As Canada and the United States prepare for a late April meeting of officials to open “consultations” on Canadian wheat exports south, an American grain industry official said the risk of disagreement is real.
“It is fair to say we may have a political problem here,” Bob Petersen, president of the Washington-based National Grain Trade Council, told the Canada Grains Council April 10.
He said his group of grain companies and traders lobbied during the last flare-up in Canada-U.S. grain relations in 1994 to “keep the border open to commerce.”
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Now, pressure from Great Plains wheat farmers on the U.S. Congress and administration is creating enough political heat that the industry group has decided to swing into action again.
“That coalition on the U.S. side has requested an opportunity to meet with (trade) ambassador (Charlene) Barshefsky to discuss the issue.”
He noted that two weeks ago, Barshefsky met farmers in Minot, N.D. who complained about an increase in imports from Canada.
Last week in Washington during a visit by prime minister Jean ChrŽtien and various ministers, the U.S. trade representative raised the issue with Canadian trade minister Art Eggleton.
No export cap
Eggleton told reporters he had rejected the U.S. view that exports are on a path that could lead to a record volume. He also said the trade is fair and Canada will not agree to a cap on exports.
Nonetheless, Canadian and American officials are planning to meet in Washington April 24 or 25 to discuss the issue.
A Canadian trade official said late last week Canada is responding to a formal American request for consultations on the level of exports.
“We will listen to what they have to say, and provide our own analysis, but the political stance has clearly been laid out that we will not support a cap on sales,” he said.
Petersen said higher volumes of Canadian grain are rolling south because U.S. supplies of hard wheat are tight and American millers need the supplies. But he also warned that American pressure and politics will continue to percolate through the industry.
“USDA continues to ask why we don’t see at least some U.S. wheat and barley move across the border in localized situations where it makes sense,” he told the Canadian grains conference. “It looks like there are cases where Montana barley should, and does not, readily flow across the border to Alberta feedlots.”
Subsidies may be used
He said pressure also could mount this summer to use the Export Enhancement Program to subsidize exports.
“The conventional wisdom is if there are large U.S. supplies in July, there will be very strong political pressure to use the $100 million that is allocated for EEP.”
However, any such decision would have to clear some hurdles in the U.S. government before it happened, said Petersen.
And since wheat acreage estimated for planting is down to 69.2 million acres and Northern Plains flooding could affect seeding in some wheat states, it is far from clear that there will be large supplies in the U.S. this summer.
