THE complaint launched by Canadian corn growers against American corn imports last week is well grounded and timely.
The Ontario Corn Producers Association, Manitoba Corn Growers Association and Quebec’s federation of agricultural producers started the ball rolling on a trade challenge of American corn imports on several fronts, including a formal complaint to the Canadian Border Services Agency.
Early speculation suggested Ottawa was leading the charge to retaliate against American intransigence in the softwood lumber dispute, but the corn growers’ action last week showed that pressure for a trade challenge has grassroots support.
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Farmers have complained about U.S. corn imports before. In 2000, Manitoba growers acted alone, without the support of the far larger Ontario industry.
That investigation found that subsidies in the U.S. farm bill justified a countervail duty of $1.58 US, but the case failed when the Canadian International Trade Tribunal found there was not sufficient injury because most Manitoba corn did not enter the commercial market.
This time, Canadian corn growers are united in their anger about being displaced in domestic markets by cheap American corn and prices depressed by subsidized competition.
Ontario Corn Producers notes that in 1980-85, before the U.S. moved into big agricultural subsidies, Ontario’s corn area averaged 2.1 million acres and production 207 million bushels, about equal to provincial use. By 2000-2004, area had fallen to 1.6 million acres that produced, thanks to higher yielding varieties, 203 million bu. But provincial corn use had climbed to 260 million bu., with U.S. imports averaging about 58 million bu. OCGA forecasts corn imports to Ontario in 2005-06 will be 75 million bu.
While Ontario acreage dropped, U.S. corn area increased, thanks to a range of subsidies that set a floor price and reduce growers’ risk.
As if subsidies under previous U.S. farm bills weren’t enough, Congress increased support in the 2002 farm bill.
Canada has a persuasive case, but there would be drawbacks to closing the corn pipeline. Canadian livestock producers have at times needed U.S. corn when drought slashed feed production here and drove up costs.
But despite that occasional need, the damage that U.S. subsidized production does to Canada in depressed grain prices and unfair competition, year in and year out, can no longer be ignored.
Indeed, the timing for a complaint is propitious.
U.S. farm subsidies have already been found to violate WTO rules in a complaint Brazil launched against American cotton. A Canadian corn challenge will increase the pressure.
Also, the administration in Washington is trying to lower farmer expectations for the next farm bill, due in 2007.
If a Canadian countervail and anti-dumping challenge succeeds, it would help show that the world will no longer abide market-distorting subsidies.
