Source: USDA/FAS GAIN reports CA 5067

On September 16th, the Canada Border Services Agency (CBSA) formally announced it would be initiating an investigation on dumping and subsidy of U.S. corn exported into Canada. Along with the CBSA’s investigation of dumping and subsidization, the Canadian International Trade Tribunal (CITT) initiated a preliminary injury investigation to determine if the possible dumping and subsidization of the products under investigation have caused injury or are threatening to cause injury to the Canadian industry. Reaction to the announcement came from across Canada’s agriculture and processing industry.

The Manitoba and Canadian Pork Councils are sympathetic to the underlying reasons for the trade action, but are opposed to duties on corn coming in from the United States. Both groups have indicated that any duty applied on imported grains will drive up Canadian prices, thereby increasing Canadian cost of production. Canadian pig producers are price takers when it comes to the price paid for pigs in the United States. Any change in cost in production on the Canadian side of the border would not affect U.S. prices. Therefore, any increase in feed cost as a result of any duties placed on U.S. corn could make it more economical for Canadian pig producers to ship weanling pigs to the U.S. to be fed out. This could result in more weanlings being shipped into the U.S., possibly prompting another trade challenge by American hog producers.

Corn Products International Incorporated, the parent company that operates Casco, reacted to the possibility of duties on U.S. corn by stating that the duty could lead to the closure of one or all three of the Casco plants in Ontario. The Casco plants are Canada’s largest industrial corn user and the sole processor of corn-refined starches, sweeteners, corn oil and animal feeds. The plants employ more than 400 people. Corn Products has indicated that depending on the size of the duty, the impact on its Canadian operations could be significant. A large duty could require the company to realign operations, and possibly close one or all of its Canadian plants.

Prior to the official launch of the case, the ever-expanding ethanol industry in Ontario voiced its concerns about the possibility of a duty on U.S. corn. Suncor Energy is currently in the process of building a new ethanol plant near Sarnia, Ontario and is concerned that a duty could put the company at a competitive disadvantage to ethanol plants across the border. Seaway Co-Op strongly opposes the imposition of duties on U.S. corn. Seaway indicated that with gas prices soaring, ethanol is looking more and more attractive as an alternative fuel and that this was the wrong time for Ontario corn growers to be seeking a duty.

Corn trade dispute may benefid Manitoba corn acres

According to the Manitoba Corn Growers Association (MCGA), one of the groups involved in the case against U.S. corn, the outcome of the trade action against U.S. corn is expected to help determine corn acreage in Manitoba. If a duty is imposed on U.S. corn, MCGA is expecting there to be an increase in seeded corn area in Manitoba. Of the three primary corn growing provinces in Canada, Manitoba is the smallest. In 2005, the estimated corn a creage in the province was 150,000 acres, which was down from the 250,000 to 260,000 acres planted the year before. Poor weather over the last two growing seasons has impacted corn production in the province.

Original report: http://www.fas.usda.gov/gainfiles/200509/146131082.pdf