Nafta Talks Offer Hope to US Farmers Seeking ‘Grain Trading Equality’

April 28th, 2017


Category: Grains, Policy

building-450x299(Agrimoney) – The renegotiation of the Nafta treaty proposed this week, as President Donald Trump backed away from a threat to withdrawn the US from the agreement, could bring “fairer treatment” for the country’s wheat farmers, officials said.

The US Department of Agriculture’s Ottawa bureau, said that US growers were eyeing “fairer grain grading rules” as part of a reworking of Nafta, the free-trade agreement with Canada and Mexico which the three countries agreed this week to renegotiate.

Current rules do not allow imported wheat, even if from a seed registered for growing in Canada, to be graded by the official Canadian Grain Commission, hampering its use for anything but livestock feed.

“US wheat delivered to a Canadian grain elevator is sold as either feed grade (lowest grade) or according to a specification at any price agreed to by the buyers and seller,” the bureau said.

‘Bringing new hope’

However, there “have been calls from industry on both sides of the border to level the playing field for US farmers delivering grain to Canadian elevators”, the bureau added.

Critics have urged the permission of “official grading, handling, and export of US grain through Canada”.

The prospect of Nafta revamp offers the opportunity to reform the regime, as Canada indeed proposed three years ago, before the effort fell foul of the 2015 general elections.

“Recent talks of renegotiations to Nafta are bringing new hope for American grain farmers seeking fairer treatment under Canadian grain grading rules.”

‘Grain trading equality’

The application in Canada of the free grade regime applied in the US would answer a long-standing for what US Wheat Associates, which promotes US wheat exports, has termed “grain trading equality”

“While US producers of high quality wheat are permitted to market their product directly to Canadian processors at a premium price, their inability to receive a grade or sell to elevators based on grade puts them at a significant competitive disadvantage,” US Wheat Associates said.

“By contrast, Canadian producers are free to market their wheat in the US through normal marketing channels.”

‘Virtual border wall’

The disparity means, for instance, that Canadian farmers can choose to deliver wheat to whichever domestic or US elevator offers the best price.

US growers, by contrast, “can only look at prices in US elevators, because if she tries to take her wheat to a Canadian elevator, it will automatically be graded as the lowest value.

“This and other regulations put up a virtual border wall to US wheat along what is otherwise one of the most free and open borders in the world.”

The comments came in a document in which US Wheat Associates flagged a growing disparity in wheat trade between the two countries – both large net exporters.

In 2016-17, Canada exported more than 800,000 tonnes of wheat to the US, including durum, according to the Canadian Grain Commission.

US exports to Canada totalled less than 45,000 tonnes, according to the USDA.

‘Step up exports’

The bureau’s comments came as, in its first estimates for 2017-18, it forecast the Canadian wheat harvest at 28.6m tonnes, a figure in line with that from AAFC, Canada’s farm ministry.

While representing a drop of 3.1m tonnes year on year, a reflection of an expectation of a return to average yields from last year’s bumper levels, a harvest at that level, coupled with ample carryover stocks, would allow exports to nudge 500,000 tonnes higher to 21.0m tonnes next season.

“The tighter world supply of wheat coupled with a weaker Canadian dollar will poise Canada to step up exports in 2017-18,” the bureau said.

‘Still waterlogged’

However, the forecast was more upbeat than that of the International Grains Council, which on Thursday pegged Canada’s wheats exports next season at a five-year low of 20.3m tonnes.

The IGC – while upgrading its estimate for Canadian wheat output this year by 900,000 tonnes, reflecting bigger-than-expected sowing intentions data released last week – left the estimate, at 28.1m tonnes, shy of the AAFC and USDA figures, noting the threat from wet sowings conditions.

“With parts of Manitoba and Saskatchewan still waterlogged after heavy precipitation over the past six months, showers in late-April were expected to further delay fieldwork,” the IGC said.

Setbacks were likely “especially in areas where 2016-17 crops are yet to be harvested”, with poor weather having forced growers to leave some of last year’s crops standing through the winter for harvest early this year.

‘Severe pressure’

The IGC estimated that for canola alone “as much as 1.0m tonnes is still to be threshed” of 2016 crop, out of a total harvest pegged at 18.4m tonnes.

Some 2.3m acres of crops overall in the key Prairies region is seen as remaining unharvested, a source at a major Canadian institution told on Thursday.

This overhang will place “severe pressure” on growers attempting to sow crops during the ideal window, the source said.


Add New Comment

Forgot password? or Register

You are commenting as a guest.