World Grain - March 2014 - 30

FEATURE: Canada, e.u. make a deal

Ripening fields of wheat in British Columbia. Canadian wheat growers say CETA will give them improved market access for their product. Photo by TBob.

cessed pulses and grains.
The Canadian Agri-Food Trade
Alliance estimates, when fully implemented, CETA could result in $1.5 billion in new Canadian agri-food exports.
This includes $600 million in beef, $400
million in pork, $50 million in bison,
$90 million in canola, $20.5 million in
wheat, $1.9 million in other grains, and
$50 million in biofuels.
While it may be the largest trade
agreement Canada has ever entered
into, there are several major differences when you compare CETA to previous trade agreements.
CETA, as it's presently drafted, is
not a phased-in agreement. Most of the
non-agricultural items traded between
Canada and the E.U. will become duty
free almost immediately.
However, for a wide range of grain
products that are exported to Europe,
including wheat, there will be a sevenyear introductory period before tariffs
are reduced to zero (the average tariff
on Canadian exports to Europe at present is 13.9%).
But, as has been pointed out by the
Western Canadian Wheat Growers
Association, just the knowledge that
these tariffs will be eliminated within
seven years will provide certainty to
the market and lessen the risk of protectionist trade tariffs in the future. It will
30

also end a tariff that is now applied to
Canadian exports of low-protein wheat.
Also, while it's estimated by Ottawa
that Canadian trade to Europe will increase by about C$1.5 billion (about
3%) as a result of the signing, these new
export opportunities are most likely to
positively impact a few specific sectors
- particularly the meat trade.
Producers of feed wheat and barley
expect Canadian beef and hog herds will
benefit from immediate access to Europe
and domestic herds will increase, creating a greater demand for feed wheat
and barley supplies. As well, Canadian
dairy farmers and poultry producers
have grown up in a system of marketing boards that control production and
market prices that are based on input
costs. However, with the Canadian
Wheat Board conveniently stripped of
its monopoly powers prior to the signing, one very large marketing board has
been removed from the arena.
From a global standpoint, Europe's
competitiveness as an exporter of agricultural products has declined in recent
years due to systematic high costs, extremely difficult environmental regulations and the fact that subsidies that
resulted in overproduction have mostly
been put to rest.
On the other hand, to wheat and
barley producers in Canada who have

only recently been unshackled from the
Canadian Wheat Board, CETA provides
a refreshing opportunity to sell their
product in a market that is about to open
its doors to trade, which many Canadian
farmers have been doing over the past
decade as Western Canadian agriculture
has moved from what was essentially a
wheat monoculture to a polyculture and
a diversity of non-board crops resulting
in a less vulnerable industry.
In the process of shifting a portion
of their acreage to canola, field peas,
beans, lentils, malting barley, canary
seed and other specialty crops, farmers
and their associations have also learned
how to market their product in the global marketplace and adapt new crops to
their farming operations.
WESTERN CANADIAN
WHEAT GROWERS
"This deal is hugely important for
Western Canadian grain farmers," Levi
Wood, president of the Wheat Growers,
said in a prepared statement. "Not only
will we see improved market access for
grains, but it will also be of substantial benefit to the beef and pork sector.
Canadian cattle and hog farmers are major customers of our grain."
"The Comprehensive Economic and
Trade Agreement will significantly reduce and eventually eliminate tariffs on
a wide range of grain exports, including wheat," he said. "In recent years,
Canadian exports of durum and highprotein wheat have entered Europe
duty-free. However, the E.U. maintains
the right to impose tariffs (up to 90 euros per tonne on wheat) under existing
trade rules. CETA would see these
tariffs reduced to zero over a sevenyear period. The tariff that now applies on Canadian exports of lowprotein wheat to Europe would also be
eliminated over a seven-year period.
Ending these tariffs creates trade certainty and greatly lessens the risk of
future protectionist trade action."
BARLEY/FEED BARLEY
The Barley Council of Canada apMarch 2014 / World Grain / www.World-Grain.com

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World Grain - March 2014

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