Trade, especially when it comes to agricultural commodities, generally works well when left to the pressures of supply and demand.
There are of course exceptions, those instances when people in a particular country go to bed hungry because the country simply cannot afford to buy food from a foreign country. But those instances are an issue of world wealth distribution, something no one seems willing to discuss. That of course makes some sense inasmuch as the wealthy have no reason to change the system and the hungry are more focused on finding their next meal rather than changing the system.
But, in general, supply and demand economics works well for agriculture.
Unfortunately, trade has become the favoured way by countries to impose their will upon other countries.
Canadian farmers are seeing that firsthand in terms of canola trade with China. China has blocked imports of Canadian canola by both Richardson International and Viterra after Canada detained a Huawei executive under an extradition treaty with the United States.
The clearly political move by China to put pressure on the Canadian government by blocking trade in a key commodity certainly has many producers wondering about spring planting decisions, and the issue has become a political football here in Canada as well with a federal election this fall.
In terms of impact it was a well-placed volley by the Chinese, coming ahead of seeding, and in the midst of our federal parties gearing up for an election.
That is of course why trade has been used by various governments for years. We are not pleased with what China is doing, but non-tariff barriers to trade are hardly a new tool discovered by the Chinese.
The United States has worked diligently to keep the economy of Cuba stunted by banning American companies trading with the island nation, and let’s not forget the efforts the Canadian beef industry undertook as the U.S. looked to impose Country of Origin Labelling (COOL.)
Putting barriers to trade in place impacts sales, which in turn has commodity organizations and key company officials putting pressure on government to address the situation.
At the same time primary producers and frontline workers feel the pressure as well.
The situation with China at present as stated is not unique, but that does not make it any less unacceptable.
Unfortunately, how to address such disputes in an expedient fashion, which would normalize trade is not easily achieved. Such situations have a tendency to worsen as governments dig in to present a public image of strength against what is essentially extortion by another country.
How this situation plays out will be something Canadian farmers will be watching with interest as seeding draws ever closer for 2019.