“A library outranks any other one thing a community can do to benefit its people. It is a never failing spring in the desert.”
Andrew Carnegie
Halifax Library, Halifax Nova Scotia
Friday Reflection
Archives for March 2018
Dr. Sylvain Charlebois: What StatCan and Loblaw numbers are really telling us
“Eating out is costing more, as are tomatoes for some strange reason. Here’s the good news. Bread is cheaper. But one thing is clear though: 2018 is turning into a very challenging year for the food industry.”
Dr. Sylvain Charlebois
Dr. Sylvain Charlebois
Dean, Faculty of Management
Recent StatCan numbers indicate that grocers are in trouble. Food inflation is now above 2% for the first time since April 2016. This is typically good news for grocers as it gives more room for them to increase margins. But given major headwinds affecting the industry, grocers will need to get even more creative to reassure investors.
Loblaw has reason to be particularly worried, having posted underwhelming 4Q results last week. Food retail sales dropped by 1.2% and total revenues slipped by 0.9%. Despite strong Shoppers Drug Mart sales, company executives indicated that reforms affecting the price of generic drugs will impact profits. But it is higher wages that seem to be the big worry for the company, as provincial governments are exploring options, figuring out how an economy with a $15/hour minimum wage would work. In fact, StatCan numbers may be suggesting where things are headed with minimum wage increases.
It may too early to tell, but Ontario minimum wage hikes likely pushed menu prices higher in January, especially in fast food, where most of the income earners are paid minimum wage. And this likely just the beginning. After a 22% hike on January 1st of this year, Ontario’s minimum wage is due to increase again to $15/hour on January 1, 2019. Alberta will join the $15/hour club in October of this year, and British Columbia intends to pass the $15 mark in 2021. Other provinces like Quebec and Nova Scotia are thinking about following suit. The $15 campaign will not go away any time soon. Obviously, most people don’t object to the concept that people should earn a decent living. The challenge with Ontario, though, is how quickly wage hikes are being implemented. A 32% increase in 12 months is simply irresponsible. Restaurants, and many of them are family-owned businesses in regions across the province, will have a hard time coping.
The grocery business is also being affected by higher minimum wages, but indicators are subtler. Here’s one example. The price of tomatoes, one of the most popular produce items, jumped by more than 30% in one month. It’s hard to tell, but this was likely an effect of minimum wage increases, as it is unusual to see any fruit or vegetable price increase by even 4% in one single winter month. Even imports have a critical impact as the value of the Canadian dollar remained relatively stable against the U.S. greenback. Margins are typically much higher in this section of the store.
2018 is turning into a very challenging year for grocers, especially Loblaw. Results we saw last week from Loblaw are indicative of what is to come. For the Brampton-based giant, it is a godsend to see food inflation rise again, so that it can tweak certain price points, and increase margins without most people noticing. Loblaw will need to get creative — very creative — in order to continue to deliver over the next few quarters. Results indicate that store traffic is an ongoing issue, so converting store sales to online activity will be critical, especially with what is on the horizon.
Meanwhile, in the U.S., Amazon is continuing to create havoc in the grocery landscape. Bloomberg just reported that two grocers, Winn-Dixie parent Bi-Lo and Tops Friendly Market, could declare bankruptcy this month. This is likely due to the ominous shakedown in the grocery industry caused by Amazon and its newly acquired Whole Foods subsidiary. This is only the beginning, and Amazon is slowly capturing more market share in groceries, destroying historically well-established players one by one, as it did in other sectors like bookstores. Loblaw is realistically concerned that Amazon will make its way into Canada — a further threat to this major grocer.
But there is still hope. Higher menu prices may slow down the food service sector’s string of successes in recent years. As food and labour are a restaurant’s highest expenses, this may be an opportunity for a grocer like Loblaw to commit more seriously to both ready-to-eat and ready-to-cook spaces. Increasing food retail sales will become more and more difficult. While menu prices go up, exploiting the nexus between food service and retailing may give Loblaw an advantage. This could be Loblaw’s next move, but they clearly need to think differently about how to grow the business.
Interestingly though, while posting its 4Q results, Loblaw made no mention of it $25 gift certificate campaign, launched because of its self-confessed involvement in the bread price-fixing scheme in December. Nonetheless, StatCan numbers confirmed what many suspected. Bread prices are dropping across the country. BMO stated earlier this year that bread prices were down 2.5% since December, after Loblaw made the disclosure. According to StatCan, bread prices dropped 1.7% in January alone. In fact, it seems most bakery products are cheaper than they were a month ago. This may be a sign that grocers are trying to make amends with the public, since the story has garnered so much attention. It is unclear whether the aggressive discounting we have seen in many stores will continue — only time will tell.
Dr. Sylvain Charlebois
Dean, Faculty of Management
Dalhousie University
February 2018
Dr. Carolan McLarney: Mary Parker Follett on Leadership
“Leadership is not defined by the exercise of power but by the capacity to increase the sense of power among those led. The most essential work of the leader is to create more leaders.” Mary Parker Follett
Dr. Carolan McLarney
Dr. Carolan McLarney has explored the remarkable life of Mary Parker Follett since her doctoral days. 2018 is the 150th anniversary of Follett’s birth as well as the 100th anniversary of her book, The New State: Group Organization the Solution of Popular Government. To honour this milestone, Dr. McLarney has graciously agreed to give a series of interviews over the course of 2018 which will highlight her research on Mary Parker Follett. What will surprise you, as it did me: many “cutting edge” concepts we think came from our “modern time” had their origins in the writings of Mary Parker Follett. We invite you to join the discussion over the coming year and welcome your thoughts and comments.
Dr. Carolan McLarney
Mary Parker Follett lived in the United States from 1868 to 1933. A writer, political analyst, social activist, philosopher, lecturer, colleague and friend, she lived in a time when the United States was undergoing great changes resulting from increased urbanization and industrialization. It was not the age of the feminist, but somehow Mary Parker Follett penetrated the inner sanctum of some of the world’s leading organizations (Rowntree’s of England and Dennison’s of the United States to name two). She observed and commented on the workings of these organizations, and from them, she formulated an encompassing theory of leadership.
Mary Parker Follett wrote about leaders and leadership in the early part of the last century. Her work in leadership theory from a historical Organizational Behaviour perspective finds resonance in the theories from 1902 all the way to to-day. There is no single theory which seems to encompass her writings, but rather there are elements scattered throughout the over 3,000 empirical studies on leadership. Mary Parker Follett’s view of leadership can be found in the early literature on Trait Theory, which argues that leaders are born possessing the affinity and characteristics for leadership, to Fielder’s Contingency Theory which focuses on style and control over a situation. She also believed that there were a number of qualities that comprise leadership. In the Essentials of Leadership, she wrote:
“…tenacity, sincerity, fair dealings with all, steadfastness of purpose, depth of conviction, control of temper, tact, steadiness in stormy periods, ability to meet emergencies, power to draw forth and develop latent possibilities of others…” (1933, p. 45)
While Mary Parker Follett believed that these qualities enhanced leadership, she did not accept that these qualities were the only aspect of leadership. She believed that leaders were neither born nor simply created, but rather there exists an element of both in a good leader. Leaders could not be simply identified by just their traits or just their behaviours. Miss Follett felt leadership could be learned and strongly endorsed leadership training. Leadership involved gaining an understanding the organization and management; in other words, she felt that as a successful leader you had to know your job. A good leader knows their place in the organization and “his relation to all the other parts.”(Leader and Expert, 1930)
Mary Parker Follett wrote in The New State: Group Organization the Solution of Popular Government, that a leader can only lead the group from within the group. It is within the group that the leader can come to understand what the group’s goal(s) means to each member of the group. It is within the group that the leader can determine the varying interests of the group members and harmonize any conflicting interests through two-way communication. Only from within can they reconcile these interests to the group’s goal(s).
“…the leader of our neighbourhood group must interpret our experience to us, must see all the different points of view which underlie our daily activities and also their connections, must adjust the varying and often conflicting needs, must lead the group to an understanding of its needs and to a unification of its purpose.“(1918, p. 61)
Mary Parker Follett did not finish her theory with the search for universal behaviours, she broadened her view with the idea that leadership is situationally influenced. Miss Follett understood that leadership depended and changed according to the situation within which the group found themselves.
Dr. Carolan McLarney, Professor
Rowe School of Business
Prior to completing her doctorate, Dr. McLarney held management positions in various companies in the hospital, transportation, and consulting sectors. Her research interests include the interface between small businesses and international business strategy, and the use of strategic alliances to garner success. Dr. McLarney also explores issues relating to board governance, particularly the use of outside directors.
Dr. Binod Sundararajan: Facebook is Dead, Long Live Facebook!
“While pundits will explicate the reasons for the situation that Facebook currently faces, as issues with the business model, lack of transparency, or delayed response from the CEO in the face of this current crisis involving Cambridge Analytica, the writing has been on the wall for Facebook that it is passé.” Dr. Binod Sundararajan
BINOD SUNDARARAJAN
Associate Professor of Management; Associate Director, Rowe School of Business; Academic/Research Director, CELNET
Dr. Binod Sundararajan: Facebook is Dead, Long live Facebook! – A commentary about the half-life and shelf-life of the social media behemoth.
The half-life term is generally used to describe the decay of discrete entities, often, at the atomic or sub-atomic levels. On the other hand, shelf life refers to how long a product, service or entity can be stored/used before becoming unfit for consumption. If we were to have the two face-off each other, then according to a post on pharmainfo.net, “Half-life is the amount of time needed for a substance/drug to fall to half of its initial value. Shelf life means the duration of time for which the drug/substance would remain stable and not be deteriorated.”
Let’s take stock then (pun intended) of Facebook’s valuation as of March 2018. According to Delventhal (Investopedia, March 21, 2018), “shares of the Menlo Park, Calif.-based company are now trading at their cheapest level since the firm hit the public markets in 2012 at around 18 times its 12-month forward price-to-earnings ratio.” The article further quotes experts who say that it is probably good to buy Facebook stock now, i.e. buy low, but other experts indicate that if new regulatory measures are implemented, then it would affect the long-term growth strategy for Facebook.
Facebook is no longer seen as anything other than a place for parents to connect and a place for some membership groups to exist. It is of little interest to the millennials and gen Z demographic.
While pundits will explicate the reasons for the situation that Facebook currently faces, as issues with the business model, lack of transparency, or delayed response from the CEO in the face of this current crisis involving Cambridge Analytica, the writing has been on the wall for Facebook that it is passé. Facebook has tried to stay current by acquiring other companies or merging with still others. But with the passing of Web 2.0, the tweenage struggles of the Internet of Things (IoT), and a general cry of despair from cross-cultural and cross-political milieu about the lack of trust in things on the web, Facebook’s response (or lack of in the first five days since the Cambridge Analytica story broke) has to be seen as symptomatic of an organization that is out-of-touch with its demographic. Facebook is no longer seen as anything other than a place for parents to connect and a place for some membership groups to exist. It is of little interest to the millennials and gen Z demographic.
Modern users of social or sociocultural media understand that they are giving up a certain aspect of their private lives to make the online connections that they seek.
In order to remain relevant Facebook, like all big organizations, has acquired companies like Instagram, Whatsapp, and a host of other smaller entities. However, its acquisition of Whatsapp did not deter the co-founder of Whatsapp, Brian Acton, to urge the “deletion of Facebook”, or maybe it was the way Facebook acquired Whatsapp, that caused Brian Acton to join the #deletefacebook movement, This sheds light on typical M&A (Mergers and Acquisitions) approaches, but more so on CEO and organizational strategies not considering certain cardinal rules about what is important to constituents – in this case the seemingly real or illusionary aspect of a modicum of privacy with user data.
Modern users of social or sociocultural media understand that they are giving up a certain aspect of their private lives to make the online connections that they seek. These connections are often to locate friends and family lost through the mists of time, seek new friends or support groups, while away their time playing this game or that, or find some entertainment to enjoy and recommend.
If individuals, organizations and governments fail to adapt to the changing realities of the modern world or the needs of the demographics these entities seek to fulfil, then such organizations will slowly disappear into the black hole of “has beens”.
But as more and more such platforms are taking users away from Facebook, each providing better security, more options, and increased ability to connect with others, the one-stop-shopping experience of Facebook is antiquated. Is this then the death knell for Facebook? Probably not entirely. Facebook may continue to exist in some form, or go the way of its predecessors like Friendster, MySpace or Orkut. But, as has happened repeatedly, if individuals, organizations and governments fail to adapt to the changing realities of the modern world or the needs of the demographics these entities seek to fulfill, then such organizations will slowly disappear into the black hole of “has beens”.
So, it will be for Facebook. It appears that Facebook has reached its half-life and decayed in value (not just financial, but in the real or perceived value that Facebook users feel), is well past its shelf-life, and in effect, Facebook is dead. Long live Facebook!
Dr. Binod Sundararajan is the Associate Director of the Rowe School of Business, Faculty of Management at Dalhousie University. He teaches Managing People at the MBA level, and Business Communication, and Corporate Communications at the undergraduate level. Binod’s knowledge and experience is recognized internationally. His speaking engagements and conference presentations span the globe.
Friday Reflection – Our First Video
“See the world. It’s more fantastic than any dream made or paid for in factories. Ask for no guarantees, ask for no security.”
Ray Bradbury, Fahrenheit 451
Vancouver Seawall
Dr. Sylvain Charlebois: Killing a Canadian Icon
“It appears Canadians are starting to realize who’s behind the heartless stance against Tim Horton’s employees here in Canada. But RBI’s future plans may have nothing to do with Canada, and even less so with low-wage Canadian employees.”
Dr. Sylvain Charlebois
Dr. Sylvain Charlebois
Dean, Faculty of Management
Destroying Canadian icons seems to be a trend these days. In 2017, it was Sears. While employees were losing their pensions because of poor management, lawyers and consultants were receiving millions. Now, as minimum wage policies are slowly shifting across the nation, and not just in Ontario, Alberta and B.C., Tim Horton’s, or perhaps Restaurant Brands International (RBI), is displaying what many would consider unwise resistance.
Several Canadian retail icons have crumbled, due to weak managerial strategies. This was the case with Eaton’s and most recently, Sears. Most closures, though, have historically been self-inflicted. With Tim Horton’s and RBI, the act seems almost deliberate, even tactical, and implicitly calculated. Most executives and members of the board at RBI have unquestionable business and financial acumen. RBI’s shares have almost doubled in value since its inception in 2014 when Burger King merged with Tim Horton’s and landed its Head Office in Oakville, where Tim Horton’s used to be.
But RBI’s share price is starting to weaken. After hitting a record high price of about $84 in October 2017, it is now down to approximately $77. It appears that markets may be starting to connect franchise-based challenges with the parent company, which also owns Burger King.
RBI is all about cost management, and has served several food outlets so far beyond reproach. But Burger King and Tim Horton’s are two very different franchising worlds. A typical Tim Horton’s franchise owner has about 3 stores on average. Most are regionally located, family-owned operations looking to support communities and create jobs for the next generation. With the Burger King division, on the other hand, RBI deals with franchise owners who typically own about 150 restaurants, sometimes even more. RBI’s role with Burger King is inherently different. Burger King franchise owners are massive companies, dealing with an outer-agent in RBI, and act more like an association of buyers. In addition, Burger King is no iconic brand but more of a me-too project which came out of the McDonald’s expansion years ago. Similar observations can be made about Popeye’s, another fast food chain recently purchased by RBI.
RBI is run by competent leadership who know a thing or two about how to operate franchises in the food industry. But its style, fueled by the ever increasing number-focused obsession of Brazilian group 3G Capital, does not offer the stewardship the iconic Canadian brand needs.
On the other hand, RBI’s aims may be deliberate. RBI’s intends to expand beyond Canada, and make Tim Horton’s a global brand, something Tim Horton’s has failed to do over the last few decades. So far, results in the U.K. are promising but more investments will be required. RBI is essentially using its established iconic status in Canada to support its international ambitions. In the process though, lies several victims, including franchise owners, and most important, low-wage employees being asked to pay for uniforms and limit paid breaks. When numbers matter too much, as it is the case for RBI, human capital is treated, heartlessly, as unimportant. And now, an increasing number of Canadians are noticing.
But there is more to this. Relocating RBI’s Head Office is a strong possibility. The company has never shied away from the idea, giving itself five years to do so, after its expansion in 2014. With the U.S.’s new tax reform, the fiscal climate is more attractive for a potential move south of the border. Burger King’s move north was considered a corporate tax inversion ploy in 2014. With a new tax regime in the U.S., we should not be shocked to see Tim Horton’s become a true American-owned brand. Canada will matter less and less, as the company expands internationally.
Nonetheless, the brand is suffering and will continue to suffer for a while, to the dismay of many Canadians. Many of us gather at Tim’s for regular chats, to celebrate birthdays — there have even been a few weddings at Tim Horton’s. None of this seem to matter to RBI. Regrettably, Tim Horton’s faith, the brand that is, could end up looking like the life of the legendary hockey player, Tim Horton, himself. They both started as Canadian, moved to the U.S. for a while before, well, we all know the rest of the melancholic story.
Dr. Sylvain Charlebois
Dean, Faculty of Management
Dalhousie University
January 2018
John A. Luchetti: Cover-to-Cover
“In our family, books were more than a path to knowledge! They were period pieces that spoke to the culture and human spirit at a point in time. They were windows to the soul of the author.”
John A. Luchetti
John Luchetti MBA(FS) 2015
Books have always been an integral part of my family history. My grandfather had a library in his house in Italy with over 10,000 books. The oldest book I perused was printed in 1550. It was called Ciceronis Orationum. Unfortunately, this book, like most of the books in this collection, were lost to family politics. The only remaining books finding their way to Canada was a 1775 version of the same titled book, and a series of Jules Verne classics printed in the mid-to-late 1800s.
In our family, books were more than a path to knowledge! They were period pieces that spoke to the culture and human spirit at a point in time. They were windows to the soul of the author. They were springboards to new ideas, innovations, and inspirations. They made us think, laugh, cry, escape, and even ponder alternate realities through fantasy and science fiction. Books took us places, and led us through journeys not possible anywhere else.
In short, books stirred feeling in us that expanded our realm of possibilities, what could be more human than that?
On a trip to Rome in 2008, I fondly remember performing several very clumsy pirouettes in the center of the Roman Coliseum. It wasn’t the first time I was there, however, it was the first time I was on a trip where I felt absolutely insignificant. I marveled at the history of this place, the people that lived, worked, taught, learned, created, and died here throughout the ages.
John (white t-shirt) and his brother visiting their Grandfather’s library in Italy.
My mind was bombarded by the historical possibilities, the realities of lives lived, and lives lost in this time-weathered place. What stories are known? Which are unknown? What key learning has been brought forward through time? Have we missed more than what we know? And what will we never know? Forever lost to history.
The rush of information which permeated my senses as I stood in this place trying to recall what I knew about Ancient Rome was overwhelming. What experiences, hardships, heartaches, successes, failures have this place seen? I shivered with delight and shuddered with insignificance of my own mortality. I thought, how could I live multiple lives in one lifetime?
I remembered, decades earlier, when picking up Ciceronis Orationum. It was illegible, written wholly in Latin. Reading the book was not an option, however, I do remember saying: “Dad, I’m holding history. How many hands do you think touched this book? What kind of person would have read this book? What would they say of its content?”
My father was an intellect. He was very cerebral – logical and precise, I guess as a chemist, you need to be. He thought deeply about many things and one example he had hanging in his study which now hangs in mine, its origin is unknown to me.
English translation:
Here live men who have outlived themselves
Here they speak silently
Here they listen and remain quiet
Here they are interrogated and mute is there response
The feelings and the questions inspired by this old book so many years ago where similar to the feelings and thoughts I had standing in the Roman Coliseum.
This book inspired me to love books as did standing in the center of the coliseum in Rome inspired me to love a life of life-long learning. This was the impetus that led me to Dalhousie’s MBA(FS) program. A thirst for knowledge and experiences.
Having completed my MBA(FS) in 2015, and with some serious time on my hands, I have started to collect books, all kinds of books. I tend to shy away from digital books because there is no better feeling then immersing oneself in a book, flipping the pages, using a bookmark, and reading it cover-to-cover.
John A. Luchetti MBA(FS) 2015 is PMO Lead at TransUnion, specializing in project/program/portfolio management. His areas of expertise cover a broad spectrum from relationship management and cross functional team management, to negotiation, conflict resolution, and mediation. John has graciously agreed to be a repeat contributor on CFAME Connection.
Photography Credit: John A. Luchetti
Prof. Joan Davison Conrod Receives the 2017 Management Teaching Excellence Award
Joe Gladwin, Prof. Joan Conrod, and Hillary Beck Photo Credit: Michelle Hunter
Congratulations go to Prof. Joan Davison Conrod, for receiving the Dalhousie Faculty of Management 2017 Management Teaching Excellence Award.
The Management Teaching Excellence Awards are presented annually to faculty members from the Faculty of Management’s Rowe School of Business and Schools of Information Management, Public Administration, and Resource and Environmental Studies who, in the opinion of their students and peers, display the qualities of superior teaching, excellent understanding of the subject area and interest in the needs of the students.
Inspiring, compassionate, enthusiastic, and visionary, Joan’s dedication to providing a rich and productive learning environment is legendary. She has mastered the art of teaching and dispensing knowledge. Students fortunate to have been in her classroom, recall her charismatic approach to the study of accounting, years after they crossed the stage to receive their degree. Everyone has a “Joan” story. My story dates to December 2001 when Joan answered my call for help while she was shopping with her family at Home Depot.
In a recent virtual interview, Joan said that it was a great honour to be chosen to represent teaching excellence.
Prof. Conrod:
I decided in high school that I wanted to be a teacher – a high school teacher! I was passionate about English and History. My decision was final – I was going to be a teacher and a writer.
My father, a chemist, took a dim view of that career choice. He wanted me to take Science at university. Better jobs in Science. It was a classic teenage standoff: My father wanted Science, I wanted Arts. I took Commerce! Ha!
Fortunately, I discovered accounting, a language all its own. I loved it. After I finished my degree, I earned a professional designation, and was given an opportunity at Dalhousie to teach as a very junior instructor. I worked very hard at it. The outcome of those efforts was finding my calling. Teaching at Dalhousie turned into the career I always wanted – the “teacher and writer” of my dreams.
Hillary Beck, Joe Gladwin, Prof. Joan Conrod, Benoit A. Aubert, Director of the Rowe School of Business Photo Credit: Michelle Hunter
Friday Reflection
“For books are more than books, they are the life, the very heart and core of ages past, the reason why men worked and died, the essence and quintessence of their lives.”
Marcus Tullius Cicero
Halifax Boardwalk, Halifax Nova Scotia
Photo Credit: John Luchetti, MBA(FS) 2015
Dr. Sylvain Charlebois: Canada can’t win a trade war with the United States
Canada can’t win a trade war with the United States
THE CANADIAN PRESS/Sean Kilpatrick
Sylvain Charlebois, Dalhousie University
Bill Morneau is perhaps an influential figure in Canadian Prime Minister Justin Trudeau’s cabinet, but he’s not conducting himself like most finance ministers. Given the budget he presented recently, he may be more of a social justice warrior.
Supporting more diversity, equality and inclusiveness is obviously critical to the betterment of our society, but I believe most Canadians expect more from a finance minister. His recent budget was sorely lacking.
There were no plans to balance the books and, most importantly, there were no mitigating strategies presented in relation to a floundering global trade environment.
Few details were given on the government’s plan to deal with NAFTA’s possible demise on Washington’s “America First” policy, and there were no attempts to circumvent trading challenges.
The ugly face of protectionism is slowly making its way across the globe. U.S. President Donald Trump announced last week he’s considering new trade restrictions, including a 25 per cent tariff on imported steel and a 10 per cent duty on aluminum, though the White House has suggested Canada and Mexico may be exempt from the measures.
Nonetheless, trade wars are something Trump appears to relish.
Despite recent trade deals signed by Canada, the world seems at odds with open trade, and instead everyone wants to protect their own domestic markets.
This is a seemingly dangerous path given that agriculture and food are often considered the most vulnerable and sensitive sectors when it comes to trade barriers.
They’re easy targets. Tariff or even non-tariff barriers can make a significant dent in a country’s economy almost instantly, and consumers are often affected the most.
Most economists see freer trade among nations as an absolute good until politics come along. But not all trade is created equal. Some win while others lose, and given the economics of our country, Canada cannot win many trade wars, especially not with the United States.
In fact, we are already witnessing how a trade war could affect the Canadian agrifood sector as Canadian pulse farmers are now bracing for some major trading headwinds from India.
Some political opponents are linking our prime minister’s recent globally mocked visit to India with the country’s decision to increase tariffs on chickpeas from 44 per cent to 60 per cent, overnight.
The decision comes after India introduced a variety of tariffs on pulse crops, including lentils, peas and chickpeas, in the past few months.
(AP Photo/Altaf Qadri)
These are growth sectors for our economy. Canadian pulse exports to India alone are worth well over CDN$1 billion. This could easily escalate further and affect other sectors of our agrifood economy.
In Europe, South America — everywhere — we are seeing more governments reducing their exposure to international markets. It cuts risks and simplifies business for many producers.
But there is also considerable consensus around the world that trade wars can backfire and ultimately hurt consumers.
Expensive way to retain jobs
Trade barriers, which are often scientifically unjustifiable but politically motivated, make economies weaker and less competitive over time. Duties may look like an attractive, simple mechanism to protect domestic interests, but they are an extremely expensive way to retain jobs in an economy.
But Canada doesn’t exactly have an immaculate record either on trade barriers.
Canada itself applies heavy duties on many imports, including dairy products, poultry and eggs. These duties are embedded into our supply management regime, considered by many as one of the most protectionist policies in the world.
In some cases, duties exceed 300 per cent.
Most countries do enact duties on a variety of food products, but Canada goes even further by enabling and controlling domestic production with quotas. We are the only western economy still doing it. That makes it extremely awkward to ask trading partners for exemptions to their own trade barriers.
THE CANADIAN PRESS/Sean Kilpatrick
What remains under-appreciated is how intertwined all economies are, not just those of the U.S. and Canada. Duties in one sector will affect the ability of other sectors to trade. It is difficult, if not impossible, to link steel and aluminum with dairy, poultry and/or eggs, but the connection exists.
Trade wars easily escalate, spelling trouble for an open economy like Canada’s. Given our abundance of resources and knowledge, we have plenty to share. Almost 60 per cent of our economy is trade-driven.
Morneau essentially short-changed Canadian taxpayers last week with his so-called budget. I believe the government’s focus on equality would have been better served at another time.
We should not be shocked to see Ottawa utterly unprepared for Washington’s wrath towards its trading partners. Upholding equity values for our country is undoubtedly noble, but the government could fall short on its social promises if it runs out of cash.
Sylvain Charlebois, Professor in Food Distribution and Policy, Dalhousie University
This article was originally published on The Conversation. Read the original article.