Canadian Agri-Food Exporters Face Bumpy Road
If last year was a road full of potholes for Canadian agri-food exporters, 2020 is hardly looking much better. Already facing global geopolitical issues, increased protectionism and mounting modernization challenges to remain competitive, Canada’s agri-food industry has been battered this winter by Indigenous rail blockades that paralyzed meat and grain supply chains for several weeks
by Leo Ryan – American Journal of Transportation
No small matter for the world’s fifth largest agri-food exporter whose sales abroad reached a record C$60 billion in 2019.
February, indeed, was a nightmare for the Canadian economy as a whole after a series of protests and blockades began on Feb. 6 on CN tracks in Tyendinaga Mohawk territory near Belleville, Ontario. This was on the critical CN main freight line between Toronto and Montreal, resulting in the subsequent shutting down of services with the ports of Vancouver, Prince Rupert, Montreal and Halifax. Freight train service began resuming on Feb. 24 after police detained protesters and dismantled the blockade near Belleville. Canada’s other Class 1 railway, CP, could only pick up a relatively small part of the stranded cargoes.
“The turmoil happened just when the outlook was improving for Canadian pork producers, who had been anticipating a recovery in demand from China”
The crisis was over the C$6.6 billion Coastal Gaslink pipeline project that had been approved by the elected band council of the 20 First Nations along the route. But a group of hereditary Wet’suwet’en chiefs launched a campaign against the project, claiming the hereditary leaders, not elected band councilors had jurisdiction over their unceded traditional territory located outside federal reserves. A complicated situation was worsened by not only lack of consensus among the Indigenous people but by colliding priorities for the Trudeau Liberal government over climate change, energy projects and reconciliation with the First Nations. Middle grounds were highly elusive on all sides.
On March 1, at least some light appeared at the end of a complex tunnel when a proposed tentative arrangement was reached on land title rights in initial talks between hereditary leaders and ministers from the federal and British Columbia governments. Though the pipeline issue was not resolved, the arrangement allowed construction to resume pending further discussions. But on March 2, barricades by the Mohawk Nation in Kahnawake were still in place on a Canadian Pacific main line near Montreal used by eight freight trains daily.
Impact of Rail Blockades
At the end of February, the Port of Vancouver, Canada’s biggest bulk and container port handling 144 million metric tons in 2019, estimated that there were 52 ships at anchor, awaiting chiefly grain cargo delayed by the blockades. Moreover, some two dozen vessels cancelled calls due to the outbreak of coronavirus which has reduced demand in China for Canadian coal.At the time, CN management informed Canadian Transport Minister Marc Garneau that the railway had 184 trains parked in Canada and the United States. Not surprisingly, it could take weeks if not months for CN rail services to return to normal and for huge backlogs at Vancouver in particular to be eliminated.
Strong global demand for Canadian grain generated a new record of 28.3 million tons for grain, specialty crops and feed through the Port of Vancouver in 2019. Wheat alone climbed by nearly 16% to 11 million tons. The port saw trade with China, its leading partner, fall 14% as China cut wheat and canola shipments from Canada amidst diplomatic tensions. Robin Silvester, president and CEO of the Vancouver Port Authority, is hopeful that a recent mild “thawing” between the U.S. and China could benefit Canadian bulk exports to a certain degree.
Up till late February, grain shipments to Canadian ports had plunged by 1.2 million tons. “At some point and time, we might make this up, but it will be way into summer before we do,” suggested Mark Hemmes, president of Quorum Corp., which monitors grain movements.
The turmoil happened just when the outlook was improving for Canadian pork producers, who had been anticipating a recovery in demand from China after Beijing lifted a four-month suspension on all Canadian meat.
Like their grain counterparts, pork producers depend on rail containers to move meat out of storage facilities for shipments to ports. But with not enough trucks available as alternative modes, processors were running out of storage space to house the backlog.
Canada is the world’s biggest exporter of canola, with 90% of the crop exported. The Canadian Canola Growers Association does not foresee the impact of the rail disruption receding within a short time.
Assessing the key challenges in 2020, the Canadian Agri-food Trade Alliance (CAFTA) listed an unstable global environment, trade wars and ongoing geopolitical tensions, and non-tariff barriers. And it qualified the loss of functionality last December of the WTO’s Appellate Body as “perhaps the most devastating trade policy development in 2019. Given the vital role the dispute settlement system plays in ensuring the rights of Canadian exporters are protected, this attack on the WTO is yet another blow to the rules-based global trading system.”
Regarding various free trade agreements, CAFTA urges Canada’s parliament to swiftly complete the process of ratification of the Canada-US-Mexico free trade agreement (CUSMA), to expand the CPTPP accord to countries like South Korea, Thailand and Indonesia, and to address significant barriers in the Canada-European Union agreement (CETA) that prevent Canadian agri-food exporters from taking advantage of opportunities.
The Next Agricultural Revolution and Canada
Meanwhile, is Canada well-placed to be competitive in the next agricultural revolution?According to John Stackhouse, who pilots the research of the Royal Bank of Canada on major economic, social and environmental issues, there have been some promising initiatives like a protein supercluster based in Saskatoon but much needs to be done for Canada to attain the Farmer 4.0 model. “We’ll need a lot more agriculture technology, and a new generation of skills to harness tech platforms, artificial intelligence and advanced machines, from precision drones to robotic harvesters.”
courtesy of American Journal of Transportation
Our October 2024 Issue
In our October 2024 issue we feature FCC partnering with Glengarry Farm Finance, USDA $35 million in meat grants, Port worker strikes, PEI cattle producers bucking herd decline, Chicken farmers supplying food banks, and government funding to improve Animal Health and Welfare, and much more!