Canola tariffs expected to push Canadian farmers to spring wheat

The prospect of tariffs on Canadian canola from China and the United States has prompted farmers to turn to wheat. Farmers are still planting, so it’s impossible to know the extent of the shift in acreage to wheat, but early indications, based on interviews with more than 20 Canadian and U.S. farmers, agricultural analysts, traders and industry organizations, suggest the grain, primarily used for baking, is proving to be a big winner in this year’s global trade war, Reuters reports.

China’s 100% tariffs on Canadian canola meal and oil and threats to impose tariffs on canola seed as well amid President Donald Trump’s wider global trade war have alarmed Canadian farmers, who nearly quadrupled their canola acreage since 1990 before cutting back in recent years amid growing concerns about drought, high production costs and crop diseases.

Now, the tariffs are expected to hasten the likelihood that thousands of farmers could cut back plantings even further, resulting in hundreds of thousands or even millions of acres of canola being cut and more wheat being planted, farmers and analysts estimate.

“There’s going to be a massive switch,” said Jerry Klassen, a Manitoba farmer and market analyst at Resilient Capital. He has converted hundreds of acres on his farm from canola to spring wheat this year and thinks like-minded farmers will do the same. And farmers have their own motivation: Improved wheat varieties have boosted grain yields to 2.45 to 2.72 tons per hectare, tripling since the 1990s.

The shift toward wheat reflects the country’s vulnerability to exporting its staple crop. Last year, more than 95% of Canada’s 3.5 million tonnes of canola exports, valued at $10.59 billion, went to the United States, with China accounting for two-thirds of the seed exports, which are processed domestically into oil and feed. Wheat is sold in dozens of countries around the world, and Canadian farmers expect wheat to be a safer bet in a protracted trade war than crops whose markets may have been lost.

Statistics Canada’s next report is scheduled for June 27, but the numbers for that report are being compiled before farmers finish planting, the agency said.

Earlier, it was reported that canola acreage in Canada declined for the second year in a row, with the forecast amount of 8.738 million hectares representing the second consecutive annual decline of 1.7%. Overall, acreage has plateaued after peaking at 9.3 million hectares in 2017.

Tags: Canada, wheat, rapeseed