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We need a shift when it comes to international trade

The disappointment in the financial performance of China is almost palatable in the West. With Chinese banks badly indebted and infrastructure in disarray, the nearly religious adoration that Canada unabashedly displayed in every public and policy corner has somewhat quieted.

Volatility in the world markets driven by the widespread underlying dissolving of currency value and stock markets plunges has everyone from the poverty stricken to the politician in a state of worry. If Canada cannot break into the vast retail empire of China, then where do we go next?

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The beef industry firmly believes that product can and will go that direction. Surely there is hope even as China remains on a somewhat slower growth trajectory and is now considered one of the most contaminated nations on earth. As a friend of mine who spends one-third of his working hours in China said, “they are trying to get it done yesterday, and without reservation, completely destroying their country.” Long story short, the Chinese would rather eat our food than theirs.

But, doing business in China isn’t easy. From a global perspective it is much easier to do business in Canada, which the Economist magazine rates as the sixth-best business-friendly nation in the world. China was rated at 50th with its centralized control, lack of infrastructure, indebted financial sector and history of hoarding. Some countries are getting bored with the waiting and are on to the next best thing.

So attractive is Canadian soil and the business of food, tax incentives and guarantees that investors now include such precious unknowns in agriculture as pension funds along with newly minted foreign investment from the Chinese and many others.

While the Chinese were busy buying land and businesses in Canada, we looked further afield to sell beef or cattle to places like Russia. For a long time the beef industry held high hopes for Russia and in many ways were successful. The current political aggression has slammed the ruble and in truth, farming really did not grow in Russia even though the demand for food did. In the last two decades more than one million acres of arable land have been abandoned and the cattle herd has been reduced by two-thirds. What once was a destination for beef and other products is now a vast steppe of wary souls and a collapsing economy (oil is one-half of Russia’s export activity and 40 per cent of the federal budget).

Globalism is a moving target and our focus, like much of the first world, is moving to India. Both China and India have vast populations, an emerging middle class and a nearly identical growth rate in GDP in 2014 with China at seven per cent and India at 6.7 per cent. India is rated as the 48th best place in which to do business.

For specific technologies India excels. We have many businesses in Canada, such as in grain handling, that manufacture their products in India and the folks whom I visited there were happy with their dealings. While in India, I saw numerous Canadian companies, especially ones that dealt in metals.

But food is another story. India is the world’s largest exporter of beef. They are a force when it comes to meat and dairy products so I see vast potential to sell dairy genetics and other goods, but it is the access to a huge working demographic that is of interest to Canadian companies.

The Economist rating for business environment evaluates a country’s economy, the political environment, the spirit of free enterprise, attraction for investment, trade, low taxes and an infrastructure that works. (Unfortunately, it has no evaluation of human rights.)

What I know for sure from my travels is that the critical missing piece when it comes to trading partners is infrastructure. The Shanghai Wholesale Wet Market with its massive trade in beef, pork and lamb will not be replaced any time soon by an out-of-culture eating experience that involves intensive food safety and massive refrigeration, nor will the thousands of wet markets in India.

More concerning is the fact that we seem to be looking in a mirror. Just as we depend on wheat exports yet we deal with the largest wheat-producing nations in the world which are China and India. In filling the queue and cheerfully calling out “next please” what will our parameters of trade look like in a more liberalized trade environment?

There most certainly will not be stability when it comes to commodities. We have only to look at what has happened in corn for proof of that. Recently we have seen that without a value-based system beef remains a victim of market volatility. Yet there remain many potential routes available with new value-added products, hand-to-hand deals and a shift from the status quo. That may mean accepting new dance partners and with Canada’s GDP growth at 2.8 per cent — that is exactly what we need.

This article was originally published as ‘Next please’ in the March 2015 issue of Canadian Cattlemen

Brenda Schoepp is an inspiring speaker, consultant and mentor who works with young entrepreneurs across Canada and around the world. She can be contacted through her website brendaschoepp.com. All rights reserved. Brenda Schoepp 2015

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Contact Brenda through her website: www.brendaschoepp.com. All Rights Reserved. Brenda Schoepp 2018

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