U.S. Senator aims at Canadian grading rules for American wheat

While much of the attention in the last few weeks on the Canada-U.S. trade file has been focused on well-publicized trade irritants like dairy and softwood lumber, a U.S. Senator has introduced a resolution asking President Trump to address how U.S. wheat is treated in Canada.

The resolution brought forward by Montana Senator Jon Tester last week calls for “fair and equitable grading treatment for exports of United States wheat products to Canada.” (Read it here.)

Under the Canada Grain Act, foreign grain is automatically downgraded to the lowest grade in its class. (As a result, Canadian elevators buying U.S. wheat will usually pay for it “on spec” based on specific attributes, instead of grade.) Canadian wheat sold south of the border is generally treated the same as U.S.-origin grain.

To address the issue behind last week’s Senate resolution, the Western Canadian Wheat Growers Association (WCWGA), along with the U.S. Wheat Associates and National Association of Wheat Growers, have urged the Canadian government to update the Act so U.S. grain would be graded as if it originated in Canada.

“We know much of the grain coming north is in fact bought by the industry on spec, so they are getting value for their grain based on the qualities of the grain, but it’s some antiquated language (in the Canada Grain Act) that needs some word-smithing,” says Robin Speer, WCWGA executive director, in the interview below.

“We don’t want to have a tariff slapped on Canadian product going south, which they just did on lumber,” he continues.

The Canadian government and grain industry have already made several major changes over the past decade to address U.S. concerns about cross-border wheat trade, including the removal of kernel visual distinguishability (KVD) requirements for registration in 2007. KVD made it almost impossible for U.S. varieties to be registered in Canada. The end of the Canadian Wheat Board in 2012 and more recent changes to the wheat class system have also opened up opportunities for U.S. wheat coming into Canada.

On the issue of grading, Bill C-48, introduced by the Conservative government in late 2014, would have amended the Canada Grain Act to allow U.S. grain to be assigned its highest possible grade, provided the variety was registered in Canada. However, the legislation was not passed before the federal election in fall 2015 when the Liberals took office.

Speer says they’ve made their position known to Agriculture Minister Lawrence MacAulay and Foreign Affairs Minister Chrystia Freeland, who’s handling the Canada-U.S. file in cabinet.

“Everyone is starting to realize we’re in this new era with President Trump. There are some dangers and some challenges associated with that, as we just saw on lumber, but there are also some opportunities to go ahead and make some positive changes for our industry at the same time,” he says.

Speer joined us on RealAg Radio on Tuesday to discuss the U.S. Senate resolution on cross-border wheat trade and the results from the Wheat Growers’ survey of Conservative Party leadership candidates (find their responses here):

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