Canadian grain shipments to the United States are taking millions of dollars out of U.S. farmers’ pockets, says a study by a North Dakota State University economist.
Durum shipments drove down U.S. durum prices by about 6.4 percent during the years 1993-95, while barley prices were lowered by 5.8 percent as a result of Canadian imports.
That translates into lost income averaging $154.8 million (U.S.) a year for American producers of those two commodities, said the study by agricultural economist Won Koo.
North Dakota senator Byron Dorgan, who commissioned the study, immediately used the results to continue his longstanding campaign to limit Canadian grain shipments into the U.S.
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“The evidence continues to mount that this unfair agreement (the Canada/U.S. Trade Agreement) has hit North Dakota farmers squarely in the pocketbook in a big way,” he said.
The study says if Canadian exports continue at the same pace as the past three years, and once the so-called multiplier effect has been taken into account, the net effect will be to take $270 million annually out of the North Dakota economy.
Getting at a number
Koo’s results are based on a mathematical formula linking grain prices to supplies. For the years 1993-95, the price of durum in the U.S. would have been $6.67 a bushel if there were no imports from Canada, according to the formula. The price was actually $6.26, with the difference ascribed to the impact of Canadian imports.
The study pegged the average annual loss at $81.6 million for durum and $73.2 million for barley.
Dorgan sent the results of the study to U.S. trade representative Charlene Barshefsky, who has been discussing the grain trade with the Canadian government in recent weeks.
The study, which consists of four pages of text and three pages of tables and graphs, cites a number of factors for increases in Canadian exports to the U.S. since implementation of free trade between the two countries:
- The relative size of the two countries’ domestic markets and the fact Canada has such large exportable supplies.
- The U.S. Export Enhancement Program, which encouraged overseas sales through subsidies. That cut into U.S. domestic supplies, making it a more attractive market for Canadian exports.
- The elimination of Canadian rail subsidies, making it cheaper for Canadians to ship grain to the U.S. than overseas.
- Exchange rates, which have made Canadian goods cheaper in the U.S.
- The consistent quality of Canadian grain which is preferred by some U.S. millers.
The study says U.S. farmers could fight against Canadian imports by improving their production and marketing efficiency, and taking advantage of their transportation cost advantages.
It also says the two countries should take steps to harmonize trade policies and establish common grain quality standards. And it called for restrictions on the total volume of Canadian grain that could be exported to the U.S. in a year.
