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THE COMPETITION IN 1997
U.S. and
Competitor Expenditures on Export Promotion and
Export Subsidies for Agricultural, Forestry and Fishery Products
Canada
The Canadian government funds agricultural export market development through a number of programs which are operated cooperatively between Agriculture and Agri-Food Canada (AAFC) and the Department of Foreign Affairs and International Trade (DFAIT) to benefit the agriculture, fishery, and forestry sectors. Other Canadian government agencies and provincial governments also fund export market promotion. Federal and provincial export promotion funding for 1996/97 was estimated at $10.3 million. The Canadian Wheat Board, a Crown Corporation, helps fund export promotions through the Canadian International Grains Institute. It is estimated that the Canadian government provides about $1 million to the Canadian Grains Institute. Industry funding for all export promotion was estimated at $13 million for 1996/97. Government, producer and industry funds totaled $24.4 million. The primary target areas for Canadian agricultural export promotions are the NAFTA countries and Asia (Japan, South Korea, and ASEAN countries).
Canadian Government Activities:
Agriculture and Agri-Food Canada’s (AAFC) Market and Industry Services Branch (MISB) takes the lead in developing Canada’s agricultural trade. In 1995/96, the Canadian government set a goal of Can $20 billion (US$15 billion) in agricultural exports by the Year 2000, an increase of 15 percent from 1995 exports. This goal was exceeded in 1997. In spite of massive budget reductions, the Canadian government restructured its export promotion of agricultural products and increased funding for the promotion activities to help boost exports. AAFC also operates information, intelligence and analysis services for Canadian agricultural exporters, including an electronic Commodity Bulletin Board, electronic trade leads, and market assessment and advisory reports.
To be eligible for export promotion funding under any of several Canadian government programs, private companies must participate through non-profit agri-food associations representing a majority of the exporters in a particular sector either on a national or regional basis. These associations must participate in the Agri-Food Market Strategies or AIMS process. Under AIMS, associations are required to develop a long term export market strategy that is reviewed by an interdepartmental (usually AAFC & DFAIT) Steering Committee. Branded promotion applicants require an export strategy acceptable to the AIMS Steering Committee which must demonstrate that the industry represented is being disadvantaged by brand promotions supported by the U.S. MAP, or similar programs of other exporting countries.
Export promotion funds are available through four main programs. The Program for Export Market Development (PEMD) is administered by DFAIT for exports of all Canadian products, including agricultural products. AAFC administers three other programs dedicated to agricultural products: Agri-Food Trade 2000, the Post-Initiated Agri-Food Fund (PIAF) and the Regionally Initiated Agri-Food Fund (RIAF)
PEMD is a financial risk-sharing program which includes access to international market information and services in facilitating export links. Financial outlays are allocated as individual proposals are approved. If export sales result from a PEMD plan or mission, the companies are required to reimburse a portion of the PEMD contribution. Each agreement contains a repayment clause that stipulates the terms under which the applicant will repay the Government of Canada. One element of the PEMD is the Special Activities plan directed at agricultural trade associations. It is estimated that 60-70 percent of the PEMD agriculture budget is directed under the Special Activities Program. Activities by these associations must be for the benefit of their members and may include the generic promotion of the association's products or services. Funds allocated to trade associations are not repayable. PEMD provides financial assistance of 50 percent on selected travel, trade fair participation, and other export- and export promotion-related costs. PEMD also includes a very small branded cost-share promotion program.
Agri-Food Trade 2000 is also a cost-shared funding program aimed at helping Canadian agri-food industry associations carry out a wide range or marketing and trade activities. PIAF is a fund available to agri-food trade officers in foreign embassies to implement export promotion initiatives which cannot be paid for under other programs. RIAF is a fund for use by MISB’s regional offices to support regional market development activities such as exporter seminars, trade missions and market research. For 1997-98, priority is being given to activities to promote exports to the United States which are implemented most effectively at a regional level.
Provincial governments also operate export promotion programs. For example, the Quebec Food Product Exporters (Quebec Export Club) published a Gourmet Export Directory, a full index of Quebec food products for export and helped sponsor group participation in international food shows (SIAL, ANUGA, etc.). Some Provinces, such as British Columbia, maintain offices in important foreign markets like Japan to promote their products. Several provinces operate industry specific promotion organizations. For example, British Columbia’s Coast Forest and Lumber Association (CFLA) is active in Japan where it promotes the use of Hemlock lumber as a building material.
Canadian Wheat Board:
The Canadian Wheat Board (CWB) is authorized under the Canadian Wheat Board Act of 1935 to control the export marketing of Canadian wheat and barley. The CWB exports all western Canadian wheat and barley (Manitoba, Saskatchewan, Alberta, Peace River area of British Colombia) and issues export licenses for wheat produced in other regions of Canada (the Ontario Wheat Producers Marketing Board). Seventy-five percent of Canadian wheat and 20 percent of Canadian barley is exported.
The CWB offers its producers and foreign buyers a host of services. Price pools ensure the same price for all types of wheats. The CWB controls the procurement, storage, and shipment of grain for export. For foreign buyers, the CWB extends loans guaranteed by the Canadian government and negotiates long-term agreements with foreign import monopolies.
The Canadian Wheat Board's (CWB) market development staff works with overseas customers to develop new demand for prairie grain. To support its goal, the CWB organizes technical missions to customer countries and introduces new varieties to foreign customers, such as AC Karma, a Canada Prairie Spring (White) wheat developed for Asian noodle manufacture. In past years, the CWB arranged for 14 mills in five Asian countries to fully assess the new variety.
The CWB's partners in market promotion are the Canadian Grain Commission (CGC) and the Canadian International Gains Institute (CIGI). Responsible for grain quality standards, the CGC also provides scientific and technical expertise to develop the understanding of end-use grain quality and the marketability of Canadian grain around the world. International programs are the core of the CIGI's activities. The CIGI holds training sessions (incoming and outgoing) for customer countries which primarily focus on handling and processing methods and technology. The CIGI works closely with participating countries. In March 1998, for example, the CIGI received incoming missions from Tanzania and Lithuania.
Industry Promotions:
Some important commodity groups and organizations are active in export market development and fund their own activities. Others are covered, at least in part, by the federal PEMD umbrella. Producer and industry groups promote the following Canadian agricultural products in export markets: canola, flax, soybeans, pulses, special crops, pork, furs, beef, dairy and livestock genetics, certified seed and wine and specialty beers. Forest products are promoted by the Council of Forest Industries (COFI). Agricultural industry funding was estimated at $13 million for 1996/97, a slight increase over year-earlier funding.
Some industry associations maintain offices abroad. For example, the Canadian Beef Export Federation has offices in Tokyo, Hong Kong and Korea. These offices coordinate participation in foreign food shows as well as organizing trade missions of foreign buyers to Canada. Other organizations work through the local Canadian Embassies and Consulates.
In addition to the normal promotion activities, some Canadian organizations work with foreign governments to remove technical barriers for their products. For example, in 1997 COFI activities included securing fifteen new certifications of Canadian mills under Japanese standards (JAS). COFI successfully participated in the re-drafting of the new JAS 111 for structural glulam products, and lobbied for the easing of other lumber grade related trade barriers.
Competitor Activity:
The major market development activity used by competitors is trade shows, but Colombia, Iran and Morocco have used television commercials to increase Canadian consumer demand for their products. Most other have used print media advertising.
All of the major wine producers are active in the Canadian market, including France, Italy, Spain, Australia, Chile, South Africa and New Zealand. Chile also promotes its fresh produce, as do Mexico and the Netherlands. South Africa and Morocco emphasize fresh fruit, while tomato products are promoted by Italy and Romania, as well as Morocco. Meat promotion is primarily Australian beef and New Zealand lamb. A number of countries promote cheese, including Italy, the Netherlands, and Switzerland. Processed foods are the most import products for Germany, Austria, and the U.K. Italy and Greece also promote olive oil while Colombia advertises coffee and Iran advertises dried dates.
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