As things stand now, none of the high quality spring wheat and durum grown by western Canadian farmers this year will find its way into premium markets south of the border.
The United States commerce department has increased the countervailing duty and anti-dumping tariffs that were imposed on Canadian wheat and durum last spring.
The new combined tariffs and duties translate into an import tax of about $30 a tonne on spring wheat and $36 a tonne on durum, up from around $21 and $32 respectively.
Such high penalties will almost certainly close the door to the sizable and lucrative U.S. market, said Adrian Measner, president and chief executive officer of the Canadian Wheat Board.
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“Our customers will determine whether or not these tariffs are prohibitive … but it will make sales very, very difficult,” he told reporters following the Aug. 29 announcement.
The moment of truth for prairie farmers will come Oct. 13, when the U.S. International Trade Commission rules on whether Canadian wheat imports injured the U.S. wheat industry during the three crop years ending in 2002-03.
If it says no, the duties will be revoked.
If it says yes, they will remain in place, likely for several years.
“If common sense prevails, then the ITC will decide there is no injury,” said board chair Ken Ritter, noting that Canadian imports account for less than five percent of the U.S. domestic market for wheat and less than 20 percent for durum.
Losing access to the U.S. market would be a significant financial blow to wheat growers.
In recent years Canada has sold about 1.5 million tonnes of wheat and durum to the U.S. annually. Those sales fetch about $400 million in revenue, representing about 10 percent of the board’s total sales revenue.
Selling the same wheat into other lower-priced markets around the world would generate a little more than $350 million in revenue, says the board.
In March, the commerce department imposed a preliminary countervail duty of 3.94 percent on spring wheat and durum, after finding that wheat sales to the U.S. in 2001-02 were subsidized through federal guarantees of CWB borrowing, and the use of federally owned hopper cars.
In May it instigated anti-dumping tariffs of 6.12 percent on wheat and 8.15 percent on durum, after deciding the board sold wheat to the U.S. at below fair market value during 2001-02.
That put the total border tax at 10.06 percent on wheat and 12.09 percent on durum.
Last week, after revising its calculations, the department boosted the countervail duty to 5.29 percent and the anti-dumping tariffs to 8.87 percent on spring wheat and 8.26 percent on durum, for a new combined duty of 14.16 percent on spring wheat and 13.55 percent on durum.
The North Dakota Wheat Commission, which initiated the case last year, said the decision validates the commission’s claim that the board sells wheat with the aid of government subsidy and under market value.
“Today’s decision gives U.S. farmers some relief from the monopolistic CWB’s unfair pricing,” said commission chair Larry Lee.
Wheat board minister Ralph Goodale said the federal government will examine ways to fight the U.S. duties using the North American Free Trade Agreement and the World Trade Organization
“We have obviously not made any decisions at this point,” he said
“Nothing is either ruled out or ruled in.”
