Why some Canadian farmers may soon tower 'head and shoulders' above their U.S. rivals in Japan - Action News
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Why some Canadian farmers may soon tower 'head and shoulders' above their U.S. rivals in Japan

With a new Asia-Pacific trade deal slashing tariffs, Canada's pork and beef producers see even more potential in a lucrative Japanese market.

Beef and pork producers see growth in sought-after Japanese market as Canada gains edge on U.S.

Canadian beef producers are hoping to make big gains in Japan thanks to the new CPTPP trade agreement. (Jeff McIntosh/Canadian Press)

It was the 1990swhena pair of Japanese butchers climbed aboardan airplane and travelled some8,000 kilometresto visit a family-ownedpork plant in rural Alberta.

The local owners of Sunterra Farms hosted the men because, to crack one of the world's most desirable markets, theirstaff needed to see exactly how Japanese consumerslikedtheir meat.

The swift, preciseblade work of the meat cutters left quite theimpression.

"One of the guys that was on our [production] line said, 'These guys aren't butchers they're artists,'" recalledRay Price, president of Sunterra Farms.

From those early days, Sunterra's Japanese exports have grown tobecome the majority of theirprocessing business. And with a newly minted trade pact among Asia-Pacific nations, Price can seeeven better things ahead.

"It's really good," said Price, assessing the impact of thedeal called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on his business with Japan.

"We see it as an opportunity to continue to grow that market."

Trade ministers from CPTPP nations pose for a pictures after the signing ceremony in Santiago, Chile, last March. (Esteban Felix/Associated Press)

The CPTPP is afree trade agreement involving Canada and 10 other countries in the Asia-Pacific region.Among the group areAustralia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

It does not include the United States, which backed out after Donald Trump became president.

The deallifts, cuts or phases out tariffs involving a variety of industries but there's also more to it than that, said Carlo Dade, a trade expert with the Canada West Foundation in Calgary. For one, it also harmonizes regulatory practices.

"Even in places where the tariffs don't come down, we have an advantage over the Americans, in that we now have formal agreements to dealwith all the non-tariff stuff that drives farmers and exporters crazy," Dade said.

For many in Canada's agrifoodsector, and beef and porkproducers in particular,the jewel in the deal appears to beJapan.

Canadian farmers for years faced their share of challengesto make inroads into the country, oftencompeting against the heft of American exporters while luggingthe expense of trade levies.

Now, armed with the tradepact, some are setting their sightson carving out abigger pieceof that rich market, especiallywith the United States sitting on the sidelines.

This maybe good for canola and wheat growers, but it's those in the meat business that might be happiest of all.

"Exports of pork and beef products should benefit most from the absence of the United States," according to one federal economicanalysis issuedlast year.

Dennis Laycraft is with the Canadian Cattlemen's Association. (Radio-Canada)

Japan is one of the largest meat importers in the world, with the United States and Australia the biggest suppliers. Australia has benefitted from having lowertariffs, while the U.S. has competed on price and with marketing.

With tariffs on Canadian fresh beef being phaseddown from 38.5 per cent to nineper cent, Canadian producers feel like they canmake a bigger mark.

"It's levelling the playing field for us with with Australia and it's putting us head and shoulders above our competitors in the U.S.," said Stan Blade, dean of the faculty of agricultural, life and environmental sciences at the University of Alberta.

Canadian beef represents about two to three per cent of the market in Japan, said Dennis Laycraft of the Canadian Cattlemen's Association, butthey'd like to get to around 10 per cent.

"It's just simply one of the largest, high-quality beef markets in the world," Laycraftsaid.

The trade agreement "clearly makes Japan a more attractive market to move our product in there," he added.

There's a lot of money on the table.

Japan Prime Minister Shinzo Abe will be the host as the first meeting of the CPTPP Commission is held in Tokyo this weekend. (Eugene Hoshiko/Associated Press)

Under the CPTPP, according to the federal analysis, Canada'sannual beef exports to Japan are projected to nearly double,climbing$378 million, once the tariffs have been phased down.

"We have a real big opportunity here for our producers to increase their market share at the expense of U.S. producers that have a significantly larger presence thanus," said University of Calgary economist Trevor Tombe.

Pork exports are expected to eventually climb by more thanthird, or $639 million, according to the same analysis.

Price doesn't think Canadiangrowth will come at the expense of the U.S. pork producers, however.

"We were actually selling almost as much or a little bit more chilled pork into Japan as what the Americans were already without this [trade deal]," Price said.

"It'll help expand our marketplace [but]I don't see us eroding much of the U.S. market share."

Jim Carr, minister of international trade diversification, will meet this weekend with Japanese industry representatives to discuss market access for Canadian products. (John Woods/The Canadian Press)

Japanese consumers are fastidious in their food choices and the market ishighly competitive. The beef rivalry between the U.S. and Australia in Japanhas been referred to as an "arms race."

While tariff reductions are helpful, price alone likely won't win the day.Both Laycraft and Sunterra's Price say qualityis critical and so are relationships, something both have been working on for years.

International Trade Diversification Minister Jim Carr willlikely try to forge some of his own this weekend when he sits with Japanese industry representatives to discuss market access for Canadian products. Those discussions will follow the first meeting of the CPTPP Commission in Tokyo on Saturday.

The University of Alberta's Bladesaid the fact Canadian agriculture has anestablished reputation in Japan built up over the years is another reason for optimism about the trade pact.

"Japan wants to do business with Alberta, with Canada, and they have done so even when there have been these these you know fairly tough tariff regimes," Blade said.

"Now, from a just purely cost point of view, we're becoming much more competitive."