As the federal government continues its efforts to economically punish Russia for its invasion of Ukraine, Ontario farm groups and representatives of the Canadian fertilizer industry are warning that cash crop growers and consumers are paying the price.
In March, Finance Minister Chrystia Freeland and International Trade Minister Mary Ng announced that in retaliation for Russia’s illegal invasion, Canada imposed a general customs duty of 35% on virtually all Russian imports — including nitrogen fertilizers that growers in Eastern Canada rely on to boost crop yields.
The timing — just weeks into the planting season — couldn’t have been worse. Farmers often make risky decisions about which crops to grow and place orders for seed and fertilizer months in advance.
Russia had been a reliable source of nitrogen shipments. Prior to the imposition of tariffs, it exported 660,000 tonnes of nitrogen fertilizer annually to Eastern Canada, or about 85-90% of the total fertilizer applied.
“About a third [of the 2022 shipments] had not yet been delivered to Ontario when this tariff was applied, and some of these vessels were even told that they would have to turn back,” said Ryan Koeslag, executive director of Ontario Bean Growers, who represents about 1,100 farmers cultivating about 100,000 hectares of dry crops such as white or black beans.
Fertilizer prices are a major input cost for already low-margin cash crop operations. A 35% hike in that tariff — when combined with farmers’ already inflated energy and gasoline bills — puts strong upward pressure on commodity prices.
That’s why the Koeslag organization — along with the Grain Farmers of Ontario, the Ontario Canola Growers, the Atlantic Grains Council, Les Producteurs de grains du Québec, half a dozen other farm groups in eastern Canada and fertilizer industry representatives — called on the federal government again this week to reconsider.
Why is Canada forcing our farmers to pay the cost of the war in Ukraine?– Ryan Koeslag, Bean Growers of Ontario
“Take a second look at it, figure out if that’s ultimately the outcome they wanted to get by applying that tariff, and then compare that with what we see as an inflationary problem in groceries,” Koeslag said. at CBC News.
“We need compensation for farmers negatively impacted by tariffs, and we want a safe and reliable supply of fertilizer so that we can roll up our sleeves and do our part to help the world through this crisis,” said Brendan Byrne, president of the Grain Farmers of Ontario, in a press release.
The groups say that if the government does not reimburse the cost of the tariff, it should invest in expanding the domestic supply of fertilizers so that producers no longer find themselves in this situation in 2023.
Canada has the natural gas resources to become self-sufficient in fertilizer if the government invests in domestic nitrogen production, Koeslag said.
Following a meeting of federal, provincial and territorial agriculture ministers in Saskatoon on Friday, Agriculture and Agri-Food Minister Marie-Claude Bibeau said the government is investing in the fertilizer by funding research and innovation and helping farmers find new suppliers.
While modern farming techniques such as cover crops and crop rotation can help reduce bulk fertilizer use, not all growers can pivot on the fly, Koeslag said. Natural sources of nitrogen, such as livestock manure, have also been targeted by federal climate change policies.
“It’s hard to be a green farmer when you’re operating in the red,” Koeslag said.
When farmers cannot afford optimal levels of fertilizer, they may apply less to their fields and resign themselves to reducing crop yields.
Meanwhile, a bumper crop of plant-based protein and grains from Canadian producers could help address food insecurity and supply chain issues stemming from the loss of acres in Ukraine and the stalling of exports.
G7 allies ditched fertilizers
“Tariffs, retaliation and sanctions are most effective when you can design policies that have the maximum impact on the counterparty whose attention you are seeking, and do you the least possible harm,” said Freeland a week after the invasion of Russia and two days before imposing the tariff last winter. Even at this early stage, she warned that the war risked harming the Canadian economy.
The fertilizer tariff could make Canadian crops less competitive on the world market during a period of relative scarcity, hampering economic growth.
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Other G7 allies have not targeted fertilizers, making this request for an exemption different from those involving tightly coordinated sanctions among Western democracies.
“The United States does not apply a tariff. The United Kingdom and France do not apply a tariff. Why is Canada the one forcing our farmers to pay the cost of the war in Ukraine.. . which we also believe to be unfair and unjustified?” said Koeslag.
About 90% of edible beans grown in Ontario are exported.
While Germany’s request to Canada for a sanctions waiver to allow the return of a natural gas turbine for Russia’s Nord Stream 1 pipeline has been approved – a controversial move now the subject of hearings upcoming parliamentarians triggered by the official opposition – the farm groups have yet to see any response to their request for a stay.
Agriculture ministers on Friday announced improvements to the prepayment and loan programs for farmers, but Bibeau offered nothing in response to specific questions about the tariff.
“There’s a bit of a double standard in terms of how we treat big business versus small farmers,” Koeslag said.
“I know there have been messages out there that… once you remove one tariff for one industry, you’ll have to remove it for all, which I don’t believe. I think we’re smarter than that. We’re more agile than that. The public understands the situation more than that.”