In a joint statement, they listed a number of steps taken that should help boost U.S. exports of beef, poultry and other farm products to China, and said U.S. food and agricultural products exports were benefiting from Chinese tariff relief.

“These steps show that China is moving in the right direction to implement the Phase One agreement,” said Agriculture Secretary Sonny Perdue. “We will continue to work with China to ensure full implementation of its commitments and look forward to seeing further improvement and progress as we continue our ongoing bilateral discussions.”

As part of the deal signed Jan. 15, Beijing agreed to nearly double its U.S. farm product purchases and lower several agricultural trade barriers that Washington said limited access to the lucrative Chinese market.

China since promised it would not impose a nationwide ban on imports of U.S. poultry if the United States finds cases of avian flu, instead suspending imports only from the states where cases are found.

Beijing banned imports of U.S. poultry and eggs in January 2015 because of a U.S. outbreak of highly virulent avian flu, closing a market that was worth US$500 million in 2013. The ban was lifted in November 2019.

China has also recently increased buying of U.S. farm goods, including the country’s first hard red winter wheat purchase since 2017 and its largest U.S. corn purchase since 2013.

But imports of key products such as soybeans, the most valuable U.S. farm export, remain well below pre-trade war levels.

China’s season-to-date purchases of soy harvested last fall totaled about 12.1 million tonnes as of mid-March, according to USDA data. At the same point of 2017, China had purchased nearly 35 million tonnes of the oilseed.

— Reporting for Reuters by Andrea Shalal and David Lawder in Washington and Karl Plume in Chicago.

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The agreement, meant to reduce tensions after nearly two years of a tit-for-tat tariff war, included a pledge by China to purchase at least an additional $12.5 billion worth of agricultural goods in 2020 and at least $19.5 billion over 2017 levels of $24 billion in 2021 (all figures US$).

U.S. President Donald Trump’s insistence on a big commitment to buy farm products was a major sticking point in talks leading up to the signing, people briefed on the negotiations said, as China wanted the freedom to buy based on demand.

China’s Vice-Premier Liu He, standing beside Trump, said on Wednesday Chinese firms will buy U.S. products “based on market conditions.”

That sent future prices of U.S. soybeans, the top U.S. farm product shipped to China by value before the trade war, as much as one per cent lower.

“Soybeans broke after that,” said Terry Reilly, senior commodities analyst with Futures International. “When the market dictates means they may not come back for 36 months. Who knows? It means when they need it and the price is right.”

Benchmark Chicago Board of Trade March soybean futures have now shed nearly all the gains since the deal was announced on Dec. 13. The text of the agreement published on Wednesday did not detail which products China intended to buy.

“I don’t know if the soybean market was ever convinced that we were going to see record purchases of soybeans,” said Joe Vaclavik, president of Standard Grain, a brokerage. “It never traded that way.”

Ted Seifried, chief strategist with brokerage Zaner Group in Chicago said a lack of specific purchase contracts was also disappointing.

The agreement did not reduce tariffs on major U.S. agricultural exports to China including soybeans, sorghum and pork, which is subject to a 68 per cent tariff even as China’s pork demand increases as African swine fever ravages its own herd.

“I am positive and very appreciative, but we really need the tariffs to go away for our producers to realize the maximum benefit,” said David Herring, president of the U.S. National Pork Producers Council and a hog farmer at Lillington, N.C.

Trump said before the signing ceremony he expected tariffs to come off in a Phase Two deal he would soon start negotiating.

The agreement text also says China will strive to purchase and import $5 billion per year of U.S. agricultural products, in addition to the minimal commitments over the next two years.

Chinese traders also expressed doubts.

“I feel like China is not getting anything out of it (the deal),” said one China-based crop trader before the ceremony. “Just spending some money for some peace in return.”

Biotech and meat

China promised to speed up its review of U.S. biotechnology products it imports to no more than 24 months, according to the agreement text. Delays in China approving new varieties of crops grown form genetically modified seeds have long frustrated the U.S. agricultural sector.

“We’re moving in the right direction with these biotechnology approvals,” Bill Gordon, soy farmer from Worthington, Minn. and American Soybean Association president said in an interview.

“Our work isn’t done. I think you’re going to have a lot of negotiations now and steps to relieve those tariffs,” said Gordon, who attended the White House signing.

China also made some concessions to the meat industry, agreeing to eliminate cattle age requirements for beef imports. The U.S. use of the growth hormone ractopamine, not permitted in China, has hampered meat exports in the past.

China agreed to “conduct a risk assessment for ractopamine in cattle and swine as soon as possible,” the agreement said.

U.S. grain traders Archer Daniels Midland and Cargill both praised the Phase One agreement in separate statements.

— Reporting for Reuters by Mark Weinraub, Karl Plume, Julie Ingwersen and Tom Polansek in Chicago and Hallie Gu in Beijing; writing by Caroline Stauffer.

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Beijing and Washington have portrayed their “Phase One” agreement as a momentous step after months of start-stop talks punctuated by tit-for-tat tariffs that uprooted supply chains and stoked fears of a further slowdown in the global economy.

“Together we are righting the wrongs of the past and delivering a future of economic justice and security for American workers, farmers and families,” U.S. President Donald Trump said as he touted the deal in rambling, partisan remarks at the White House alongside Chinese Vice-Premier Liu He and other officials.

The centrepiece of the deal is a pledge by China to purchase at least an additional $200 billion worth of U.S. farm products and other goods and services over two years, over a baseline of $186 billion in purchases in 2017 (all figures US$).

The deal would include $50 billion in additional orders for U.S. agricultural products, Trump said, adding he was confident that U.S. farmers would be able to meet the greater demand. He also said China would buy $40 billion to $50 billion in additional U.S. services, $75 billion more in manufacturing goods, and $50 billion more worth of energy supplies.

Officials from both countries have touted the deal as ushering in a new era for U.S.-Sino relations, but it fails to address many of the structural differences that led the Trump administration to start the trade war in the first place.

They include Beijing’s long-standing practice of propping up state-owned companies, and flooding international markets with low-priced goods.

Trump, who has embraced an “America First” policy aimed at rebalancing global trade in favour of U.S. companies and workers, said China had pledged action to confront the problem of pirated or counterfeited goods, and that the deal included strong protection of intellectual property rights.

Earlier, top White House economic adviser Larry Kudlow told Fox News the agreement would add 0.5 percentage point to U.S. gross domestic product growth in both 2020 and 2021.

But some analysts have expressed skepticism it will set U.S.-China trade on a new trajectory.

“I find a radical shift in Chinese spending unlikely. I have low expectations for meeting stated goals,” said Jim Paulsen, chief investment strategist at Leuthold Group in Minneapolis. “But I do think the whole negotiation has moved the football forward for both the U.S. and China.”

The Phase One deal, reached in December, canceled planned U.S. tariffs on Chinese-made cellphones, toys and laptop computers and halved the tariff rate to 7.5 per cent on about $120 billion worth of other Chinese goods, including flat panel televisions, Bluetooth headphones and footwear.

But it will leave in place 25 per cent tariffs on a vast, $250 billion array of Chinese industrial goods and components used by U.S. manufacturers.

Trump, who has been touting the Phase One deal as a pillar of his 2020 re-election campaign said he would agree to remove the remaining tariffs once the two sides had negotiated a “Phase Two” agreement. He added that those negotiations would start soon.

He also said he would visit China in the not-too-distant future.

— Reporting for Reuters by David Lawder and Andrea Shalal; additional reporting by Lisa Lambert and Susan Heavey in Washington, Tim Aeppel in New York, and Se Young Lee and Stella Qui in Beijing; writing by Heather Timmons.

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China may impose additional tariffs on U.S. farm products bought shortly before the purchase ban took effect, China’s Commerce Ministry said. China also let the yuan weaken past the key seven-per-dollar level on Monday for the first time in more than a decade.

Before the trade war started, China bought $19.5 billion worth of farm goods in 2017, mainly soybeans, dairy, sorghum and pork (all figures US$). The trade war reduced those sales to $9.1 billion in 2018, according to the American Farm Bureau.

China’s ministry of commerce said in a statement it hoped the U.S. would keep its promises and create the “necessary conditions” for bilateral cooperation.

U.S. President Donald Trump said on Thursday that Beijing had not fulfilled a promise to buy large volumes of U.S. farm products and vowed to impose new tariffs on around $300 billion of Chinese goods, abruptly ending a truce in the Sino-U.S. trade war.

Earlier, China’s state broadcaster CCTV reported an official from China’s National Development and Reform Commission (NDRC) as saying Trump’s accusations were “groundless.”

China is the world’s top buyer of soybeans, the most valuable U.S. export crop. The Trump administration has announced plans to spend up to $28 billion compensating U.S. farmers, a key Trump constituency, for lost income from trade disputes.

American Farm Bureau Federation president Zippy Duvall called the announcement “a body blow to thousands of farmers and ranchers who are already struggling to get by.”

The National Pork Producers Council said in an email it was important to end the trade war so pork producers could “more fully participate in a historic sales opportunity.”

Farmers can start applying for the next round of trade aid this month, but trade uncertainty makes long-term planning difficult.

“We’ve been thankful for the aid payments. They have helped but we’d rather have open markets because it creates stability in our financial sectors,” said Derek Sawyer, 39, a corn, soybean, wheat and cattle farm from McPherson, Kansas.

“There’s just so much volatility right now because nobody knows the rules of the game and nobody knows how to look at things going forward.”

China is buying more soybeans from Brazil. Its overall need for soybeans used to feed livestock has fallen as African swine fever kills millions of pigs. U.S. meat exporters had hoped to take advantage of the disease to export more pork to China but 62 per cent retaliatory tariffs have limited exports.

Overall, China has purchased about 14.3 million tonnes of last season’s soybean crop, the least in 11 years, and some 3.7 million tonnes still need to be shipped, according to U.S. data. China bought 32.9 million tonnes of U.S. soybeans in 2017, before the trade war.

China applied a 25 per cent tariff on soybeans in July of last year in response to U.S. tariffs on Chinese goods.

China is honouring agreements signed earlier to import U.S. soybeans, according to Cong Liang, secretary general of China’s NDRC, CCTV reported. The report said that 2.27 million tonnes of U.S. soybeans had been loaded and shipped to China in July, since Trump met Chinese President Xi Jinping in Osaka at the G20 summit at the end of June.

China bought 130,000 tonnes of soybeans, 120,000 tonnes of sorghum, 60,000 tonnes of wheat, 40,000 tonnes of pork and products, and 25,000 tonnes of cotton from the United States between July 19 and Aug. 2, Cong said according to the report.

Weekly U.S. data on Aug. 1 confirmed the first new U.S. soybean sale to China since June, of 68,000 tonnes from the crop that will be harvested this fall. Additional sales through Aug. 1 could be recorded in the next U.S. government export sales report on Thursday.

Two million tonnes of U.S. soybeans destined for China will be loaded in August, followed by another 300,000 tonnes in September, Cong said.

However, the U.S. Department of Agriculture said on Monday less than 600,000 tonnes of soybeans were inspected for export to China the week ended Aug. 1, fewer than the previous week.

— Reporting for Reuters by Hallie Gu and Tom Daly; additional reporting by Koh Gui Qing in New York; Humeyra Pamuk in Washington; and PJ Huffstutter and Tom Polansek in Chicago; writing by Caroline Stauffer.

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“The intention… is not to escalate anything but simply to do what we said we’d do — have dollar-for-dollar retaliation,” MacNaughton said in Washington, D.C. while addressing the North American Agricultural Journalists’ annual meeting, part of which was livestreamed.

“I think that’s what Canadians expect of us to be true to what we said we were going to do. What we will do is pull off the list of potential targets and have consultations within Canada and the United States to see which of them will have the least impact on Canadians and the most impact on Americans frankly. That’s what retaliation is designed to do.”

Last July 1 Canada announced it was slapping $16.6 billion worth of tariffs on many U.S. imports ranging from kitchen appliances, boats and lawnmowers to ketchup, pickles, Jack Daniels whisky and toilet paper, in retaliation to U.S. President Donald Trump’s decision to hit imported steel and aluminum with 25 and 10 per cent tariffs.

Canada’s Foreign Affairs Minister Chrystia Freeland said then and now that the tariffs, launched under section 232 of the U.S. Trade Expansion Act of 1962 — legislation which allows the president to restrict imports seen as threatening national security — are illegal.

“We will not escalate and we will not back down,” Freeland told reporters in Hamilton June 29.

Since announcing its tariffs last year, Canada removed some on U.S. steel and aluminum because the metals were part of integrated supply chain.

“(W)e didn’t want to harm both sides of the border so we’re looking at releasing a new list… within the next week I would say would be most probable,” MacNaughton said.

“A significant number of (U.S.) agricultural products” will likely to added to the new products tariffs list, MacNaughton was reported as saying in the online publication AgInsider. Apples, pork and ethanol have been mentioned, and wine is a possibility too.

Since Canada, the U.S. and Mexico have ratified a new free trade agreement, Canada says the U.S. should end its tariffs on imported Canadian steel and aluminum.

Freeland has said repeatedly the tariffs must end before the new Canada-U.S.-Mexico Agreement (USMCA) is ratified.

AgInsider reported MacNaughton as saying if the tariffs aren’t gone before Canada’s federal election this fall they will become part of the debate and “it won’t be pleasant…”

AgInsider reports Trump administration officials as saying the tariffs could be replaced by quotas — something Canada also opposes.

AgInsider also reported that MacNaughton expressed dismay at the possibility the U.S. would resolve its trade war with China with Beijing promising larger purchases of U.S. products, including farm exports.

China has stopped importing Canadian canola seed. It’s widely believed the ban followed from Canada’s arrest of the chief financial officer of Huawei at the request of the U.S., which accuses her of fraud.

“We would expect the United States… to be a strong ally of ours,” AgInsider reported MacNaughton as saying.

Dale Moore, executive vice-president of the American Farm Bureau Federation, said he expects Congress will vote on USMCA ratification this year but did not suggest a date, AgInsider reported. The tariffs “need to be addressed,” Moore is quoted as saying.

U.S. farm groups support the trade pact and repeatedly have said the tariffs should end.

“I am convinced and confident we will get USMCA done,” AgInsider reported Moore as saying.

Senate finance committee chairman Chuck Grassley of Iowa directly asked Trump to remove the tariffs a few weeks ago and got a flat rejection, AgInsider reported.

— Allan Dawson is a reporter for the Manitoba Co-operator at Miami, Man.

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The added capacity and dedicated service would also ensure grain and other agricultural products “would not be affected by having to compete for space on existing trains,” the province said in a release.

Notley, who says the cars are needed to help deal with stranded oil that has slashed the price of Alberta oil, told a business audience she was disappointed that the federal government was not helping fund the purchase.

Reuters revealed last week that Alberta had proposed a joint purchase of two unit trains and estimated the one-time capital cost at about $350 million. Federal officials are cool to the idea, saying by the time the cars come on line late next year the supply problems will have eased.

The 120,000 bpd of rail capacity is nearly equal to the current amount of stranded supply.

“Alberta will buy the rail cars ourselves to move this oil… we have already engaged a third-party to negotiate and work is well underway. We anticipate conclusion of the deal within weeks,” Notley said in the prepared text of her speech.

The province said Wednesday it can’t release financial details of the rail investment “while negotiations are underway.” The first rail cars from the deal are expected to start moving oil in late 2019.

Notley said last week that the province was willing to buy the train by itself if Ottawa doesn’t back the province’s proposal to split the costs.

Notley, who reiterated her demand for more pipeline capacity, said the cost of buying the cars would be fully recouped through royalties and the selling of shipping capacity.

The Alberta premier said there was “no excuse” for Ottawa not helping and castigated the government of Prime Minister Justin Trudeau for proposing tougher environmental standards she said would make it harder than ever to build pipelines.

The glut “is happening because Canada willfully holds Alberta’s economy and Canada’s economy hostage,” she said, estimating the losses at $80 million a day.

Ottawa denies it is being unhelpful, noting that earlier this year it bought the Trans Mountain pipeline.

Several Canadian crude producers have curtailed production and asked Alberta to mandate cuts for other producers. Notley did not mention this idea in her speech.

Last week Finance Minister Bill Morneau said businesses would be allowed to write off additional capital investments, a measure he said oil industry executives had pressed for.

— David Ljunggren is Reuters’ political correspondent in Ottawa. Includes files from Glacier FarmMedia staff.

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The report by the Canadian Chamber of Commerce, titled Death by 130,000 cuts in reference to the number of federal regulations alone, said too much red tape is weakening Canada’s international competitiveness and dampening foreign investment.

There are an estimated 380,000 regulations on the books in Ontario alone, it said.

The biotechnology sector, pesticide management and food labelling are cited as examples of the discouraging aspect of government regulation.

Canada wants to boost its agri-food exports $75 billion annually by 2025 and, “Innovation in agricultural biotechnology — the development of new technology, products and processes — must be a driving force if Canada is to meet this target,” the report said. “As one of the most closely regulated industries in the world, rapid technological change in the biotechnology sector relies on efficient regulatory processes.”

• Growing pains for Canada’s agri-food sector

In 2000, the federal government funded the Canadian Regulatory System for Bio­technology (CRSB), an initiative that provided $218 million in funding to six federal departments over seven years to build efficiency and effectiveness into biotechnology regulation.

The CRSB was wound down even though it made Canada a biotechnology leader and the sector has suffered as a result, the report said.

In 2017, industry stated that there has been little progress in improving the regulatory efficiency at Health Canada and the Canadian Food Inspection Agency, and long approval timelines are delaying new pro­ducts from coming to market or altogether reducing industry innovation.

“The current approval pro­cess for new products in Canada is generally much longer and more difficult than in the United States,” the report said. “They are also discouraging the use of cutting-edge innovations among small- and medium-size companies and public researchers.

“Canada can restore its competitive advantages in this sector by reinvesting in more predictable, transparent and efficient regulatory frameworks. Modernizing the delivery of these regulatory programs is critical to avoiding a reduction in innovative activities and causing Canada to fall behind the United States and other OECD countries.”

Meanwhile, the Pest Management Regulatory Agency is supposed to ensure all registered pesticides undergo full re-evaluation at least every 15 years and conduct special reviews if there are health or environmental risks associated with a product, the report said.

“PMRA currently has more than 100 re-evaluations underway, with an additional 369 expected over the next 10 years. As of early 2018 there were 23 special reviews in progress, with many more anticipated as the European Union implements a stricter regulatory approach that will result in up to 75 products being withdrawn from the market.

“The PMRA is not currently positioned to undertake this growing workload, though Canadian farmers depend on these reviews so they can access the crop protection products they need to remain competitive,” the report said. “Delays in new product approvals and post-approval evaluation processes can result in compressed timelines and insufficient consultation of stakeholders. This leads to increased investment costs and ultimately restricts product availability for Canadian farmers — putting them at a competitive disadvantage compared with their U.S. peers.”

Meanwhile the PMRA’s speciali­zed expertise is crucial to growing and sustaining Can­adian exports of agricultural products, the report said.

“PMRA expertise in both setting and defending maximum residue limits (MRLs) is now an essential element of trade facilitation. This requires active PMRA participation in international standard-setting forums and direct engagement with Canada’s international trading partners to foster collaboration on science policy and the establishment of MRLs internationally.”

To fulfil all its responsibilities in pesticide MRL matters “requires people and operating resources for travel, which the PRMA does not currently have,” the report said. “As a result, PMRA is relegated to an ad hoc firefighting role and has become a bottleneck to economic growth for Canada’s agricultural companies.”

Compounding the problems are provincial regulations on the sale, use, transportation, storage and disposal of pesticides, the report said. “Ontario and Quebec also restrict agricultural uses of some federally approved pesticides… These restrictions only serve to put farmers at a competitive disadvantage to their counterparts in other parts of Canada, as well as internationally.”

Health Canada’s proposed front-of-package (FOP) nutritional food labelling initiative will be another regulatory headache for the agri-food sector as it will apply to about half the products on grocery store shelves, the report said.

The United States Food and Drug Administration has developed a credible voluntary FOP labelling system that appears on products in Canadian grocery stores, the report said. The Codex Alimentarius Commission is currently developing global principles to underpin FOP labelling.

Despite that, Health Canada’s regulations will be inconsistent with both of these initiatives, the report said. “By moving Canadian regulations forward in the absence of global principles that are still under development, Canada is at risk of introducing a new barrier to trade with not just the United States, but with all of its trading partners.”

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The trade teams began a seventh round of talks on Sunday aiming to finish reworking less contentious chapters of the North American Free Trade Agreement in order to create space to broker agreement on the trickiest subjects.

Still, with a presidential election looming in Mexico in July and U.S. mid-term congressional elections in November, the talks increasingly run the risk of getting entangled in domestic political considerations.

Negotiators are confident that the lesser hurdles will gradually be cleared. But the discussions have again been clouded by the proposed wall along the U.S. southern border that Trump has long touted as a necessity to curb illegal immigration and that he says Mexico must pay for.

Mexico has consistently rejected paying for the wall, and its government had hoped to arrange a meeting between President Enrique Pena Nieto and Trump in the next few weeks. However, a senior U.S. official said at the weekend that plan had been postponed after a phone call between the two soured over the wall earlier this month.

The trade negotiators have become used to such distractions, but the talks are increasingly centering on U.S. demands that officials say can be resolved only at the top political level.

Mexico’s government has not commented officially on the derailment of the planned meeting, but Juan Pablo Castanon, head of the powerful CCE business lobby, was less reticent as he took stock of the unfolding NAFTA negotiations in Mexico City.

“Obviously, the cancellation of the Mexican president’s trip to the United States is an important element in the negotiations: it’s politics that can help us resolve the technical issues we’re moving forward on,” Castanon said.

The NAFTA talks were launched last year after Trump said the 1994 agreement should be overhauled to better favor U.S. interests or Washington would quit the accord.

One former Mexican official still familiar with the process said the government was concerned that the fallout from the Trump-Pena Nieto phone call could weigh on the atmosphere at the talks, in spite of hopes that several chapters may be finished.

Castanon of the CCE said measures on e-commerce, telecommunications and sanitary standards for agricultural products were almost completed, and others close to the talks believe the energy chapter could also conclude.

Officials do not anticipate major breakthroughs on the most intractable proposals during the latest round of talks in Mexico City, which are due to run until March 5.

U.S. demands range from changes to automotive content origin rules and dispute resolution mechanisms, to imposing a clause that could automatically kill NAFTA after five years.

Agriculture, rules of origin, labour and regulatory practices were among the issues due to be discussed on Monday, one day before chief negotiators return to the fray.

Auto components

The Trump administration wants NAFTA rules of origin changed to make automakers source more parts from the region and specifically the U.S., a major sticking point that the industry itself opposes.

The government is concerned that a lack of progress on the issue could hurt the renegotiation, the former official said.

In a sign of movement, the U.S. official leading the auto content negotiations was called back to Washington from Mexico for consultations on Monday, U.S. and Mexican officials said.

One official said the negotiator went back to talk to U.S. automakers and U.S. Trade Representative Robert Lighthizer.

Seeking to break the deadlock, the Mexican government has said it would put forward a proposal on rules of origin at this round, but a Mexican official said on Monday no new ideas had been presented so far.

There was little sign of compromise on other thorny issues early on, with a senior Canadian agriculture official pushing back against U.S. demands to dismantle Canadian protections for the dairy and poultry sectors known as supply management.

“When it comes to supply management, we believe there can be no concession,” said Jeff Leal, Ontario’s minister of agriculture, food and rural affairs.

— Reporting for Reuters by Anthony Esposito and Sharay Angulo; additional reporting by Dave Graham.

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That statistic is highlighted in the second report by the Advisory Council on Economic Growth, which was established by Minister of Finance Bill Morneau and led by respected economic adviser Dominic Barton.

The report has received a lot of national attention, and contains what appear to be well-considered recommendations on how governments and the private sector can manage this country’s future economic challenges.

What does it say about agriculture? In the text of the section titled “Unleashing the growth potential of key sectors,” the word “agfood” appears 95 times, “agriculture” 15 times and “farmers” three. In other words, it says a lot about food but not much about farming.

The report makes several recommendations for increasing Canada’s export food market share, including establishing an Agfood Growth Council of “visionary, high-profile and respected leaders from the private sector.” Similar recommendations were made in a report released in April by the Canadian Agri-Food Policy Institute and the Public Policy Forum.

• Read more: Agrifood a pillar in federal budget’s ‘innovation’ plan

This may be worthwhile, but it’s a signal to farmers to start lobbying for the council to include them, and at least one member needs to be a “devil’s advocate.” In light of some recent corporate expansion disasters, companies are adopting the management practice of appointing someone whose role is to raise tough questions to avoid “confirmation bias,” which is when everyone gets so upbeat about expansion that no one dares to suggest that there might be problems. Anyone remember Saskatchewan Wheat Pool?

Any council on the directions for “agfood” should include members who do, and who remember that we’ve been around this block before. In 1989, Agriculture Minister Don Mazankowski commissioned a “Growing together” initiative in which the industry was supposed to pull itself out of a slump by getting farmers more involved in “value added.”

Ironically, at that time Prairie farmers did own a good chunk of the grain and oilseed processing and fertilizer industries through the Prairie Pools. The failed drive to expansion into value-added investments forced them to sell them to raise cash in a failed attempt to save the companies. The failed value-added craze led to Prairie farmers losing their ownership of the handling system as well as the processing system, and many lost a lot of equity that would have supported them in retirement.

A devil’s advocate is also needed to counter the notion that ending supply management would lead to an export-driven boom of dairy industry prosperity. Just as ending the wheat board didn’t lead to pasta plants and flour mills springing up on the Prairies, ending supply management isn’t going to make Canadian farmers competitive with New Zealand farmers raising cattle outside on grass 365 days a year. And by the way, much of the (currently glutted) export dairy market is for manufacturing infant formula for China, where mothers have apparently been convinced that formula is better than breast milk. Do we really want to be in that market?

And in a worrisome parallel with the Prairie Pools, dairy farmers currently own a good chunk of their processing industry through co-operatives. Let’s hope their boards and senior management are familiar with the term “confirmation bias.”

This is not to say that there is no merit in the recommendations of the recent reports. By all means, industry representatives should get together to discuss ways of improving the Canadian economy through adding more value to farm products.

But that takes us back to that example of how Netherlands is doing so well. The Economic Council report tells us that it exports $7.2 billion in agricultural products, but in 2014 that included, for example, $1.5 billion in soymeal and $102 million in durum. Since the Netherlands produces neither, this seems odd until you realize that its export statistics include products that are imported into Rotterdam and then re-exported to other countries in Europe. That’s part of the reason for such a big export value.

But it’s not the whole reason; the Dutch have indeed done a fantastic job of making money by processing stuff that they don’t grow themselves. We could do the same in Canada — we’re right next door to the U.S., which would be more than happy to sell us cheap subsidized raw material for our processing plants, rather than us producing it here and having to support farmers with business risk management programs.

An Agfood council may be worthwhile, but it needs members who can ask tough questions, especially this one: “But what does it mean for the farmers?”

John Morriss is a former editor of the Manitoba Co-operator.

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Swiss-based Glencore on Thursday released preliminary results for 2016, booking net income attributable to equity holders of $1.379 billion on $152.948 billion in revenues, up from an $8.114 billion loss on $147.351 billion in revenues in 2015 (all figures US$).

The company’s “swift and decisive actions to reposition and optimize our capital structure and industrial asset portfolio have reduced net funding by $14.7 billion over the past 18 months and generated more than $1.3 billion in cost savings at our industrial assets in 2016,” CEO Ivan Glasenberg said in a release.

Those actions included Glencore selling about 50 per cent interest in its Agricultural Products division for $3.1 billion, with the Canada Pension Plan Investment Board and B.C. Investment Management Corp. taking about 40 and 10 per cent respectively. Both deals closed in December.

With year-over-year results adjusted accordingly, Glencore reported its marketing EBIT (earnings before interest and taxes) from Agricultural Products down nine per cent in 2016 from 2015, “in large part due to a lower Viterra Canada contribution.”

The Canadian arm of Regina-based Viterra “faced challenges in the first half of 2016, as the crop harvested in September 2015 was below average, with margins suffering from competition amongst handlers in the face of low prices and farmer retention,” Glencore said.

Viterra Canada’s margins improved in the last quarter of the year, however, on a “near-record, albeit poor-quality, crop harvested in September 2016.”

Viterra’s business in South Australia was “broadly similar,” as a “disappointing” October 2015 harvest weighed on the first half of 2016 and the final quarter saw a “record” 2016 South Australian crop.

During that time, Glencore said, “we had added storage and were well prepared for the large Viterra Australia intake. The crop size and delayed Australian harvest is also expected to positively impact results in the first quarter of 2017.”

Overall, Glencore said, prices and volatility in the Agricultural Products business “generally remained subdued during the period, with our grain and oilseed marketing business performing consistently well in the circumstances.”

Its marketing of wheat, Brazilian corn, soy meal and rapeseed generally “exceeded expectations, while sugar and cotton were below expectations.”

The division’s processing businesses booked increased production in 2016, mainly from the crush plants it bought at Becancour, Que. in late 2015 and at Warden, Wash. in January 2016, and from “higher capacity utilization” in Argentina.

The former TRT-ETGO oilseed plant at Becancour saw “poor” margins early in fiscal 2016 as sales of meal “proved challenging,” but those margins increased in the second half of the year, Glencore said.

Worldwide, the Agricultural Products division saw its revenue from commodity marketing drop to $18.678 billion from $20.617 billion in 2015, and revenue from “industrial activities” such as processing rise to $3.292 billion from $2.529 billion.

The adjusted EBIT on the division’s marketing activities came in at $418 million, down from $461 million, while EBIT on its industrial activities rose to $104 million from $63 million.

Glencore’s grain marketing volumes for 2016 remained nearly flat at 43.8 million tonnes, up from 43.7 million in 2015, while oilseed and processed oil marketing volumes rose 15 per cent, to 26.7 million tonnes. — AGCanada.com Network

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