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Spuds become latest trade irritant as U.S. senator calls for probe of alleged Canadian potato dumping

U.S. and Canadian trade negotiators might need to add spuds to
a list that already includes cheese, steel and softwood lumber.

A Republican senator has asked his government to investigate
allegations by American farmers that Canadians are illegally
dumping potatoes into their market, potentially opening a new
front in the two nations’ trade war.

A Democratic member of the senate has added her voice, too,
suggesting there’s a “strong case” that Canadians are unfairly
taking away American share of the tuber market.

U.S. producers point to the surge in imports from across the
border in recent years, and say they suspect the lower price of
Canadian potatoes is due to government subsidies or dumping.

And they charge that Canadian rules have all but closed the
market here to them.

“At some point, you reach a boiling point where you say ‘Enough
is enough, we’re going to start to figure out what’s going on
here and take action’,” Donavon Johnson, president of the
Northern Plains Potato Growers Association, said Thursday.

Canadian farmers respond that they are partly just benefiting
from a favourable exchange rate, and say there is nothing to
the subsidy allegation.

Regardless, Johnson and colleagues visited Washington, D.C.
recently, meeting with officials from the U.S. Trade
Representative’s office — the body holding NAFTA talks with
Canada, the Commerce Department and U.S. International Trade
Commission (ITC).

Sen. John Hoeven, from North Dakota, said he is now urging the
ITC and the Senate’s finance committee to study the impact
of Canadian trade on the nation’s potato producers.

“Unfair treatment from our trading partners is exactly what we
are trying to resolve through these trade negotiations,” 
Hoeven said in a recent statement.

Sen. Heidi Heitkamp, also from North Dakota and locked in a
neck-and-neck electoral battle with her Republican challenger,
said she raised the issue at a meeting with Canada’s deputy
ambassador to the U.S.

“Red River Valley potato growers have a strong case to be made
that Canada has unfairly limited their profits and narrowed
their fair market access,” said Heitkamp in a release last
month.

Johnson said his group — representing growers in North Dakota
and Minnesota – was spurred into action by the growing flow of
Canadian fresh potatoes into the U.S. Those are separate from
seed potatoes or those used for making french fries and other
processing.

Canadian exports of potatoes — almost all to the U.S. — grew 41
per cent over the five years leading up to 2016, according to a
Canadian Agriculture Department report, with $212 million in
fresh potatoes shipped to the U.S. in 2015-16.

At the same time, American potato farmers have seen demand for
their product drop, resulting in a steady shrinking in potato
acreage. The area farmed dropped by eight per cent just last
year, Johnson said.

Red River Valley potato growers have a strong case to be made
that Canada has unfairly limited their profits and narrowed
their fair market access

Senator Heidi Heitkamp, North Dakota

Buyers tell the American producers that Canadian potatoes are
simply cheaper, he said.

And fueling their concerns is evidence of government subsidy of
the Canadian industry.

A cursory online review does find a number of news releases
about government programs to help the potato industry. They
include an investment of up to $4.5 million announced by Ottawa
this April for robotic equipment to pack and sort fresh
potatoes at a plant in Quebec, “helping the company develop new
markets in the United States.”

But David Jones, head of the potato industry for the Canadian
Potato Council, said most government support programs are loans
that must be matched 50-50 with an investment by the recipient,
and repaid over 10 years.

If there is a price advantage currently for Canadian farmers in
the States, it has much to do with the low value of their
dollar, he said.

“There is no subsidy for Canadian potatoes being exported to
the U.S.,” said Jones. “We have favourable conditions right now
with the exchange rate, shipping into the U.S.”

Johnson also complained about the system of “ministerial
exemptions” in Canada, which bars exports if the potatoes can
be sourced locally, creating a “closed, protectionist market”
for Americans.

With about 90 per cent of its potato exports destined for the
U.S., Canada had a $113-million potato trade surplus with the
States in 2016.

Jones, however, said Canadian farmers are subject to the same
rules, meaning that a P.E.I. grower cannot ship into Ontario
unless there is a shortage in that province. And both Americans
and Canadians are free to ship potatoes without restriction in
“standard” 110-lb. containers — as opposed to by the truckload,
he said.

“There just needs to be some clarity around what the rules
are,” said Jones.

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