NEW ORLEANS, La. — U.S. wheat growers have been demanding for years that Canada get rid of its grain transportation subsidies.
But an American agricultural economist said last week that could turn out to be a big mistake.
If they were eliminated, Demcey Johnson told the National Association of Wheat Growers, that would simply encourage Canadian farmers to look for closer markets for their grain. And the closest market of them all, not to mention the biggest and richest, is right across the 49th parallel.
Read Also
Manitoba beekeepers battle for survival
Honeybee colony losses have hit 43 per cent, making 2025 the latest in a string of poor bee survival years for Manitoba’s honey producers
“If you get rid of Canadian rail subsidies, our economic model shows, you get a higher volume of imports from Canada, not a lower volume,” he said during a panel discussion on grain transportation.
Those rail subsidies have been an incentive for Canadian farmers to ship their export grain to Vancouver or Thunder Bay, said the North Dakota State University economist.
While his study involved barley, Johnson said the same principles would apply for wheat.
Johnson also had some uncomplimentary things to say about the Export Enhancement Program. EEP, he said, is a major factor driving Canadian grain imports to the U.S.
That’s an argument made repeatedly by Canadian grain industry and government officials, but it’s always been dismissed by their U.S. counterparts.
But Johnson said his study showed that exporting large volumes under EEP drives down world markets and boosts domestic prices in the U.S. The combination of the domestic market void resulting from the heavy exports and the high local price is a magnet for Canadian barley or durum wheat.
U.S. policy-makers and farm lobbyists can’t have it both ways, he said: “Our export subsidy program is working at cross purposes with the open border policy.”
Johnson said the results of his study pose a serious strategic question for the U.S., namely, should the priority be to subsidize export sales or protect domestic markets from Canadian competition.
He added that if the Canadian Wheat Board can be accused of anything it’s probably that it has been “underselling” into the U.S.: “The economics suggest that should really be pushing barley into the U.S. but maybe they’re been showing some restraint for political reasons.”
Johnson’s presentation was described by several U.S. wheat growers in the room as one of the most thought-provoking they’ve ever heard on the Canada-U.S. trade issue.
“That was all new to me,” said Jim Squires of Glendive, Mont.
He said it pointed out there are often unforeseen results to policies and drives home the importance of serious cross-border consultations and co-ordination between farmers and governments.
Kansas congressman Pat Roberts, an unabashed supporter of both the EEP and restrictions on Canadian grain imports, wasn’t there to hear Johnson’s presentation. But in an interview later he agreed it raised serious questions.
“It shows you have to look at the law of unintended consequences,” he said.
Johnson’s presentation didn’t prevent the NAWG’s board of directors from affirming its long-standing position demanding that Canadian rail subsidies be reduced or eliminated.
