Key testimony at a vital trade hearing on Canadian wheat exports boiled down to the age-old debate of what came first, the chicken or the egg.
American millers argued they need to import Canadian wheat and durum because there isn’t enough grown in the United States.
Producers countered they’re not seeding as much of those two crops because millers are bringing in cheap product from Canada.
The two sides presented their cases last week before the U.S. International Trade Commission in Washington, D.C. That hearing that will help determine whether Canadian wheat and durum growers maintain access to their most important market.
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On Oct. 14, the commission will decide if U.S. Department of Commerce duties of 14.16 percent on Canadian hard red spring wheat and 13.55 percent on durum will stand or be retroactively revoked.
The Canadian Wheat Board’s biggest ally, the North American Millers’ Association, told the commission that U.S. production of the two crops falls far short of their needs.
Between 1996 and 2002, growers in North Dakota cut their plantings of hard red spring wheat by 2.7 million acres or 28 percent and durum by nearly one million acres or 30 percent.
U.S. production of hard red spring wheat was 176 million bushels short of millers’ needs in 2002, while durum missed the mark by 40 million bu. Exacerbating the shortfall was the fact that only three-quarters of the American spring wheat crop was of milling quality that year.
“Competitive access to Canadian spring wheat and durum allows us to fulfil our obligation to supply U.S. bakers and pasta makers with the quality and quantity of flour and semolina they require,” said millers’ association director John Miller.
He said the industry will continue to look first to domestic suppliers, “but we must not be prevented from securing alternative supplies from other sources when conditions require.”
Harlan Klein, vice-chair of the North Dakota Wheat Commission, said American farmers have no choice but to grow less spring wheat and durum because “undervalued” Canadian product has driven down prices for those commodities.
Fellow North Dakota farmer and U.S. Wheat Associates chair Alan Lee told the commission it wouldn’t bother him if individual Canadian farmers sold their durum at below cost, but not when it’s marketed by the CWB, with its “government-backed financing” and “government guaranteed monopoly powers.”
Growers received support from North Dakota senator Kent Conrad and state member of congress Earl Pomeroy, who said the CWB is “distorting trade” in the two classes of wheat under investigation.
Wheat board chair Ken Ritter said evidence presented at the Sept. 4 hearing “clearly established” the CWB is trading fairly in the U.S. market.
“Far from undercutting prices, Canadian wheat and durum is fetching a premium,” said Ritter, referring to testimony delivered by numerous American millers.
One such statement came from the largest pasta producer in the U.S., who told the commission in his nine years of dealing with the CWB it has never undercut U.S. durum prices.
“We are willing to pay the premiums for Canadian durum because we offset the cost with better mill yields and improved product quality,” said American Italian Pasta Company executive vice-president David Potter.
Those kinds of comments left Ritter upbeat about the eventual outcome of the trade complaint.
“I am confident that when the ITC makes its decision based on the facts, the duties will be removed and we will once again be able to meet the needs of our American consumers,” he said.
