(Montreal) Farmers in eastern Canada are feeling the brunt of tariffs imposed on Russia in March. They are asking the federal government to act to avoid having to pay the price.
Russia is a major producer of fertilizers, particularly nitrogen fertilizers – nitrogen being one of the essential elements for crops, along with phosphorus and potassium. In monetary value, it is the second country, behind the United States, which imports fertilizers into Canada, according to Statistics Canada.
March 2 saw the entry into force of an order from the Canada Border Services Agency subjecting all goods originating in Russia or Belarus to a customs tariff of 35%. This measure is part of the sanctions that Canada imposed on Russia following its invasion of Ukraine.
As a result, agricultural producers find themselves with a hefty bill when many of them had already placed their fertilizer orders long before this date.
Several organizations representing more than 50,000 farmers are calling on the government to ensure that tariffs levied on fertilizers are paid directly to farmers.
They say the government collected $34 million in tariff revenue on fertilizers imported into Canada this year.
Among these organizations, the Producteurs de grains du Québec represent some 9,500 farmers producing corn, soybeans, wheat, oats and canola in particular.
“We understand the warning that the Canadian government wants to give Russia, but on the other hand […] it does not have to be suffered only by the agricultural producers as such”, underlines the president of the Producteurs de grains du Québec, Christian Overbeek.
And fertilizers from Russia would not be the only ones to have suffered a price increase.
“The other countries that produce fertilizers, therefore Russia’s competitors, may have also adjusted their price list, seeing business opportunities,” suggests Mr. Overbeek.
He believes that the situation is unfair, especially since producers in other countries do not see themselves imposing such an additional cost.
“We sell our productions on global stock market references, so if we have a production cost that is higher than our American competitor producer, when we offer our products, whether on the local or international market, we have a economic disadvantage, he explains. If there was a positive profit margin, it is much smaller, but if there is a negative margin, due to that tax, the cessation or significant reduction in local production will result. »
Mainly Russian fertilizers in the east
Appearing before the Standing Committee on Agriculture and Agri-Food on March 31, the President and CEO of Fertilizer Canada, Karen Proud, stated that Eastern Canada receives 660,000 to 680,000 tonnes of nitrogen fertilizer in from Russia every year. This represents between 85 and 90% of the total nitrogen fertilizer used in the region.
Unlike western Canada, which has significant fertilizer production infrastructure, the east is rather lacking.
“We based ourselves more on imports,” recalls Mr. Overbeek. If no fertilizer production plants have been set up in eastern Canada, it is simply for reasons of economy. It was cheaper to import it. »
Fertilizers are therefore mainly imported from the United States – approximately 59% of fertilizer imports into Canada in 2021 according to Statistics Canada – followed by Russia (17%) and Morocco (11%).
However, in Quebec, nearly half of the imported fertilizers come from Russia (43% in 2021), it is the main supplier country for the province. In Ontario, Russia provides 30% of imported fertilizers, behind the United States, while in Prince Edward Island, the United States and Russia share the market.
In this context, agricultural producers are calling on Canada to ensure a business environment that is stable and predictable.
In discussion with the Ministry of Agriculture
Representatives from the Atlantic Grains Council, Producteurs de grains du Québec, Grain Growers of Ontario, Ontario Bean Growers Association, Ontario Canola Growers and the Christian Farmers Federation of Ontario have begun discussions with Ottawa, “except that the result is slow in coming,” notes Mr. Overbeek.
He says he had to do an awareness-raising exercise, because “the subtleties of the agricultural market were not well understood by all the decision-makers”.
For its part, the government recalls that the imposition of customs tariffs on Russian products is a way of condemning Russia’s attack on Ukraine and of showing Canada’s support for the Ukrainian people.
“To help Canadian agricultural producers deal with the general rise in the cost of inputs, we have made changes to the Advance Payments Program that result in an estimated reduction in interest costs of $69 million over two years,” says Agriculture and Agri-Food Minister Marie-Claude Bibeau in an emailed statement on Saturday.
She says she is in discussions with industry representatives to determine how the government can better support producers in Ontario, Quebec and the Atlantic, who are hardest hit by the rising cost of fertilizers.