Trade war fund needed for grain farmers: GFO

There are increased concerns now that it looks like the U.S. will further subsidize its farmers

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Grain Farmers of Ontario is calling for the federal government to create a fund so that grain farmers are protected from losses during global trade disputes.

Why it matters: American farmers received almost $9 billion last year from the American government to cover losses from trade and U.S. President Donald Trump recently promised $15 billion more.

“A trade war fund needs to be established by the Canadian government to protect Ontario grain and oilseed farmers from political decisions outside their control,” says Markus Haerle, chair of Grain Farmers of Ontario. “The U.S. is protecting its farmers and we need the Canadian government to protect our farmer members from trade disputes that have impacts on markets and distort prices.”

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GFO says that political decisions are creating serious uncertainty for farmers, especially in commodity markets.

Indeed, in mid-May soybean and corn markets plunged and recovered over the course of a few days.

The trade war between China and the U.S. has resulted in a steep decline in demand for American soybeans from China. Canada’s challenges with China due to trade have also meant a slowing in demand from China for Ontario soys.

Other factors weighing on crop prices include the African swine fever outbreak in China which has reduced demand for soybeans and soymeal.

Ontario crop farmers have been somewhat isolated from the tough times faced by U.S. farmers with a weak Canadian dollar aiding basis levels. Export demand for Ontario soybeans and corn has been strong from other markets, especially Europe.

However, with Canadian prices for crop commodities set at the Chicago Board of Trade, anything that happens to affect American prices affects Canadians too.

With the upcoming election, GFO is also calling on the federal government to:

  • Activate a pilot project of Grain Farmers of Ontario Gross Margin insurance product by 2020. This product would be a voluntary top up to the current production insurance product. This will help farmers address a 15 per cent loss that is currently not covered by AgriStability.
  • Defend current markets and find new markets for grains and oilseeds. The federal government should normalize commercial relationships with China, ratify the CUSMA and CPTPP. They should invest in domestic processing and explore new markets. The government needs to eliminate harmful tariffs, including aluminum and steel tariffs.
  • Implement impactful climate change programs. The government should eliminate the carbon tax and focus on programs that will bring about real climate change impact, such as ethanol mandates.

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