Welcome to this midweek edition of RealAg Radio! For today’s discussion, your host Shaun Haney is joined by Michael Harvey of CAFTA to talk about the U.S. -Canada trade war and its consequences, and Michael English of PWC to talk about non-U.S. ag exports and what needs to happen to make this possible. Also on today’s show, Haney unpacks some listener feedback!
00:00 - Coming up...
02:08 - Michael Harvey of CAFTA
17:35 - Michael Harvey of CAFTA
28:53 - Shaun Haney’s unpacks listener feedback
35:33 - Michael English of PWC
50:55 - Shaun Haney unpacks today’s topics
Thoughts on something we talked about on the show? Connect with host Shaun Haney at shaney@realagriculture.com, on X/Twitter by using the hashtag #RealAgRadio, or give us a shout on the response line, 1-855-776-6147.
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Read more » With Canada's trade issues with the United States, there's a lot of talk this week about trade diversification and Canada's trade growth in the future. How do we make sure that that is more diversified going forward? We've got a guest today that has done some research looking at the investment that Canada needs to make in trade infrastructure. Now, this isn't the first time we've heard about this. I've had a lot of different guests on this show that have talked about how Canada, if it's actually going to find new customers and find, you know, execute on new markets. It's easy to say, it's another thing to do. And one of the things that needs to be done is ensuring that we have the trade infrastructure in place to actually be able to fulfil that increased business. So we've talked about it before. What's the missing piece? Why are we still talking about this? Well, our guest today is going to say it's actually the will, and that's actually maybe the most concerning part, the continued continued trend of the gap being the will and the action to do what Canada needs to. We'll talk about that today on RealAg Radio.
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It's time for RealAg Radio on Rural Radio Channel 147 on SiriusXM. RealAg Radio and RealAgriculture.com is your home for insight and analysis of the issues that are impacting your farm business. Let's get real and get connected with RealAg Radio. Welcome to RealAg Radio here on Rural Radio 147 at SiriusXM. Shaun Haney, your host here on this Wednesday midweek edition of the show. Thanks so much everybody for making RealAg Radio and Rural Radio 147 Such a big part of your day. We've got a lot of issues to talk about here today. We'll be joined by Michael Harvey. He's the Executive Director with CAFTA. Now, that's— CAFTA is the organisation that represents all the different exportable agricultural commodities. We're going to get his take on what we're seeing in this US-Canada trade spat, war, battle, however you want to put it. And what does it mean for some of these exportable commodities that have really tried to stay out of, I guess, the consequence, the prop wash? Of, of some of this. We're also going to hear today from Michael English. He is with PwC. They've got some new research out on, hey, listen, if Canada is going to be doubling some of its non-US ag exports, the reality is that some things have to happen. It's just not just going to magically sort of appear. He'll talk about that today on the show. And I got some other commentary I want to provide as well and all the stuff that is happening. If you have any feedback on today's show, send me an email, shaney@realagriculture.com.
Thanks, Paul.
Let's start off today's show all about trade because that is the big topic of the week, and joining us right now is somebody that thinks about trade and exports all the time. It is Michael Harvey. He's Executive Director with CAFTA, which is the Canadian Agri-Food Trade Alliance. Michael, it's great to chat with you again.
Great to be back on the show.
Okay, so what's your reaction to the retaliatory list yesterday?
Let's go a little bit broader. Let's go beyond the list. I mean, we were disappointed that the talks broke down. And disappointed because that brings you to lists like this. This brings you to tariffs on Canadian goods, tariffs on U.S. goods. I mean, CAFTA exists to oppose tariffs, so we're disappointed. At the same time, we understand the Prime Minister's decision and support it. He didn't have a lot of great options.
Yeah. Did you think that they were pretty close to a deal on Friday? I guess when talks broke down and the news all happened and there's been a lot of hoopla since, Were you— because I was surprised. I actually thought there was going to be a deal on Friday. What was your reaction to it?
So I was somewhat surprised, not hugely surprised. I mean, it's not like I had a personal opinion. I'm on, as you know, the Prime Minister's Advisory Committee for Canada-US Economic Relations. So Minister Dominic LeBlanc and our chief negotiator, Jan Charette, and our ambassador to the US, Marc Weisman, have been briefing us regularly on how the talks are going. And they told us that they were fairly confident that they would reach an agreement, but that it could all fall apart because there was still a lot to get over. So I was surprised, but let's call it mildly surprised.
Yeah, yesterday we had Keith Currie from the Canadian Federation of Agriculture on the show, and I asked him this question. I'll ask you the same. Is, is CAFTA supportive of the talks getting restarted as soon as possible, or what are your thoughts on that? What are you encouraging at that table of the Prime Minister's Advisory Council? What are you promoting?
Oh, so let me put it this way. We, I mean, we're disappointed that the talks have stopped, but we understand why they stopped. To me, I've negotiated a lot over the years in different contexts, When you step away from a table, it's a way to reset the terms of the table. So, I mean, we'd love to see the talks start again quickly, but that would happen if there were a big change in the terms being offered by the United States, and I'm not sure that's going to be quickly. So I don't want to say that we're pushing for the talks to start quickly. What we want is the talks to start on a basis that allows them to get to a successful conclusion.
Can that happen before September 8th in your experience? Because you have been at some of these tables over the years in different countries. Can that happen before September 8th?
This can happen anytime. I mean, to my perspective, this is a question of how things play out in the United States political system. And from my reading of books and articles and listening to podcasts about the US political system under President Trump, it's unpredictable.
Yeah, I think that's— there's a thriving on some of the chaos and some of the unpredictability, and in some ways not being predictable can be a result of not being organised, or it can be a strategy. Time will tell on which one it is. As you look at the retaliatory tariffs, A lot of the groups that you represent, there is some concern about this tit-for-tat. Pulsed proteins, or what other commodities inside of your CAFTA ecosystem are really facing some challenges because of this response?
So, CAFTA has one friend, which is a lower-level membership category, the Canadian Aquaculture Industry Alliance. And US fish or US seafood has been hit by tariffs. So there's always the concern that that puts a target on your back if the US decides to counter-tariff the counter-tariffs. There's agricultural machinery, which is always a concern in terms of input costs, especially if there aren't Canadian alternatives for that machinery. But I'd say broadly, the agri-food sector, the agri-food exporting sector, is not as central to this discussion because the United States, which is maybe drifting away from strictly economic decision-making processes, still sees that putting tariffs on Canadian agri-food products increases prices for U.S. consumers. So it's difficult for them politically given their affordability difficulties.
I think one of the One of the strategies I heard on mainstream TV in Canada over the weekend, I've received messages from some members of our audience suggesting that, you know, the real step that Canada should take here to really remind the US that there is more, this is a two-way street from a benefit of trade, is export taxes. And of course, potash falls into that. There's lots of different commodities that can fit into that, but energy and potash are usually brought up the most. What's your thoughts when you hear export taxes?
Well, that would be ratcheting things up, and we're always nervous about escalatory spirals. That's the way I've said it in all my interviews.
Yeah, yeah, I like that.
I like that. Because when you escalate, often people escalate thinking that it's going to get you back to where you were more quickly, and sometimes you escalate and then you just have to work to get back down a level to where you are today, right? It's not obvious that ratcheting things up more easily solves things, so it would be a high-risk move. I mean, what the Prime Minister's people have told us in the advisory committee is that everything's on the table. Everything's on the table is the sort of broad comment that drives journalists nuts, But it means they're going to keep considering things as things go on. Right now, it's really a question of whether or not the U.S. is going to come back with either new attacks or will they come back with modified terms that allow the sides to get back to the table.
What are you hearing about— the Prime Minister had communicated on Saturday that one of the requests was to limit Canada's ability to do future trade deals with, I think how he phrased it, other countries. Can you speak to that at all based on what you've heard and what the premise of that was?
No, so what we were told is that the United States had a request to cap Canada's FTAs. Now, I don't 100% understand what that means to cap Canada's FTAs. That means no more free trade agreements, if that means that the US has the right to tell Canada that it can't sign certain free trade agreements. But in any case, I think from a CAFTA perspective, we totally understand why that's a red line. Though the United States is our most important market in the world, we want to sell all around the world. Diversification is a big part of our strategy, and we don't think it's acceptable that the United States could—
Right.
tell us that we can't sign free trade agreements with other countries.
Yeah, you know what, to be honest, I think that request, and I think most Canadians would agree that that seems like a cross the line, that just on that request alone, the Prime Minister was within his right to say, hey, we're done here. That's not acceptable. But I've also heard from a lot of people in the US saying, That request has initiated a response from some Americans saying, what are we doing? That is a nutty request. No, we would never accept that as America. Why would we expect Canada to do so? We heard on Saturday, the Prime Minister mentioned restarting significant trade talks with Europe as a part of this diversification strategy. From CAFTA's perspective, what opportunities are there in Europe?
So in Europe, we've had quite a bit of difficulty with their precautionary approach to decision-making on regulatory issues around some things like genetically modified crops or the way they manage some of the animal, the veterinary issues around hormones, carcass washes. So that's been difficult. At the same time, Europe's an important market for things like our cereals, our pulses. Europe's a big rich market but one that's quite protectionist. We're happy to discuss and we think we can always do better there.
That's been one of the challenges with Europe. There are still countries that have not ratified the CETA agreement, which is rather frustrating.
Yes, although it is being implemented even though it hasn't been ratified. Let's not get too deep into EU political processes.
Yeah.
But I mean, generally, our big growth markets are places where you have a big growing middle class that's allowing them to eat more protein, eat higher quality food, buy Canadian products, which are generally higher cost, higher quality. So you look at the big growing markets in Asia, for example. Again, the US is such a big market, it's not like we're going to replace it. And let's not forget that we're selling into the US as we always have right now. What we've got right now is this political risk that's all over the map, but we're still selling well to the United States. And let's not forget that the reason why we sell so well in the United States is because it's the biggest market in the world and it's right next to us.
Yeah, and agriculture obviously is caught up in a little bit of this, you know, current retaliatory back and forth, the, the US applying these Section 338 tariffs, Canada's retaliatory response Starting on September 8th, it is rather narrow. There, there is agriculture inside of those lanes, but it's still a pretty narrow— even though there's like 2,400 lines of tariff code, it— I've heard a lot of financial analysts this morning listening to Fox Business and Bloomberg saying it's still pretty narrow. It's not as broad. as maybe some people are making it out to be. Would you agree with that?
Yeah, again, we have to manage the short game, but let's keep our main strategy on the long game. The long game is that we live right next to the United States. It's a great market, the greatest market in the world. We'll keep selling there. And the long game is that the American political system over time, I think, understands economics. And economics is that freer trade, integrated supply chains means lower costs for American consumers, lower input costs for American producers. It's a good thing for the United States to have free and open trade with Canada. In the short term, there's political difficulties that we have to deal with. We wish weren't there, but let's not cut off our nose to spite our face here.
The United States will come back to something that's more reasonable, and let's not forget either that the United States administration announces a lot of things Yeah, I think some people are looking at those January 1st auto tariffs that were announced as an example of providing a window for opportunity for negotiation that's a long ways out, but also something when it's so far out it gives you a lot of time to maybe change your thoughts. We're talking to Michael Harvey, Executive Director with CAPTA. He's going to hang with us for one more segment. Hey, rooted in agriculture, MNP Ag Advisors combine field-level agronomic knowledge with financial and operational insight to help farmers make informed decisions. Farm businesses make confident decisions, turning insight into action. Learn more by going to MNP.ca. We're back here on RealAg Radio, Rural Radio 147, right after this.
Hey, whatcha looking at out there?
Huh?
Oh, nothing.
Uh, didn't you say that like a week ago?
Still true.
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RealAg Radio is Canada's only daily radio show focused on agriculture. Get expert advice on Agronomic Monday, Tuesdays and Wednesdays, we'll cover a broad range of issues. Thursday, we'll hear from farmers across the country on the Farmer Rapid Fire, and we'll wrap things up Fridays with the RealAg Issues panel with Kelvin Heppner and Lyndsey Smith. Join us Monday through Friday at 4:30 Eastern, and don't forget about the replay at 7 in the morning on Rural Radio 147 SiriusXM. And we are back here on RealAg Radio, Rural Radio 147 SiriusXM. SiriusXM. Shaun Haney, your host, and we're joined by Michael Harvey, Executive Director with CAFTA, this organisation that represents all the exportable ag commodities. And of course, exports, very critical to Canadian agriculture. We'll get back to our discussion here in a second. Every season begins with the conditions left behind from the last. From the Raptor stripper headers to the Spider disc drill, Kayhart designs equipment to support low disturbance farming practises throughout the production cycle. Visit kheartindustries.com. Michael, coming up here a little bit later on in the show, we'll be talking to PwC, who's put a report talking about, okay, like, we can talk about trade diversification, but we need to have trade infrastructure investment to be able to, to do so. We'll get to that discussion here a little bit. Do you agree with that premise? Do we have gaps? We talk about trade diversification, But is the system set up, like, do we have the assets in place in order to really seize that opportunity if customers really step up to the table?
Yeah, so I don't work directly on infrastructure issues, Shaun, but I can tell you my members do. And I mean, we've obviously got bottlenecks in our system. The Port of Vancouver always comes out really low on these global rankings. Our railways can be very difficult for our farmers to deal with. There's a number of issues. Again, there's bottlenecks. And the labour issues are often brought up. It seems like there's a strike every year that stops our export products for a while, and that really hurts our reputation with purchasers.
Yeah, you know, not to go back to the US for a second, but I had to laugh because, you know, in Canada we know that labour disruption has been a very contentious issue in agriculture, whether it's, you know, railways or terminals and things like that. We've kind of been through that cycle. And we talked about being a reliable trade partner and being able to get products when customers need them around the world. And then I heard Commerce Secretary Howard Lutnick say on the weekend on Fox that Canada— did you know that Canada doesn't have auto unions? And like, there's an example of the gaps in information because let me, let me make sure that all of our American audience knows this. Canada definitely has auto unions. In fact, they're quite powerful.
Yeah.
They, they have a lot of leverage. And, and so there is definitely unions in, in Canada. When you look at the trade diversification strategy, and, and I've heard Goldy Hyder from Canada Business Council say it this way, USMCA Plus, in how he describes that. Where are the— where, where is, is there low-hanging fruit or is it, is it a case of incremental increases with countries we're already dealing with? Where are the opportunities around the world?
I'd say incremental increases. I mean, we've worked a lot in the Indo-Pacific region in recent years because that's really a part of the world where this middle class is growing and people are eating higher quality food, getting more protein. People are eating more meat means we can sell Canadian meat, but it also means we can sell a lot of Canadian soy for feed. And just in general, we're not a low-cost producer, we're a high-quality producer. So as the world gets richer and the world keeps getting richer, Markets around the world grow.
China is also a factor. What are your thoughts on Canada's current trading relationship with China?
We've been very pleased with the direction it's gone under Prime Minister Carney. When he did the trip to China and opened things up, frankly, I think I did an interview with you at the time. Very pleasantly surprised. The day before everything unblocked, we didn't know it was going to. It's not every day that the politics come out a lot better than you thought it was going to. Things are going in the right direction. One thing in the Prime Minister's Advisory Committee I've said is that we need to, yes, solve our problems with the US, but we can't sacrifice our relationship with China to solve our relationship with the US. We need to sell to both countries. These are our 2 biggest markets. We need to sell to both.
Yeah, and we have President Xi of China visiting the US in late September. You know, US agriculture is very focused on that meeting. I don't believe there's any plans for President Xi to visit Canada. With him in North America, is there any opportunity for that to improve the Canadian position with China, or what are your— What is the— what are the signals to watch for?
So just on Canada, I'd say again, we're on the right path with China. The US, something that's interesting with CAPTA, we've gone down to Washington 3 times in the last year and a half, and often we'll get people, especially on the Republican side of the House, explaining to us, you know, we're a bit concerned with Canada getting closer to China. And we remind them that President Trump went to China, went there with a lot of American CEOs, sign big agreements, including signing big agreements for American agricultural products. So we do push back and explain that if you're worried about Canada getting closer to China, it doesn't help your credibility when you're doing so constantly in the same way.
Yeah, I, from an agriculture perspective, I agree. Both Canada and US agriculture are really looking for the same opportunities in China, right? Because, because that, that, that there's such a demand vacuum that is created by the economy of that size. It, it's difficult to replace that volume, just, just like it'd be very difficult for Canada to replace US volume. It's very difficult for North American agriculture to replace the China volume, right? We're, we're kind of in the same boat in that regard.
The difficulty in the management of our ag trade relationship with China is to not be collateral damage for other issues.
Oh man, that's true.
Has this excess capacity in areas like steel, for instance, or the fact that China, thanks to years of development of their EV industry and massive government subsidies, is now leapfrogging over Western countries and especially North America in terms of the quality of their EV vehicles. These create situations where governments decide to protect those industries And when government decides to protect those industries, the Chinese can see agriculture as a useful hostage, right? So we try to play into these government decisions to protect our industries, but they're often not ag issues. It's that we're collateral damage for other issues, and that's very difficult for us to manage.
Yeah, I think whether it's China, it's any country, it seems that Especially at the commodity level, maybe not as much products, but at the commodity level, agriculture is always one of the first places that countries go to, to try to respond to trade challenges, right? And so agriculture really just tries to— how I phrase it is just trying to stay out of the propwash of some of these bigger issues. And we see this in the Canada-US negotiations. It's autos, it's steel, aluminium, it's forestry.
Right.
Dairy is an issue, but it's not to the same level of context or significance in the talks as some of those others. And it's just trying to just— it's almost like you wish we could have a separate agricultural agreement. Do you know what I mean? It would make things a little bit simpler.
Yeah, that would work great for the ag sector. But I mean, ag products are not national security issues in the same way other products are. So if Canada talks about keeping Huawei out of our telecommunications networks, it's a little bit hard for the ag sector to understand how we would be the target for issues that started as like a national security discussion. But unfortunately, the world's going in the direction of more and more managed trade. And as it goes in the direction of managed trade, politics plays a big role. And politicians can go for the easy targets. I mean, the US has gone after Canadian wood furniture for national security reasons, right? So in an environment where the United States goes after Canadian wood furniture for national security reasons, we really see politics playing too big a role in the trading system.
Yeah, very, very fair. Okay, to wrap up here, Michael, what are you watching for here over the next 30 days or so when it comes to this trade tariff tit-for-tat that we're currently experiencing?
So let's see if the US responds. Let's not assume that all true social posts with Lake Ontario becoming Lake America are US response. Let's see if the US actually responds in the tariff world, and we got to watch the US political system too. Midterms are coming up, and that's obviously very central to the thinking of the administration. I'm not sure how that's going to play out, but it's definitely something that's central to their decision-making. So let's see if things move quickly, if things move slowly, and let's see how much is reality and how much is just rhetoric.
We've been talking to Michael Harvey. He's Executive Director with CAFTA. Michael, it's so great to chat with you. Thanks a lot for joining us here today.
Thanks for having me again.
Hey, we are back here on RealAg Radio, Rural Radio 147, right after this quick break.
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And we're back here on RealAg Radio, Rural Radio 147, SiriusXM. Hey, stay ahead this year with expertise from your G3 Farm Business Representative. And with G3 SmartSell, you can sell grain anytime, anywhere. Learn more by going to g3smarter.ca. Okay, we heard there in the previous couple segments from Michael Harvey with Kafka, you know, and it's been kind of interesting seeing and reading some of the listener feedback.
Yeah.
On this trade issue, and honestly, I would say there are perspectives that are really all over the board. There is a lot of different opinions on where all this goes next and what should happen. Everything from, you know, how does the US save face and back down and try to bring Canada back to the table? There's other people talking about, hey, there should be export tariffs on Canadian energy and potash.
Right.
Others saying, hey, the retaliatory tariffs, I'm glad they— I understand why they did it, I wish they wouldn't have done it. Other people saying, I'm really glad that, you know, Canada retaliated with tariffs even though there's going to be some short-term hurt. There's a lot of different perspectives out there for sure, and you can keep that feedback coming by sending me emails, shaney@realagriculture.com. I'd really love to hear from some of you on the RealAg feedback line, 855-776- 613-613-6147. Got an email here from Gary who says Carney doesn't want a deal, he's waiting for the midterms and hoping that the Democrats win. Now we appreciate the email, Gary. We talked about this yesterday with Jim Wiesmeyer, and if you missed that, go back and listen to yesterday's episode on YouTube or the RealAg Radio podcast. I think this is kind of a Canadian narrative that there is this belief that if the Democrats take the House, things are going to change. I'm of the opinion that is a strategy that is really based on real false pretences, real false— like, if that's our strategy, if that's Canada's strategy, good luck.
Yeah.
I just don't see that. We did hear from Wiesmeyer yesterday who kind of said, to be honest with you, it might actually get worse. Here's another email from Dean who says, hey, I don't send you emails because you already probably get too many, but great interview with Dr. Cole. So not related to trade whatsoever, But hey, Dean, thanks. I really appreciate that email. Dean is alluding to the new Mind Your Farm Business episode that has been published at RealAgriculture.com with Dr. David Cole. Really a legend. Legend. I am not— that is actually understated. Dr. Cole is like the— we talk about the Mount Rushmore of whatever. Dude's face may be on there by himself when it comes to farm management and talking about trying to make farm operators more in that CEO kind of category, and what are some of the things you need to do given some of the external and internal challenges that farmers and ranchers are facing in North America on a daily basis. I feel fortunate on the speaking circuit to get a chance to run into Dr. Coyle from time to time, and he joined us on the most recent episode of the Mind Your Farm Business podcast brought to you by RBC Royal Bank, and we just talked about like the 2 and 10 principle and just a lot of different stuff. He He is a legend. I encourage you to cheque out that interview and that episode. You can find it by going to mindyourfarmbusiness.com. Here is another one. Oh, it's back on the trade front. Sorry, back in the trade front where Randy says, I don't think Canada should have applied the retaliatory tariffs. Why? If we're arguing that Tariffs only hurt American consumers when the US does it. Why are we following suit doing the exact same thing? So appreciate that email, Randy, and I did receive some of those commentary and those thoughts.
That is a—
that there is— that's not just one person's opinion. I've heard that from a number of different people on top of some really extreme measures, which some people are talking about export tariffs. Like, so when President Trump says You know, we don't need anything from Canada. Canadians are getting ruffled up and saying, well, we'll show you, we'll put an export tax on things like potash and Canadian energy. Let's, you know, from my perspective, again, let's really hope that we don't get to that level of a trade war because I think at that point things are getting really nasty and ugly and agriculture is really going to get caught. So keep your feedback coming, shaney@realagriculture.com. When we come back here on RealAg Radio, we're going to hear from Michael English. He's with PwC, and they've got some new research out on what needs to change from a Canadian trade infrastructure perspective. You're listening to RealAg Radio here on Rural Radio 91.7.
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And welcome back to RealAg Radio here on Rural Radio 147 SiriusXM. Hey, step up and lead! Saskatchewan Pulse Growers and SaskOilseeds are looking for registered producers to join their boards. Make your voice heard, shape the future, and apply by September 11th. Director nomination forms available at saskpulse.com and saskoilseeds.com. Well, both Pulse Growers and oilseed growers are obviously very much thinking about trade at the current time. There's some new PwC research saying Canada could increase its non-US good exports by an additional $146 billion by 2035, but there is a but to that, and here to discuss the but is Michael English. He is Transportation Logistics Leader at PwC based out of Toronto. How are we doing today, Michael?
I'm good, Shaun. How are you?
Good. Okay, so where— what are the gaps if that's our target? And, you know, we hear Prime Minister Carney talking a lot about trade diversification for Canada in response to some of the trade issues with the US. What are the gaps?
Yeah, yeah. So as you pointed out, Mark Carney has been clear we want to double our non-US exports by 2035. So what we wanted to do in our research and say, what is it that we're going to ship and where we're going to ship it to? Because that, that impacts how we manage our whole supply chain in the country. So we looked at all kinds of data models. We brought in our economists from various parts of the world, and we narrowed it down to 3 categories. One, agri-food, minerals, and energy, oil and gas. And we're going to talk about agri-food, of course. But the other 2 are also important because we're going to compete in terms of investment dollars coming in. And you, you've asked me a question, Shaun, what are the gaps? Well, infrastructure is going to be the big discussion point here.
Okay, and is there specific parts of that trade infrastructure, like is it, is it the amount of capacity of plants, is it rail networks, is it port capacity, or is it maybe all of the above?
Yeah, yeah. Well, easy answer would be all of the above, but let's dissect it a little bit, right? So we know today we export our agri-food significantly to the US. That will continue to grow. So in the next 10 years, we will double, we're projecting to double the amount of US exports. But what's interesting in our projections is areas like Europe, Sub-Saharan Africa, Middle East, and North Africa will triple or quadruple, right? So all of a sudden you start seeing a shift in where the products move, where before we're— we will still continue to ship a lot to the US, but we're going to ship more and more towards the East as an example. So now we start thinking about extra bulk capacity in East Coast ports. And we start thinking about extra carload capacity specifically designed for the agri-food sector.
Okay, so which ports would be examples where there's opportunity then?
So St. John, Halifax are big ports shipping our products to the east, but we could explore also some inland ports, right? The Thunder Bays, the Hamiltons. There's potential opportunities there. But I think largely with our great rail network that we have, I think it's really the synergies between rail and the big ports that we have out east. If I contrast though to mineral and energy, agri-food's got a leg up because the supply chain already exists today. Whereas when we think about minerals, the Ring of Fire, there's more investments to do there.
Are you a proponent of Churchill?
Churchill is a very cool discussion. I'm certainly a proponent to evaluate all the benefits of it. I think there's various opportunities around it, but I think there are some logistics challenges too, even with the type of soil that sits in that area. Can we bring heavy rail towards the Port of Churchill? I think there's a lot of studies to still be done on that point.
Yeah, one of the issues that comes up a lot when it comes to trade infrastructure is, you know, very much in line with what we've been chatting about. But there's another bolt-on component of that, and that has to do with reliability. You know, we have to deal with Mother Nature. Cold weather definitely impacts rail's ability to live up to some of its capacity promises. Canada is no stranger to labour disputes with the rail, with terminals. What specific investments protect these kind of trade routes from some of the supply shocks related to weather or labour disruption?
Yeah, this is a great, great question, Shaun. There's a lot to unpack here because when we think about climate change, it creates risks in our own supply chain, but it also creates opportunities, right? Maybe with some of the warming that we're experiencing, our agriculture seasons might increase a little bit. And those factors that we're experiencing here, other countries around the world, again, areas in Africa, emerging Asia, they've got these issues too. And because of those specific issues you're describing here impacting us here, the demand offshore wants to diversify. They want to find new sources of products, and Canada comes top of mind when they think about a reliable partner overall. Now, of course, we've got to create resiliency. We've got to create perhaps new routes, interchangeability between our different modes of transportation to continue to be a very reliable partner.
Michael, you're not the first guest I've ever had here on the show that's brought this issue to our attention. What's holding us back? Is it capital investment? Is like, what's the hang-up here?
I think it's the willingness. I think it's a focus on understanding the ecosystem as a whole, right? If we micro-solve opportunities one after the other, we lose the connectivity between all the partners involved. So I think we do need to look at capital, but even we talk about agri-food here today, if we're building port capacity at the moment, are we building it for minerals or agri-food? Right, so we have to think as Canadians about how we're going to balance this demand, not just for agri-food, but all the other big sectors that are all going to fight for the same investment dollar. There is a solution, but I think it needs to be— it's to be thought through altogether.
Can it not be all the above from all those, you know, those 3 different lanes of product types? Or like, is there overlap where certain kind of transportation infrastructure investments benefits all 3, or are they just really all 3 so unique that's not possible?
No, that's another great question, Shaun. I do think there is overlap. So As an example, in Ontario, we're building roads now towards the Ring of Fire, right?
Uh-huh.
And we're eventually— the idea is to mine new minerals out of that region. We're not— railroads are not going to set up a new track at every single one of those mines. They're going to set up these, these intermodal terminals somewhere. Well, now these terminals could also service agri-food moving products from west to east. So I do think there's a relationship. I think our railroads that are well established can play a role in coordinating so that the thought leadership behind this, the network studies behind this, but I think our agri-food players, and I'm going to talk about processors in a second, but they also have a role to play in understanding the relationships with these other categories that we move. I think the only way we really punch hard and meet our objectives to double non-US exports is playing game together, right? It's going to be by collaborating with those new investments that are happening also in the defence sector, right? We're going to move software. If I think about the defence strategy we have for the north part of Canada, things have to move east to west as well. So I think it's a collaboration between these sectors that can make us stronger.
Is there some strategic steps that agri-food businesses take in the next 12 months to, I guess, prepare or enable this 2035 target that is pretty aggressive?
Yeah, it's an aggressive target. Sharing numbers though, right? We talked about, if you saw in the report, Shaun, specifically for agri-food right now, last year we shipped $30 point— almost $31 billion in non-U.S. exports. That would potentially grow to $82 billion, right, by 2035. These are absolutely big numbers. In terms of first steps for me is we're getting caught up a bit in the short term right now. We talk a lot, we have to talk about tariffs, of course. There's things that are happening every day. We cannot lose sight of these growth numbers in the long term, right? So if I'm a food processor right now, I've got to think, where's my next DC? Where do I place my next DC? Do I think I'm going to— and it's tough to forecast 10 years out. But that's where you bring in macroeconomic conditions and we say population growth, income growth, who needs our products? And if we all agree that there's going to be an increased demand in the East, now it starts shifting some of our distribution capacity, shipping capacity towards the East. And we know a DC takes a few years to build, a plant takes 5 years to build. So what I'm asking in a way, our listeners today or viewers, is to really think, we got to think short-term, protect our businesses, but we also have to think long-term, and we've got to think about those investments together.
Do you have a perspective on, you do mention European markets and other growth markets as being the opportunity we're trying to feed here. We heard the Prime Minister say on Saturday, Canada is going to be restarting trade negotiations with Europe specifically. in that address last weekend. Is there a real opportunity to increase exports to Europe, or is that just something that sounds nice?
No, I think there's a real opportunity here, Shaun. I'll even give you numbers. I think in Europe, we're expecting in the next 10 years our agri-food exports to triple. Now, if we did nothing, by the way, right, if we did nothing, it would still grow. Right, there's been a constant amount of growth over the last decade.
Yeah.
That will continue, but with, with Carney's policy ambition, we expect that growth to actually triple in the next 10 years. So it's going to happen. They need to diversify their sources, right? They've got their population growth as well in some other areas outside Europe a little stronger. I think about North Africa, for example, close to Europe. But they need to diversify their sources, they need to find reliable partners, and that's both on the wheat, the barley, the grains, but of course on the food manufacturing, the processing sides.
We had Michael Harvey from KAFTA on the show earlier today, and he was talking about Europe as well, but also talked about the long-time frustration and the lack of science-based approach that Europe can have and, you know, the precautionary method of the way that they make some decisions and some of the non-tariff trade barriers and those kind of frustrations, those things are going to have to evolve and change if Canada is going to be able to seize this opportunity and be able to ship more agri-food products to Europe.
Yeah, the same way we are trying to diversify— I'm using the words outside the US, it's in addition to the US, to be clear— I think the same applies to Europe. I do think Europe is such a large market that we have to consider. But yes, you're illustrating some risks related to that, right? Some opportunities. But there's emerging Asia, sub-Saharan Africa, long-term play, right? But that's where the growth might be the highest, right?
Yeah, and I think a lot of times we hear Europe, we think France, Germany, and Italy, like Spain. But, you know, I was hearing on Bloomberg this morning, like, the real economic growth that's happening in a place like Poland. for example, right now, and in countries like that. We've been talking to Michael England. Sorry, go ahead, Michael, go ahead.
I was just going to add maybe a last point here, Shaun, when you were just making that point about the specific countries. When we look at our analysis here, we look at the market size, the growth, the income, but we also look at the market openness and their ability to produce the products that we have. So you raised Poland as an example. There's some countries in Eastern Europe, in the south that don't have the ability to produce what we produce here. And that creates the opportunity that we've identified here.
We've been talking to Michael English. He is transportation logistics leader at PwC. Michael, thanks so much for joining us here today. Really appreciate it.
Thanks for having me, Shaun.
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And welcome back to RealAg Radio here on Rural Radio 147 SiriusXM. Hey, FB Genetics SU Performer hybrid fall rye, known for its standability and harvest stability. Visit fpgenetics.ca to discover FP's dynamic rye portfolio and to contact your local territory manager or product specialist. FP Genetics— gain a genetic advantage and experience the next wave. You know, we were just talking to Michael English, and here's the reality. He is bringing up a topic that is— we've heard it on the show here before, okay? This isn't new. Where we're talking about how, you know, Canada can have these trade diversification goals and strategies, and maybe it's like a national plan, whatever that looks like. We can talk about it, but you got to ask yourself, why isn't it happening? And English alluded to the fact that, listen, It's, it's will. That's the problem. That is kind of— that is a real problem. It's the action part. And I'm sorry, I don't want to like get into some sort of old retreaded rant that I've executed here on the show before, but there is a bit of a common thread being pulled here. If English is correct, And it's really a will issue, that's a problem. If the trade battle with the US isn't enough of a wake-up call for Canada to make changes and to diversify its trade portfolio, if this doesn't create the will, I, I don't know what ever will.
Yeah.
We'll just continue to talk about it. It'll just be a thing that's, you know, I'll host panels at future meetings, at conferences across the country. You know, how does agriculture become the superpower that we talk about? Like, I don't know how many panels I've done on that topic. And quite frankly, I hope, you know, it would be A real testament to the action if we don't have to do that in the future.
Trade—
Michael Harvey said this earlier on the show today— Canada is going to trade with the US. This isn't about not trading with the US longer term. This is about what Goldie Hyder talks about in terms of USMCA Plus, and the plus part is diversifying the increased trade, the incremental amount over top of what goes to the US, making sure that is more— the trade growth, making sure the trade growth is more diversified. But that requires, as English alluded to, will and action. And there's a bit of a common thing being developed here where we like talking about stuff, we'll put things on the board, We may even write them down, but we got to find the action. That is the important part. If you have any feedback on today's show, I'd love to hear from you. What are your thoughts on what we heard from our guests here today? You can send me an email, shaney@realagriculture.com. You can also call or text the RealAg feedback line, 855-776-6147. Thanks everybody for getting real and getting connected with RealAg Radio. We'll of course chat again tomorrow. Cheers, everybody.
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