MNI: Canada Must Spend On Tariff Fight, New Markets-Farmers

Farm industry leaders tell MNI they are pushing Canada's government to pay compensation for losses in a prolonged U.S. trade war and spend on expanded port and rail lines moving goods to new overseas markets, pressuring officials who are already missing deficit targets.

Subsidy costs will multiply with other export-based industries like manufacturing facing higher costs and uncertainty from Donald Trump’s trade policies, they say. “We’re asking the government to be ready to be prepared, to make sure that they help out all sectors including agriculture, to make sure that we don’t lose businesses,” Federation of Agriculture President Keith Currie said. “It will be multiple billions of dollars of harm that happens to the industry.”

One example are the greenhouse farmers who export 90% of their produce to United States. Their products' limited shelf life means they can't be sent overseas and “because of our population size this isn't a problem that we can eat our way out of," Currie said. Livestock is another issue because "these animals are growing and they need to go to market as soon as they're ready," he said.

Incoming Prime Minister and former BOC and BOE Governor Mark Carney has pledged to keep deficits small while boosting investment aimed at reviving productivity. He also plans to keep retaliatory tariffs in place until the U.S. removes its penalties, and to reinvest that revenue into the economy.

VANCOUVER BOTTLENECK

That tariff reinvestment promise is essential with farmers facing higher costs of seeds, fertilizers and farm equipment from the U.S. Canadian growers import much of their equipment from the U.S. so tariffs are extra painful on top of the weakness in the country's dollar against the greenback. 

“If you're buying a million-dollar John Deere combine and you apply a 25% tariff on that, that's a significant increase in price for the individual farmer. And we'd want to see those funds go back to the farmer so they're supported,” Grain Growers of Canada Executive Director Kyle Larkin said.

To keep up with expected big U.S. tax cuts, farmers call for a higher cap on interest-free loans and a 100% first-year tax write-off for equipment purchases. They also want Carney to follow through on promises to scrap carbon and capital gains taxes that could bring in billions of revenue. 

Canada's stated goal of reducing the 75% of exports sent to the U.S. requires upgrading the country's largest port in Vancouver, alongside other railways and sea ports, industry officials told MNI. “Over 50% of the grain that's produced in Canada is exported through the port of Vancouver, so anytime we have any disruptions at that port it has a major impact," Larkin said. Vancouver is unable to load grain for about half of the year because the last upgrade failed to protect some of the port's loading areas from rain that would damage crops, according to Currie.