There is a palpable sense of angst in the agricultural community these days as farmers struggle with the immediate challenge of harvesting fields in weather the seems to keep turning against them.
But it’s more than an exhausting harvest. All that talk they’ve been hearing in recent years about unlimited market opportunities has turned out to be a mirage. Canada is still selling record volumes of grains and oilseeds, but not at prices farmers need to sustain their businesses.
Surging protectionism threatens even more troubles on the international trade front, and ineffectual international dispute-settlement mechanisms seem to hinder more than help.
As an example, even though Canada is complaining to the World Trade Organization (WTO) about China’s decision to virtually stop buying its canola, getting a ruling will take years and the WTO has about as much clout as a toothless tiger when it comes to enforcement.
Ratification of the much-touted USMCA (U.S., Mexico, Canada agreement) or CUSMA as the Canadians prefer to call it, is now mired in the current impeachment proceedings against U.S. President Donald Trump. Canadian farm exports are also facing restrictions in India, Saudi Arabia and parts of the EU.
When economists Al Mussell, Doug Hedley, and Ted Bilyea with AgriFood Economic Systems cased the horizon for trade in their research policy brief, they came to this ominous conclusion: “Major elements of this order have now changed, and many of the assumptions based on past experience may no longer be accurate or reliable,” they wrote.
“The emerging evidence is that there is exceedingly little scope for returning in the coming years to the markets, domestic policy and trade relationships that have prevailed in the previous 20 to 25 years. In this regard, Canada’s strategy and policy structures for agri-food development will need to be re-thought and redesigned.”
They point to the Arab spring of 2011 as one of the first indicators that the liberal world order favouring multilateralism that emerged following the Second World War was fading. Although it initially appeared to be a populist uprising that would pressure governments in that region towards more secular liberal democracies, the opposite occurred.
“Instead, new despotic governments have developed that seek tribal retribution against their predecessors, with increased conflict and instability.”
Even though China has emerged as a global economic superpower, it continues to have status under WTO rules as a “developing country,” a designation that gives it more latitude to use domestic policy to protect and support its agricultural sector. It’s clearly showing it plans to play the international game by its own rules.
“The trade environment is challenged today with the increased economic and geopolitical prominence of countries that do not fit with many of the assumptions of a liberal world order,” they write.
That’s bad news for a small country heavily dependent on exports such as Canada.
The structural issues affecting international trade, and by osmosis Canada’s domestic agriculture and food policy, won’t be resolved overnight. The hard reality facing farmers, their lobby organizations, and governments is that unlike the relatively few years in which the sector saw strong prices, these negative pressures on price and export flow could define this farming generation.
Much of the frustration in farm country has been focused on the fact that the recent federal election didn’t go its way and that the carbon tax imposed by the Trudeau government as a means to reduce this country’s greenhouse gas emissions will increase their costs.
This conveniently ignores the reality that the issues they face are bigger than any one government’s mandate or any single policy.
Whether it’s the imposition of carbon taxes or emerging trade issues, these times are signalling that business as usual is no longer an option.
Governments can provide tactical support in the form of subsidies, negotiating trade deals or developing new markets — but farmers are on the front lines.
It will be decisions they make on their farms that determine whether their businesses survive or fail.