There are times when the grain prices at Montana Hi-Line elevators are so low that trucking wheat to Canada seems appealing, or would be if trade terms were better.
Montana wheat has never flowed freely across the Canadian border. That’s because Canada’s list of wheat varieties doesn’t include any that Montana farmers grow. Varieties not on the list are graded as “feed wheat,” meaning they’re officially recognized as fodder for livestock, but not for bread or pasta.
The North America Free Trade Agreement did nothing to prevent the exclusion. Wheat groups are hopeful the U.S.-Mexico-Canada Agreement, often referred to as NAFTA 2.0, will address Canadian grain rules.
“There have been times in the last couple years where the price has been higher in Canada and there would be incentive for the Montanans to move grain there if they were near a Canadian elevator,” said Lola Raska, executive director of the Montana Grain Growers Association.
Canada, like the United States, is a major wheat exporter. It has controlled the value of its product by sticking with a limited number of recognized varieties known for quality. The United States, on the other hand, has accepted more varieties, including those on the Canadian list, but used grading for qualities like protein, and low alpha-amylase to determine value.
Northern border Republican senators and Sen. Tina Smith, D-Minn., are asking the U.S. Trade Representative to ensure the grain grading issue is dealt with in USMCA.
“The ability for our growers to export wheat of domestic origin to Canada has been long sought as a measure to level the playing field for our producers,” lawmakers from Montana, North Dakota and Minnesota said in a letter to USTR Chief Agricultural Negotiator Greg Doud. Sen. Steve Daines, R-Mont., was one the letter's authors.
All three states have significant wheat acres within 100 miles of a Canadian elevator, according to the senators. Roughly 37% of Montana’s wheat crop is within driving distance to a Canadian elevator. More than half of North Dakota’s wheat and 41% percent of Minnesota’s is within 100 miles.
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Trade agreements require congressional approval, and the process starts in the Senate Finance Committee, where Daines and other lawmakers held hearings on the trade agreement in June. House lawmakers have done less.
Tuesday, Politico reported that U.S. Trade Representative Robert Lighthizer met with House Democrats to begin discussions about USMCA. At one point this spring, there was talk about getting the USMCA to a vote this summer, but time has since run out.
There are only 14 working days left before Congress takes August off, after which there will be a September push to finish key budget legislation before the end of the federal fiscal year. In the House, USMCA’s patch starts in the Ways and Means Committee, where Chairman Earl Blumenauer, D-Ore., said June 25 that there would have to be more enforceable labor terms in USMCA than what NAFTA offered.
“The renegotiated NAFTA presents a rare and valuable opportunity for the United States, one that is too important to rush,” Blumenauer said during a hearing on labor reform in Mexico. “We have a chance to raise living standards across our continent rather than leading to a race to the bottom on who can make goods with the lowest labor costs.”
Blumenauer rarely refers to USMCA as anything other than “revised NAFTA,” which is a common description by stakeholders who say USMCA is more adjustment than new agreement.
The urgency for passing USMCA before fall grows out of concern the politics of the 2020 elections will diminish the trade agreement’s chances. In May, former U.S. Sen. Max Baucus told the Billings Gazette there was time to get USMCA passed this summer. He had teamed up with Farmers for Free Trade to promote USMCA across farm country. President Donald Trump signed off on USMCA in November.
Wheat trade with Canada was a priority mentioned by Baucus and farmer Michelle Jones, immediate past president of the Montana Grain Growers. Barley trade with Mexican breweries was another key issue. Increasingly, Mexican breweries have become buyers of Montana barley.
The free trade framework that has dominated U.S. trade deals for the past 25 years has allowed jobs to move to foreign markets with cheaper labor and lower environmental standards. USMCA must be strengthened to help to keep jobs in rural communities: https://t.co/oPFRV0yvu0 pic.twitter.com/QQ8HCDzvQs— National Farmers Union (@NFUDC) July 9, 2019
Other farm groups like National Farmers Union say USMCA needs language protecting the environment and reducing the price of prescription drugs before Congress votes on passage.
"According to our member-driven policy, a trade agreement should be measured by its benefit to U.S. farmers," said NFU President Roger Johnson in a letter Monday to House Speaker Nancy Pelosi, D-Calif. "By this this measure, the U.S. Mexico Canada Agreement would be a success with the inclusion of proposals to strengthen labor, environment, enforcement and prescription drug provisions."
Correction: U.S. Sen Tina Smith, D-Minn., joined Republicans in asking the U.S. Trade Representative to ensure the grain grading issue is dealt with in USMCA.