Canadian farmers face grim fate of looking up at break-even

Hey there, time traveller!
This article was published 15/03/2025 (238 days ago), so information in it may no longer be current.

With tariffs screaming like rocket volleys across international borders, markets in turmoil and the federal government headed toward an election, there is a lot for farmers to worry about as spring approaches.

And there’s not much they can do about any of it.

Canadian farmers are no strangers to trade wars. They have been caught in the crossfire in the past, usually when conflict erupt between the global trading giants. They have suffered through closed borders due to phytosanitary issues and fought back against contrived non-tariff barriers designed to limit market access.

However, this time, their two biggest customers have Canada’s food sovereignty squarely in their sights.

U.S. posturing about Canada becoming the 51st state aside, its perverse tariff strategy is driven by a desire to rebuild America’s manufacturing economy, partly through its food sector.

“Our new trade policy will also be great for the American farmer — I love the farmer — who will now be selling into our home market, the U.S.A., because nobody is going to be able to compete with you,” U.S. President Donald Trump said in his now-infamous March 4 address to the nation and world.

U.S. farmers recoiled in horror, even though many voted for him and still would.

If U.S. trade policies make their crops less competitive in global markets — which is what happened during the last Trump administration — they will not only suffer lower commodity prices, but will permanently lose market share to other exporters.

As an example, the U.S. share of China’s soybean imports now sits at 14 per cent, down from 27 per cent prior to the last Trump tariff war. No one in the industry expects that to come back any time soon, so any growth in domestic processing will come at U.S. farmers’ expense.

Food processing is Canada’s largest manufacturing sector. It was already languishing due to policy shortfalls, labour shortages and shrinking investment in innovation.

China’s decision to retaliate against Canada’s imposition of tariffs on its electric vehicles by targeting canola products, peas, pork and seafood, kicks Canada in places designed to create the most obvious pain and produce the loudest screams.

Farm organizations didn’t disappoint this week, issuing a bevy of news releases and media interviews to quite rightly point out — once again — they’re being spanked for a spat they had no role in starting.

This doesn’t change the reality facing grassroots farmers with spring calves already on the ground, weanling pigs ready to ship to U.S. feeders or crop farmers preparing for spring planting.

Statistics Canada has just issued its first official estimates of what farmers intend to plant this year, but the numbers are based on a survey of plans as of December. That survey indicated modest shifts towards more wheat and less canola.

Based on the current market scenario, those shifts could become even more pronounced — although farmers have already purchased seed, fertilizer and pesticides. Planting decisions are also guided by crop rotation considerations, so there is limited wiggle room to make wholesale shifts in plans.

In the current environment, it doesn’t matter much what they plant, they are looking at below break-even returns. The outstanding question, the answer for which will be different for every farm, is how far below zero they will land.

So far, the federal government has encouraged farmers to participate in the existing suite of risk-management programs and expanded the cap on interest-free cash advances on new crop sales to $250,000 from $100,000. That alone is worth tens of thousands of dollars in saved interest costs, so it’s not insignificant.

But it’s not enough.

The existing risk-management programs were written in an era when bilateral and multilateral agreements set the rules of trade and the institutions refereeing those agreements were respected. That world order no longer exists.

These times call for a redraft of Canada’s food and farm policy — and some “elbows up” interventions in the meantime — if it hopes to preserve a sector fundamental to national security.

Laura Rance is executive editor, production content lead for Glacier FarmMedia. She can be reached at lrance@farmmedia.com