Loading...
The Rural Voice, 1994-09, Page 12JOHN RICHARDSON, M.P. Perth -Wellington -Waterloo Constituency Office First Floor - Festival Square 10 Downie St. Stratford N5A 7K4 Handicapped Accessible Hours: 9 - 4:30, Thursday 9 - 6 5 Days A Week Phone 272-0032 Fax 272-1892 1-800-565-1864 "Our experience assures lower cost water wells" 94 YEARS' EXPERIENCE Member of Canadian and Ontario Water Well Associations • Farm • Industrial • Suburban • Municipal Licensed by the Ministry of the Environment DAVIDSON WELL DRILLING LTD. WINGHAM Serving Ontario Since 1900 519-357-1960 WINGHAM 519-664-1424 WATERLOO 8 THE RURAL VOICE Robert Mercer Canada/U.S. wheat deal good for Ontario - or just good The Western Canadian Wheat Growers' Association say they were sold out in the recent one-year wheat trade deal between Canada and the U.S. They say they lost market access while Ontario "kept unencumbered access to the same market". They failed to say of course, that western wheat — spring wheats — were the problem, not the long standing traditional and stable market for Ontario white winter wheat into the U.S. The deal does break the Liberal government's promise earlier in the year not to bend to U.S. pressure and limit wheat exports to the U.S. This is a "promise compromised" since the saving factor is that the limits and tariffs arc for one year only. Politically the U.S. had to cap Cana- dian wheat imports as that was the deal that U.S. President Clinton struck with northern Plains States Senators for their support on NAFTA. He got a political cap on wheat imports for 1994/95. It may, in fact, have very little practical significance since 1993/94 was an aberration in shipments due to the low U.S. crop and the large volume of cheap wheat in Canada, a good supply of durum and a U.S. export subsidy program that shorted the domestic market of durum. This year Canada may not have the cheap feed wheat, whereas the U.S. will have an oversupply of cheap corn. There is some belief that part of the unwritten deal is that the U.S. will greatly curtail its use of the Export En- hancement Program funds for durum. That is indeed good news if true. It doesn't look like it as the U.S. sold Algeria 25,000 tonnes of durum on August 3 (just after the trade deal was signed) for an EEP bonus of $6.69. Other whcat has been getting an EEP bonus of close to $44/t, such as was given to China. The U.S. exported 54 million bushels of durum under the generous Canada could win through value added exports EEP terms for export market support last marketing year. In Ontario the U.S. market remains open with only the NAFTA tariff of $3 per tonne applying to exports. Those exports run about 350,000 to 300,000 tonnes per season. And with a "peace clause" in the text to hold off any other action under NAFTA or GATT, there should be relative calm in the market for the next 12 months. It is also worth noting that there has been no tariff mentioned on barley or oat exports to the U.S., both of which have climbed significantly. The deal does not cover flour or pasta exports so Canada could win by shipping in value-added durum rather than the durum grain. The U.S., in part of its explanation of the deal, noted the fear of the pasta manufacturers of higher prices for durum and stated that the cost of durum in a $1.50 box of pasta amounted to eight cents, and this deal would not affect that cost. Another point to note is that the U.S. position is so ridiculous that U.S. durum is sold to Turkey under the EEP and then Turkish pasta and noodles are imported back into the U.S. well below regular prices, at $460/t rather than $800-$1,000/t from other sources. It would be nice to think that the expert panel set up to review the wheat war under this bilateral agreement could straighten out this spaghetti -like mess. If, as we understand, the U.S. does lay off subsidizing durum export sales, the world market will become more attractive to Canadian exports. The world doesn't start and stop at the U.S. border. Canada still has all of the world market to pursue. We think the deal is a lot better than the mass media and Opposition politicians have led people to believe. Canada did extremely well in this round of bilateral negotiations. The ef- fective cap is about 1.9 million tonnes of wheat, which is likely to exceed the need for this one year of the agreement, but almost more important is the fact that the U.S. failed to tic into wheat, the problem of supply management differences over yogurt and ice cream and poultry. We kept the negotiations clean and won on almost every point.° Robert Mercer is editor of the Broadwater Market Letter, a weekly commodity and policy advisory letter from Goodwood, ON LOC IAO.