International trade has dominated the agenda of the Ontario Corn Producers’ Association (OCPA) for most of its 15-plus years of existence. NAFTA and the 1994 multilateral trade agreement represented partial milestones. They did lead to some reduction in trade-distorting subsidies and provided better means of resolving international trade disputes in agriculture. Their benefit was magnified by recent years of weather-induced crop shortages and consequent price increases, subsidy reductions, and a period of relative peace in the world of grain trade.

But with global grain stocks once again large – and with prices back down to near historic lows in real-dollar values – agricultural trade successes of the past decade are showing signs of unraveling. European grain export subsidies are prevalent again. Non-tariff barriers to international trade in agriculture and food are rising. The trade rhetoric is again becoming aggressive.

The biggest change recently has occurred in the U.S. where vigilante action has occurred against agriculture imports, and where subsidies for grain and oilseed producers are growing rapidly. With its recent subsidy program changes, the U.S. has effectively abandoned any pretense that price- and production-linked subsidy programs have been eliminated in that country. U.S. actions also cast doubts on their stated "Farm Bill" strategy of phasing out grain subsidy support through "transition payments" ending in 2002.

The millennium round of international trade negotiations, scheduled to begin in late 1999, is timely. But there can be no delusions of a quick or complete fix. In addition to negotiations on the traditional trade subjects of tariffs, subsidies, and trade dispute resolution techniques, there will also be much debate this time on biotechnology, environment, labour, state trading, health, culture, food security and more.

The world has seen a steady improvement in the rules of international trade since World War II. However, it’s false to assume this trend will continue automatically. Forces for increased domestic protectionism loom large within most countries. The millennium round will be politically hazardous. The outcome is uncertain.

Agriculture and food are particularly contentious topics in trade negotiations. Few countries will accept unfettered dependence on foreign food – regardless of trade liberalization policies in other areas. And countries which have traditionally been grain importers are now sometimes grain exporters.

Certainly there will continue to be international (i.e., non-North American) markets for agricultural commodities. These markets are crucial where domestic production vastly exceeds domestic usage. But this is a marketplace fraught with uncertainly and instability. And this is unlikely to change, the millennium round notwithstanding.

There will always be global food crises and hunger in developing countries, but the best long-term solutions to these involve political stability, improved standards of living, and improved domestic food production, not sustained high-volume food sales or donations from afar..

About a decade ago, OCPA directors concluded that it made little sense to link the future well-being of Ontario corn growers to the vagaries of overseas sales of bulk corn. Of course, some unique international sales opportunities would continue, but heavy dependence on overseas markets – especially via a high-cost seaway system – meant a future of low price basis values and market instability.

Instead, it made more sense to concentrate on domestic value added, and on international and domestic sales of high-value processed products, or of corn grain with unique quality characteristics. The one exception was sales to feed mills in the Eastern U.S. But from an Ontario perspective, this can be viewed as a simple extension of the domestic market.

While this strategy has far to go in implementation, it is already paying dividends.

Domestic processing of corn continues to grow. Domestic corn usage now exceeds that of all other crops except barley. And compared to barley, the domestic usage pattern for corn is far more diverse and it is the non-feed markets where growth has been most notable. According to analyses by Brian Doidge (www.ontariocorn.org/supply.html), Ontario corn use will reach 221 million bushels in 1999/2000 with 82 million bushels of this being industrial usage. The corresponding figures for 1991/92 were 171 million bushels and 46 million bushels. Of the 50 million bushel growth in provincial usage during this span, 72 per cent is industrial. Though potential production and corn are estimated as similar in both years, overseas sales of Ontario corn are projected at only two million bushels next year, versus 17 million bushels in 1991/92.

The point is not that Ontario corn producers are or can be immune to global trade concerns. Our prices are based on the Chicago market, and the border is open. Many of the products of industrial processing are sold internationally. But somehow these problems seem less critical than those of times past when we spent energy trying to compete for sales to countries like Iran and Iraq – and on how to get credit from the Export Development Corporation for financing.

There is no intent to suggest the OCPA strategy is right for other commodities. And the next few years will be most trying for Canadian grain farmers everywhere. But thanks to "value added," the trade perspective of Ontario corn growers, this time, is somewhat less uncertain than what we faced when the last trade round began 12 years ago.