Soy Canada Presentation to the House of Commons Standing Committee on International Trade: Trade Opportunities in the Indo Pacific
September 23, 2022, Ottawa ON – I’m here representing the soybean value chain. Soy Canada includes seed developers, growers, processors, and exporters. We have a diverse industry with soybeans grown from the Atlantic Ocean to the Rocky Mountains. Soybeans are the 3rd most valuable crop in Canada, with exports worth $3 billion in 2021. We produce world leading food grade soybeans for things like soy milk and tofu, as well as commodity beans that are crushed into meal for livestock and oil for humans and biofuel.
With more than 70% of our production exported, we are very focused on global markets. We appreciate the Committee’s interest in the Indo Pacific because you have an opportunity to enable significantly more growth.
Before I describe the most important ways that we can create more trade in the Indo Pacific, I’d like to share why we see it as such an important opportunity.
From a soybean perspective, the Indo Pacific is the heartbeat of global demand. Take the ASEAN region as an example – which excludes other major Indo Pacific soybean markets like Japan, China and Korea.
ASEAN imports approximately $9.1 billion worth of soybeans at current prices. With $380 million in Canadian soybean exports in 2021 and strong growth rates, there is significant room for growth. At the same time, demand for soybeans is growing significantly in the region for both food and feed markets.
- Take the Philippines as an example, where there has been a 12% annual growth for soy foods over the last five years.
The question facing us, is how do we get the most of current demand, and the demand growth that’s happening? For our sector, this will happen by improving our access to these markets.
First, we need to eliminate tariffs and establish ongoing regulatory collaboration on plant, animal and environmental health issues as part of a free trade agreement with Indonesia
Eliminating tariffs would create growth opportunities and predictability. For example, under its current commitments, Indonesia could raise tariffs on soybeans to 27%.
But eliminating tariffs is not enough, we also need to address non-tariff barriers like sanitary and phytosanitary issues related to plant, animal and human health. These issues can appear suddenly, create costs, create risk and even stop exports. I asked last week when the last time we had government to government engagement with plant health regulators between Indonesia and Canada. The answer? I’m still waiting to know too.
Second, we need to secure access to India for our food grade soybeans.
Increasing food grade exports to India is an opportunity for growth if we have competitive access. Currently we face tariffs of 45%, but they are also very unpredictable and could be raised to 100% at a moment’s notice.
Soybean trade with India is interesting as we are a significant importer of organic Indian soybeans that come in without a tariff. While Canada faces high and volatile tariffs on our soybean exports to India, other origins face lower tariffs to export to India. For example, recently there was a $100/tonne premium for non GM beans in India compared to China, but because of the import tariff applied to Canadian beans, India sourced beans from elsewhere.
Third, we need to invest in industry/government collaboration to proactively prevent non-tariff issues throughout the region.
Increased collaboration and investment would reduce risks and costs while helping to enable innovation on Canadian farms. I’ll provide two current examples of how limited engagement is costing us, and how more investment would help.
One example is in Vietnam, where we are unable to export our soybeans in bulk vessels. While beans produced in the US can be exported in bulk to Vietnam, concerns about thistle seeds prevent us.
Another example is the regulation of seed and crop protection technologies. Throughout the region, regulations are evolving – though often not in sync with what’s happening here in Canada. The result is that while these technologies are approved here in Canada, until they are accepted in export markets we cannot commercialize them. Investing in more collaboration between Canadian regulators and their Indo-Pacific counterparts will help minimize the trade barriers that arise when technology is regulated differently or is not based on science.
Thank you for chance to share how Canada can seize more opportunity in the Indo Pacific. I look forward to your questions.
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For further information, please contact:
Brian Innes
Executive Director
Soy Canada
613-617-8483
binnes@soycanada.ca