctioned, the EU steadfastly refuses to accept any beef products that have been raised with growth hormones.

Imported pork can't have been raised with ractopamine, a growth promoter widely used in the pork sector. Use of these growth promoters improves production efficiency for Canadian producers by a range of 20 to 30 per cent.

Are the increased sales worth that kind of productivity penalty? Apparently not, judging from the beef industry's public grumbling about A&W's decision to sell hormone-free burgers. Even before this deal with its expanded access was negotiated, Canadian beef exports to the EU were only a fraction of duty-free quota already in place. European farmers need not lose any sleep over the prospect of boatloads of Canadian beef overtaking their market any time soon.

However, the Irish Independent is reporting EU hog producers could face more competition as a result of the deal.

"The price gap between EU and Canadian pigmeat is even greater than beef, with Irish farmers currently receiving 30 per cent more for their pigs than their Canadian counterparts," an article last week stated. "Canadians use growth hormones to give extra efficiency, but even factoring these out, Canadian pork has the potential to undercut Irish pig products."

Meanwhile, Canadian dairy farmers see themselves as the big losers in this new deal, which offers access to Europe's specialty cheeses equivalent with four per cent of the overall cheese market, but 32 per cent of the specialty market in Canada. That's going to hurt local cheesemakers, such as Bothwell, but also dairy producers, who will sell less milk.

Canadian cheeses would gain access to the EU market in return, but again, there's a catch. In order to be price competitive with EU cheese, Canada has to drop its export dairy prices below the cost of production, which amounts to an sanctionable export subsidy.

Under supply management, Canadian dairy farmers don't oversupply the market, but regulated pricing offsets their costs of production. Although European dairy farmers are paid world market prices, which are often below their costs of production, the EU significantly subsidizes their incomes through other programs.

The full details of this agreement won't be known for quite some time, but at the outset, it appears there is a little more sizzle than steak in the pan for Canadian farmers.

Laura Rance is editor of the Manitoba Co-operator. She can be reached at 204-792-4382 or by email at laura@fbcpublishing.com.

Republished from the Winnipeg Free Press print edition November 2, 2013 B10

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