In January 2009, the United States will have a new president. A majority of North Americans will cheer that day.

If you asked them why, a preponderance of Canadians would site the American invasion of Iraq, presidential torture and the American preoccupation with border security (read inconvenience, delay and barriers to trade). If you ask the Americans, they would agree with us on Iraq but add loss of jobs, healthcare coverage, the sub-prime mortgage housing crisis, trillion dollar deficits and the battered image of the United States in the world.

In a bid to polish his legacy, George Bush met with Prime Minister Stephen Harper and Mexico’s President Felipe Calde earlier this week in New Orleans (Monday and Tuesday) to discuss the North American Free Trade Agreement (NAFTA) and border security issues.

The backdrop to these discussions is the U.S. primary season and recent threats by Barack Obama and Hillary Clinton to scrap the fourteen year old NAFTA if Canada and Mexico refuse to make concessions on labour and environmental standards. The Clinton/Obama threats were exacerbated by an off the record meeting between a representative of Obama and a senior Canadian diplomat where apparently it was suggested that Obama was just talking election-speak and had no intention of withdrawing from NAFTA.

That conversation was leaked to the media by a high-ranking Canadian official. It is assumed by many that the leak contributed to Obama’s defeat in the Ohio primary. The resulting publicity prompted Mr. Harper to initiate an investigation into the source of the leak.

One irony in all of this is that both Clinton and Obama blame NAFTA for job losses in the United States when in fact most of the losses have been created by out-sourcing of U.S. manufacturing and service jobs to China in the first instance and India in the second. Their unstated concern is that thousands of manufacturing jobs have also been lost to Mexico in response to its low wage environment.

In this week’s NAFTA discussions, Prime Minister Harper responded to the Clinton/Obama threats by telling Mr. Bush that any reopening of NAFTA would cost the United States. He naively reminded the Americans that energy is important to them and that Canada is their single largest supplier of energy (mainly oil and natural gas).

He suggested that if NAFTA was reopened for discussion, Canada would be in a much stronger bargaining position than it was twenty years ago, the implication being that the United States would be the loser. Apparently, President Bush burst out laughing at these remarks.

That brings me to the David and Goliath part of the story. The discussions between the three leaders have dominated Canadian media all week. I’m sitting here in the southern United States where it’s a non-event. On Wednesday, I picked up the local papers plus USA Today to see what had happened on Tuesday. There was nothing. Only USA Today, on its page four, buried half a dozen paragraphs of report on the meetings – the implication being that the presidential/prime ministerial meetings were non-events, certainly when compared to front page headline coverage of Hillary Clinton’s Pennsylvania primary victory or former President Jimmy Carter’s meetings with Hamas.

On Thursday, I went to a U.S. sports bar to watch the Montreal-Philadelphia hockey game. There were a bunch of Canadians there and a contingent of Philadelphians. The atmosphere was warm and friendly for most of the evening until the Canadians tied the score and a bunch of Canadians (not the hockey team) began parading their success. The mood changed dramatically.

One of the Philadelphia fans yelled something punitive at the Canadians and the fun was over.

My point is that Canada’s relationship with the United States is deep but fragile. They are far more important to us than we are to them. 75% of our exports go to that country and account for more than a quarter of our gross domestic product (GDP). They are a military super-power and an economic super-power, even though they are indebted to the world and suffocating in their own debt.

Like it or not, Canada is a minor player in the U.S. scheme of things even though we are their biggest suppliers of energy and their second biggest trading partner. The current NAFTA issues are cover for America’s concern for its economy, its preoccupation with border security and “illegal aliens” (read Mexican immigrants – the Lou Dobb factor) and its loss of economic superiority to China, India and much of Asia.

For American politicians, NAFTA is a side show where Canada gets dragged into U.S. - Mexico issues whether they be drugs, border security or immigration to avoid offending Hispanic voters. We need to wake up to this reality and do something about it.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at mailto:bill.bellstrategic@nb.aibn.com

Every time you start your car, you’re putting pressure on the world’s food supply.


The global food crisis became official this week when the United Nations (UN) called for urgent intergovernmental action and farming reforms to tackle the soaring food prices that are plunging millions of people into potentially deadly poverty.

The connection between your car and food prices begins with the rising cost of oil and gasoline.

It’s compounded by the fact burning gasoline produces greenhouse gas emissions, a major contributor to climate change. It’s further compounded by off oil policies that encourage switching to biofuels like ethanol (a grain alcohol produced from crops such as corn) as an alternative to gasoline.

The result is a decline in the supply of grains, as food crops are diverted to the production of biofuels. The problem is expanded by Asia’s increasing demand for meat which in turn diverts food crops to animal feed.

A UN sponsored study, compiled over three years by a panel of 400 experts is calling for more local food production using sustainable, natural and ecological farming methods, as well as safeguards to protect rapidly dwindling resources. It confirms that “diversion of agricultural crops to fuel is pushing up food prices and reducing our ability to alleviate hunger throughout the world". Wheat prices have risen by 130% since March 2007 and soybean prices by 87%. Last week, the World Bank warned that 100 million more people could be pushed into poverty because food prices had risen by 83% in three years.

Goldman Sachs says the cost of ethanol from corn is $81 a barrel (oil equivalent), with wheat at $145 and soybeans $232. Price is built on subsidy. New technology may one day open the way for the use of non-edible grain stalks to make ethanol but for now the only biofuel crop that genuinely pays its way is sugar cane at $35 a barrel (oil equivalent).

Sugar is carbohydrate: ideal for fuel. Grains contain proteins made of nitrogen - useless for fuel but vital for people.

The UN says it takes 232kg of corn to fill a 50-litre car tank with ethanol. That is enough to feed a child for a whole year. Last week, the UN predicted "massacres" unless biofuel policies are reversed.

We are all part of this drama whether we fill up with gasoline or ethanol. World grain stocks have fallen to a quarter-century low of 5 million tons, rations for just eight to 12 weeks. The United States will divert 18% of its grain output for ethanol this year, chiefly to break its dependency on oil imports. It has a 45% biofuel target for corn by 2015.

The UN Food and Agricultural Organization, which contributed to the report, said food represents 60 to 80% of consumer spending in developing countries, but just 10 to 20% in industrialized nations like Canada and the United States. In many countries, price inflation is forcing poor families to take children out of schools to go to work to help pay for food. According to the World Bank, 33 countries are now in danger of political destabilization and internal conflict as a result of food price inflation even though authors of the 2,500 page UN Report say the world produces enough food for everyone although 800 million people go hungry.

Growing populations combined with rising incomes will intensify food demand, especially for meat and milk, in turn requiring a larger share of the world’s crop-land for feed grains.

As wheat and rice prices rise, the unassuming potato is being rediscovered as a nutritious crop that could help feed an increasingly hungry world. In Peru, troubled by wheat prices that have doubled in the past year, they have started a program to encourage bakers to use potato flour to make bread. Apparently it tastes just as good as wheat bread.

China, a huge rice consumer has become the world’s largest potato grower. India wants to double its potato production. Developing countries are looking at the potato as both an income-generator and a hedge against food shortages.

The potato is already the world’s third most important food crop after wheat and rice. Corn, although widely planted is used mainly as animal feed and more recently for ethanol production. One thing that makes the potato affordable is the fact that it is not a global commodity and attracts little speculative investment. 17% of wheat production is exported around the world while less than 5% of potatoes are traded internationally.

Science is moving fast to increase the mobility and yield of potatoes. New Brunswick is a major potato producer. It would be ironic if one day our biggest export was the potato product and not a forest product.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at mailto:bill.bellstrategic@nb.aibn.com

When an airline sells you a ticket, it contracts to transport you from Point “A” to Point “B” at a specific price.


Years ago, airlines would honour those contracts by providing alternative transportation, accommodation and meals in circumstances where that contract could not be honoured because of weather, mechanical problems or other.


Sadly, we have allowed them to ignore their contractual responsibilities for the last few years as many of them disappeared, faced dramatic financial restructurings or succumbed to Draconian cost and service-cutting measures to make themselves more price-competitive.


On Thursday of this week, Air Canada announced that it is launching what in effect is an insurance program designed to underwrite its contractual obligation to honour its transportation commitments.


For a $25 to $35 dollar service fee, (depends on the length of trip), Air Canada will ensure that travelers who have their trips interrupted by weather or mechanical problems will have priority access to customer service representatives who will help arrange alternative flights, complimentary hotel accommodations, car rentals and complimentary meals.


The insurance must be purchased when tickets are issued. In the event of a flight disruption, an insured traveler would be able to call a dedicated Air Canada customer service line to air his/her complaints or find alternate flights, lodging, etc. Presumably, others would be left to their own devices.


On the surface it looks like a good idea for customers who are willing and able to pay the premium. Air Canada rationalizes the fee on the basis that those who are not willing to pay it benefit from the cost savings.


I would argue that when you pay someone to transport you from A to B and particularly when you pay them in advance of your transport, they have an obligation to get you to your destination without additional cost or unreasonable disruption.


We know how frustrating it can be when travel plans are disrupted by factors beyond the airline's control, such as bad weather or air traffic delays and we know that weather is not an airline responsibility but transportation is their responsibility.


It’s one thing to offer multiple layers of service and charge extra for premium services. It’s quite a different thing to offer transportation at a discount price and then ignore your promise to deliver the service because the weather gets bad. Air Canada rewards those who travel at off-peak times.


That makes sense.


It also has a bizarre pricing practice that penalizes people who have to travel on short notice or make changes to their travel plans.


Example; a few weeks ago, I was in Toronto. I had a late afternoon flight to Ottawa but I arrived at the airport early afternoon. I checked in and asked the attendant if I could get on an earlier flight. She said yes, there were lots of seats but if I wanted to go earlier, it would cost me an extra $158. How stupid is that?



Had Air Canada put me on the earlier flight, they would have had an opportunity to sell another seat. Instead, they flew an empty seat on the earlier flight and lost a potential replacement sale on the later flight.

It doesn’t stop there. Two days later, I called about changing my flight from Ottawa to Moncton. Yes I could do that but it would cost me an extra $357, more than double the original purchase price. Go figure.


Air Canada argues that its weather-insurance program is simply an extension of its pay-per-service structure already in use. “Travelers who purchase lower-priced fares pay additional fees if they want to choose their seats in advance” check their baggage or enjoy an on-board snack.



This trend is part of what Air Canada calls the “democratization of airfares” an evolution of air travel from what used to be an elite service for the super wealthy to a service that is available to the masses at an affordable price. What a crock!


It’s true, air travel has become a commodity and competition is based mostly on price.
It’s also true that when price responds to competition, quality of service usually declines. In respect to the insurance fee, we are not talking about an extra in-flight service. We are talking about funding the failure of a carrier to honour a purchase and sale agreement relating to transportation.


Air Canada has noted that in the event of flight disruption or cancellation, rebooking on the next available flight has been standard procedure for years but in the new world of democratization, the airline will have limited capacity to rebook passengers, especially on another airline, if they don’t have flight interruption insurance.


This sounds a bit blackmailish to me.


Why not build the $25 into the base fare for everybody.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at mailto:bill.bellstrategic@nb.aibn.com

It’s Masters’ week in Augusta Georgia, so let’s talk about golf.

Earlier this week, the Provincial Government converted a $4.8 million loan to Royal Oaks Golf
Course to equity in return for a promise that a 50% share of the golf course’s profits will be paid to the Government until the loan is fully repaid.

As I understand it, profits in this case do not include real estate development and that seems strange.

Local media reported this transaction as a $4.8 investment in the golf club. That’s wrong.

Ten years ago, the Government of the day provided Royal Oaks with a $3.3 million loan “guarantee”. A loan guarantee requires the guarantor to repay the loan in the event the borrower defaults on the loan. In 2002, the Conservative Government of Bernard Lord paid off that loan and its accumulated interest, resulting in Government ownership of the loan.

It would appear that something happened this week to trigger a crisis at Royal Oaks that would have forced the golf course into a hole that in turn would have caused the Government to lose any chance of recovering its outstanding loan and interest due. The Government took the only action it could and that was to convert its loan to equity (a common practice in business restructurings) in order to preserve some hope of cash recovery.

This begs the question “should governments be in the business of financing golf courses?”

The knee-jerk reaction is to say no but there are circumstances that justify such investments when they can be shown to generate economic development and/or to create demand for a tourist destination.

Prince Edward Island is a good example of a destination province that has consciously invested in golf course infrastructure to create visitor demand for the Province. Some of the golf courses lose money but the net benefit to the economy has been positive because while people travel to the Island specifically to play golf, they leave dollars behind for hotels, food and beverage, gift purchases, car rentals, etc. It’s not much different than the City of Moncton guaranteeing the financing for a major rock band that might come to Magnetic Hill.

Royal Oaks and Fox Creek are world-class golf courses. Both have received publicly financed loans from the government.

In 2005, the Lord Government advanced a $2 million forgivable loan to the Fox Creek Club in Dieppe. Kingswood Park in Fredericton and the Algonquin course in St. Andrews are also world-class.

The Algonquin course has a $4.3 million dollar government loan. There are others in the province, Restigouche, Mirimachi, Gowen Brae and perhaps more that have received government funds under rural development programs.

What’s missing in all of this is a government policy that says we will invest in golf courses for these reasons.

There is another problem. Dozens of golf courses in this province live on the edge. They are financed by members and private investors. They have to compete for golfers with these publicly financed golf courses.

Some of them could be economic generators if properly funded but many if not most of them, by virtue of location are not able to generate the traffic needed to make them net contributors to the provincial economy.

There are an estimated 14 golf courses within an hour of downtown Moncton. They compete with Royal Oaks and Fox Creek for golfers but none of them compete at a world class level when measured in terms of design or course quality.

A few of them including the Moncton Club, Lakeside, Magnetic Hill and Pine Needles, by virtue of their locations have the potential to become world class but realization of that potential would require investments of $3 to $5 million each.

This begs the question; should there be a business financing program that could be made available to all golf courses on the basis that they are small business operators and job creators?

Should there be a more focused program designed to create golfing destinations for tourists? Many will say “no way, we need that money for healthcare and education”. In my opinion, it’s not an either/or situation.

If one can make a solid business case for a golf destination that justifies government loans or grants on the basis of real economic potential, why should it be treated any differently than a call-centre or a paper mill that needs a loan for equipment upgrades?

I suspect that a five million dollar investment in the Moncton Club would yield higher returns than the Royal Oaks conversion.

Government should not be selecting the winners or the survivors. Government should be creating the policy that rationalizes golf course investment in New Brunswick on the basis of economic development potential.


W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at mailto:bill.bellstrategic@nb.aibn.com