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Farmers See Small Gains Selling Grain Into Canada

Canadian elevators were able to fairly grade a handful of U.S. wheat varieties planted in Montana starting July 1. U.S. wheat varieties unrecognized in Canada were downgraded to animal feed status for years as common practice and discounted in price, regardless of quality.

Mike Cuffe, Pacific North-West Economic Region president, advocated for the new grain terms. “It allows Montana grains to be treated on an equal basis with Canadian grains when they’re shipped north,” said Cuffe. “And that has been a sore spot.”

“My understanding was that there was a real imbalance. Any wheat going north was automatically dropped to a feed wheat, feed grain, cattle feed value, which was the lowest valued product, even if it was used for fine pastry,” said Cuffe.

Montana Wheat and Barley Committee executive vice president Cassidy Marn said that three wheat varieties planted in Montana are recognized in Canada. Getting more varieties recognized will involve Canadian research and approval, which could take more time.

“They have the option now, so that’s an improvement, at some level, if the price was ever favorable for us to go north,” Marn said.

Montana lost very little in the new trade agreement. Terms for shipping Montana malt barley into Mexico remain unchanged. Sugar exported into the U.S. from Mexico didn’t increase, though Canadian sugar exports did, a change that could negatively influence the domestic price paid for Montana beet sugar.

Nationally, the big selling point for USMCA replacing the North American Free Trade Agreement was a retooling of auto manufacturing rules. U.S. automakers with operations in all three nations will have to use more parts made in North America. The pay of the workers making those parts also increases, a change that makes it less advantageous to shift auto manufacturing to Mexico.

The new trade agreement also sets terms for intellectual property and digital trade, which weren’t on the horizon when NAFTA was negotiated more than 26 years ago. NAFTA was initiated by the administration of President George H.W. Bush and finalized by Democratic President Bill Clinton in 1993.

But NAFTA was opposed by labor unions and the left-leaning agricultural groups alike. The trade agreement made it easier to relocate manufacturing jobs to cheaper markets, while also granting better U.S. access to beef, vegetables and other farm products from Canada and Mexico.

President Donald Trump made a 2016 campaign promise to get rid of NAFTA, which he called the worst deal ever. Congressional Republicans throughout the USMCA process recognized the new trade agreement was very similar to NAFTA. Senate Finance Committee Chairman Chuck Grassley, an Iowa Republican, referred to USMCA as “new NAFTA” when the Senate approved it in January.

Both Montana Sens. Steve Daines, a Republican, and Jon Tester, a Democrat, voted for USMCA.

Montana’s sugar beet farmers also had a stake in USMCA. The industry is comprised of beet acres along the Yellowstone and Big Horn Rivers and sugar factories in Billings and Sidney. The Sweetener Users Association, a group of confectioners and candy companies who opposed the U.S. sugar quota system and advocated for more sugar imports, praised the increased sugar imports from Canada.

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