Trade parity seen for durum, pulses with Morocco FTA

Canadian producers and exporters of durum and pulses hope to at least secure their market share in Morocco against U.S. competition, as Canada and Morocco head into free trade talks.

Prime Minister Stephen Harper and his Moroccan counterpart Abbas El Fassi on Thursday announced the two countries will begin negotiations toward a free trade agreement (FTA).

If a deal can be completed, apart from its significance as Canada’s first on the African continent, it would at a minimum allow “access parity” for durum and pulses, according to Canadian producers and exporters.

Such parity is needed as tariff walls continue to shrink in Morocco for U.S. exporters, already in year six of the implementation period for a U.S./Morocco FTA finalized in 2006.

“Western Canadian farmers now supply 80 per cent of the durum imported by Morocco, where it is a staple food source,” Ian White, CEO of the Canadian Wheat Board, said in a separate release Thursday.

The CWB exports an average of 525,000 tonnes of durum each year to Morocco, most of that being No. 1 Canadian Western amber durum (CWAD) for use in couscous, pasta and bread.

The colour of CWAD flour and the wheat’s consistent quality from cargo to cargo make the Canadian product “very desirable” in Morocco.

But during its implementation period, the U.S./Morocco FTA already provides an “increasing tariff advantage” for U.S. durum, the CWB said.

Far ahead of lentils, peas and canaryseed, durum makes up 92 per cent of the value of Canadian ag exports to Morocco, the CWB said — and 65 per cent of Canada’s total merchandise exports, according to the Canadian Agri-Food Trade Alliance (CAFTA), a body of pro-free-trade ag commodity groups.

“We cannot afford to have our dominant position eroded if the U.S. retains preferential wheat market access,” said White, who was in Morocco to meet with end-users.

“Price and quality”

Pulse crop exports from Canada to Morocco, meanwhile, amount to over 26,000 tonnes per year, worth about $15 million annually, according to the industry group Pulse Canada. Morocco is now one of the top five markets in the world for green lentils.

“During a 2009 visit, Moroccan importers told us they want access to Canadian product and continued competition between suppliers,” David Nobbs, a Kindersley, Sask. grower and chairman of Pulse Canada, said in that group’s release.

“Our expectation is that a trade agreement between Canada and Morocco will give us access parity to this market, and give Morocco access to suppliers from Canada and the (U.S.) who will compete on the basis of price and quality, not market-distorting tariffs.”

But the terms of the U.S./Morocco FTA call for elimination of import duties for U.S. pulses over a 10- to 18-year period, which without a Canadian FTA would put lentils from Canada, the world’s largest lentil exporter, at a 50 per cent tariff disadvantage.

And Canadian peas are already at a 25 per cent tariff disadvantage behind U.S. peas, Pulse Canada added.

With no FTA for Canada, given current prices of about $1,000 per tonne for lentils, Moroccan tariffs would eventually add $500 to the cost of Canadian lentils, effectively eliminating those exports, the group said.

“Ready and eager”

“In a local market today, we met several merchants who were proudly selling Canadian lentils and were excited to meet us when we told them we were from Canada,” Richard Phillips, executive director of the Grain Growers of Canada, said in a separate release from Morocco. “Because they are happy with our agriculture products, they are promoting our goods directly to Moroccan consumers.”

Morocco’s import and export interests “are ready and eager to do business with us, as we are with them,” he said.

“Increasing disposable incomes, a relatively young population and a large tourism industry could also lead to growing opportunities for branded, packaged and processed food products in this country,” CAFTA executive director Kathleen Sullivan said in a separate release.

The CWB and Canadian International Grains Institute (CIGI) already host training programs in Winnipeg for Moroccan customers to demonstrate Canadian durum’s performance and quality, the board said.

In early January, the board noted, the CWB and CIGI held a seminar in Casablanca on the characteristics of the 2010 western Canadian wheat crop, for major Moroccan end-users, importers and government officials.

A trade deal with Morocco would also clear a path to that market for yet more Canadian ag products, Dennis Stephens, executive secretary of the Canada Grains Council, said in a separate statement.

Furthermore, he said, “bilateral agreements also provide an excellent opportunity to address non-tariff trade barrier issues that are increasingly causing trade disruptions bringing significant harm to Canada’s grain industry.”

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