Saskatchewan Pulse Growers will not follow the lead of the Ontario Corn Producers Association.
After conducting a month-long inquiry into the unusually high level of American peas and lentils flowing across the Canadian border, the association has determined it will not ask the federal government to pursue an anti-dumping countervailing duty on the subsidized American commodities.
“To be blunt, it won’t change things,” said Saskatchewan Pulse Growers executive director Garth Patterson.
A duty would not curtail overproduction of U.S. pulses. It would only force American farmers to find routes to overseas markets where their cheap product will continue to compete with Canadian pulses in places such as India and Spain, he said.
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As well, because Canadian trade law allows domestic firms to claim back duties on imported product that is processed for export, some argue the trade action would have no impact, said Patterson.
Glenn Hepworth, a pulse producer from Assiniboia, Sask., is disappointed by the findings of the investigation. He finds it hard to comprehend why something can’t be done about the American trucks lined up at local processing plants.
“(Rail) cars are being used for U.S. production when we desperately need those same cars to move our own product,” said Hepworth.
He noted that pulses have returned decent margins to farmers over the past decade and now American producers, who are assured a floor price for their peas and lentils, are dimming what was once a bright light.
“It’s pretty devastating for the industry.”
Patterson empathized with growers like Hepworth who are confronted with near record low prices for their commodities. But he pointed out there are a number of reasons for slumping values, including two years of record pulse production in Canada, huge carryover volumes and the soaring Canadian dollar.
It is not illegal for processors in southern Saskatchewan to import more pulses from the U.S.
“They’re not obligated to source Canadian product,” said Patterson.
According to the United States Department of Agriculture’s Oct. 20 Vegetables and Melons Outlook, U.S. pea and lentil exports amounted to just over 300,000 tonnes for the 2004-05 crop year, up 45 percent over 2003-04.
Canada was the top destination among the 98 countries that received U.S. shipments, importing 16 percent of that total, or 48,000 tonnes of peas and lentils.
And the pace of U.S. exports to Canada is accelerating.
Saskatchewan Pulse Growers’ investigation uncovered that for the first two months of the 2005-06 crop year processors brought in 30,443 tonnes of American pulses. Those commodities are being sold in Canada at prices well below the cost of production.
It costs U.S. producers $154.28 per tonne to produce peas and $254.50 to grow lentils, according to statistics provided by North Dakota State University. Bids by Saskatchewan processors on No.1 medium yellow peas are averaging $124.78 per tonne while No. 1 medium green lentils are averaging $225.91.
The U.S. farm bill insulates American growers from low prices by establishing a loan rate for peas of $155.48 per tonne and one for lentils of $302.12 in North Dakota and Montana.
Patterson said surging U.S. exports are just a symptom of the real problem, which is market-distorting government subsidies.
And that’s a conundrum that requires intervention at a higher level, which is why the association met with federal agriculture minister Andy Mitchell two weeks ago, and urged Ottawa to continue to support the reduction of grain production subsidies at World Trade Organization talks.
