Crop value chains are working hard to meet customer needs and keep markets open for Canadian crops.
With exports being so crucial to the success of Canadian agriculture, the current trade disputes really underline the importance of ongoing efforts to resolve and prevent such problems. National associations that bring together crop growers, processors, exporters and others in the value chain are playing a vital part in these efforts. The associations are using a range of strategies to tackle market access issues, focusing on meeting the needs of our customers.
One of their key strategies is a proactive program that advises Canadian crop growers on the latest best practices to ensure their farm’s products will meet end-user needs. It’s an important tool to help growers do their part in keeping our markets open.
A Quick Look at Trade Issues
These days, trade disruptions are affecting a number of Canadian crops. Tariffs and non-tariff issues — like biotechnology, sustainability requirements, and phytosanitary specifications related to plant diseases, weed seeds and pesticide residues — are limiting or preventing market access for Canadian grains.
“There are some significant market access issues for Canadian cereals at the moment,” says Cam Dahl, president of Cereals Canada, a national organization that involves all sectors of the cereals value chain.
“We have serious concerns because of country of origin labelling in Italy, which has significantly reduced our durum exports. Peru has notified the World Trade Organization of phytosanitary concerns with Canadian [wheat] shipments because of weed seeds, threatening over one million tonnes of exports a year. Saudi Arabia currently issues their tenders with the notice they can have any origin but Canada, so that market continues to be closed to us. And Vietnam is essentially closed to Canada because of thistle seeds; Vietnam is part of the TPP [Trans-Pacific Partnership trade agreement] and a market we were hoping to expand into,” says Dahl.
“We depend on trade, and every time a market is restricted or greater uncertainty comes into a market, that comes with a cost. Every one of these trade issues hurts farmers’ bottom lines.”
Canada’s current dispute with China about canola seed is a high-profile example of the trade challenges for canola. “When it comes to canola, we export 90 per cent of everything we grow. Market access has always been a major priority for this sector because trade disruption is really damaging,” says Brian Innes, who is the vice-president of public affairs with the Canola Council of Canada — which includes grower associations, processors, exporters and life science companies.
“The Canola Council has been working on market access issues for many years. Throughout that time, we have seen a number of issues that have stopped our exports,” he says.
“We have seen canola meal being disrupted because of salmonella regulations in the United States. We’ve seen canola seed be disrupted in going to China as far back as 2009, and our canola meal exports to China were stopped from 2013 to 2015. We’ve also seen a number of market access issues related to technology that have prevented farmers from using the latest seed genetics or pesticides. And we’ve seen an inability for canola to be used in the biofuel markets in the United States and Europe.”
The Canadian pulse sector’s most important trade challenge involves exports to India. “The world really changed for our pulse industry in 2017 with the imposition of various restrictive trade policies in what was our largest market historically — India,” says Mac Ross. He is director of market access and trade policy at Pulse Canada, a national association of growers, traders and processors of Canadian pulse crops.
“Right now, India has import tariffs of 33, 50 and 66 per cent for lentils, peas and chickpeas, respectively, as well as quantitative import restrictions limiting pea imports into India to 150,000 tonnes from April 2019 to April 2020.
“We shipped 40 per cent of our pulses to India as recently as 2016. That has really decreased in the last few years. In 2018, we were at about 85 per cent of our usual exports to India, and this year we have climbed up a little bit. India is probably our third largest market this crop year, but our exports to India are still nowhere near the magnitude that they have been in the past. Anytime you lose such a large market and such a large percentage of your overall export market, the farmers are going to feel that at the farm gate,” says Ross.
Trade Disruptions a Fact of Life?
International trade disputes seem to be constantly in the headlines. Are continued trade disruptions in Canadian crop exports expected?
Agriculture and the food sector have always been sensitive to trade disruptions because consumers and governments are concerned about food safety and because farmers in importing countries are concerned about how the imports might affect them, says Innes. However, Canada is facing unprecedented uncertainty in the world of international trade, he adds. “Geopolitics is affecting trade in a way that it hasn’t in the past.”
From Dahl’s perspective, world trade has gone through a major change over the past two or three years. “Prior to that, we had a time where the world was looking for ways to facilitate trade. We were negotiating trade agreements that were reducing trade barriers, like the agreement with Europe or the TPP,” he says.
“Now, we have moved to a new age of protectionism where countries are pulling back from supporting multilateral and global trade. They are looking to put up trade barriers; Italy is a prime example of that. And often countries look to phytosanitary issues, such as disease or pesticide residues or weed seeds, they can use to block trade. I expect to see more of these trade issues going forward.”
Ross views the pulse industry’s current trade issues as a symptom of two inherent realities of the industry. “One is that Canada is super reliant on the export market. We have only 37 million mouths to feed here in Canada, so we can’t eat all that we produce. We are able to grow a lot of high-quality, safe, food, but we depend on the export market to purchase it and for the continued success of our industry,” he says. “And in the case of pulses specifically, we have been over-reliant on one or two export markets. When some uncertainty arises in one or two of these markets, the effects can really reverberate right through our entire industry.”
Still, Ross agrees with Innes and Dahl that we are seeing a higher level of uncertainty in the global marketplace at present. “Canada has done a very good job over the past few decades of entering into free trade agreements with a lot of key export markets. We like to say we are the only G7 country that has a free trade agreement with every other G7 country. But now that we have secured duty-free access, we are seeing countries are using other non-tariff means to keep products out if they wish to do so.”
Strategies to Keep Markets Open
Pulse Canada, the Canola Council and Cereals Canada are each actively working with their value chains, Canadian government agencies, and others to find solutions to current trade issues and prevent market access problems from emerging in the future.
The Canadian pulse industry and Pulse Canada have a strong emphasis on market diversification. “Pulse Canada has developed a ‘25 by 2025’ strategy which aims to move 25 per cent of Canadian pulse production, or 2 million tonnes of pulses, into new markets and use categories by the year 2025. The strategy is focused on developing inroads into food and pet food manufacturing, processing, and food service industries in markets with the greatest volume potential for pulse ingredients,” explains Ross.
“Finding new opportunities for Canadian pulses is critical given the uncertainty we face in markets we’ve relied on for decades. The growing demand for plant protein and interest in sustainability in markets like the U.S. and Europe present exciting new opportunities for Canadian pulses.”
As well, Pulse Canada is working with others to improve access to the Indian marketplace. “We’re working with other pulse-producing nations to try and insert predictability and transparency into India’s policy decisions. That is being done through the Global Pulse Confederation and their relationships with various government bodies in India,” says Ross.
“We also are experiencing a technical barrier with India as pulse imports from all origins are required to be fumigated prior to arrival in India or be subject to additional charges. We feel this measure is technically unjustified due to Canada’s demonstrated ability to consistently meet India’s technical requirements without the need for fumigation. That is a science-based issue and we’re seeking a science-based solution for it, with Canada dealing with India on a bilateral basis.”
Dahl highlights a few examples of Cereals Canada’s ongoing efforts to enhance market access for cereals. “We’re working with Global Affairs Canada and our embassies abroad as well as the Canadian Food Inspection Agency and the Canadian Grain Commission to address market issues and keep markets open,” he says.
“We also work directly with regulators in our importing countries and with industries in those countries. For instance, we just had a visit from Peruvian regulators to audit the Canadian [grain] system — starting with the farm and going through the handling and country elevators and terminal elevators and the regulatory system. Hopefully that will help lead to a resolution of the issues with Peru.”
Dahl adds, “We also have ongoing outreach with major customers. The annual New Crop Missions are an example of that, which we carry out with the Canadian International Grains Institute and the Canadian Grain Commission. We visit our top customers, about 20 countries every year in about six weeks, to review the quality, milling attributes and processing attributes of the crop that is coming off.”
The Canola Council works with the Canadian canola value chain, the federal government and import partners to create solutions to trade issues that meet the needs of all involved. “It is critical that we bring solutions to the table and work with our customers and their governments to find ways to resolve market access issues and encourage stable trade of our products,” says Innes.
One example is the issue of blackleg on canola seed. “The blackleg issue was identified by a customer, and we worked with our value chain to understand more about it. We implemented solutions here in Canada, such as supporting research and extension for improved blackleg management to help show the customer how we are taking action to control the risk.
“Another example of the Canola Council’s market access efforts, is we bring together our exporters and our customers in foreign markets so we can increase understanding and help our customers work with their governments to promote stable trade. We have done that in Japan for over 40 years. We’ve done that in China over the last number of years. And we just recently did that in Korea in June,” says Innes.
The Canola Council, Cereals Canada and Pulse Canada are also involved in various other strategies that contribute to improving market access. For example, they monitor pesticide residue requirements in different markets and work with crop protection companies to address potential market risks. And they work with the Canadian government to encourage more consistent review processes and standards for crop commodities in international markets.
Traceability Increasingly Important
Traceability and quality assurance systems are important components for ensuring ongoing market access. “When it comes to the grain handling system, traceability is the responsibility of the processors and exporters,” explains Innes. “For instance, to meet the food safety requirements in the United States, our processors have to be able to trace their products through the system.”
“All the grain handlers keep records of where grain is coming from, so if there are issues, then we can address them very quickly, and not have an entire market close on us,” adds Dahl.
Ross notes, “In the global marketplace, consumers increasingly want more transparency to understand where their product came from and how that product was grown. In addition to the regulatory oversight we already have here in Canada, the industry is ensuring their own quality assurance oversight along the entire value chain because that is what the end-user is looking for.”
Essential Role of Growers
Cereals Canada, Pulse Canada and the Canola Council have teamed up to create another initiative to help keep markets open. It’s a proactive outreach program for crop growers called Keep It Clean (keepingitclean.ca).
“Our growers do a great job. We want to help them continue to do that. These days, more countries are testing for pesticide residues, and more countries are setting their own limits for residues rather than relying on international standards. There is also the ability to detect very low levels of residues in products. We want to ensure that our products are meeting the [regulatory and contractual] requirements of our end-users. With the Keep It Clean program, we are ensuring that growers are aware of what they can do to ensure our exports meet these requirements and to maintain market access,” explains Ross.
Dahl says Keep It Clean’s key message is what happens on the farm really matters in international markets. “Farmers need to be taking the steps necessary to keep our markets open because just a little bit of something that is not supposed to be there can close a market. As an example, often pesticide residues are measured in parts per billion, but one part per billion is [equivalent to] one second in 32 years. And mycotoxins are often measured in parts per trillion, which is one second in 32,000 years. These are miniscule levels, and yet these are the standards that everybody is being held to internationally. It really does matter what individual farmers do.”
Keep It Clean identifies five basic tips for all crop growers:
- Use acceptable pesticides only
- Always read and follow the label
- Grow disease-resistant varieties and use practices that reduce infection
- Store your crop properly
- Deliver what you declare
As well, the Keep It Clean website has sections specifically for cereal growers, canola growers and pulse growers. Those sections explain how the basic tips relate to each of these three crop sectors.
In addition, these crop-specific sections provide details on top concerns for market access. For example, Keep Cereals Clean highlights issues like Fusarium and glyphosate. Keep Canola Clean focuses on blackleg, malathion and glyphosate. And Keep Pulses Clean highlights glyphosate and pulse-specific tips on applications of crop protection products. For each of the three crop sectors, the list of pesticides that could cause marketing concerns for growers is updated every year, and growers are encouraged to check the website for the latest updates or speak with their grain buyers.
Particularly during this time of unusual uncertainty in international trade, Canadian crop growers and the rest of the value chain need to continue to be vigilant in following practices that meet the requirements of our customers and their governments. It’s key to helping markets remain open to Canadian crops.