Farmers are continually faced with decisions that have implications months or even years out. Some decisions are made with a high level of predictability, while others have less certainty. When predictability is less certain, farmers often take steps to reduce those risks – for example, purchasing crop insurance to curtail production risk or using futures to manage price risk.
But how often do farmers consider the predictability of access to markets? While usually stable, market access can change and, when it does, there can be significant ramifications along the entire supply chain. For a crop like canola, where 90 per cent of the crop is exported, having a level of certainty about market access is critical.
“Unstable markets mean price volatility and uncertain demand. For growers, they’re planning a long way in advance for the crop that they grow, which means that they’re making decisions months in advance for what the potential returns will be,” says Brian Innes, vice president of government relations at the Canola Council of Canada.“If you’re on the seed development side, you’re making investments years in advance.”
Farmers can’t buy market access insurance, but collectively, the canola industry and the Canadian government are working to minimize market access risk. They’re doing this through individual country-to-country negotiations (as in the case of China and blackleg),through regional trade agreements such as the Trans-Pacific Partnership, and through international MRLs being established. The collective goal is to build trade rules based on scientific evidence, which creates more stable and predictable markets.
“Without facts, regulatory approaches can be used as an artificial trade barrier, but if you apply scientific rigour, legitimate science-based concerns regarding plant health can be resolved.”
Scientific evidence deals with facts. Having science-based rules for trade puts facts at the centre of the conversation – making it easier for countries to study, discuss and resolve trade issues. Limiting trade regulations to those justified by scientific evidence can also prevent costly rules from being imposed.
“Requiring trade regulations to be based on science means that we can avoid having arbitrary and costly measures imposed on the Canadian industry,” says Innes.
The World Trade Organization (WTO) has clear science-based rules regarding animal and plant health, commonly referred to as sanitary and phytosanitary (SPS) measures. To promote fair and transparent trade rules, governments from member countries of the WTO must follow the SPS Agreement. The agreement states that “members shall ensure that any sanitary or phytosanitary measure is applied only to the extent necessary to protect human, animal or plant life or health, is based on scientific principles and is not maintained without sufficient scientific evidence.”
The recent trade dispute between Canada and China highlights the importance of science-based trade rules. At the centre of the dispute was China’s intent to lower the dockage levels of Canadian canola from 2.5 per cent to one per cent to protect China’s domestic crop from blackleg.
Rick White, chief executive officer of the Canadian Canola Growers Association, says there wasn’t scientific justification for moving to the lower dockage standard. “The canola industry completed joint studies with China and the evidence didn’t justify moving down to one percent dockage.”
“Without facts, regulatory approaches can be used as an artificial trade barrier,” says White, “but if you apply scientific rigour, legitimate science-based concerns regarding plant health can be resolved.”
While countries have the ability to impose restrictions based on legitimate reasons to protect plant, animal and human health, Innes says all countries in the WTO have agreed that governments should only put restrictions in place when they are needed. Other issues should be left to the commercial terms of trade negotiated between the customer and the supplier.
“For Canada, a country that is very dependent on its trade and exports, science-based regulations are very important,” says Frederic Seppey, chief agricultural negotiator for Agriculture and Agri-Food Canada (AAFC).
“AAFC continues to press Canada’s trading partners for the implementation of science-based, transparent and predictable regulatory frameworks to facilitate the trade of agriculture and agri-food products, so as to allow our producers and exporters access to global markets,” says Seppey. “AAFC also maintains a dynamic dialogue with Canada’s grains and oilseeds industry to coordinate our approaches to engagement with international markets.”
For White, science-based regulations level the playing field for all. “Sticking to the science is the predictable safe ground; there are no ulterior motives,” he says. “Science withstands the test of time and it’s the right way to increase predictability in export demand.”