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$12B bailout for U.S. soybean growers will come at Canada's expense, says Dresden farmer

The U.S. government recently announced a $12 billion plan to assist farmers who have impacted by the trade dispute — something Phillip Shaw, an agricultural economist and Chatham-Kent soybean farmer, said is problematic for soybean farmers in southwestern Ontario.

'We do not have the same type of agricultural stabilization policies here in Canada'

A customer scoops soybeans as she shops at a supermarket in China, the world's largest importer of the product. (Reuters)

It's not a good time to be a soybean farmer in southwestern Ontario — the price of their legumes has been tumbling for weeks after being caught in the crossfire of the Canada-U.S. trade war.

In early July, China placed a 25 per cent tariff on American soybeans — after the U.S. hiked tariffs on $34 billion worth of Chinese imports. Since then, farmers in Ontario have watched the global price of soybeans fall steadily. By mid-July, reports put the price of a bushel of soybeans down about $2 U.S.

By the month's end, the U.S. government announced a $12-billion plan to assist farmers who have impacted by the trade dispute — something Phillip Shaw, an agricultural economist and Chatham-Kent soybean farmer, said is problematic for soybean farmers in his region.

"We do not have the same type of agricultural stabilization policies here in Canada," Shaw said. "While [U.S. farmers are] going to get cheques from the American government, we're going to have a little bit of a reality check because that drop in revenue is going to be real in southwestern Ontario."

A $12-billion bailout for U.S. farmers unveiled last month includes government purchases of surplus products as well as direct compensation for farmers according to the size of their harvests. (Evan Vucci/Associated Press)

That revenue drop is about 20 per cent for $100 an acre. For Shaw, that's a "really significant blow." 

"You can look at the fundamentals of grain — and there are a lot of soybeans around and we have a reduction in demand from China — but with the action of Mr. Trump, he likes to tweet in the early morning and set the news cycle," he said, adding any comment from U.S. President Donald Trump can force a reaction from the market.

"It just adds a very extraneous variable to the grain price outlook. It makes it that much more challenging for southwest Ontario farmers."

'Tariffs are incredibly damaging'

Shaw estimates farmers in Ontario could lose a total of $37.5 million in revenue, due in large part to the drop in soybean prices.

"These tariffs are incredibly damaging to agriculture on both sides of the border. It represents a destruction of Chinese demand for soybeans and they will be garnering supplies from other places."

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