2014 a year to remember in agriculture

Agriculture yet again had to confront a number of controversies, from rail shipments to trade agreements

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CALGARY, AB, Jan 29, 2015/ Troy Media/ – There is never a shortage of issues, events and controversies confronting the agriculture industry each year – and 2014 was no exception. But no matter how dire, what affects agriculture rarely makes it into the consciousness of city folks as long as cheap food continues to appear in grocery stores.

Last year started out with a grain transportation crisis thanks to a bumper crop the previous fall that saw bins bursting with cereals, oilseeds and special crops. The rail transportation system, you see, is designed to ship only average crop yields and only expands incrementally as business expands. It can’t handle a sudden surge from a bumper crop. At the same time, severe weather reduced train numbers through the Rockies and increased oil shipments took up a lot of the railway companies’ attention.

Beware politicians meddling in agriculture

Rail companies predicted that better weather would resolve the backlog, which is what essentially happened. But that didn’t stop voter-conscious politicians from beating their chests and enacting draconian legislation to expedite grain shipping. In the end everyone claimed victory and the issue will naturally be forgotten until the next bumper crop shipping crisis.

Last year also saw the federal government crow about completing the European Union/Canada free trade agreement. That agreement is supposed to open new markets for Canadian products and usher in a new era of unfettered trade with the EU. Most agriculture commodity organizations went along with the government party line with the usual boosterism, but the reality is a bit different.

For one thing, it may take the EU, with its 28 disparate members, a number of years to approve the principles of the agreement. Then there will be years of wrangling about the details: the EU will still not allow the importation of genetically-enhanced commodities, hormone added meats and it has a host of other non-tariff barriers.

Agricultural controversies are like the weather: always changing

The biggest reality check, however, is that the EU market is already well served by agricultural products from competing countries like the U.S., Australia, and New Zealand. They will all want their own trade deals and will not let Canada steal their market share. While there may be some increase in agriculture trade to the EU, it will only occur years down the road, hard fought for and probably modest in size. But it was all a good news story at least on the surface.

In the livestock sector, the World Trade Organization (WTO) for the third time ruled in favour of Canada in its long battle against discriminatory American Country of Origin (COOL) legislation. While the decision was appealed, it puts Canada closer to inflicting retaliatory punitive tariffs against American imports to compensate for the damages done by COOL to the livestock industry. The federal Agriculture Minister has engaged in much sabre rattling over the issue but it is not clear whether Canada has the courage to apply punitive tariffs to its largest trading partner. Canada tends to be a boy scout on trade issues and is usually loathe to act against the principles of the North American Free Trade Agreement. Much will depend on what Mexico will do, as it is the co-complainant with Canada at the WTO tribunal.

Interestingly, an unrelated event could push Canada to actually implement the retaliatory tariffs. Canada could go ahead if U.S. President Barack Obama rejects the Keystone pipeline – a sort of “tit for tat” retaliatory response. However, a wide-open American cattle market could have a severe economic impact on the two giant meat processors in Alberta if Canadian cattle move in very large numbers across the border.

Wild world of agriculture

It’s one of those “be careful what you wish for” situations. Besides with record high cattle prices, COOL isn’t as critical now as it was a couple of years ago. But all in all, it’s still an important issue that could be settled in 2015 – maybe.

2014 also saw a significant swing in farm commodity prices between crops and livestock. The year before saw cereals and oilseeds reach record high prices, but they then moderated in 2014. But last year then saw cattle prices reach sky high levels and hog prices nicely recovering. The question is – will livestock prices now decrease in 2015? I guess it’s all part of the wild world of agriculture. Happy New Year.

Will Verboven covers rural issues for Troy Media.

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