Producers fret over corn duty

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Published: January 12, 2006

Exemptions from the corn duty for some hog producers could worsen an already destructive situation for Canada’s industry, says the manager of Sask Pork.

The duty on U.S. corn imported into Canada makes it more costly to feed a pig in Canada, while the exemption encourages producers to ship their animals south rather than keep them home for processing.

“It will encourage Canadian producers to ship the smaller weanlings and isoweans down to the United States to be fed,” said Neil Ketilson of Sask Pork.

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“That’s totally counterproductive to what we’re trying to do in Canada, which is value-add our product here.”

Canadian Border Services Agency officials have been telling Canadian hog producers how to apply for exemptions and refunds from the corn duty, which is charged on U.S. corn imported to Canada.

Canadian trade laws allow producers of goods to be exempted from anti-dumping duties if they sell the finished product outside of Canada.

That means if a hog producer imported cheap U.S. corn to feed hogs that will later be sold to U.S. buyers, he will not have to pay the duty on the corn, or else have the duty refunded.

But a producer importing U.S. corn to feed pigs intended for sale to a Canadian buyer probably could not win a refund or exemption.

Right now this situation is not creating a big problem, because Canada is glutted with its own feed grains.

According to George Morris Centre hog industry analyst Kevin Grier, a new basis spread has not developed between the U.S. and Canadian feed grain markets. So while the corn duty has had no immediate large influence on hog movement, it might over time.

“If this thing becomes permanent, people will begin to rethink their behaviour and what business to be in,” said Grier.

“For now there are contracts to be honoured and the basis hasn’t shifted a whole lot. It’s still kind of early.”

Canadian packers hope they will not be put at a disadvantage.

“We’re hoping that (the exemptions to the duty) will also apply to meat,” said Jim Laws, executive director of the Canadian Meat Institute.

“We certainly rely on an open market, a North American market.”

Laws said the institute has asked Canada to drop its import duty on U.S. live hogs, which was imposed last year, since the U.S. government is going to remove the Byrd amendment. Canadian packers may need access to American hogs if the corn duty drives too many Canadian pigs to the U.S.

“It’s in case the corn duty makes it less equal than it is now,” said Laws.

Ketilson said hog producers don’t blame Canadian corn growers for the duty, because the U.S. does subsidize corn production. But he said Canada’s agricultural policy establishment needs to find a way to stop the differences between U.S. and Canadian policy from sideswiping Canadian farm sectors.

“At some point Canadian farm policy needs to address this issue,” said Ketilson.

“We need to assess where we are and how we’re going to level the playing field. Otherwise these trade irritants are going to keep going.”

The Canadian government is expected to decide in April whether to make the corn duty permanent.

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Ed White

Ed White

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