Seed is key to the kingdom

CUSMA puts Canada’s multi-billion dollar grain sector in jeopardy by giving new U.S. access to the Canadian grain handling system and regulatory change processes

May 10, 2021

4-minute read

On March 31, newly confirmed United States Trade Representative (USTR) Katherine Tai published the 2021 National Trade Estimate (NTE) Report detailing perceived significant trade barriers for U.S. exports.

Eleven pages are devoted to Canada, including a section on our seed regulatory system.

For many major field crops, Canada’s Seeds Act generally prohibits the sale or advertising for sale in Canada, or import into Canada, of any variety of seed that is not registered with Canada’s Food Inspection Agency (CFIA),” says the report. “However, there are concerns that the variety registration system is slow and cumbersome, and disadvantages U.S. seed and grain exports to Canada.”

The USTR further problematizes the seed grading system under the Canada Grain Act, which it claims discriminates against U.S. varieties. “The USMCA includes a commitment to discuss issues related to seed regulatory systems,” says the USTR. “The United States will continue to discuss with Canada steps to modernize and streamline Canada’s variety registration system.”

Canada’s reputation for high quality grain exports and excellence in our food system is the result of over a century of farmer and public resistance to powerful grain trade interests. The Canadian Grain Commission (CGC) and the now dismantled Canadian Wheat Board (CWB) were forged in the inherent conflict between the farmers and the commercial grain trade.

The contest for control of the grain system and access to the wealth that farmers create has never stopped. Today arenas include the Seeds Act Regulatory Modernization and the Canada Grain Act Review, in which “everything is on the table,” we’re told. The stakes are high for our entire food and agriculture system.

Predatory grain companies are nothing new to Canadian farmers. In the early 1900s, farmers were entirely at the mercy of elevator companies that could, and would cheat farmers by downgrading the grain they delivered. Farmers either had to take an unfair low price or haul the grain home and try to sell it another day. That was, until the CGC was established in 1912 to administer the Canada Grain Act (CGA).

In the early 1900s, farmers were entirely at the mercy of elevator companies that could, and would cheat farmers by downgrading the grain they delivered.

The mandate of the Commission is to regulate Canada’s grain handling system in the interests of grain producers and to maintain quality standards for Canada’s domestic and exported grain. The CGC balances power between the grain trade and individual farmers and prevents corruption in the grain handling system as a whole.

Since 1912, governments have generally understood that it is in the public interest to support farmers’ incomes and guarantee the quality of Canadian domestic and exported grain. Yet when CUSMA was negotiated, Canada included a giveaway that seriously undermines our system.

How CUSMA changes grain handling

Article 3.A.4 (Grain) of CUSMA requires Canada to treat wheat grown in the United States the same as wheat grown in Canada in regard to grading when it is delivered to elevators in Canada. This provides access to Canada’s grain handling system for U.S.-grown wheat, allowing it to be treated as if it were Canadian-grown and exported in shipments identified as Canadian.

When Canada implemented CUSMA via Bill C-4 in March 2020, the Canada Grain Act was amended to make not only wheat but all grain originating in the U.S. eligible for the highest possible grade, which is over and above what CUSMA requires. Since wheat varieties must meet the Grain Commission’s standards for end-use quality to be eligible for registration (and thus an attractive grade), the USTR now sees our seed variety registration system as an impediment.

Anticipating this, CUSMA Article 3.A.4 also requires that at U.S. request, Canada “shall discuss issues related to the operation of a domestic grain grading or grain class system, including issues related to the seed regulatory system associated with the operation of any such system, through existing mechanisms.”

Multinational grain and seed corporations would like to operate in Canada without restriction. They would like to get rid of independent quality standards, cut their own costs, buy farmers’ grain for less, and make farmers pay more for seed.

An end to Canada’s variety registration system would allow grain companies to buy any variety of U.S. grain offered into Canada’s grain handling system, mix it with Canadian-grown grain and export it under the Canadian brand. U.S. grain dealers would become free riders on our robust, century-old quality control system that differentiates Canadian grain on world markets. However, that good reputation would soon become meaningless. Admixed with U.S. grain and without variety registration “Canadian” grain would be forced to accept lower prices to secure market share.

Multinational grain and seed corporations would like to operate in Canada without restriction. They would like to get rid of independent quality standards, cut their own costs, buy farmers’ grain for less, and make farmers pay more for seed .

Spinoff effects of weakening Canada’s grain system

Erasing the border for grain sales would embolden railways hauling U.S. grain north to push to eliminate Canada’s regulated grain freight rates, known as the MRE (Maximum Revenue Entitlement) or revenue cap. Freight rates would rise, as higher value bulk commodities easily outbid grain for access to cars. Lower grain prices and higher freight costs would displace more farmers, replacing them with farmland investment companies using contracted labour on larger tracts of land.

Multinational seed companies would also like to see an end to our variety registration system. They could then sell varieties bred for larger markets, such as the U.S. and Europe, without proving they will perform in our growing conditions. Farmers would no longer have independent data to base their seed purchasing decisions on and would have to absorb the risk of crop failure due to unsuitable seed.

Companies would be able to contract seed growers in lower-cost countries and import the seed into Canada. Our independent seed growers would soon be squeezed out of business. It would be increasingly difficult for our public plant breeding institutions to survive under these circumstances, in spite of their ability to develop high quality seed for Canadian growing conditions.

The Canada Grain Act and the Seeds Act (and its regulations) have been agriculture’s solid foundation for all of living memory. It is easy to take them for granted and believe that how things are is simply natural. Yet these policies and regulations would not be under attack if they did not effectively check corporate power.

The USTR report suggests that multinational grain and seed companies are again preparing for battle against long-standing public institutions, governmental practices and traditions that have served Canadian farmers well. While CUSMA requires Canada to discuss the USTR’s latest complaints, there is nothing that compels the government to concede any more ground than it already has.

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