The introduction of the U.S. Farm Bill has offered little change for most farmers with the exception of dairy. Cool will not change and that leaves Canada with a few options — many of which will be discussed in this magazine. American farm insurance will be enhanced with US$10 billion going toward covering insurance deductibles.
Although the amount for food stamps has been reduced slightly over the next decade, the majority of the Farm Bill — 79.1 per cent or US$756 billion — will be allocated toward food stamps. Today, 46.5 million persons in the United States live below the poverty threshold of $23,050. This paints a picture of economic dependency within our major trading partner. Welfare, charity and aid have been proven to perpetuate dependencies. Food stamps may keep the nation fed but never motivated and current-day U.S. is hardly the model of economic efficiency.
Looking at the whole picture, I must question whether beef cattle don’t fall into the category of economic trade dependency with the United States. Canadians continue to insist on monotrade when it comes to commodities rather than view opportunity from a global platform. We have a trade deficit in processed food, specifically meats, and yet continue to hope to sell a live product to a country that picks up the benefit of the value add. The globe keeps spinning while our liners are faced due south.
In 2012, U.S. exports of agricultural products to Canada totalled US$20.6 billion. Canada is the second-largest U.S. export market in agriculture. Items destined for Canada by leading categories were fresh fruit ($1.8 billion), snack foods ($1.7 billion), red meats, fresh/chilled/frozen ($1.6 billion), fresh vegetables ($1.6 billion) and processed fruit and vegetables ($1.3 billion).
Products that moved from Canada into the U.S. were similar in trade value but differed by category. Agricultural products from Canada to the U.S. totalled $20.2 billion in 2012. Leading categories: snack foods (including chocolate), ($3.1 billion), other vegetable oils ($2.0 billion), red meats, fresh/chilled/frozen ($1.7 billion), live animals ($1.5 billion), and processed fruit and vegetables ($1.3 billion). The live beef cattle industry in Canada is nearly equally dependent on live trade as it is on red meat trade. When you look at it from the perspective of a trade profile, it is the only main trade category without a value-added component.
- More Straight from the Hip: Something that I said
The total of all exports from Canada to the U.S. is US$324.2 billion. Between agriculture, mining, fuels and manufacturing, Canada contributes 2.47 per cent of the total world exports. And although both the U.S. and Canada have a sticky dependency on each other, it is not until the Americans ignite true economic growth that we will ever see a Farm Bill that is about — farming.
Canada has one of the highest ratios of income equality in the world while the U.S. and Mexico are near the lowest. Our stable economy allows us to be leaders in trade and value-added marketing, allowing for an eventual trade surplus, even in red meats. And while our poverty rates continue to decline, we are for some obscure reason putting our eggs in the basket of a country whose poverty rates continue to increase.
We now know that aid does not help countries or the folks in it. Africa for example, is much poorer than it was 40 years ago. By nation though, where there has been economic reform and growth, the level of baseline poverty has dropped (in this example the base line is US$1.25 day). It may surprise you to know that in the United States, those food stamps and other subsidies are allocated to individuals who live on $2 per day or less if not for the intervention of government programs. At the beginning of 2011, 1.48 million U.S. households were surviving on $2 a day or less and those households cared for 2.8 million children equating to 20 per cent of all American households with children living in extreme poverty, according to a Harvard University report. It paints a grim future for robust trade of high-quality items such as Canadian beef.
In the cattle industry we have also seen consolidation of poverty which was borne by the cow-calf operator in 2003 because of our economic dependency on live trade. The opportunity to stretch trade and to work with other countries presented itself but truthfully Canada defaulted back to live trade with the U.S. Minister Ritz has stepped to the plate and started engaging countries in beef trade. Today, our feeding industry really feels the need for live trade to reign in the basis. Let us step back and look at it from a food-processing perspective and the potential for a created or eliminated basis.
Today, we have the opportunity to uproot the beef trade though the CETA and other proposed agreements. It would mean a focus on product differentiation to the buyer’s specifications and open the door once again to value-added product. The dollar is working in our favour from the perspective of a global trading platform. This may be the only way to keep our calves competitive at home while allowing for the feeding industry to prosper by value adding to grain and the packing industry to prosper by value adding to cattle. Canada need not have an economic dependency on live cattle. Climb down from viewing that southbound liner and spin the globe, opening up a world of possibility.
Brenda Schoepp is a Nuffield Scholar who travels extensively exploring agriculture and meeting the people, who feed, clothe and educate our world. A motivating speaker and mentor she works with young entrepreneurs across Canada and is the founder of Women in Search of Excellence. She can be contacted through her website www.brendaschoepp.com. All rights reserved. Brenda Schoepp 2014