First George Morris Lecture Deals With TPP
By Larry Martin
Most Agri-Food Management Excellence (AME) alumni know that CTEAM and CFAME were started by the George Morris Centre and that the Centre no longer exists. When it closed, its Board transferred its remaining funds to the University of Guelph. One of the results is an annual George Morris lecture by a recognized scholar.
The first George Morris lecture was presented by Dr. Rick Barichello, a UBC economist whom I respect. He provided some early estimates of the potential impacts of the Trans Pacific Partnership Agreement (TPP) on four of Canada’s agricultural industries: wheat, beef, pork and dairy. His analysis is based on conservative assumptions and market parameters that are estimated from the past, when trade was not liberalized. History shows that, with liberalization, Canada makes adjustments that give more benefit than the initial analysis suggests.
Nonetheless, the numbers are significant. For wheat and beef, assuming Canada merely hangs onto its share of increased exports, the benefits are in the millions of dollars. These are modest increases in Canadian exports compared to recent history. For pork, there are potentially large improvements in access to markets in Japan and Vietnam. They would make the benefits much larger than wheat and beef, in the neighborhood of 25% of current exports, which are already significant.
The estimated effects on the dairy industry are insignificant because increased imports are well within the expected growth in domestic consumption. The real challenge facing the dairy industry is the mountain of surplus skim milk powder (which is of the industry’s own making because of its decisions a decade ago). The result of those decisions is that any exports from Canada are regarded as subsidized with the current pricing system.
Perhaps the most significant aspect of Barichello’s presentation is what would happen if Canada does not join TPP. The difference between joining and not joining is a loss of at least a half billion dollars per year, indicating the obvious for an economy based on trade.
This dovetails with other recent analyses that show Canada has a rapidly growing trade deficit in processed food products amounting to a whopping $9 billion annual greater imports than exports. Hand in hand with that is analysis showing that annual Canadian investment in food processing is less than annual depreciation – so, in a world of rapidly increasing food trade and food demand, Canada is exporting relatively less and disinvesting in the food processing industry. What’s wrong with this picture?
The most fundamental need is market access, which TPP provides. Many barriers will be removed. The next challenge is to create a vibrant and productive food industry that can take advantage of that access.