CETA opens the door to new relationships

Glacier FarmMedia Special Report: Once the deal is ratified the real market development work begins

Glacier FarmMedia assembled a team of reporters from its network of publications, which includes the Manitoba Co-operator, to examine the implications of Canada’s new trade deal with the European Union on Canadian agriculture and food processing. In coming weeks, watch for a series of articles that zero in on the challenge Canadian agriculture faces turning this new market potential to market share.

It’s one thing for governments to ink a deal.

It’s another to fly across the ocean and shake hands, hang out and form real human relationships.

However, the latter is what it takes to build new customers and markets, say some with much experience in Canada’s international grain business.

“There’s nothing like getting on an airplane,” said Brian Hayward, a board member with export-oriented companies and the former chief executive officer of Agricore United.

“You’ve got to arrange and make some meetings. Go to trade shows. It’s boots on the ground time. You’ve got to go there and tell people what you have.”

The pending ratification of the Canada-European Union free trade deal (CETA) would give Canadian crop, meat and food exporters better access to the huge European market in most commodities. Some products will have free access, and others will have more tariff-free access or lower tariffs and impediments than today.

However, new business doesn’t just develop by creating the conditions that allow it to grow.

New business arises from fresh, deep and trusting human relationships, and those require hard work to cultivate, said Rex Newkirk, who for years worked with overseas buyers of Canadian crops while a senior official at the Canadian International Grains Institute.

Trade barriers

It’s especially true when trade barriers have long stopped buyers and sellers from considering doing business together.

“Trade is really based on relationships, so when there is a trade-distorting issue out there, then you don’t build those relationships with customers,” said Newkirk, who recently became a University of Saskatchewan professor and chair of its feed-processing technology program.

“It’s about making sure that relationship between buyer and seller comes through, and it’s really on the onus of the seller to instigate that. The key is that the buyers get to trust the sellers, that the sellers get a good awareness of what the buyers’ needs are.”

A significant grain trade already exists between Canada and the EU. High-protein wheat from Canada is a staple commodity with some European high-quality bread bakers, Canadian durum forms a major part of the Italian pasta industry and other crops regularly flow to longtime European buyers.

Hayward and Newkirk said the companies buying and selling those crops already know each other well and probably won’t see much change with CETA, even if it improves their businesses.

However, the new opportunities available with CETA should make new sales of crops, ingredients and foods possible if hopeful exporters are willing to do the work.

That’s where the challenge lies, Newkirk said.

Commercial grain and food companies aren’t always willing to lift their heads from the daily hurly-burly trading grain to begin cultivating relationships that might yield new business in the future.

“Relationships take some time and they take money, and for everybody in the trading industry, they’re trying to move as much stuff as they can, as quickly as they can,” said Newkirk.

“There needs to be a way to encourage those buyers and sellers to get to know each other to get some trust there.”

Market development

That’s where organizations such as Cigi, endeavours such as Canada’s annual new crop missions and services such as Canadian embassies’ trade officers and provincial trade offices can help connect hopeful exporters with potential buyers.

“I’d be looking to Canada’s trade commissioners for connections,” said Hayward.

“That’s why we have embassies.”

He said Canadian exporters need to be culturally sensitive and understand that there is no one European culture or identity. The EU comprises more than two dozen countries, and each country, region, and language area has its own culture.

They need to be approached differently and with an open mind.

“We have a way of doing things here that is different from how the Germans would do it, or the French, or the Americans,” said Hayward.

For example, Newkirk said building a relationship in Mediterranean Europe is essential before any business deal can be pondered.

On the other hand, harder-nosed business aspects such as price, quality and promises of service can be what gets northern European and Canadian business people talking and pave the way for the relationship to develop naturally.

Canadian producers and exporters who want to sell to Europe might not have a choice but develop new business relationships. Some might form the relationships and get the business and keep it, while others won’t bother and then not have much of a chance after that.

“The one who builds the relationship first often gets a lot of the sales,” said Newkirk.

“Time is of the essence.”

About the author



Ed White is a reporter with Glacier FarmMedia and has specialized in markets coverage since 2001 and has achieved the Derivatives Market Specialist (DMS) designation with the Canadian Securities Institute.


Stories from our other publications