CHICAGO/DEVILS LAKE, N.D., (Reuters) — Gordon Stoner, who grows wheat in Montana near the Canadian border, would like to sell his wheat to grain elevators in Saskatchewan.
However, due to a quirk in Canadian law, the high-protein variety he raises would be automatically downgraded by government inspectors to feed quality.
“When I cross the border, my wheat is automatically treated as feed wheat,” said Stoner.
That feed grade means a deep discount: Saskatchewan grain elevators this month were paying about 30 percent more for premium-grade wheat versus feed grade.
Read Also
Saskatchewan RM declines feedlot application, cites bylaws
Already facing some community pushback, a proposed 2,000-head cattle feedlot south of Swift Current, Sask., has been rejected for a municipal permit, partly over zoning concerns about the minimum distance from a residence.
Stoner and other farmers in the northern United States have found sympathetic ears in the administration of U.S. President Donald Trump, which dragged the decades-old issue of Canada categorizing all U.S. wheat as livestock feed into the North American Free Trade Agreement renegotiation.
Northern U.S. wheat growers, particularly those like Stoner who grow durum, are the sort of constituency the Trump administration has sought to protect with his “America first” policy, aimed at reviving industries such as coal and manufacturing and bringing back jobs from overseas.
The grading issue contributes to a striking imbalance in the U.S.-Canada wheat trade: 50,751 tonnes of U.S. wheat were exported to Canada in 2017 while 2.8 million tonnes of Canadian wheat were shipped into the United States, according to U.S. Department of Agriculture data.
The bilateral agreement the U.S. and Mexico announced on Aug. 27, before Canada rejoined NAFTA talks, called for “non-discriminatory treatment in grading of agricultural products,” according to the Office of the U.S. Trade Representative.
The USTR included “eliminating discriminatory barriers and unjustified technical barriers, including to U.S. grain and alcohol” in its objectives for renegotiating NAFTA.
The USTR’s chief agriculture negotiator is Gregg Doud, a Kansas native who once worked for the U.S. Wheat Associates in Washington.
Trump addressed wheat growers’ concerns at a rally in North Dakota this summer, saying fellow Republican Senator John Hoeven and Representative Kevin Cramer had flagged the problem for him.
“Canadian wheat markets consistently discriminate against the United States’ wheat by grading it as feed,” Trump said at the time. “I don’t know what the hell it means. I just know it’s a bad deal.”
Hoeven’s office said the senator had spoken with the president and Agriculture Secretary Sonny Perdue about what he called unfair treatment from Canadian grain elevators. He recently brought it up with U.S. Vice-President Mike Pence, spokesperson Alex Finken said.
Canada’s agriculture ministry and the Canadian Grains Council said U.S. farmers can work out better deals for high-quality wheat directly with buyers.
“There is nothing in the current grain handling system preventing U.S. producers from entering into contracts with grain-handling companies or processors located in Canada to get a fair price for the quality of product being delivered,” said Guy Gallant, spokesperson for Agriculture Minister Lawrence MacAulay.
He did not respond to a question on whether the issue was part of NAFTA negotiations.
U.S. farmers say the grain-grading system keeps Canada closed to the U.S. while Canadian wheat can freely move to U.S. flour mills.
“I suspect it will be fixed through NAFTA, assuming we don’t blow it up,” said Stoner.
Cramer, who is trying to unseat Democratic Senator Heidi Heitkamp in November, could not immediately be reached for comment. Democratic Senator Jon Tester of Montana last year introduced a resolution in Congress urging Canada to change its wheat-grading procedure. Stoner said Montana’s second senator, Republican Steve Daines, has frequently met with Trump and has been a vocal advocate for the cause.
Daines said in a written statement that he was “hopeful that this issue can get resolved in the ongoing NAFTA negotiations.”
Durum has been particularly affected by Canadian policy, farmers said. After a strong Canadian harvest last year, durum has flooded into the U.S. and prices have fallen to eight-year lows.
U.S. pasta makers are increasingly buying Canadian durum as Italian demand declines due to strict origin laws introduced last year requiring pasta to include labels telling consumers where the wheat was cultivated. The law has favoured Italian durum and U.S. farmers are producing less of the grain as a result.
“If I was a farmer in Canada, I’d be hauling every kernel of durum down here, too,” said Mark Martinson, a North Dakota farmer, who is also president of the U.S. Durum Growers Association.
U.S. plantings of durum fell to 1.887 million acres in 2018, down 18 percent from 2017 and 22 percent from 2016, according to the USDA. That’s about four percent of total U.S. wheat acreage.
While U.S. prices for durum are generally higher than prices at elevators in Canada due to greater demand from millers, so much Canadian durum has entered the market this year that since June, durum has fetched more in some parts of Canada.
That makes not being able to sell across the border all the more frustrating for U.S. farmers.
Martinson said the durum growers association had recently hired lobbyist Jim Callan “to roam the halls” in Washington. Callan has been working with a different group, the North Dakota Grain Growers Association, since March.
“We want to level the playing field for U.S. durum. We don’t want to see it left off the table,” said Callan.
Martinson said he recruited two “bright, young, 30-plus-year-old farmers” to the durum growers association board, only to have them quit two years later, struggling to turn a profit. But he sees evidence of grain flows from Canada in truck stops in Minot, N.D., about 80 kilometres south of the Canadian border.
“I get going through Minot quite often, and the parking lot is full of Canadian trucks out of Saskatchewan,” Martinson said. “You can’t find an American truck.”
