Corn Duty

[TOM4CWB]

Craig:

The shots have now been fired... and the trade war is on.

Who is at fault?

Where will this lead?

Who will be hurt the most?

All I know is we in western Canada are MUCH more dependant on exporting our Ag produce than US producers are.

It may feel good just after the shot is fired... and we see it hit... just what are the consequences?

Hadn't we better be ready to shut down exports of all produce to the US...?

What will be the effect if this the end event of our actions?

[cowman]

I wonder if this duty will stand up to a NAFTA or WTO challenge? I would assume the federal government knows...or are they just playing politics?
How come in 2002 there was no challenge to subsidized corn destroying the western Canadian feed grain market? Was it because it was only hurting the Alberta grainfarmer...and hey who cares in Ottawa about a bunch of dumb rednecks in Alberta!
I'll tell you one thing if this corn duty results in the USA slapping the cattle and hog producers with tariffs all feed grain producers might just find out how valuable those producers really are? The beef and hog sector don't need to be shut out of the USA right now...their finances are a little shaky after the garbage both have gone through the last few years? Many of them are teetering on the edge?
I wonder where anyone gets off calling the American corn diseased? What do you think they have been hauling into feedlot alley from Sask. and Manitoba the last several years? About as diseased and dirty as it gets!
I am not saying American corn isn't subsidized and that it should be coming in, but if this duty won't stick we could be buying ourselves a whole load of trouble...for nothing? It is unfortunate that we have a federal government that can't deal with this American administration to solve these problems? Maybe it's time to elect a government that can?

[Vader]

I heard the President of Cargill USA say that if there were enough plants to process all of the US corn into ethanol that todays energy prices would result in a corn price of $3.25 per bushel.

In other words $3.25 per bushel is the energy value of corn relative to crude oil. Lacking that processing capacity and therefore without the link to energy prices, the market surplus of corn has driven prices down to that $1.50 range. Then US farm programs kick in to backfill the deficit with subsidies.

[TOM4CWB]

Cowman;

We had this Discussion at the Alberta Barley Commission Annual Meeting last week.

A close vote just turned down support for the corn countervail duty... one which we as barley growers have no right to vote on that is legally binding... barley is different than corn in the trade agreements.

I would agree with those grain producers who feel hurt... however your question about 2002, is a different matter than today.

Drought induced prices... were very different than today, as are the amount of subsidies which are much higher than today.

Further the CDN$ was close to it's low, which made corn much more expensive in 02-03 ($164/t) 03-04 ($169/t) than it is today (pool B $118/t). The US gov. is spending many times more today, what it spent back 2-3 years ago, on AG subsidies.

THe WTO Brazilian win against USA cotton subsidies opened up a whole raft of actions against the USA Ag. programs...

The CDN Corn action is a simple result of that outcome. The USA knows this.

This corn countervail issue will actually push livestock feeding back to Alberta... as we are still the lowest cost feed grain here of the developed world with the CDN Corn duties in place. Ontario/Quebec and Manitoba/B.C. livestock producers will feel most effect.

THe corn countervail actually cancels out part of the CWB's "single desk" monopoly pool effect of limiting high value exports by innovative CWB "designated area" grain producers.

THis action will certainly burn through our feed wheat surplus at a much higher speed... and bring higher value to all feed grains; IF we can find the capacity within Canada to actually transport the feed to the areas that need it outside AB and SK.

[agstar77]

The trade war has been on along in case you have been sleeping. There has always been one side or the other that has felt put upon. The real problem here is the low price of all feed grain relative to what cost of production is . It is impossible to sell feed grain at these prices without a government subsidy or a farmer funded subsidy. If we are afraid to launch trade challenges , what is the purpose of NAFTA or WTO? Alta. stands to lose if the U.S. retaliates with meat import quotas, that is why they have reluctant to challenge subsidized corn. Well you can't have it both ways, cheap feed and large meat exports, you will destroy the domestic feed producers.

[wedino]

Add to the hurt, those producing ethanol in Eastern Canada.

[lakenheath]

I am not sure what margins feedlots operate on, so how crippling would it be to a feedlot operator (with today's cattle prices) to pay and extra $1.50 a bushel for feed barley. What would that do to their margin? Our feed grain prices are considerably below the cost of production and, I for one, am happy to see the corn duty slapped on. At the same time realizing there could be adverse consiquences down the road.

[craig]

We seem to struggle with this trade challenge issue all the time because we are scared of the consequences for a country so dependent on export trade. The problem has become that the U.S. uses this to their advantage. How can we ever expect to have acceptable trade with the U.S. if we don't stand up for our principles.I continue to point out that if we destroy our local feedgrain production( feed barley in serious jeopardy right now) then can our livestock industry survive on importing all there feed supplies. There is a mutual benefit for both industries to exist together. It seems that we forget that some times.

[Riley]

Its unfortunate that these sorts of issues tend to drive a wedge between grain producers and feed users. While I suppose this is understandable to a certain extent, after all grain producers want as much as they can get for their grain while grain users want as cheap feed supplies as possible, there is one trait that all agricultural producers share, and that is when they are doing well, they put their money in circulation. That economic benefit ripples through the entire rural economy. In my opinion we need both sectors operating at a profit in order to help stem the decay of rural Canada.

However, as to the issue of subsidies, it seems to me that the U.S. sytem of support for grain production subsidizes not only their grain producers but their livestock industry as well, by supply cheap feedgrains. That subsidy also flows into Canada when subsidized corn is trucked across the border. The only one as I see it that is left out in the cold, is the Canadian grain producer.
It was interesting to note that the Canadian Pork Council said as much in one of its press releases. They admitted that grain producers were being forced to sell their product below the cost of production and that perhaps some other way could be found to compensate them rather than imposing duties. In fact they went so far as to suggest that perhaps the Federal government consider adopting a similar system of support for our grain producers as is seen in the U.S.

I also have to agree that if this was strictly a "Western" problem with the current government in power, very little attention would be paid to it. However in vote rich Ontario where many rural riding were decided by extremely narrow margins, it would seem that the plight of both grain and livestock producers might strike a little more resonance with the powers that be especially during an election. What should the government's response be? Do we need to adopt as the CPC suggests...a similar type of government support for grain producers that is available to our U.S. counterparts? If not how do we keep our livestock producers competitive with their biggest competitors (ie U.S.)when grain prices drop below support levels in the U.S.? I look forward to your comments.

[TOM4CWB]

Riley;

The Grain Growers of Canada has been working on the Trade Injury Compensation package for many years.

It is alltogether sad that the feds have not been brave enough to face reality and look after this federal responsibility... trade, and lack of progress to resolve this issue.

Now that grain farmers income is low enough... money starts to flow into this sector... as it is reasonable seeing that feed grain growers are in a bad income position.

Capatilisation of CDN subsidies is not an immediate problem, as this support is neither predictable nor appears to have long term stability. Just as well or land lords/owners of land are the big winners in the USA... from the subsidisation structure there. Some CDNs who own large tracts of land would not agree with me I am sure.

WTO, how does our new system deal with this?

I see foreign aid as a problem more than a solution... my brother sees much of the grain shipped turned into booze/sold/bartered... the only way to get it to hungry women and children is to actually deliver the food in a bowl... and not allow anyone else/the elite/powerbrokers to scoop it away!

What is the solution?

Low priced exports with or without subsidies destroy every nation states ag economy that imports them.

Now if we need a higher price level... how to prevent overproduction... yet 1 billion go to bed hungry each night! The world's poorest people no doubt.