The average age of the farmer in Japan is now 62, and very few farms are being started.
This has left land abandoned or underutilized, with Japanese farmers now supplying just 39 per cent of the nation’s caloric intake (down from 73 per cent in 1965), which is a measure of self-sufficiency.
Japan is in the race to be Canada’s second-largest trading partner for agriculture and food, buying $4.2 billion in goods from us in 2012, which is nearly double what it was at the start of the century. Canada’s trade profile with Japan is varied, but is heavy on oilseeds, cereals and meat. In the area of beef, trade with Japan is stagnant because competitors are aggressively selling into the market (although last year, beef sales rose 19 per cent by volume).
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Trade with South Korea is expected to be a growth area, thanks to a trade agreement that will eliminate tariff rates of 40 per cent over the next 15 years. (Offal will go from 18 per cent to zero in an 11-step process that will take at least that many years.) That’s not a fast pace and is expected to benefit the next generation of Canadian producers rather than the current one.
- More from the Alberta Farmer Express: Trade deal reopens door to Korea
South Korea went from one of Canada’s largest beef markets prior to 2003 to a small bit of trade worth $7.8 million in 2013 at a 40 per cent tariff rate. Although beef industry negotiators predict that annual trade to Korea will reach $10 million, they are reluctant to give it a timeline.
What about the European Union?
The Comprehensive Economic and Trade Agreement has not been completed, but it’s estimated it will result in EU eventually taking an additional 500,000 head of cattle. We are seeing the speculative response to this now as Canadian inventory of beef cows is 1.4 million head less than it was in 2003. Predictions it will take a couple of years to implement this trade deal are kind, but this is an important agreement that targets a huge population.
- More from the Alberta Farmer Express: Complete Canada/EU trade pact text finalized
I’ve often talked about China in this column, but the nation remains a bit of a mystery because of its high debt (estimated at $23.3 trillion), sluggish economy, and because consumers are backing off in their purchase of domestic food and beverage (which is often a precursor to a slide in other domestic spending). Agriculture Minister Gerry Ritz moved the trade file with China forward this June with an agreement to allow bone-in beef under 30 months and live animal shipments to China. China has raced past Japan, once Canada’s premier destination for agri-food products, and bought $5.6 billion of Canadian agricultural exports in 2013. The latest deal has the potential for $240 million worth of annual beef sales.
Earlier in the year an agreement was reached with Taiwan to allow for Canadian beef under 30 months of age. This market also has huge potential because the nation of 24 million people imports 94 per cent of is beef. Canada continues to ship 10 per cent of beef exports to Mexico, which is expected to be surpassed by shipments to Hong Kong and Macau.
Although Canada ships beef to 70 different markets, 73 per cent of its beef and live cattle go to the United States (of which 77 per cent comes from Alberta). Over a million head of live cattle went to the U.S. in 2013, severely shorting Canadian markets when beef cow inventories remained depleted.
With such an open slate of candidates, Canadian beef can go anywhere.
Most certainly Russia has been in the game and the collection of small deals by Minister Ritz has been especially important to the industry. It looks like China is set to dominate, but with the shifts in economies anything is possible.
As a nation, we also have to be aware that our trade deficit in agri-food is growing, meaning we import more than we export. This is especially true in processed meats. So “trade” may offer an opportunity to grow in country as well as agreements between processors, service providers, producers and infrastructures are sought.
At the very least, it is imperative that we maintain self-sufficiency so we do not become a mirror image of Japan – unable to meet the food needs of the nation. Where trade will grow will depend largely on the speed in which trade agreements are implemented and the number of years that it takes for import tariffs to be reduced.
This article first appeared in the August 4, 2014 issue of the Alberta Farmer Express
