Corn Duty

[Riley]

What if any will be the impact on agriculture in general and grains in particular of the imposition of today's corn duty of $1.65/bu U.S.? Thoughts?

[clancey]

Most analysts do not believe it will have an immediate impact on corn markets. End users may have accumulated stocks and it does not apply to anything which crossed the border prior to today. Once they use those up, they will buy in Canada. However, the only people who can be counted on to buy corn are those who must use corn. Others will buy cheaper feed grains.

[charliep]

Would agree with above. WCE feed wheat and barley up slightly today. Bigger impact on processors (distillers/snack food) in western Canada. Manitoba will be interesting in that hog feeders will likely have to draw from further into Saskatchewan to find zero DON (ie. non fusarium) feed wheat. Will let someone from Ontario comment on their situation.

[wd9]

Charlie, do you have the numbers on domestic corn production for Manitoba? Seems with the cold weather and excess rain, the yields were not where they normally are. Dry in Ontario, same thing.

[charliep]

Can't find the Manitoba numbers at home but can get the prairie numbers. Western Canada produced 245,000 tonnes in 2005 versus 53,000 tonnes in 2004 and 524,000 tonnes in 2003.

Ontario produced 5.8 MMT in 2005 versus a range of 5.1 MMT (2001) to 5.6 MMT (2003).

Canadian corn production was 9.5 MMT in 2005 versus a range of 8.4 MMT to 9.6 MMT over the previous 4 years.

I will have to check out another source to get Manitoba/a longer historical perspective on Ontario.

[craig]

It's time someone jumped into the fray. While legally it is only the corn producers who can start a trade challenge against American's dumping corn, it is all feed grain producers who potentially benefit from such action.I find it hard to believe that Manitoba hog producers can't use feed wheat at comparable costs to corn in their rations especially in light of today's prices. Maybe there is someway to use empty rail cars heading east to transport non fusarium grains to Manitoba. We(Alberta) has been the dumping ground for poor quality cereal grain from the eastern prairies, so maybe it's time to return the favor. I don't buy the argument that livestock producers have to have access to subsidized american grains to be competitive.Livestock production is value added processing and by using domestic production they help support the grains sector and in turn reduce everyones reliance on government support.

[lakenheath]

I agree with Craig 100%. Cheap, subsidy filthy Amercian corn has done enough damage to our farmers and people. Keep it out.

[clancey]

This year's corn production was:
Manitoba 211,500 MT
Ontario 4,322,700 MT
Quebec 1,799,900 MT
Canada 7,469,000 MT

Manitoba imports around 300,000 MT of corn a year. If it has already imported 150,000 for 2005-06 because of the pending duty, the net benefit to producers in 150,000 MT. However, Ontario will likely reach into western Canada to replace some corn with barley, oats and feed wheat.
Imports have been around 2.2 million MT a year.

[cropduster]

CRAIG...paste that onto the beef production and listen to the whining!The CCA ,in their speaking notes/questions to potential candiates for federal election,are asking to have the tariff removed.Do you think they really CARE about where and how they get the cheapest feed possible?Anxious to see the text of the supposed WTO agreement.

[silverback]

There was sure no loyalty to Alberta barley a couple of years ago. They were quite happy to let it sit in the bins of their former suppliers.

[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.