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Making or Missing the EU 3 rd Country List: The Case of Organic Wheat

Making or Missing the EU 3 rd Country List: The Case of Organic Wheat. Shon Ferguson Project on Organic Agriculture University of Saskatchewan November 5, 2004. Introduction. Canada currently has a voluntary national organic standard

emerald-mcfadden
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Making or Missing the EU 3 rd Country List: The Case of Organic Wheat

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  1. Making or Missing the EU 3rd Country List:The Case of Organic Wheat Shon Ferguson Project on Organic Agriculture University of Saskatchewan November 5, 2004

  2. Introduction • Canada currently has a voluntary national organic standard • A mandatory standard is necessary in order to negotiate equivalency agreements with other countries • Equivalency is currently granted on a sale-by-sale basis

  3. Introduction con’t • December 31, 2005 deadline for negotiating equivalency with the European Union (EU) • Three possible scenarios: 1) Meet deadline and trade continues 2) Miss deadline and Canadian organic products are barred from entering the EU 3) Deadline extended and trade continues • What will the impact be if we make the deadline or miss it?

  4. Canadian Organic Wheat Exports • $13.2 million (estimate) • 45% to EU • 45% to the U.S. • 5% to Japan • 5% to rest of world

  5. World Organic Wheat Trade • Canada has ¼ of world market share in world organic wheat trade • Competition: • U.S. • Hungary • Australia, Argentina, Slovakia • EU imports 65% of organic wheat

  6. Trade Theory • EU halt to Canadian organic exports: • A “non-tariff barrier” • Potentially devastating to Canadian producers • Producers and consumers in every country affected • Equivalency established: • Trade cost savings?

  7. Scenario 1: EU stops organic wheat exports from Canada

  8. Scenario 1: EU stops organic wheat exports from Canada

  9. Scenario 2: Canada meetsdeadline Certification Cost Savings: • Producers may save about ½ a day in time filling out certification papers • Certification Bodies may save accreditation costs • BUT not likely to lower costs of trade • No increase in trade

  10. Scenario 2: Canada meets deadline Trade cost savings: • Assume trade cost savings of 1% • approx. $3/tonne • ($120 per 40t container) • Due to less hassle for importers and exporters

  11. Scenario 2: Effect of $3/tonne trade cost saving

  12. Scenario 2: Effect of $3/tonne trade cost saving

  13. Conclusion • A halt to trade with EU would have a devastating impact on Canadian organic wheat producers • Trade loss = $8,600 per producer • U.S. would be flooded with Canadian organic wheat • U.S. producers worse off • Possible trade friction?

  14. Conclusion • The additional benefits of gaining equivalency with the EU are small, uncertain • Cost savings passed back to producers? • Producers may find it easier to market their own grain directly to EU buyers • Canada MUST either • Make the December 31, 2005 deadline • Or extend the deadline To avoid the worst-case scenario

  15. Questions?Comments?Suggestions?

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