There is rich irony in the cattle trade merry-go-round that the members of the so-called North American Free Trade Agreement are riding.
A series of countervail tariffs has created the weird situation of Canadian beef leapfrogging over the United States directly into Mexico.
Improved market penetration is surely welcome, but we wish it didn’t come as a result of such silliness in trade practices.
As we reported last week, Mexico levied a tariff against American beef, which it says is being dumped in Mexico.
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They launched their action in response to a trade complaint by the Ranchers-Cattlemen Action Legal Fund that alleged Mexican cattle were being dumped into the U.S.
It was the same sort of allegation R-CALF successfully pursued against Canada.
So, with less U.S. beef going into Mexico and more beef available in Canada because fewer Canadian cattle can be exported to the U.S., Canuck steaks are barreling straight down the highways and across the Rio Grande.
The market share they are taking belonged to the Americans.
Subsidies and restrictions on trade usually create a trail of unintended consequences.
Remember the Crow Benefit? The goal was to reduce grain farmers’ transportation costs, but cattle producers complained it created artificially high feed grain prices.
So Alberta brought in the Crow offset to lower feed grain prices and encourage growth in the cattle industry. That caused Saskatchewan to start its own version of the offset.
And Manitoba, where feed grains should have been cheapest due to the distance from port, almost lost its cattle industry.
And around and around we went.
Speaking of things that go around, the American complaint about Canadian durum imports just spun into view again.
American millers bought more Canadian durum, so that must mean lower durum prices, American growers complain.
Of course they didn’t complain when their government last winter brought in a ridiculously high support price for durum in its revenue insurance program.
This encouraged U.S. durum growers to report they were going to greatly boost acreage last spring, helping push durum market prices down $40 a tonne. When the U.S. department of agriculture realized its mistake and wanted to lower the price guarantee, durum growers took it to court.
With all this spinning, it’s no wonder farmers are feeling dizzy and sick.
It’s time to end this merry-go-round.
