Canada's Fertilizer Tariff on Russia Hitting Canadian Farmers Hard

Strategic Insights -

As the federal government continues its efforts to punish Russia economically for its invasion of Ukraine, Ontario agriculture groups and representatives of Canada's fertilizer sector are warning that cash crop farmers and consumers are the ones bearing the cost. Ontario agriculture groups are calling on the federal government to reconsider the 35 per cent tariff on Russian imports, including nitrogen fertilizer that Eastern Canadian growers rely on to boost crop yields. Farmers make risky decisions about what crops to grow and place orders for seed and fertilizer months in advance, and the tariff has put a significant strain on their operations. Fertilizer prices are a major input cost for already low-margin cash crop operations, and the 35 per cent hike from this tariff has put a lot of upward pressure on commodity prices.

Key Takeaways:

  • Ontario agriculture groups, including the Ontario Bean Growers, the Grain Farmers of Ontario, and the Ontario Canola Growers, have called on the federal government to reconsider the 35 per cent tariff on Russian imports, including nitrogen fertilizer.
  • The tariff has already disrupted shipments, with around one third of 2022 shipments not yet delivered to Ontario when the tariff was imposed.
  • The 35 per cent hike in fertilizer prices, combined with energy and gasoline bills, puts a significant strain on cash crop operations and may lead to lower crop yields.
  • The groups are requesting compensation for farmers negatively impacted by the tariffs and a secure and reliable supply of fertilizer to prevent this situation from happening again in 2023.
  • Canada has the natural gas resources to become self-sufficient in fertilizer production if the government invests in domestic nitrogen production.
  • Other G7 allies did not target fertilizer, making Canada's exemption request different from those involving sanctions that were closely co-ordinated among Western democracies.
  • Farm groups have yet to see a response to their request for a reprieve on the tariff, with Agriculture Ministers announcing improvements to advance payment and loan programs for farmers but offering nothing regarding the tariff.

Statistics:

  • 660,000 tonnes of nitrogen fertilizer were exported annually from Russia to Eastern Canada before the tariff was imposed.
  • 85 to 90 per cent of total fertilizer applied in Eastern Canada came from Russia.
  • 1,100 farmers grow approximately 100,000 acres of dry crops like white or black beans in Ontario.
  • 90 per cent of the edible beans grown in Ontario are exported.
  • A 35 per cent hike in fertilizer prices has put a significant strain on cash crop operations.

Sources:

  • CBC News: "Farmers, fertilizer sector warn Ottawa of economic harm from Russia tariff"
  • The Toronto Star: "Ontario farmers, fertilizer sector urge Ottawa to reconsider 35% tariff on Russian imports"
  • The Globe and Mail: "Canada's fertilizer tariff on Russia hits farmers hard, groups say"