Agriculture
What the USMCA Might Mean for Agriculture and Biotechnology?
We welcome guest writers to all of our Todayville platforms. Here’s a submission from Emily Folk. Emily is passionate about agricultural sustainability and more of her work can be found on her site, Conservation Folks. In this story, Emily Folk explains the USMCA Impact on Agriculture.
What Could USMCA Mean for Agriculture and Biotechnology?
The United States Mexico Canada Agreement (USMCA) has been in the news a lot lately. The leaders of the respective nations signed the trade agreement on November 30, 2019, and ratification is pending. You can think of the USMCA as an updated version of the North American Free Trade Agreement (NAFTA).
U.S. President Donald Trump vowed to renegotiate NAFTA after publicly speaking unfavourably about it. The USMCA is the result of that vow. The agreement spans several areas, such as the origin of automobile parts and new labor laws in Mexico that make it easier for workers to unionize. The USMCA also has a “sunset clause” that makes its terms expire after 16 years. Plus, every six years, the leaders of the countries involved must agree on whether to extend the deal.
Some agriculture-specific stipulations also exist within the USMCA. Additionally, the agreement notably mentions biotechnology. Here’s a closer look at how the USMCA might change these two industries.
More Exporting Opportunities for Farmers
One of the key points often mentioned about the USMCA is that parties expect the agreement to cause a $2 billion increase in U.S. agriculture exports, triggering a $65 billion rise in U.S. gross domestic product (GDP). Canada and Mexico are currently the top two exporting markets for American farmers, supporting more than 325,000 American jobs. In 2018, the food and agricultural exports destined for Canada and Mexico totaled more than $39.7 billion.
The USMCA also opens exporting opportunities that did not exist before. Now, U.S. dairy farmers will have expanded access to send products such as fluid and powdered milk, cheese and cream to Canadian parties. There will also no longer be U.S. tariffs on whey and margarine. This change is notable, considering the Canadian dairy market produced roughly 17% of the United States’ annual output over the past three years.
In exchange, Canada will give the United States new access to chicken and eggs, plus increased access to turkey. Plus, all other agriculture products traded between the U.S. and Mexico will be under a zero-tariff model.
Moving Forward With Agricultural Biotechnology
Another improvement associated with the USMCA is that it looks at agricultural technology more broadly than other trade agreements have.
For example, the Trans-Pacific Partnership — a proposed trade agreement between 12 nations — only addressed biotechnology regarding recombinant DNA (rDNA). That process involves joining the molecules from two different species, then inserting the product into a host to create new genetic combinations. Instead, the USMCA opens possibilities for all kinds of agricultural technology, including gene editing. Moving ahead with biotechnology could be crucial for addressing pressing matters that affect agriculture, such as water scarcity.
Approximately 700 million people suffer from water scarcity, and that number could double by 2025. Also, the agriculture industry is the greatest user of water. Things must change — both to address the growing water scarcity problem and to give farmers more options for growing things without using so much water.
Biotechnology has already helped, and it seems highly likely to continue spurring progress. In one example, scientists altered the expression of one gene common to all plants. This change led to a 25% increase in the plants’ water-use efficiency without adversely impacting yield or photosynthesis.
As part of the USMCA, Mexico, Canada and the United States agreed to improve information sharing and cooperation about biotechnology matters related to trade. That change could speed new developments, resulting in positive outcomes for all involved groups and the world at large.
Fairer Agricultural Grading Standards
A grading system for agricultural products defines trading procedures. For example, commercial buyers of a product grown in another country refer to the grading standards to set expectations about a product’s quality. The USMCA specifies that Canada will evaluate U.S. imported wheat and assign it a grade no less favourable than it would give Canadian-grown wheat.
Canada will also no longer require country of origin statements associated with inspection certificates or quality grades. The United States and Canada will discuss issues related to seed regulations under the USMCA, too.
Concerning Mexico and the United States, the two countries agreed to non-discriminatory grading standards and services. Moreover, a dialogue will begin between the two countries to flesh out the details for quality standards and grading regarding trade.
A Promising Future
It’s too early to say what the real-life effects will be of the changes outlined here. But, the commitments laid out within the USMCA seem like they’ll represent clear improvements for agriculture professionals, as well as everyone who benefits from their goods.
I’m Emily Folk, and I grew up in a small town in Pennsylvania. Growing up I had a love of animals, and after countless marathons of watching Animal Planet documentaries, I developed a passion for ecology and conservation. You can read more of my work by clicking this link: Conservation Folks.
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Agriculture
Ottawa may soon pass ‘supply management’ law to effectively maintain inflated dairy prices
From the Fraser Institute
Many Canadians today face an unsettling reality. While Canada has long been known as a land of plenty, rising living costs and food insecurity are becoming increasingly common concerns. And a piece of federal legislation—which may soon become law—threatens to make the situation even worse.
According to Statistics Canada, rising prices are now “greatly affecting” nearly half of Canadians who are subsequently struggling to cover basic living costs. Even more alarming, 53 per cent are worried about feeding their families. For policymakers, few national priorities are more pressing than the ability of Canadians to feed themselves.
Between 2020 and 2023, food prices surged by 24 per cent, outpacing the overall inflation rate of 15 per cent. Over the past year, more than one million people visited Ontario food banks—a 25 per cent increase from the previous year.
Amid this crisis, a recent academic report highlighted an unforgivable waste. Since 2012, Canada’s dairy system has discarded 6.8 billion litres of milk—worth about $15 billion. This is not just mismanagement, it’s a policy failure. And inexcusably, the federal government knows how to address rising prices on key food staples but instead turns a blind eye.
Canada’s dairy sector operates under a “supply management” system that controls production through quotas and restricts imports via tariffs. Marketing boards work within this system to manage distribution and set the prices farmers receive. Together, these mechanisms effectively limit competition from both domestic and foreign producers.
This rigid regulated system suppresses competition and efficiency—both are essential for lower prices. Hardest hit are low-income Canadians as they spend a greater share of their income on essentials such as groceries. One estimate ranks Canada as having the sixth-highest milk prices worldwide.
The price gap between the United States and Canada for one litre of milk is around C$1.57. A simple calculation shows that if we could reduce the price gap by half, to $0.79, Canadians would save nearly $1.9 billion annually. And eliminating the price gap would save a family of four $360 a year. There would be further savings if the government also liberalized markets for other dairy products such as cheese, butter and yogurt. These lower costs would make a real difference for millions of Canadians.
Which brings us back to the legislation pending on Parliament Hill. Instead of addressing the high food costs, Ottawa is moving in the opposite direction. Bill C-282, sponsored by the Bloc Quebecois, has passed the House of Commons and is now before the Senate. If enacted, it would stop Canadian trade negotiators from letting other countries sell more supply-managed products in Canada as part of any future trade deal, effectively increasing protection for Canadian industries and creating another legal barrier to reform. While the governing Liberals hold ultimate responsibility for this bill, all parties to some degree support it.
Supply management is already causing trade friction. The U.S. and New Zealand have filed disputes (under the Canada-United States-Mexico Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) accusing Canada of failing to meet its commitments on dairy products. If Canada is found in violation, it could face tariffs or other trade restrictions in unrelated sectors. Dairy was also a sticking point in negotiations with the United Kingdom, leading the British to suspend talks on a free trade deal. The costs of defending supply management could ripple farther than agriculture, hurting other Canadian businesses and driving up consumer costs.
Dairy farmers, of course, have invested heavily in the system, and change could be financially painful. Industry groups including the Dairy Farmers of Canada carry significant political influence, especially in Ontario and Quebec, making it politically costly for any party to propose reforms. The concerns of farmers are valid and must be addressed—but they should not stand in the way of opening up these heavily regulated agricultural sectors. With reasonable financial assistance, a gradual transition could ease the burden. After all, New Zealand, with just 5 million people, managed to deregulate its dairy sector and now exports 95 per cent of its milk to 130 countries. There’s no reason Canada could not do something similar.
Bill C-282 is a flawed piece of legislation. Supply management already hurts the most vulnerable Canadians and is the root cause of two trade disputes that threaten harm to other Canadian industries. If passed, this law will further tie the government’s hands in negotiating future free trade agreements. So, who benefits from it? Certainly not Canadians struggling with food insecurity. The government’s refusal to modernize an outdated inefficient system forces Canadians to pay more for basic food staples. If we continue down this path, the economic damage could spread to other sectors, leaving Canadians to bear an ever-increasing financial burden.
Author:
As the 2024 growing season comes to a close, Minister of Agriculture and Irrigation RJ Sigurdson issued the following statement:
“While many Albertans were enjoying beautiful fall days with above-average temperatures, farmers were working around the clock to get crops off their fields before the weather turned. I commend their continued dedication to growing quality crops, putting food on tables across the province and around the world.
“Favourable weather conditions in August and early September allowed for a rapid start to harvest, leading to quick and efficient completion.
“The final yield estimates show that while the South, North West and Peace regions were slightly above average, the yields in the Central and North East regions were below average.
“Crop quality for oats and dry peas is currently exceeding the five-year average, with a higher rate of these crops grading in the top two grade categories. In contrast, spring wheat, durum, barley and canola are all grading in the top two grades at rates lower than the five-year average.
“Crop grading is a process that determines the quality of a grain crop based on visual inspection and instrument analysis. Factors like frost damage, colour, moisture content and sprouting all impact grade and affect how the grain will perform during processing or how the end product will turn out. Alberta generally produces high-quality crops.
“Farmers faced many challenges over the last few years and, for some areas of the province, 2024 was a difficult growing season. But Alberta producers are innovative and resilient. They work constantly to meet challenges head-on and drive sustainable growth in our agricultural sector.
“Alberta farmers help feed the world, and I’m proud of the reputation for safe, high-quality agricultural products that this industry has built for itself. Thank you to our producers, and congratulations on another successful harvest!”
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