Western Canada’s farmers may not get a vote in the upcoming U.S. election, but policy south of the border can have a major effect on the agricultural markets across North America.
U.S. agricultural policy “is extremely important… and has always had drastic effects on us,” said Terry Boehm, president of the National Farmers Union in Canada, pointing to issues such as the previous U.S. export enhancement program that weighed on cereal prices — and more recently, the U.S. ethanol mandate that has taken prices higher.
“Their (U.S.) farm policies crucially affect the livelihoods of Canadian farmers,” Boehm said. “Depending on what the American ag policy is, it ultimately affects us directly.”
However, he added, “there is a high degree of inertia in American farm policy, so changes are incremental.”
The U.S. is a major customer for Canada’s agricultural products, but is also a competitor in the international market. In the past, both Democratic and Republican administrations have taken their turn introducing protectionist policies that could be seen as a detriment to Canadian trade.
“Republican or Democrat… I’ve seen no evidence that our (Canadian agriculture) interests would be helped or hindered either way, regardless of the (U.S.) administration,” said Blair Rutter, executive director of the Western Canadian Wheat Growers.
Trade policy, and whether or not one administration would be more protectionist than the other, is hard to say, with both being more or less protectionist at times, said Rutter.
At the same time, he noted, Democrat and Republican administrations have also both endorsed free trade agreements in the past.
Ryder Lee, manager of federal/provincial relations with the Canadian Cattlemen’s Association, said the big cross-border issue for the livestock sector these days remains Washington’s mandatory country-of-origin labeling (COOL) rules currently affecting trade with the U.S.
The COOL regulations were initially put in place in 2008, when Republican George W. Bush was still president. Following a challenge from Canada and Mexico, the COOL measures were deemed as violating Washington’s World Trade Organization commitments.
The U.S. now has until Dec. 4 to comply with the WTO. The simplest solution would be for the U.S. to make changes to its recently-expired Farm Bill when that legislation is renewed following the election, Lee said.
“If they are taking steps that make American producers more competitive, then we suffer from that, and if they take steps that make the U.S. market more protectionist, then we suffer from that,” said Lee.
“It doesn’t matter whether it’s an elephant or a donkey, those steps can come from either side and we just deal with them as they come along.”
Aside from direct agricultural policy, where an argument could be made in favour of either U.S. party from a Canadian perspective, the economic situation in the U.S. may have a much larger impact on Canadian agriculture.
One question, Boehm said, was just how long the U.S. could continue with quantitative easing — buying financial assets and securities from banks and other private institutions as a way to spur growth through cash injections.
Whether Washington continues with its ethanol mandate will also be important to watch from a Canadian standpoint, he said.
The American Soybean Association sent a questionnaire to both President Barack Obama and Republican challenger Mitt Romney asking about their policies on a number of agricultural-related topics.
While there may be some difference in the details, the two presidential candidates both appear to be in favour of continued supports for the biofuel sector and increased trade agreements.
Both also expressed their support for passing a new farm bill and supporting the U.S. agricultural sector in general.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.