$15 billion in aid.
That’s the amount the U.S. government announced on Monday for its producers through the Market Facilitation Program (MFP) as compensation for lost income stemming from the country’s trade war with China. This is not the first, but the second round of aid given, as a trade agreement eludes U.S. President Trump and Chinese President Xi. Instead, the pair of presidents keep slapping tariffs on certain American and Chinese products, sending shockwaves through the financial and grain markets, and American farmers are taking the brunt of the hit.
However, it’s not just American farmers who are suffering — it’s Canadian farmers as well.
On Tuesday, the Grain Growers of Canada (GGC) called on the federal government to develop a strategy to address the increasingly unpredictable trade environment affecting the incomes of grain farmers across Canada.
“The time has come for the Canadian Government to aggressively defend the interests of Canada’s agriculture sector in China and around the world,” says GGC chair, Jeff Nielsen from his farm at Olds, Alta. “This is a non-partisan issue and Canadian farmers need government support to ensure that we are well positioned to weather this storm.”
The U.S. president also indicated he will look at purchasing grains from his country’s own farmers, another reason the GGC is sounding the alarm for something to be done before the markets are further rocked by waves of uncertainty.
In addition to fluctuating markets, Canadian farmers are also dealing with China blocking two of its major canola exporters. The GGC says, “industry and government officials have confirmed Chinese importers are reluctant to sign contracts for other Canadian agricultural products given the uncertainty in the market.”
On top of all of this, the GGC adds soybean prices are dropping and imports to China have slowed to a trickle, reaching levels not seen in a decade.
“The issues we are seeing with trade into China can no longer be said to be commodity specific. As a soybean farmer I’ve seen my prices plummet and markets close due to the flooding of the market by U.S. product,” says GGC vice chair Markus Haerle from St. Isidore, Ont., who’s also the chairman of Grain Farmers of Ontario (GFO).
“The U.S. is protecting its farmers and we need the Canadian government to protect our farmer members from trade disputes that have impacts on markets and distort prices,” he says.
During a media callback about her trip to the G20 agricultural minister summit at Niigata, Japan, Agriculture and Agri-Food Minister Marie-Claude Bibeau said she’s working in the best interest of Canadian farmers. When specifically asked if compensation would be given to farmers given the length of the trade spat that’s on-going with the U.S. and China, Bibeau mentioned the increase to the Advanced Payment Program (APP) adding that, “this is where we are now, but this is, as i’m saying often, we are following the situation and our response will also evolve according to the situation.”
However, the increase in the interest-free portion of the APP program is limited to those who grow canola. In addition to developing a strategy, the GGC is calling on the government to add other commodity groups to the additional assistance.
Meanwhile, the GFO is asking for a little bit more. The organization is calling on the Liberal government to:
- Establish a Trade War Fund to, “protect Ontario grain and oilseed farmers from political decisions outside their control”;
- An activated pilot of Grain Farmers of Ontario Gross Margin insurance product by 2020. This product would be a voluntary top up to the current production insurance product. This will help farmers address a 15 percent loss that is currently not covered by AgriStability;
- Defend current markets and find new markets for grains and oilseeds. The federal government should normalize commercial relationships with China, ratify the CUSMA and CPTPP. They should invest in domestic processing and explore new markets. The government needs to eliminate harmful tariffs, including aluminum and steel tariffs; and,
- The implementation of impactful climate change programs. The government should eliminate the carbon tax and focus on programs that will bring about real climate change impact, such as ethanol mandates.
Will the government oblige? If so, what will that look like? And what impact does government intervention — because of government intervention — ultimately have? Canadian and American farmers alike are waiting to see.