Farmers again caught in geopolitical crossfire

A week ago, things were looking up for Prairie farmers.

Canola prices were rising on news China would follow through on its promise to reduce its 75.9 per cent anti-dumping tariff on canola seed after Canada eased steep tariffs on imported EVs.

Those canola tariffs have now dropped to 5.9 per cent, plus the nine per cent standard import tariff already in place. While not zero, tariffs of just under 15 per cent make it possible to restore trade flows and maintain China as Canada’s second-largest canola customer.

As well, Canada’s prime minister was in India on another diplomatic defrosting mission with positive implications for agricultural exports. Any time the world’s largest exporter of pulse crops such as peas, lentils and chickpeas can make inroads into the world’s biggest market for those commodities, the sun shines a little brighter.

While more sales to India weren’t on the agenda, the talks between Mark Carney and Indian Prime Minister Narendra Modi still shouted progress.

Among the dozens of outcomes was an agreement to jointly develop an India-Canada Pulse Protein Centre of Excellence to advance co-operation in value-added agriculture and food innovation.

Then, the U.S and Israel launched their offensive against Iran.

While the rationale and the timing for this conflict remain openly debated, there is growing consensus the ensuing conflict won’t be over any time soon.

Of concern to farmers across North America is the significance of the Strait of Hormuz to the world’s fertilizer and fuel supply chains. Fertilizer and fuel account for more than 40 per cent of a crop farmer’s annual operating costs.

Around 20 per cent of the seaborne oil and up to one-third of global trade in nutrients passes through the narrow waterway near Iran, which has effectively been closed due to the threat of missile strikes. Prices have spiked.

The fighting has also shut down key nitrogen fertilizer production facilities as sources of natural gas are cut. Fertilizer analyst Josh Linville of financial services company StoneX was widely quoted by market analysts this week as saying the conflict has shuttered three of the world’s largest urea exporters and three of its largest anhydrous exporters in Qatar, Iran and Saudi Arabia.

“Fertilizer demand is just beginning to ramp up as farmers in the Northern Hemisphere get back into the fields for spring crops and top-dress winter wheat fields,” said Western Producer markets desk analyst Bruce Burnett in his daily blog. “This increase in demand is coming at the same time that supplies have been drastically reduced.”

Fertilizer prices were already at historical highs last fall, which left farmers with the dilemma of taking the hit then — and hoping they didn’t feel like a fool if prices dropped, or waiting and hoping they didn’t feel like a fool if prices rose higher in the spring.

Burnett said there is likely enough fertilizer in position to get farmers through seeding. The main effect will be on the cost for any supplies not yet priced and for supplies going forward.

Securing the Hormuz for commercial shipments will be difficult. Even with military escorts, which would tie up critical naval forces indefinitely, it will be next to impossible to guarantee safe passage for vessels. Drone attacks can be launched from afar. As well, escorts place military personnel in the line of fire — which ups the political stakes.

An Angus Reid poll released Thursday showed 47 per cent of Americans opposed going to war in the first place, with 32 per cent in favour. And 58 per cent opposed putting troops on the ground.

How does a rising body count play out in the approaching mid-term elections, especially considering a disproportionate number of military recruits come from the same rural areas that form the Republican base?

The point is, even the instigators are now acknowledging this is more complicated than it first seemed.

Once again, farmers are caught in the geopolitical crossfire, this time between a trigger-happy American-Israeli coalition exhibiting the maturity of naughty schoolboys and a bunch of leaderless zealots with nothing to lose.

What could possibly go wrong?

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