Pota­toes a NAFTA ir­ri­tant?

The Daily Press (Timmins) - - BUSINESS - Tom Black­well

U.S. and Cana­dian trade ne­go­tia­tors might need to add spuds to a list that al­ready in­cludes cheese, steel and soft­wood lum­ber.

A Repub­li­can se­na­tor has asked his gov­ern­ment to in­ves­ti­gate al­le­ga­tions by Amer­i­can farm­ers that Cana­di­ans are il­le­gally dump­ing pota­toes into their mar­ket, po­ten­tially open­ing a new front in the two na­tions’ trade war.

A Demo­cratic mem­ber of the se­nate has added her voice, too, sug­gest­ing there’s a “strong case” that Cana­di­ans are un­fairly tak­ing away Amer­i­can share of the tu­ber mar­ket.

U.S. pro­duc­ers point to the surge in im­ports from across the border in re­cent years, and say they sus­pect the lower price of Cana­dian pota­toes is due to gov­ern­ment sub­si­dies or dump­ing.

And they charge that Cana­dian rules have all but closed the mar­ket here to them.

“At some point, you reach a boil­ing point where you say ‘Enough is enough, we’re go­ing to start to fig­ure out what’s go­ing on here and take ac­tion,’ ” Don­avon John­son, pres­i­dent of the North­ern Plains Potato Grow­ers As­so­ci­a­tion, said Thurs­day.

Cana­dian farm­ers re­spond that they are partly just ben­e­fit­ing from a favourable ex­change rate, and say there is noth­ing to the sub­sidy al­le­ga­tion.

Re­gard­less, John­son and col­leagues vis­ited Wash­ing­ton, D.C., re­cently, meet­ing with of­fi­cials from the U.S. Trade Rep­re­sen­ta­tive’s of­fice — the body hold­ing NAFTA talks with Canada — the Com­merce Depart­ment and U.S. In­ter­na­tional Trade Com­mis­sion (ITC).

Sen. John Ho­even, from North Dakota, said he is now urg­ing the ITC and the Se­nate’s fi­nance com­mit­tee to study the im­pact of Cana­dian trade on “the na­tion’s potato pro­duc­ers.”

“Un­fair treat­ment from our trad­ing part­ners is ex­actly what we are try­ing to re­solve through these trade ne­go­ti­a­tions,” Ho­even said in a re­cent state­ment.

Sen. Heidi Heitkamp, also from North Dakota and locked in a neckand-neck elec­toral bat­tle with her Repub­li­can chal­lenger, said she raised the is­sue at a meet­ing with Canada’s deputy am­bas­sador to the U.S.

“Red River Val­ley potato grow­ers have a strong case to be made that Canada has un­fairly lim­ited their prof­its and nar­rowed their fair mar­ket ac­cess,” said Heitkamp in a re­lease last month.

John­son said his group — rep­re­sent­ing grow­ers in North Dakota and Min­nesota — were spurred into ac­tion by the grow­ing flow of Cana­dian fresh pota­toes into the States. Those are sep­a­rate from seed pota­toes or those used for mak­ing French fries and other pro­cess­ing.

Cana­dian ex­ports of pota­toes — al­most all to the U.S. — grew 41 per cent over the five years lead­ing up to 2016, ac­cord­ing to a Cana­dian Agri­cul­ture Depart­ment re­port, with $212 mil­lion in fresh pota­toes shipped to the States in 2015-16.

At the same time, Amer­i­can potato farm­ers have seen de­mand for their prod­uct drop, re­sult­ing in a steady shrink­ing in potato acreage. The area farmed dropped by eight per cent just last year, John­son said.

Buy­ers tell the Amer­i­can pro­duc­ers that Cana­dian pota­toes are sim­ply cheaper, he said.

And fu­elling their con­cerns is ev­i­dence of gov­ern­ment sub­sidy of the Cana­dian in­dus­try.

A cur­sory on­line re­view does find a num­ber of news re­leases about gov­ern­ment pro­grams to help the potato in­dus­try. They in­clude an in­vest­ment of up to $4.5 mil­lion an­nounced by Ottawa this April for ro­botic equip­ment to pack and sort fresh pota­toes at a plant in Que­bec, “help­ing the com­pany de­velop new mar­kets in the United States.”

But David Jones, head of the potato in­dus­try for the Cana­dian Potato Coun­cil, said most gov­ern­ment sup­port pro­grams are loans that must be matched 50-50 with an in­vest­ment by the re­cip­i­ent, and re­paid over 10 years.

If there is a price ad­van­tage cur­rently for Cana­dian farm­ers in the States, it has much to do with the low value of their dol­lar, he said.

“There is no sub­sidy for Cana­dian pota­toes be­ing ex­ported to the U.S.,” said Jones. “We have favourable con­di­tions right now with the ex­change rate, ship­ping into the U.S.”

John­son also com­plained about the sys­tem of “min­is­te­rial ex­emp­tions” in Canada, which bars ex­ports if the pota­toes can be sourced lo­cally, cre­at­ing a “closed, pro­tec­tion­ist mar­ket” for Amer­i­cans.

With about 90 per cent of its potato ex­ports des­tined for the U.S., Canada had a $113-mil­lion potato trade sur­plus with the States in 2016.

Jones, how­ever, said Cana­dian farm­ers are sub­ject to the same rules, mean­ing that a P.E.I grower can­not ship into On­tario un­less there is a short­age in that prov­ince. And both Amer­i­cans and Cana­di­ans are free to ship pota­toes with­out re­stric­tion in “stan­dard,” 110-lb. con­tain­ers — as op­posed to by the truck­load, he said.

“There just needs to be some clar­ity around what the rules are,” said Jones.

The Cana­dian Press files

A farmer works a potato field in North Tryon, P.E.I. A Repub­li­can se­na­tor has asked his gov­ern­ment to in­ves­ti­gate al­le­ga­tions by Amer­i­can farm­ers that Cana­di­ans are il­le­gally dump­ing pota­toes into their mar­ket, po­ten­tially open­ing a new front in the two na­tions’ trade war.

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