Canadian commodity groups say new free trade deal will boost market opportunities

Tuesday, March 11, 2014

by MATT MCINTOSH

While Canada’s automotive sector might not be happy, representatives from the government and several agricultural commodity organizations say that a Canada-South Korea free trade agreement would be very good for Canadian farmers.

The trade agreement, which was announced today but has yet to be officially ratified, includes provisions that remove tariffs on many different products; chief amoung them are tariffs on Canadian agricultural commodities and Korean-made cars.

“Today’s historic agreement will put producers on a level playing field with South Korea’s current free trade agreement partners by eliminating tariffs on 87 per cent of agricultural tariff lines,” says Gerry Ritz, Canada’s Minister of Agriculture, in a prepared email statement sent by his press secretary.

“This duty-free access,” he adds, “will give agricultural products like pork, soybeans, wine and beef preferential access to the lucrative South Korean market.”

Gary Stordy, manager of communications for the Canadian Pork Council, says South Korea is one of the top five export markets for Canadian pork. He notes the agreement will help Canada regain some of the market share previously lost to the United States, which forged a free trade agreement with South Korea two years ago, as well as to Chile and the European Union, each of which has had a free trade agreement with South Korea for several years.

“Canada exported $223 million worth of pork to Korea in 2011, $129 million in 2012, and $76 million in 2013,” says Stordy. “We’ve been losing out market share, but that’s what happens when you don’t have a trade agreement and your competitors do.”

Stordy says the Canadian Pork Council and the pork industry in general have been encouraging the government to finalize an agreement with South Korea for some time.

The Canadian Cattlemen’s Association is also very supportive of the government’s move. In a March 11 press release, the Association cites a 40 per cent South Korean tariff on fresh and frozen beef and an 18 per cent tariff on offals as a major reason why Canadian beef exports to Korea dropped to $7.8 million in 2013 from $40 million in 2002.

“With this agreement Canada can export about 17,000 tonnes of beef to Korea tariff free in the first year, says Matt Bowman, vice-president of Beef Farmers of Ontario. “We exported barely over 1,000 tonnes (to South Korea) in 2013, so we have a long way to go.”

According to the Canadian Cattlemen’s Association’s press release, the amount of Canadian beef allowed into Korea tariff free will increase by three per cent each year to a maximum of 26,877 tonnes. In addition, the tariffs on frozen and fresh beef will be dropped by 2.6 per cent every year for 15 years. The tariffs on offals will drop by 1.7 per cent per year for 11 years.

Grain Farmers of Ontario also offer their support for the trade deal; their press release says the new agreement will “create market opportunities for Ontario’s corn, soybean, and wheat farmers that were previously unattainable.” The organization says Canada exported 17,000 metric tonnes of soybeans to South Korea in 2013, but, since 17,000 metric tonnes is only four per cent of South Korea’s total imports, Canadian farmers have an opportunity to significantly increase their market share.

UPDATE: Tues. March 11 4:45 p.m: And don’t forget the opportunities the new free trade agreement presents for Ontario’s edible bean growers.

In a news release issued today, the Ontario Bean Growers notes that the new free trade agreement presents a growth opportunity, particularly for Ontario-grown adzuki beans. South Korea annually imports 52,000 tonnes of dry beans, half of which are adzuki beans and 17,000 are navy and kidney beans.

According to the news release, farmers in Ontario grew 13,500 acres of adzuki beans in 2013, the majority of which were sold to buyers in Japan. “In the context of the other field crops grown in Ontario, these numbers may appear small, but they are significant because this is a very profitable cropping option,” the press release states.

“We are excited about the opportunity this trade agreement will create for expanded bean markets,” says Steve Twynstra, the organization’s chair, in the news release. End of update

The Canadian Cattlemen’s Association, Beef Farmers of Ontario, and Grain Farmers of Ontario are all encouraging the federal government to promptly ratify the trade agreement.

In a statement on the Ontario government’s website, Eric Hoskins, Ontario’s minister of economic development, trade, and employment, said he welcomes the opportunities the trade agreement poses for the agricultural sector. However, he says the trade deal is still not good news for Ontario’s auto manufacturers. BF