日志
TPP will kill Poultry Industry of Canada
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TPP will kill Poultry Industry of Canada
Frank Li Jan. 19, 2014 in Waterloo Canada
http://frank-waterloo.blog.163.com/blog/static/205239029201401991428992/
TPP - the new free trade agreement will cover Supply Management - the protection umbrella for Canadian dairy and poultry industry, the cheaper foreign products will flood the market of Canada.
--- Frank Li Feb. 05, 2014 in Waterloo Canada
Recently, in April 10, 2014, a report that big gaps remain between U.S. and Japan after two days of top-level talks, the negotiators on both sides said on Thursday.
The United States wants Japan to open its rice, beef and pork, dairy and sugar sectors - politically powerful sectors that Japan's Prime Minister Shinzo Abe has vowed to defend.
A Japanese government official told Reuters this week that lowering farm tariffs was possible but scrapping them entirely - the goal of the TPP framework - was not.
Obviously, that is not including the poultry products. Once the TPP comes into effect, it will kill poultry industry of Canada, and the time is in sight.
This result is consistent with my below judgment in the Jan. 19, 2014, which is nearly 3 months already.
--- Frank Li April 10, 2014 in Waterloo Canada
Contents
2. The initiation of the TPP threatening Supply Management
3. My Survey on Poultry products
4. The Judgment on the results of TPP talks
4.1. Remain tariffs for certain products
4.2. Complete elimination of tariffs by Japan quitting TPP
5. Suggestion
5.1. To forge high quality Agriculture
TPP–Trans-Pacific Partnership is a trade agreement among the United States, Japan, Canada, totally 12 countries with 39.0% world GDP, 11.3% world population and 25.8% world trade in 2012. The goal is complete elimination of tariffs and non-tariffs barriers, which originally targeted to reach an agreement by the end of 2013, but failed. It probably reaches a deal in the mid-2014.
Supply Management - a protection policy for dairy and poultry industry of Canada with high tariffs control the imports and quotas control domestic production to ensure farmers to live a decent life with the profit from higher selling price, which was first proposed in 1948 by Fred Beeson, the editor of Canada Poultryman magazine.
However, the easy life of Canadian farmers under the protection umbrella will soon be over with the quick developemnt of free trade globalization.
2. The initiation of the TPP threatening Supply Management
Nov.13, 2011, the report <Canada to strike new trans-Pacific free trade deal: Harper> said that:
At the APEC summit in Honolulu, "Prime Minister Stephen Harper announced Canada will join the emerging Trans-Pacific Partnership trade group (TPP) and suggested that Canada’s farm Supply Management system could be on the table for negotiation."
That Harper puts Supply Management on the table for negotiation is not a sacrificial offering willingly, but due to the irreconcilable pressure of "A handful of countries in the TPP negotiations — including possibly New Zealand and the United States — have been resisting Canada’s entry into the group because of the Canadian supply management system that protects fewer than 20,000 dairy and poultry farmers behind a tariff wall and hands them production quotas."
People may ask that, whether Canada should quit from TPP talks as that of a number of experts, farmers and farmers' organization appealed.
Nov. 14, 2011, the article <A trade deal that Stephen Harper can’t refuse> has given a clear reply：
“There will be pressure on Canada to phase out protection of the dairy and poultry industries over time and Mr. Harper’s decision to participate in the TPP talks may signal the slow death of supply management, regardless of the assurances to the contrary given in the House of Commons.”
“A free trade deal that includes the NAFTA countries and Japan is a glittering prize worth potentially billions of dollars, not least for Canada’s beef producers. The country’s economy cannot be held to ransom by 12,000 dairy farmers.”
Obviously, in comparison with some farmers' losses, to join the TPP, the gains from other industries will be much more. This is the most attractive profitable transaction.
Since that Canada joins the TPP is a foregone conclusion, so, at the time that Stephen Harper announced that Canada joins the TPP, the Supply Management has been put in the state of uncertainty. Also, that is a sign that dairy and poultry industry of Canada has been entering in the stage of uncertainty with a Gloomy Outlook.
3. My Survey on Poultry products
Facing such a future, since then, the date of Nov. 13, 2011, those entrepreneurs who have strategic vision, in the dairy and poultry industry of Canada, would begin to prepare for the Era of post-Supply Management, and should certainly adjust the development strategy, especially to stop the expansion with the production capacity in Canada.
I have been concerning the poultry industry of Canada, due to I am working in Sunrise Farms - a processing enterprise of the Chicken products.
In 2012, I once seared the retail prices of the Chicken Breast Boneless of the United States & Canada, the results as follow:
Sep. 2012. U.S. http://www.bls.gov/ro3/apmw.htm,
$06.87/Kg.
Sep. 2012. Canada: Agriculture and Agri-Food Canada
$12.05/Kg.
Oct. 31, 2012. Zehrs, Conestoga Mall, Waterloo, On. Ca.
$09.92/Kg.
Nov. 01, 2012. Sobeys, 94 Bridgeport, RD, Waterloo, On. Ca.
$22.02/Kg.
Those data are too discrete to make a clear sense. For getting the latest reliable information, recetly, I called my friend who lives in Vancouver, B.C., Canada, to request him to pay attention for the price of milk and Chicken when driving to the United States for shopping.
Today, I got answer that the price for the milk is as cheaper as half than that of in Canada, and the price for the whole chicken is about $5/each, which is about $8/each in Canada.
Although, there may be the factors of currency exchange rate and retail gross margin between U.S. and Canada, however, the big gap of the price difference still surprised me. It made me immediately thought of that TPP will kill the dairy and poultry industry of Canada.
This is because that price gap is the result of the control of the Supply Management. Now, the <Supply Management will soon be covered by TPP>, the protection barrier for Canadian dairy and poultry industry will be disabled, the cheaper foreign products will flood the market of Canada, especially the United States - our big neighbor that has great production capacity in dairy and poultry.
This topic inspired by the result of the phone call.
Besides the TPP, that WTO - World Trade Organization, <Canada-European Union Free Trade Agreement (CETA)> and <Transatlantic Trade and Investment Partnership - TTIP - U.S. - EU> are all taking the elimination of agricultural subsidies and tariffs as a bargaining chip in the bickering game.
In view of those absurd behaviors in the free trade talks, in Dec. 26, 2013, I once wrote an article <Free Trade is damaging Agriculture>.
4. The Judgment on the results of TPP talks
Now, I will take TPP as example to try to discuss the impact on the Supply Management, especially on the poultry industry of Canada.
If TPP abolishes all of the tariffs, the Supply Management would be invalidated totally, there nothing is worth to say today. Thanks Japan for stirring the variable on TPP negotiations to bring a glimmer of hope for Canadian farmers.
4.1. Remain tariffs for certain products
Dec. 18, 2013, in the article <Japan may push TPP talks on the edge of more uncertainty>, I once said that:
"In the treatment of the China's East China Sea Air Defense Identification Zone, the United States unilaterally asks their Civil Aviation Companies to provide China with Flight Plan without discuss or even without inform with Japan in advance. Thus, the Japanese Medias comments that U.S. betrayed Japan. Later, in just the day before one day that Joe Biden Visits Japan, a Japanese official announced that, in the TPP negotiations, on the agricultural issues, Japan will be with no any concessions.”
As the second-large economy in the 12 member countries of the TPP, Japan has strong right for speaking and to influence the outcomes of the negotiations.
However, we must be clear that, even if the Supply Management is not completely abolished, but some of the details may be changed largely, well, what the changes would be under the new regulations of the TPP?
Jan. 17, 2012, the article <Can Japanese Farming Survive Liberalization?> said that the tariff on powdered milk is 218% in Japan currently; it seems good news for the dairy farmers of Canada by sharing the tariff protection with farmers of Japan together. Although, that is too bad for Canadians.
Now let us see how about the chicken products.
It is strange that the reports on the TPP negotiations, mostly involving milk products; I have not seen the reports on the chicken products.
Anyway, we need to find a reference.
In 6 years ago, April 4, 2007, the article <Japan, Thailand Ink FTA> said that "On farm trade, Japan will cut tariffs on Thai boneless chicken to 8.5 percent from the current 11.9 percent over five years and halve tariffs on cooked chicken from the current 6.0 percent during the same period.
Now, the related tariffs should be 8.5% and 3.0%, they seem in the normal level, and very likely to be canceled entirely to be taken as compromise as the exchanges for achieving some more important goals.
Jul. 2, 2013, the report <Abe’s Third Arrow Seen Striking Tariffs From Pork to Beef> said that “Some members of Abe’s own party, backed by farming lobby groups, have asked the government to protect rice, wheat, sugar, beef, pork and dairy products or exit the talks.” In which is not including Chicken products.
Such information is a bad sign for the poultry industry of Canada, since it will decisively affect the outcomes of the negotiations on TPP.
Despite there many uncertainties still exist, but, it is clear that, after the entry into force of the TPP, the tariffs protection of chicken products of Canada will be invalidated or nearly invalidated naturally. Then the cheaper chicken products will flood the market of Canada form the countries of the United States, EU, Australia and so on.
There is a potential powerful competitor outside the list of free trade countries or potential into the table, it is Brazil. I have read reports, in recent years, Brazil's agricultural exports, especially chicken products, in rapid growing.
From the price gap of whole chicken between the united Sates and Canada with the consideration of production capacity of the U.S. Chicken farmers, it is clear that only the United States - one country is enough to destroy the Poultry Industry of Canada.
4.2. Complete elimination of tariffs by Japan quitting TPP
Jan 26, 2014, I edited some translations from the reports in Mandarin as <2014 The Latest Development of the TPP Negotiations> with that: Jan. 25, 2014, in Davos, Japan and the United States held ministerial-level TPP talks but failed.
The talks proposed by Japan with the offer to abolish the tariffs on five agricultural products - processed rice, Oxtongues and others, thus, the proportion of zero-tariffs items have increased to about 95%. it shows the full sincere of Japan.
But the United States continued to urge Japan revoke tariffs on all agricultural products, which made Japanese feel embarrassed.
4.2.1. The elimination of tariffs on certain agricultural products will cause millions of Japanese farmers jobless; it is the most severe social issue that can not simply be measured by economic loss.
Aug. 02, 2012, <Japan Wants Free Trade. Its Farmers Don't> reports that "the number of Japanese farmers, full-time and part-time, is 2.5 million—pretty large for a country that is not a major exporter of farm products."
"One reason is the ferocious opposition of the farm lobby, which benefits from tariffs on imported rice of 341 yen ($4.35) per kilogram. Under the TPP agreement as it is envisioned, those tariffs would disappear. Japan’s farms, often only an acre or two in size, would then be overwhelmed by the super-efficient, large-scale agribusinesses of the U.S., New Zealand, Australia, and Canada."
Jul 2, 2013, <Abe's Third Arrow Seen Striking Tariffs From Pork to Beef> reports that "Japan’s tariffs on imports of pork and beef are 4.3 percent and 38.5 percent, respectively, compared with 778 percent on rice, the nation’s staple. "
If the TPP negotiations continues emphasis on the elimination of tariffs of agriculture, Japan may likely quit negotiations, because that millions of jobless farmers will capsize Japan.
4.2.2. Depreciation of the yen is the primary means of Japanese Prime Minister Abe for stimulating the Japanese economy; it certainly will not easily give up. According to the articles, that currency manipulation is the main barrier in TPP talks:
Dec.10, 2013, <Fast-track authority, currency manipulation remain top trade issues>.
Dec.23, 2012, <Japan's Abe Calls for Weaker Yen>.
Nov.25, 2013, <Yen Depreciates to Six-Month Low on Iran Nuclear Accord>.
Sep.27, 2013, Canada <Leave currency manipulation out of trade talks, Ed Fast urges>.
If the TPP negotiations continue emphasis on the elimination of currency manipulation, Japan may likely quit negotiations, because that way would castrate Abe to make him lose the function to invigorate the economy of Japan.
Once Japan quits TPP talks, then the complete elimination of the tariffs will easily come true. Then the invalidation of the Supply Management will come true.
Then, that TPP Killing the Poultry Industry of Canada will come true.
As the second large economy in TPP, Japan's quit is impossible. The United States would ultimately compromise with allowing Japan to retain rice tariffs and to continue currency manipulation.
However, no matter what happens, there will be no help for chicken products.
Then, what is the way out for Chicken farmers of Canada?
5. Suggestion
Jan, 17 2014, in the article <The Oncoming Energy Crisis of Canada>, after discussing that economic pillar of Canada - oil and gas exports is facing a bottleneck in the global market, and the prospect is gloomy with irreversible, I have made comment to forge a solid long-term survival basis:
5.1. To forge high quality Agriculture
"To supply high quality foods to emerging economy countries where the increasing affluent population increases the demand for high quality foods."
"Due to the high-latitude geographical factor, Canada is lack of sunlight energy, the agricultural products seem uncompetitive. Therefore, to develop as high quality foods supplier is the best way, and other countries can not competing with due to without the advantage as that of Canada."
To full play our strengths with avoiding our weaknesses.
