By Sylvain Charlebois (AIMS Senior Fellow)
Canola was first, and now peas and soybeans. It was highly predictable. And given how things have progressed over the last five months, the situation can only escalate.
The Canadian government has pledged to help farmers affected by our epic spat with China. But other than offering cash or support to develop new markets for canola, peas and soybeans, it’s challenging to see what else the Liberal government can do.
Unlike the United States, Canada is not a trade powerhouse.
The federal government should stop insinuating that China’s issue is related to food safety. It’s not. Using this science-based rhetoric has run its course and now some real political mediation is needed behind the scenes. To simply send a contingent from the the Canadian Food Inspection Agency (CFIA) to China would be pointless.
China is no Japan. China has historically entangled foreign policy with trade.
When the food safety narrative is used by Japanese authorities, they mean it. They have no space and since 80 per cent of the food consumed in Japan is imported, importers need to protect the public from irresponsible choices. Food safety is paramount and importers are willing to pay a premium.
China is different. Food security remains a challenge as the country’s centralized economy has miraculously made the country an agri-food powerhouse. China has options and will go for the affordable choice most of the time.
Running a co-ordinated economy is beneficial when it comes to trading. China knows its people will stick with it no matter what the costs. But the governments of other trading partners – like Canada and the U.S. – could be toppled due to internal dissatisfaction. Trade wars serve China better in the long run, especially now that the country’s agriculture has gained efficiencies.
Canada needs to keep all of this in mind.
Meng Wanzhou’s arrest in Vancouver triggered a trade war between the two countries. She was arrested on an extradition request by the Americans, on suspicion of violating sanctions against Iran.
Ottawa still claims it was never involved. But the SNC-Lavalin scandal shows that the government of Prime Minister Justin Trudeau is very much capable of political interference. And a dear price can be paid at the polls: support lost and even governments losing power.
Ottawa’s diplomatic juveniles have made our agri-food industry more vulnerable than ever. Unsurprisingly, canola was targeted first, for its economic and symbolic impact. Now peas and soybeans are among the commodities affected by harsher Chinese rules. Wheat could be next, or even lobster, if China can’t settle its differences with the Americans and, by extension, Canada.
On the livestock front, there is some good news. China needs our pork and beef after it reportedly had to cull over one million pigs because of African swine fever. But that highly-infectious and lethal disease could reach Canada’s shores in a matter of months.
Pork prices could climb in Canada if China, the world’s largest consumer of pork, continues to buy more Canadian products. Inventories are getting low for the summer. So your favourite bacon, pork chops or ribs could cost more at the retail level.
CFIA is taking proper precautions, along with the United States Department of Agriculture. But a disease can spread quickly. If the swine fever reaches Canada or the Unites States, all bets are off. Borders could shut down to our pork industry instantly, as the cattle industry discovered during the mad cow crisis of 2003. This would be devastating for Canada’s hog industry.
The trade situation with China also points to a much larger issue. Shipping commodities abroad and having other countries process our raw materials is a missed opportunity.
Peas, for example, are the main ingredient in Beyond Meat’s patties, which are being sold in over 27,000 restaurants around the world. Some peas used by the California-based company are from Canada, which is the world’s largest producer and exporter of field peas.
If we continue to stick to this traditional game plan of shipping off our raw materials, however, we’ll continue to go from crisis to crisis without learning much.