Ontario farmers say Canada's fertilizer tariff punishes them for Russia's war
Fertilizer was hit with new general tariff in March, leaving no time to pivot for 2022 growing season
As the federal government continues its efforts to punish Russia economically for its invasion of Ukraine, Ontario agriculture groups and representatives of Canada's fertilizer sector are warning that cash crop farmers and consumers are the ones bearing the cost.
In March, Finance Minister Chrystia Freeland and International Trade Minister Mary Ng announced that in retaliation for Russia's illegal invasion, Canada was imposing a 35 per cent general tariff on virtually all Russian imports — including nitrogen fertilizer that Eastern Canadian growers rely on to boost crop yields.
The timing — mere weeks from the start of planting season — couldn't have been worse. Farmers make often risky decisions about what crops to grow and place orders for seed and fertilizer months in advance.
Russia had been a reliable source of nitrogen shipments. Before the tariff was imposed, it was exporting 660,000 tonnes of nitrogen fertilizer annually into Eastern Canada — about 85 to 90 per cent of the total fertilizer applied.
"Around one third [of the 2022 shipments] had not been delivered into Ontario yet when that tariff was applied, and some of those ships were even being told that they would have to turn around," said Ryan Koeslag, executive director of Ontario Bean Growers, which represents roughly 1,100 farmers growing approximately 100,000 acres of dry crops like white or black beans.
Fertilizer prices are a major input cost for already low-margin cash crop operations. A 35 per cent hike from this tariff — when combined with farmers' already-inflated energy and gasoline bills — puts a lot of upward pressure on commodity prices.
That's why Koeslag's organization — along with the Grain Farmers of Ontario, the Ontario Canola Growers, the Atlantic Grains Council, Les Producteurs de Grains du Quebec, a half-dozen other farm groups from Eastern Canada and fertilizer industry representatives — called on the federal government again this week to reconsider.
Why is it that Canada is the one that's forcing our farmers to pay for the cost of the war in Ukraine?- Ryan Koeslag, Ontario Bean Growers
"Take a second look at it, determine if this is ultimately the outcome that they wanted to achieve with applying this tariff and then compare that with what we see as being an inflationary problem in the grocery store," Koeslag told CBC News.
"We need compensation for farmers negatively impacted by the tariffs, and we want a secure and reliable supply of fertilizer so we can roll up our sleeves and do our part to help the world through this crisis," said Brendan Byrne, chair of the Grain Farmers of Ontario, in a media release.
The groups say that if the government won't rebate the cost of the tariff, it should invest in expanding the domestic supply of fertilizer so growers aren't in this situation again 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 ministers of agriculture in Saskatoon on Friday, Agriculture and Agri-Food Minister Marie-Claude Bibeau said the government was investing in the fertilizer industry by funding research and innovation and helping farmers find new suppliers.
While modern farm techniques such as cover crops and crop rotation can help to reduce bulk fertilizer use, not all growers can pivot on a dime, Koeslag said. Natural nitrogen sources, such as livestock manures, also have been targeted by the federal government's climate change policies.
"It's hard to be a green farmer when you're operating in the red," Koeslag said.
When farmers can't afford optimal levels of fertilizer, they may apply less to their fields and resign themselves to lower crop yields.
Meanwhile, a bumper crop of plant proteins and grains from Canadian producers could help to address food insecurity and supply chain challenges resulting from Ukraine's lost acres and blocked exports.
G7 allies left fertilizer alone
"Tariffs and retaliation and sanctions are the most effective when you can devise policies that have the maximum impact on the counter party whose attention you are seeking to get, and do the minimal damage to yourself," Freeland said one week after Russia invaded and two days before slapping on the tariff last winter. Even at that early stage, she warned the war was likely to hurt Canada's economy.
The fertilizer tariff could be making Canada's crops less competitive on the world market during a period of relative scarcity, holding back economic growth.
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Other G7 allies didn't target fertilizer, making this exemption request different from those involving sanctions that were closely co-ordinated among Western democracies.
"The United States is not applying a tariff. The U.K. and France are not applying a tariff. Why is it that Canada is the one that's forcing our farmers to pay for the cost of the war in Ukraine ... which we also believe to be unjust and unwarranted?" Koeslag said.
About 90 per cent of the edible beans grown in Ontario are exported.
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While Germany's request to Canada for a sanctions exemption to permit the return of a natural gas turbine for Russia's Nord Stream 1 pipeline was approved — a controversial decision that's now the subject of upcoming parliamentary hearings triggered by the Official Opposition — farm groups have yet to see any response to their request for a reprieve.
Agriculture ministers on Friday announced improvements to advance payment and loan programs for farmers, but Bibeau offered nothing in response to specific questions about this tariff.
"There is a bit of a double standard when it comes to how we deal with large companies versus the small farmer out there," Koeslag said.
"I know that there has been messages communicated back that ... once you remove a tariff for one industry, that you would have to remove it for all, which I don't believe. I think that we're smarter than that. We're more nimble than that. The public understands the situation more than that."