January 2006
Index
Duties
Imposed on Corn Imported from the US
On December 15, 2005, the Canadian Border Services
Agency (CBSA) imposed provisional duties of US$1.65/bushel (US$64.96/tonne)
on imports of grain corn from the US. The preliminary phase of our Canadian
Corn Producers' (OCPA, FPCCQ, MCGA) complaint under the Special Import Measures
Act against imports of illegally dumped and subsidized grain corn from the US
is now complete. The CBSA will continue its investigation of the dumping and
subsidizing regarding unprocessed grain corn and will make a final decision
on or before March 15, 2006. The Canadian International Trade Tribunal will
now begin its full inquiry into the question of injury to the Canadian industry.
The Tribunal will issue its decision on or before April 14, 2006.
Imports
of the following are exempt:
| * | seed corn, |
| * | sweet corn, |
| * | popping corn, |
| * | high-moisture corn ("moisture content of approximately 24% to 26% stored in oxygen-limiting silos without being dried … used for animal feed almost exclusively on the farm where it is grown and is not normally traded or used for industrial purposes"), |
| * | and processed corn ("processed grain corn in which one of the constituent parts of the whole kernel grain corn, such as the bran layer or pericarp, germ, tip cap or endosperm has been removed") are exempt. |
All
other imports must pay the duty commencing December 15, 2005, including:
| * | unprocessed corn ("includes whole kernel grain corn and grain corn that has been milled to a limited degree such that the milled grain corn, regardless of its physical form, preserves all the constituent parts of whole kernel grain corn and is chemically identical to whole kernel grain corn"), |
| * | white dent corn, |
| * | grain corn mixed with other grains and oilseed which can be separated from the grain corn after importation, |
| * | and sliced corn. |
Canadian
Corn Producers' Statement
Guelph, ON. December 15, 2005
Canadian Corn Producers (CCP) are encouraged that today Canada Border Services
Agency (CBSA) made a preliminary determination (PD) that U.S. grain corn imports
are dumped and subsidized. Under CBSA's decision, provisional anti-dumping and
countervailing (AD/CVD) duties totaling $1.65/bushell will be imposed immediately
to prevent further injury to Canadian corn growers. "These duties will
provide some relief to the dire conditions facing our nation's corn farmers",
said Brian Doidge, spokesperson for CCP.
CCP is pleased that CBSA has confirmed that "limited milled" and "mixed"
grain corn remain part of the investigations. This allows both CBSA and the
Canadian International Trade Tribunal (CITT) to maintain their vigilance for
signs that circumvention of AD/CVD duties by unscrupulous importers is occurring.
CCP is also pleased that CBSA has excluded from its investigations "high
moisture" corn - a variety of corn used for animal feed almost exclusively
on the farm where it is grown and not normally traded or used for industrial
purposes.
CCP is surprised that CBSA has not directed the CITT's attention to anecdotal
evidence of massive importations of U.S. grain corn that have been occurring
prior to the CBSA's PD. However, CCP recognizes that this approach does not
preclude the CITT, on its own accord, from investigating further and imposing
duties retroactively if warranted.
CCP looks forward to the final phase of the proceeding which entails CBSA refining
its calculations of AD/CVD duties in a final determination due March 15, 2006
and the CITT conducting a full injury inquiry (culminating in a hearing mid-March)
and making its final decision on injury by April 15, 2006. If the CITT makes
a final injury finding, the "provisional" duties will become "definitive"
and payable on all subject goods until the CITT's AD/CVD order expires (usually,
after five-years).
Putting today's encouraging CBSA decision in context, Mr. Doidge said, "Our
anti-dumping and countervail duty action is symptomatic of a deep financial
crisis afflicting all Canadian grain and oilseed producers. Canadian net farm
income from the marketplace has been negative in five of the last six years.
This crisis is caused by low commodity prices artificially depressed by foreign
market interference, in particular illegal subsidies provided to US producers
under decades of successive US Farm Bills."
With respect to the other prongs of its attack on unfairly traded U.S. grain
corn, CCP remains disappointed by the Canadian Government's apparent inaction
on CCP's request that Canada commence WTO consultations with the U.S. regarding
the illegality of U.S. grain corn subsidies. While CCP hopes that Canadian negotiators
at the WTO Ministerial in Hong Kong this week surprise everyone by returning
with something to show for their confidence in achieving meaningful reductions
in US farm subsidies solely through the Doha Round, CCP believes that this confidence
is misplaced.
For months now, CCP has contended that complementing Doha Round negotiations
with a WTO litigation strategy respecting existing rights under the 1995 WTO
Agreement on Agriculture (as Brazil has done, with success, respecting US cotton
subsidies) is more effective for Canada than a strategy based solely on negotiations
within the Doha Round (as the C4 - i.e., Benin, Mali, Chad and Burkino Faso
- has done, without success, respecting the same US cotton subsidies).
Speaking to trade-injury income support as an important and emerging election
issue, Mr. Doidge cautioned, "Over the past 6 years, we have asked the
Federal Government to provide assistance by implementing an effective program
that would complement the Canadian Agriculture Income Stabilization (CAIS) program
and offset the impact of trade injury. We are concerned that the Federal government
now appears ready to further reduce support to Canadian farmers in an effort
to pay yet again for commitments promised by the U.S. in previous international
and WTO trade agreements, but never fulfilled."
Federal
Assistance Announced
On November 23, 2005, In the scramble to distribute
pre-election "goodies" before the House fell on a non-confidence vote,
Federal Agriculture Minister Mitchell announced funding for an emergency payment
of $755 million to the grain and oilseed sector across Canada. Details remain
sketchy, however it appears that:
| * | payments will be made directly to producers from the Federal government |
| * | initial payments will likely be distributed January - March, 2006 |
| * | final payments will be distributed sometime later in 2006 |
| * | based on average annual net sales of eligible grain and oilseed crops only |
| * | during the period 1998 - 2002 |
| * | although perhaps an individual's sales for 2003 and 2004 using CAIS information may also be incorporated if available |
| * | means farm-fed grain and oilseeds are not eligible for the payment |
| * | an application process is to be established with benchmarks for new farmers |
| * | payments count as income if a producer is enrolled in CAIS. As the Federal government's background information states, "this will reduce the amount farmers receiving this payment get through CAIS." In other words, this payment is merely a CAIS advance for those enrolled in CAIS. The Federal government itself calculates this "CAIS offset" as being about $155 million meaning the announcement of $755 million is really only $600 million in new funding. |
| * | but producers do not have to be enrolled in CAIS to receive a payment |
| * | there are no caps on the amount of the payments |
| * | perhaps $123 million would flow to producers in Ontario |
| * | very difficult to estimate individual payments, but perhaps $25/acre of eligible cropped land for the province as a whole. |
Ontario Minister of Agriculture Dombrowsky responded in a November 23 press release:
"I am disappointed with the Federal government announcement made today by Agriculture Minister Andy Mitchell.
Today's announcement does not address the need to establish the stability in the agriculture sector that a multi-year strategy would address. Nor does it deal with the need for greater investment in research, innovation and marketing.
It is important that our federal counterparts have acknowledged the financial pressure facing grain and oilseed producers. We are looking for the federal government to participate in a comprehensive package that would provide additional dollars to address the current income problems throughout the agricultural sector as well as new investments for long-term prosperity.
Our government, along with
the "Unified Voice" coalition, has been working on a plan that would
better support the agriculture industry until the second Agricultural Policy
Framework can be implemented in 2008. Ontario will continue to work with our
farming partners to convince the federal government of the real need for their
long-term support."
OCPA Opposed to Method of Distribution
The OCPA is on record as opposing this method of distribution which was also used to distribute a similar "ad hoc" payment in the spring of 2005 to which the OCPA objected at that time as well. The OCPA spoke with Minister Mitchell in Ottawa less than two days prior to his November 23 announcement. We had expressed our concerns as well as our preferred higher level of support and method of distribution.
The OCPA, along
with the Ontario Grain & Oilseed Group and the Grain Growers of Canada,
is on record as requesting that the Federal government:
| * | annually calculate the injury caused to each grain and oilseed commodity by illegal foreign market interventions, subsidies, and tariffs (such as the US Farm Bill); |
| * | annually provide funding to offset such injury per bushel of production per commodity for each province; |
| * | annually provide such funding to grain and oilseed producers in each province to be distributed as producers in each province determine. |
In Ontario, we
ask that such funding flow to the province to be matched by the province and
used to fully fund and implement our Risk Management Program.
As of the end of November, 2005, $175 million (government funding only) had been paid out to 11,080 participants as 2003 CAIS program payments from the 27,820 CAIS applications processed (39.8%). Field Crop producers, who represented 40% of 2003 CAIS program applications, received 12.9% of total payments averaging just $6,123 per payment, the lowest of any commodity sector and far below the average payment for the 2003 CAIS program year of $15,788.
As of the end of November,
2005, $90.8 million (government funding only) had been paid out to 6,033 participants
as 2004 CAIS program payments from the 14,060 applications processed to date
of the 26,530 applications received. Average payments for the 2004 CAIS program
to date were $15,061, but payments to 2,521 Field Crop producers who triggered
a payment averaged only $6,058. These figures do not include the Special Ruminant
Advance program payments distributed in December 2004.
28,919 CAIS participants selected coverage for the 2005 CAIS program year. By
comparison, there were over 36,000 participants enrolled in NISA when that program
was curtailed by government upon the signing of the Ontario APF/BRM Implementation
Agreement in December 2003.
Manual processing to calculate the Production Insurance Premium Adjustment on 2003 CAIS program files has generated $4 million in additional payments to offset some or all of the PI premiums paid (averaging $4,645 on 878 payments). It is anticipated that 2003 CAIS program PIPA calculations and payments will be completed early in 2006.
An additional $41 million
has been paid as a CAIS top-up to 12,131 CAIS participants who triggered a 2003
CAIS program payment. These payments come from the agreement with Ontario commodity
organizations concerning distribution of "wedge" funding. An additional
$40-$44 million is expected be distributed in a similar manner as a top-up to
participants who trigger a 2004 CAIS program payment.
Minister Mitchell chose not to attend the most recent Fed/Prov Ag Ministers conference in Regina November 24/25. This left several proposed CAIS program modifications hanging waiting for his signature on Implementation Agreement amendments. One major modification caught in limbo is the proposed change from the CAIS deposit to a CAIS fee ($100 minimum fee, 0.45% of 2000-2004 reference margin including structural change, late penalty charge of additional 20% after June 30,2006). There is no deposit requirement for 2005 CAIS program participation, and no retroactive fee. For the 2006 CAIS program year, the fee deadline will be June 30, 2006. The delay may be a good thing, although as months pass confusion will increase. OCPA, as well as the entire Ontario Agricultural Commodity Council, is on record as saying our preferred option remains no fee at all, and in no case should a fee be more than 0.15% of reference margin (ie. equivalent to the interest rate spread on the minimum 1/3 deposit). On farms with larger reference margins, this fee is a substantial annual cash expense that is "sunk" and not recovered. This is especially a concern for grain and oilseed participants for whom CAIS simply does not work because production and reference margins have been declining over time.
Other proposed
CAIS changes still awaiting resolution include:
| * | Allowing for a choice in calculation of the reference margin. Participants could choose either the existing Olympic 3-year average (ie. drop the high and the low of the last 5 years), or a straight 3-year average. Alberta announced November 14 that is was proceeding unilaterally to allow Alberta producers to choose either method for 2003, 2004, and 2005 CAIS program years. OMAFRA estimates such a retroactive choice would increase CAIS cost in Ontario for 2003 - 2005 by a total of $155 million or $52 m annually ($21 m Ontario share). |
| * | Changing the methodology used to value inventory to a P1-P2 (beginning price and inventory versus ending price and inventory) hybrid (does not apply to valuation of breeding livestock inventory). Current proposals suggest a phase-in of this change such that producers would have a choice to shift in 2006, but all must shift by 2007. Because the P1-P2 hybrid method is more responsive to price changes, it provides more support in years when prices decline from the beginning of the year to the end, but less support when prices rise through the year. Therefore, in the interest of fairness, the Ontario Agricultural Commodity Council suggests that if adopted, this methodology should be retroactive to the beginning of the 2003 CAIS program year. Analysis suggests that P1-P2 hybrid methodology would have increased CAIS program benefits in Ontario by $66.2 million in the 2003 program year ($7.3 m to Field Crop participants) and by $116 million in 2004 ($47.6 million to Field Crop participants). Not surprisingly, because of sharp declines in pricing, cattle feeders and field crop producers would benefit the most from retroactive application of this methodology. |
| * | A major confrontation is likely to boil up over the proposed changes to the linkage between CAIS and Production Insurance. Ontario rebates a portion of the savings to CAIS that occur because a participant paid for PI coverage and a claim increased his income. This CAIS savings rebate is up to a maximum of his PI premium paid. Ontario's method of calculating this rebate is more generous than the national approach; but neither meets the linkage as proposed by the Ontario Agricultural Commodity Council. |
| Regardless, two modifications to the linkage are being assessed: | |
| * | A stronger incentive nationally such as Ontario uses; or even better, excluding PI premium costs from the reference margin (thus making the reference margin larger). A strong incentive approach could increase CAIS costs nationally by perhaps $100 million per year on average. |
| * | Imputing PI benefits for CAIS participants who experience losses caused by risks covered by PI but who did not carry PI. Imputing benefits would save CAIS about $100 million nationally per year on average. |
Canadian Federation of Agriculture's Election Stance
November 29 , 2005: Farmers will not be ignored in election
(OTTAWA) - The Canadian Federation of Agriculture (CFA) is putting Canadian politicians and media on notice: agriculture issues will not be ignored in this election. To put agriculture on the election map Canada's farmers will target candidates with mailouts, local debates, and a reprise of the televised national agriculture debate held during the 2004 election featuring the Minister of Agriculture and Agri-Food and the opposition party agriculture critics.
"Farmers will not accept the silent treatment they got in the last election," said Bob Friesen, CFA President. "There are over 300,000 farm operators in this country. This industry generates nearly nine per cent of our GDP. What affects our industry affects all rural Canada, and even major urban canters. The farm vote counts, and we have issues we need addressed."
CFA has four main policy priorities it wants to see addressed by the political parties and their leaders and candidates:
| * | Industry-driven farm policy. CFA just met with Canada's agriculture ministers and presented its plan for the next generation of agriculture policy - a Farm Bill for Canada. All parties must commit in their policy platforms to working with the industry and supporting industry-driven farm policy, including short-, medium- and long-term measures. CFA will ask Canada's political party leaders to endorse the CFA proposal for a Canadian Farm Bill. |
| * | Trade. WTO negotiations are reaching a crucial juncture. All parties must make a firm commitment to defending Canada's interests at the WTO - reducing global export subsidies, expanding market access, and preserving our domestic marketing systems like supply management and the Canadian Wheat Board. |
| * | Farm income and the Easter Report. The income crisis is one of the most pressing issues facing Canadian farmers today. The Wayne Easter report offered some of the best analysis of the crisis to date, and made numerous recommendations that are supported by the industry. CFA calls on all party leaders to set aside partisanship and commit to implementing the recommendations of the Easter report. |
| * | Supporting farmers who provide a public good. CFA calls on all parties to include in their platforms a recognition of the public benefits farmers provide - such as food safety and environmental stewardship initiatives - and a commitment to ensuring the cost of providing those benefits is shared equally among all the beneficiaries - consumers and the public. |