China-U.S. trade spat could mean more financial aid needed by Canadian farmers

AgriStability discussions may need to move up the agenda

The escalating trade war and lack of a diplomatic solution between the U.S. and China is putting financial strain on farmers.

The ramping up of the U.S.-China trade war will put more pressure on the Canadian government to increase its financial assistance to farmers who are already suffering from the early stages of the superpower skirmish.

China has announced it will stop buying U.S. agricultural products and it may impose additional tariffs on U.S. farm products bought shortly before the purchase ban took effect. That announcement came on the heels of President Trump saying Beijing had not fulfilled a promise to buy large volumes of U.S. farm products and in retaliation he vowed to impose new tariffs on about US$300 billion of Chinese goods. China responded that his claim was groundless.

Before the trade war started, China bought US$19.5 billion worth of farm goods in 2017, mainly soybeans, dairy, sorghum and pork, the American Farm Bureau said. Those sales dropped to $9.1 billion in 2018.

Meanwhile the Trump administration has announced plans to spend up to US$28 billion compensating U.S. farmers, upping the ante for the federal government, which says it will stand behind Canadian producers. While Agriculture Minister Marie-Claude Bibeau has announced financial support for the beef, pork and grain sectors in recent weeks, it doesn’t begin to match what Washington is promising American farmers.

During last month’s federal and provincial agriculture ministers’ meeting, there was agreement for officials to study changes to AgriStability to support farmers from marketplace risks and report back by the end of the year. Otherwise there was no action on requests for immediate measures to help farmers cope with growing trade and financial pressures, which began with the arrest of a Chinese high-tech executive in Vancouver under a U.S. extradition request. Canola, pork and beef exports are among the products China has blocked mostly for violations it has yet to prove.

As Markus Haerle, chair of the Ag-Growth Coalition, said after the ministers’ meeting, escalating global trade volatility imposes greater risk for producers.

“Farmers need urgent action by the ministers to address this critical situation created by geopolitical decisions and market risks outside of their control,” Haerle said.

In addition to the challenges facing export-oriented farm sectors, dairy and poultry producers are still waiting to hear what compensation will be coming their way for increased access of foreign products to their domestic markets.

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