Corn Dispute Hurts Michigan, Ohio Farmers

LANSING - Sep 23/05 - MFB -- A Canadian trade dispute over U.S. corn sold to Canada will hurt Michigan and Ohio the most as corn trade between these Midwest states and Canada grinds to a halt, compounding the existing problem of a projected bumper crop and too little space to store the harvest as a result of last year's record-yielding corn crop and market disruptions caused by Hurricane Katrina.

A complaint filed by an organization representing Canadian corn growers, including the Ontario Corn Producers' Association, claims U.S. corn interests illegally subsidized grain exported to the Canadian market and/or "dumped" corn below the cost of production, unfairly depressing Canadian grain prices to farmers. The Ontario Corn Producers' Association claims corn prices in the province are more than 40% below their members' cost of production because of the availability of cheap U.S. corn.

If the complaint is upheld, the Canada Border Services Agency (CBSA) threatens to impose duties rumored to be anywhere from $1 to $2 per bushel on U.S. corn. That threat will, for all practical purposes, stop Michigan corn from crossing the border this season, according to Bob Boehm, manager of the Michigan Farm Bureau Commodity and Marketing Department.

"Michigan and Ohio growers will be most affected," said Boehm. "Michigan alone sends 60 million to 75 million bushels of corn valued at $72 million to Ontario annually for Canadian feed and ethanol markets."

The CBSA will complete a 60-day investigation before making a preliminary decision on the dispute. If the agency determines Canadian growers were injured, the duty imposed could be retroactive to the start of the investigation on Sept. 15. It might be next spring before a final decision is made.

"Just the threat of action has created enough uncertainty to disrupt the market," said Boehm. "That means that while we wait for the decision, corn shipments will be dramatically reduced. Who will ship across the border with this uncertainty hanging over their heads?"

The dispute, said Boehm, makes it even more crucial for Michigan farmers to investigate temporary storage of corn, since grain elevators were already warning growers about lack of storage space this season due to transportation interruptions and carryover from the 2004 corn crop.

Last year Michigan corn yielded a record 134 bushels an acre. Experts predict this season's crop will surpass that and yield 137 bushels an acre.

The argument that Canada's corn growers are being injured by imports at low prices is flawed, said U.S. Grains Council President and CEO Kenneth Hobbie in a press release.

"If Canadian producers are unable to compete with U.S. grain corn, we would expect to see significant and steady increases in imports over the past several years while Canadian corn production would post declines. However, this has not been the case," said Hobbie.

Canadian imports of U.S. corn are down over the past two years. Average corn imports from the United States between 2000 and 2003 were approximately 140 million bushels per year, dropping to 85 million bushels during the past two years. The forecast for next year is 103 million bushels. While Canada's corn production has increased, its domestic corn demand cannot be met through domestic production alone, according to experts.

The U.S. Department of Agriculture announced that it expects Canada's claims to be without foundation as claims in 1992 and 2001 were determined to be.

Even the Canadian Pork Council sides with the United States and has vowed to fight a duty on U.S. corn imports. The Pork Council fears a duty would increase the cost of feed for Canada's hog finishers, giving U.S. hog producers a price advantage that would likely set the wheels in motion for more Canadian hogs to cross the border, upsetting both the U.S. and Canadian hog industries.

Prior to the trade dispute, Michigan State University (MSU) experts were offering advice for growers in response to the existing storage and transportation challenges.

When farmers consider whether to delay harvest, it is important to measure the expected increase in harvest and field losses against potential savings in drying and storage costs, advised Kurt Thelen, MSU professor of crop and soil sciences. As energy costs for grain drying increase, the optimum economic moisture at harvest declines.

If delaying harvest becomes part of a producer's management strategy for the 2005 crop, the following points should be considered when developing a harvest schedule:

- Full-season and Bt corn hybrids generally have greater standability and should be harvested after short-season or non-Bt hybrids.

- Continuous-corn fields may have greater corn rootworm damage and should be harvested ahead of corn fields grown in rotation with other crops.

- Fields observed to have a high incidence of stalk or stem rots are not good candidates for delayed harvest.

- Fields on poorly drained soils that are prone to stalk or stem rots should be harvested before more well-drained fields.

- Fields experiencing drought stress or other types of stress during the growing season will likely have higher than average harvest yield loss if harvest is delayed.

Copyright (c) 2005 Michigan Farm Bureau

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