In this issue:
NFU calls for Fertilizer Price Investigation
Farmers Beware the Variety Use Agreement
Farmers are facing massive increases in the cost of fer????lizer. For example, for NFUO President Don Ciparis’s farm, fer????lizer prices went up 144-220% between April 7 and December 13 of 2021. Meanwhile, the big fer????lizer companies — Nutrien, Yara, CF Industries, and Mosaic – that dominate the North American fer????lizer market are making record profits. Nutrien predicts its 2021 profits be twice its 2020 level, going from $3.7 Billion to $7.1 Billion US dollars EBITDA.
Over this past year there has been an ongoing discussion in the media about the impact on our economy from increased costs due to supply chain problems, COVID related problems, increasing energy costs, etc. For farmers, these problems make our net income go down. How is it that when fer????lizer companies operate in the same economy their incomes skyrocket? It may come down to plain old profiteering.
When the four biggest companies in sector control over 40% of the market, they have the power to behave in a monopolis????c fashion. Customers and suppliers dealing with them are faced with a take-it-or-leave-it situa????on when it comes to prices. This is certainly the case with fer????lizer in Canada.
The NFU has previously shown how fertilizer companies can manipulate their costs and charges to increase their profits at the expense of farmers. Doug Scott, NFU Board member from Alberta noted that the only consistent difference between 2020 and 2021 is that the price of grain went up. He said “It seems obvious that lack of competition in the fertilizer business allows companies to raise prices to match or overtake commodity prices, regardless of their internal cost structures. Fertilizer companies are making windfall profits, while farmers are facing massively increased costs after many did not grow much of a crop in 2021 because of the drought.”
All of the Business Risk Management Programs under the Canadian Agriculture Partnership rely on a substantial level of taxpayer support, which Canadians generally agree to do in order to maintain a viable farming sector. Anticompetitive corporate behaviour and gouging will drive many farmers out of business, but equally important, exorbitant fertilizer prices will cause Business Risk Management programs to function as a conduit that flows hundreds of millions of taxpayer dollars to the corporations engaged in the profiteering. Rather than restraining anti-competitive behaviour, government programs may be enabling or even funding it.
We believe that the only way to get to the bo????om of these price increases is for an independent body like the House of Commons Agriculture Commi????ee to inves????gate all of the factors that contribute to fer????lizer pricing in Canada. On January 13, the NFU wrote to the House of Commons Agriculture Commi????ee urging it to inves????gate the all factors that contribute to fer????lizer pricing in Canada as soon as possible.
To read the NFU’s lett????er go to www.nfu.ca/fer????lizer-inquiry
You can call, write or email your own Member of Parliament to share your own concerns about fertilizer prices too. Use your postal code to find your MP’s contact information. Go to: https/www.ourcommons.ca/Members/en
CUSMA DAIRY TRADE DISPUTE
–by Cathy Holtslander, NFU Director of Research and Policy
On January 4, 2022, the decision in the very first trade dispute under CUSMA (the new NAFTA) was announced. The USA said Canada’s approach to allocang TRQs for dairy imports was not in compliance with the agreement. The tribunal found in favour of the USA. But what does this mean for our farmers?
Background
Canada is the USA’s largest market for high value food products. Trade deals have been prying open our markets to imports from the USA – and displacing Canadian-produced foods – since the Free Trade Agreement of 1988 was signed. Our supply management system s????ll stands between American food processors and their ambi????ons for even greater access to our profitable consumer market. It is not surprising that the first trade dispute under CUSMA was about dairy.
Under CUSMA (the New NAFTA or USMCA) Canada has agreed to create “Tariff Rate Quotas” (TRQs) that permit tariff-free imports of 14 types of dairy products from the USA. The maximum quan????ty of imports allowed in each category is set according to a schedule that gradually increases the allowable volume of US sourced-products in each category annually for 19 years. Any imports above these TRQ amounts are subject to high tariffs, making them uneconomic. Up to 85% of the milk, cream, and bu????er and cream powder TRQs must be for importa????on in bulk (not retail sale) to be processed into dairy products used as ingredients for further processing. A tariff is a tax charged on imports.
In December 2020 the Trump administra????on ini????ated this trade challenge, claiming Canada was not complying with the spirit of the trade deal by not alloca????ng TRQs in a way that maximizes benefits to US dairy interests.
In January 2021 a group of our US allies urged the Biden administra????on to drop the trade challenge. See Op Ed: US farm groups and unions ask Biden to end CUSMA aack on Canada’s supply management system at www.nfu.ca/op-ed-cusma-a????ack However, the US proceeded, ini????a????ng a dispute arbitra????on panel process in May 2021.
The decision
The Panel finds that Canada’s pracce of reserving TRQ pools exclusively for the use of processors is inconsistent with Canada’s commitment in Arcle 3.A.2.11(b) of the Treaty not to “limit access to an allocaon to processors.”
Canada Dairy TRQ Final Panel Report
The dispute panel’s decision focuses on the method Canada uses to divvy up TRQs among importers. Canada created a pool of poten????al importers eligible to apply for a por????on of the TRQ. In most of the 14 categories, 85 to 100 percent of these poten????al importers are processors (buying raw milk) or further processors (buying dairy products from processors as ingredients for their products). Having separate pools for importers who are processors or further processors versus those who are distributors helps Canada maintain stability and predictability in the dairy system.
The decision requires Canada to change the way TRQs are allocated, but does not dictate what approach Canada must use – as long as non- processors have some access to TRQs. And, the decision does not compel Canada to ensure that all of the poten????al dairy imports available under the TRQs are filled.
Canada’s deadline for compliance is February 3, 2022. The devil will be in the details as to what new alloca????on system Canada creates. The American dairy lobby would gain if Canada imports more altogether, and/or if a higher propor????on of the dairy Canada imports is processed in the USA where American processors could reap the value-added profits.
US-based retailers opera????ng in Canada, such as Walmart, would also benefit from impor????ng bo????led milk, packaged cheeses, etc., directly from their US suppliers. If a new TRQ approach favours increased processing in the USA and Canadian processors’ revenue drops as a result, it could lead to pressure on our farmgate prices and further loss of market share for Canadian dairy products.
FARMERS BEWARE OF THE VARIETY USE AGREEMENT
–by David Gehl and Cathy Holtslander
The eagerly awaited annual seed guides have arrived bringing farmers reliable informa????on on which to base this year’s variety choices. These publica????ons have a long history of providing objec????ve, unbiased, science-based informa????on. Data in the seed guides predict the agronomic performance, crop quality, and disease reac????ons expected from the crops in farmers’ fields. The seed guides also present informa????on regarding the varie????es’ intellectual property status. While o????en overlooked when choosing a new variety, this informa????on should be considered — especially now that some varie????es are being sold with a Variety Use Agreement (VUA). The VUA is a pilot project of the industry group, Seeds Canada where some companies make specific new varieties available only under a contract requiring the farmer to pay the company a fee every time they use the variety for farm-saved seed.
Farmers should be aware of the history of the VUA and what it means for their right to use farm saved seed.
Prior to February 27, 2015, Canada operated under the UPOV 78 Plant Breeders Rights (PBR) framework, which does not restrict farmers’ use of farm-saved seed for plan????ng subsequent crops. Since the government amended Canada’s Plant Breeders Rights Act on February 27, 2015, new varie????es have been released under the UPOV 91 PBR framework. UPOV 91 gives plant breeders sweeping rights over seed, but includes the farmers’ privilege en????tling farmers to reproduce, condi????on, and store varie????es for use as seed on their own farms without further royalty payment.
Under UPOV 91, royalties to the PBR holder can be col- lected only once per sale, generally when the ini????al seed is sold, but if that is not possible, the law permits companies to collect a royalty on the harvested crop instead.
Farmers probably remember the 2019 consulta????ons where they were asked whether they wanted the farmers’ privilege eliminated, and to instead pay mandatory “end point royal????es” on their en????re crop or to have “trailing contracts” that would require them to pay a royalty on their farm-saved seed. The answer was a resounding “No!”
Despite farmers’ clear answer, Seeds Canada is now test-driving a voluntary trailing contract system with their VUA project. Farmers who par????cipate sign a contract where they agree to pay the company whenever they use farm-saved seed of the variety. The VUA allows the seed company to collect revenue from these farmers every year a????er their ini????al purchase of the variety. When Parliament was deba????ng the UPOV 91 PBR Act amendments, farmers fought hard to protect the ability to freely use farm-saved seed. Farmers who agree to VUAs are apparently willing to surrender this principle.
Comparing the intellectual property (IP) status of cereal listings in the current seed guide with previous years shows a trend towards more royalty-generating varieties. In 2015, the Saskatchewan Seed Guide listed 193 cereal crop varieties: 21% (41) with no PBR and 79% (152) with UPOV 78. None had restrictions on producers’ ability to save and plant the seed on their farms. In the 2022 Saskatchewan Seed Guide 15.2% (30 varieties) have no PBR, 20.8% (41) have UPOV 78, and 61.4% (121) have UPOV 91 PBR – and 5 (2.5%) of these are listed as having a Variety Use Agreement (VUA), which can only be accessed by farmers who sign a con- tract agreeing to pay the company an annual fee in order to use their own farm saved seed to sow future crops.
The Saskatchewan Seed Guide 2022 contains an explanation of PBRs, including a description of VUAs. It states that the purchaser of a VUA variety commits to pay the variety owner an annual “Variety Use Fee” every time that they grow farm-saved seed from that variety, incorrectly claiming this fee is a “royalty”. This restriction on the use of farm-saved seed appears to be an attempt to use commercial contracts to supersede the farmers’ privilege provisions under UPOV 91. Indeed, Canada’s PBR Act includes clauses that allow regulations to be passed to remove or restrict farmers’ privilege. So, the VUA pilot project may also be intended to normalize paying companies for farm saved seed in order to make it easier for Seeds Canada to convince the federal government to introduce regulatory changes that would make royalty payments on farm saved seed mandatory on all UPOV 91 varieties. Even without regulatory change, if, as proposed by Seeds Canada, VUAs are widely applied when new varieties are released, there will be a massive transfer of wealth from farmers to seed companies. Farmers clearly have a choice. It’s time for Canadian farmers to vote with your feet and reject the VUA varieties!
David Gehl is a seed grower and rered civil servant. He was Head of the Agriculture and Agri-Food Canada Seed Increase Unit at Indian Head, Sask. for twenty-five years. Currently, he represents the NFU on the Variety Registraon Task Team, a part of the CFIA’s Seed Regulatory Modernizaon process.
Cathy Holtslander is the Director of Research and Policy at the Naonal Farmers Union. She provides research support to advance NFU policy recommendaons and, in collaboraon with NFU members, analyses and criques exisng agriculture and related policies.
GENE EDITING NEWS
Dr. Ricarda Steinbrecher, biologist and molecular gene????cist based in Oxford, UK, gave an extremely informa????ve and accessible explana????on of how the new gene edi????ng techniques work and what they can do – as well as their limita????ons and risks – at our January 27 NFUniversity class. If you missed it, you can watch it at www.nfu.ca/nfuniversity/past-classes/ .
In March, the CFIA intends to announce the final version of its regulatory guidance, largely unchanged from the version presented during public consultations. It would lead to most gene edited seed being exempt from any regulatory oversight and gene edited seed varie????es being put on the market without iden????fying them as such. To send a message to Minister Bibeau urging her to stop this change, visit www.nfu.ca/GMseedacti????on . Addi????onal informa????on about the issue is also posted on that page.
