On paper, USMCA ended the practice of automatically downgrading American wheat to feed, the lowest value available.
But the devil’s always in the details. And the USMCA did not mention what turns out to have been a significant detail — the Canadian Varietal Registration System. It is a list of all the wheat varieties that may be sold on Canadian markets. Any wheat varieties not on that list must be sold as feed, regardless of what the USMCA agreement says.
According to Sen. Jon Tester, D-Montana, and North Dakota’s Republican Senators Kevin Cramer and John Hoeven, that list so far excludes many of the varieties grown in northern tier states like Montana and North Dakota.
Tester said he has received several reports from growers that Montana wheat is still facing a huge competitive disadvantage in Canadian markets, and that Canada has so far indicated it is not willing to change its VRS to include Montana varieties.
The situation has prompted Tester and North Dakota’s Congressional delegation to write to U.S. Trade Representative Ambassador Robert Lighthizer and urge him to bring this issue up with Canada trade representatives to enforce the spirit of the agreement, and not just its letter.
“In theory, USMCA ends the Canadian practice of automatically downgrading all imported wheat to feed wheat, which is the lowest grade and therefore the cheapest to import,” Tester wrote in a letter to Lighthizer. “…As USMCA goes into effect, the State of Montana is hearing that the Canadian government is unwilling to make changes to the [Varietal Registration System] that would bring any real equity to the grain grading system. If Canada continues to refuse to accept U.S. varieties into the VRS, then U.S. grain growers are back at square one, and will be forced to sell their high-quality product as a low-quality import.”
Hoeven and Cramer, meanwhile, sent a letter to Ambassador Doud, Chief Agricultural Negotiator for the Office of the U.S. Trade Representative, in 2019 highlighting the issue and said they are continuing to push for a solution.
“USMCA was an important step in making sure our wheat growers have fair access to the Canadian market,” the senators said. “However, we recognize challenges remain with Canada’s Varietal Registration System, which restricts the varieties of wheat that can take advantage of this access. We’ve raised this issue with the administration and we are working toward a resolution that benefits U.S. wheat growers and provides them the market access they were promised.”
Sen. Steve Daines office, meanwhile, when reached for a comment said, “Senator Daines believes it’s critical that the USMCA is implemented ASAP, and that Montana farmers are treated fairly in Canada.”
Tester, who was among congressmen voting to ratify USMCA in January, said that his support was largely based upon it fixing unfair wheat grading practices.
“USMCA held such promise,” Tester said. “But if we are unable to deliver any real outcomes for Montana farmers from the deal, we are failing folks in production agriculture. Without robust enforcement, negotiated trade agreements will be unable to bring certainty and market stability to American farmers and ranchers.”
Tester, who has been critical of recent trade wars and tariffs, said the current administration still has much work left to do to make things right for Montana grain growers, and that he will continue to push for improvements that make the deals promise a reality for Montana farmers.