August 20, 2011

WHEAT AND TRADE: A Sad Day For U.S. Wheat Growers:

At last, sadly, the day has come and gone when the United States government has ignored the rational pleas of its citizens and businesses and handed an unnecessary advantage to countries that compete with us in world trade.

On Monday, the Colombia-Canada Free Trade Agreement (FTA) entered into force. It is an agreement first signed on Nov. 21, 2008, nearly two years to the day after a U.S.-Colombia FTA was signed. Now most Canadian industries enjoy duty-free access to the growing Colombian market. In contrast, because our government has allowed our FTA to languish, Colombian importers must still pay tariffs on most U.S. goods. For wheat, that tariff overcomes the natural advantage U.S. exporters otherwise have in providing quality wheat on a timely basis to our valued Colombian customers.

Funny, I don’t remember any press coverage about this during Obama’s midwest tour.

UPDATE: Farmer-reader Bart Hall emails:

Even if the US eventually signs the agreement, wheat growers will not be able to capture that market from the Canadians, who are by far the best wheat growers in the world. The ordinary farmer in Saskatchewan or Manitoba cleans his grain to seed grade before it ever leaves the farm. Downstream from there it might be cleaned up even more, right down to zero weeds and zero foreign matter.

American export standards allow up to 3% foreign matter and 1% weed seeds. There’s no reason for an American farmer to clean his grain because he knows that once it gets to the river terminal the consolidator has tanks of sand and bins of weed seed available to ADD to the grain in order to get right up to the export limits. As a general rule, once foreign buyers have experienced Canadian quality, they don’t care about American price.

The utterly feckless Obama administration just handed our chief grain export competitor a market of almost 50 million, second largest in South America. Most Canadian wheat is exported from Vancouver, whence it is an easy run to Buenaventura, one of the best Colombian grain ports. This is a totally unforced error from the current administration, one of depressingly many.

Indeed.

ANOTHER UPDATE: Prof. Stephen Clark writes:

When you wrote, “Funny, I don’t remember any press coverage about this during Obama’s midwest tour,” a good part of the blame should be assigned to Republicans for not highlighting this. It’s a target rich environment out there and they should be relentless.

The GOP doesn’t work the press well. Part of that is learned helplessness, but part of it is ineptitude.