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Founded in 1909, UFA Co-operative Limited is an Alberta-based agricultural co-operative with more than 125,000 member-owners. UFA’s network comprises more than 121 bulk fuel and Cardlock Petroleum locations, 35 Farm & Ranch Supply stores and a support office in Calgary, AB. Independent Petroleum Agents and over 1,200 UFA employees provide products, services and agricultural solutions to farmers, ranchers, members and commercial customers in Alberta, British Columbia, and Saskatchewan.
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It takes a certain kind of ambition to do what farmers do. Between the hours and the hard labor, to the public scrutiny and bureaucratic maze running, it's not an easy task. While the agricultural industry feeds millions, quietly tilling and producing behind the scenes, many forget that our food comes from the hands of real people with real stories.
Join us as we share stories from those with Boots on the Ground and unearth unique perspectives on agriculture's biggest conversations. It's time to grab your shovel and get to work. I'm Don Schaefer, and this is Digging In with UFA.
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Trade is built on certainty, clear rules, predictable markets.
A shared understanding of how goods move from one country to another. Today that certainty is disappearing. Following failed trade talks between Canada and the United States, President Trump imposed a 50% tariff on approximately $20 billion worth of Canadian products. Prime Minister Kearney responded with tariffs on roughly $20 billion worth of U.S. goods, while additional restrictions on certain Canadian exports further escalated tensions.
And the U.S. exchange tariffs and trade restrictions, the ripple effects are reaching communities, businesses, and kitchen tables across the country. Consumers are changing buying habits, businesses are grappling with uncertainty, and for agriculture, the stakes couldn't be higher. For farmers, ranchers, and producers, planning for the future has become increasingly difficult in a landscape where the rules seem to change overnight. So, how are they adapting to an increasingly unpredictable?
Stable reality. How do you find stability when the storm shows no signs of letting up? It's time to dig in on trade wars and agriculture.
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In the midst of such economic ambiguity, it's important we make ourselves aware of exactly what's going on and why it's happening. With months of established tension, only further inflamed with retaliatory tactics and failed resolution talks, the blast radius will leave lasting damage on both international relations and the Canadian people. Here to get to the bottom of things and what we can do to prepare ourselves, this is Al Musso and Calvin Hepner.
I'm Al Mussel. I'm the research lead at Agri Food Economic Systems, which is an agricultural research, agricultural economic research organization. I'm also a fellow in residence at the C.D. Howe Institute, and I'm a senior research fellow at the Canadian Agri Food Policy Institute. My name is Kelvin Hepner. I'm a field editor with Real Agriculture, and I've been reporting on agriculture policy and trade type stories.
For more than fifteen years, so I've been covering a lot of Canada US trade type topics. I also farm with my family grains and poultry in southern Manitoba.
After rumblings in late twenty twenty four of tariff implementation on Canada and Mexico, the United States spent twenty twenty five outlining and establishing new tariffs amidst stalling renewal talks for the Canada United States Mexico Agreement, or Kuzma for short. Since then, the tariffs have become even steeper, making relations even more tense. Our world is changing fundamentally very very quickly.
The Prime Minister has said that economically speaking we're under attack from the United States, and I think at this point we need to take that to heart. It's not just trolling, it's it's not just the president's own personal style. It is an economic attack with potential geopolitical intentions behind it. It's now happening in a context in agriculture and food in which we have an incredible situation with regard to energy flux and the whole petrochemical complex.
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We're starting to get really get worried about diesel fuel and what may be happening with pricing and availability globally. And then and and you know, in the background or s I guess from my perspective, I'm s I'm still trying to figure out whether this is gonna be nineteen seventy-two, in which we have some combination of very material crop failures, very serious crop failures, in Western Europe and Russia combined with this lack of diesel fuel.
And what that could mean in Russia in terms of how the crops harvested, how the crops are delivered. And then finally the security situation in the Black Sea, which may limit very much the transport of green out of the Black Sea, which which could present that sort of a a nineteen seventy two great green robbery type scenario. And all this is is not determined yet by any stretch of imagination. But I think that's all in play potentially. I would say in terms of
What we've seen unfold over the summer here, we of course have had the Canada US Mexico trade deal renewal of July first come and go. The parties have tried negotiating more in a bilateral sense than a trilateral sense so far. And we saw the collapse of the Canada US talks after President Trump set this deadline in August. We saw the talks collapse and President Trump follow through with imposing unprecedented Section Three Thirty Eight tariffs.
Most Canadian agricultural exports to the US are not directly affected by this, with the exception of dairy products, also alcohol or beverages. Section 338 of the Tariff Act imposes an additional 50% tariff, the legal maximum. It went into effect August nineteenth, 2026. The President of the United States can impose this if they establish an unreasonable or unequal burden on US goods compared to goods from other nations.
This rule does not require a formal investigation or approval from Congress. Of course, our Canadian grains are an input there. There are some other categories. If you look at honey, beekeepers across the country are struggling with that right now. Plant-based proteins have been caught up in some of the Section 338 tariffs on Canadian dairy categories. And so plant based potentially the the pea processing facilities that have been built in Western Canada are impacted there. And then also agricultural equipment manufacturers.
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are in some categories facing duties, new duties on top of earlier steel section 332 tariffs and and other there's been multiple rounds of tariffs applied by the US administration going back to the first Trump administration. And so now we've seen Canada since those were applied, we've seen Canada retaliate earlier this month with with its own tariffs. And in some cases there, Canadian farmers are impacted by higher costs potentially as there's counter tariffs on, for example, parts for harvesting and haying equipment. And so
That's a a measure that I believe is aimed at protecting Canadian manufacturers in those sectors, but at the same time we're in the middle of harvest and potentially facing higher replacement costs when it comes to to parts on on combines or or balers, that type of thing. Looking back to the twenty twenty five tariff debate and the escalation of this national standoff, we must make the distinction between what is reported as having changed versus the material reality. What are folks with boots on the ground?
actually feeling in this moment? Well I think quite a lot has changed. So if I take you back to January of twenty twenty five, the first round of tariffs had to do with fentanyl and and border security. They were narrowly focused on three countries on Canada, Mexico, and China, but they were broad, and you know, with some exemptions for Cusma compliant products, etc. They were then replaced by another set
Tariffs in sort of iterations under a range of leg legislative rationales, and again, you know, broad at at a broad product or even country perspective. So in in in each case, they were limited time and they required an investigation of one sort or another. Of course, now as you know, as Kelvin mentioned, we we now have these section 338 tariffs, which are product specific, they're not on the whole country, but they don't require an investigation.
And they don't they're not limited in time. They're sort of an ongoing time period. Another thing that has changed relative to back in in January 2025, we now have quite a broad range of tariffs on other countries. And that ranges from you know everything from ten, fifteen percent that either were agreed with other countries on a country by country basis, or in in other cases having to do with claims by the US under Section 301, like the forced labor.
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etc. that some countries are being challenged with. What's different about that is now we have the challenge of trade diversion that's associated with this. And and what what I mean by that is you have any number of of products that may have been destined for the US from third countries, they get shut out by the tariff wall, then they gotta find another home. And some of that product comes to Canada. A good example right in front of us, and I imagine there will be others, this is the canned vegetable case.
which is a a safeguard case. What a safeguard is, is countries, including Canada, have these trade measures in place that prevent, you know, sort of a flood of products suddenly coming across the border and they allow us to cushion that, particularly if it's a perishable product or if it im impairs our new crop, etcetera. So that's what we have in place and and at least some of that seems to be due to product that was probably intended to go to the US that's come to Canada instead.
Maybe the biggest thing that has changed again again if you go back to January twenty twenty five, you know, there there was language, you know, around fifty first state, there was language around at the time Governor Trudeau, you know, and and that could be written off as simply trolling by the president. But look, you know, now we've we've had serious threats against Greenland, we've had Venezuela, it looks like Cuba.
could indeed be the next in the crosshairs. So when the president says, as he has by times, that he's quite prepared to destroy the Canadian economy to soften it up as part of a a a geopolitical move of one sort or another. Well we have to take that very seriously now. And and that's very different than it was year and a half ago. Yeah, I I would underline that even further. I think the biggest change has been the US administration's
demonstration that it it doesn't pretend to follow a rules-based order anymore or anything along those lines where as and Canada, given the smaller country that we are, and just this in terms of scale, Canada relies on a rules-based trading order. We need an international system that is refereed that all players choose to respect. And we've seen the current administration, it's not completely a partisan issue. It's on both sides of the aisle, the protection the growing protectionist bent.
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Is certainly present as well on the Democrat side of the aisle in the US as well. But this administration has just demonstrated a willingness to, as Al alluded to with Greenland and and Venezuela examples, just blow through the guardrails on on some of the traditional norms and and limitations as to what's allowable and and the same thing applies on the trade front if you look at the section three thirty eight tariffs as an example. In the agriculture sector, farmers and producers are particularly hit hard.
In an industry that requires a great deal of preparation. When last minute political action sweeps with such devastating effects, is there any level of autonomy that farmers can maintain? As the consequences of tariff implementation trickle down to the ground floor, who is the first hit? And how does that show up for those who work in Canadian agriculture?
There's not a lot a a farmer can do when tariff and news is announced or when tariffs hit the headlines or when we see a a post on Truth Social or maybe on the Chinese Ministry of Commerce website, sometimes those are the just as impactful or in recent history have been even more impactful than what we've seen from the White House. But when you're in the middle of a production cycle, you can't the crop is in the ground, the livestock haves are on the way, that type of thing. And so there's nothing you can change, really. The only thing in a farmer's control at that point to some extent is timing of marketing and
And on the marketing side of things, whether they have the storage capacity to outweigh the tariff volatility for prices to bounce back. But after a tariff takes effect, there's not a lot in that production cycle that a farmer can do beyond timing when they sell. You know, if I if I could just add to that, some some people might say, well, well, what you could do is you could store. Well, you could store, but that's risky unto itself. And the dilemma that we're going to get into here, and thankfully we're we're not there right now.
But if you had material tariffs that the US brings against a products that that Canada exports to the US that are priced in US futures markets, I really worry about the integrity of that price mechanism for us in Canada and and frankly how our hedging would work, how our price determination would work. So the first thing about a tariff is a tariff is paid by the importer of record. So if the US charges a a tariff on
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Imports from Canada that's paid by the importer. Now, how exactly it's allocated from that point depends a lot on the product. So if you if you've got a product that there's no good substitute for in the United States, then you know chances are that that tariff will be passed on through the US supply chain and ultimately end up with the consumer. Now, if it's a commodity product, it's very different. A commodity product, by definition, it's you know it's a
Same as everybody else's, so if you're exporting that to the US, I I would imagine any US importer that has to pay that tariff is is gonna say, Well, I'm just gonna take that out of the price. And that's a clear difference. So you know, just so just to cement it, if Canada put a a tariff on iPhones, teenagers would revolt if we did that, of course. But do we have a substitute in Canada for iPhones? Well, no, we don't. So what's gonna happen? Well I'll tell you what, we're gonna pay the tariff and it's gonna it's
you go all way through the consumer level and you know there's probably some people that can't afford it at that price and they make a different choice or they sell less and other people they just they just pay more. Conversely, you know, so I I I live in southwestern Ontario. If we decide we were going to export corn to Indiana and the US put a material tariff on corn imported
Well look, we can do that, but there's plenty of corn in Indiana and theirs is the same as ours. So I'm I'm sure that anybody that you're trying to sell this to in Indiana is gonna say, Well, if a tariff applies, you're gonna you're you know effectively it's coming out of your hide because we got plenty of corn here, it's a signature. So I think that's how that will work.
Ultimately farmers make a lot of those decisions regarding input purchases, machinery purchases parts, price signals, which crops they grow on price. It comes down to the price that they're offered for that commodity. And so if there are restrictions into an export market, ultimately it comes back to supply demand. Demand is reduced because say China's off the market or India's out of the market or the US is out of the market, demand drops, price drops, and farmers will be less likely to to grow that crop relative to other crops that don't face the the same reduction in demand.
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Contracting, again, if farmers see a tariff on the horizon or there's talk about a tariff, farmers may sell more of their commodity ahead of time, trying to get ahead of it and and get that cash in the bank kind of thing before the uncertainty strikes, but often we don't have a an opportunity to do that. And then you look at storage, of course, there might be increased investment in storage if a farmer can cash flow that just to take advantage of timing and outweighing potentially some of the volatility.
Capital purchases again, if profitability suffers, capital purchases will decline. But other than that, ultimately, again, all of those things come down to to price and profitability on a on a crop. And and farmers are constantly weighing that equation and balancing which crop to grow, which which livestock, how many heifers to keep back, that type of thing by making decisions about how to maximize their profitability. And tariffs and trade uncertainty ultimately just restrict demand, and farmers are the ones who are adjusting supply in response.
Amidst this trade war, dairy has become a pawn between precedent setting tariff shifts and retaliatory tariff measures. In response to the Canadian imposition of 50% tariffs on Canadian dairy products, followed by a ban by the United States on certain dairy products, alcohol, and other Canadian imported goods, the United States' latest string of tariff increases will go into effect on september twenty ninth. As this progression heats up,
How do we look to the larger issues that are causing such a contentious political disagreement? Well, based on the communications we've had from the US over the past six months or or longer, where they want to focus has to do with on the with the allocation of the import permits.
What we understand is is that they believe the this is the the US dairy industry believes that the Cusma agreement never really worked the way they felt that it should in terms of the allocation of the import permits and the associated access that they get to the Canadian market. So what what is this all about? Well, the first thing to observe is that on products that are in demand in Canada, so cheese and butter and cream, things like that.
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The tariff rate quotas that is the volume that can come in free of tariff is heavily filled. It's heavily filled. So what more could the US want? Well, what they could want is they may want to change the product mix that fills that volume with higher value product. Well, how do you do that? Well, I think their view is that you access the retailers directly. So that seems to be their interest here. Now, what are the concerns on the Canadian side of this?
Well, first, for the most part, the tariff records are allocated to Canadian dairy processors. That allows the imports to come in and have sort of minimal disruption in the Canadian market. So for example, if I'm a Canadian dairy processor and I've got a number of different lines of cheese, if I use the import permits to fill in a gap in my cheese lineup, then that can kind of work along with everything else and it's not particularly disruptive. The difficulty is if the import permits are allocated
To retailers that are, I mean, a retailer is under no constraint, constraint in terms of thinking about what they import, how that fits in with the existing Canadian product mix. They're just looking for a merchandising profit. That's disruptive to the dairy processors, which you know, some people are going to say, Well, yeah, that's competition. Big deal. The difficulty is that our milk allocation system from the farm to the processing plant.
is a use it or lose it type system. So if you have a particular processing plant whose product is crowded out of that situation, then this begins to create havoc with their milk allocation system.
So it goes far beyond the problem of just competition. And I guess the the final piece on this is you know we've had concerns with regard to how grocery retailers interact with their their suppliers and and that you know they use heavy-handed or leverage tactics with their suppliers. And that's that's why we have a grocery code of conduct in in Canada, and that's part of our our new food strategy that is being rolled out, is to address things like this.
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If you gave the retailers direct access to American product that they can import in, it would it would change completely the dynamic with their suppliers. So so that's sort of another concern. So I I think that sort of stacks up the primary aspects of that. Now with all that acknowledged, and and this has been what what the US has said publicly about this, it's interesting in their press release having to do with the most recent tariffs, the September eighth tariffs from from Canada.
the US dairy industry is that they're they're talking about the allocation of the import permits, but they're also talking about increased access and exports of Canadian dairy proteins. So it leaves us to wonder what actually went on in the discussions. Did they want the import permits addressed plus these other things, or is there, you know, they're trying to put some sort of a squeeze on we don't know. Just to add, there is a whole lot of
Misinformation and misconception around all of this as as well. For example, we saw the president's post on Truth Social how Canada doesn't allow US dairy into our country, and yet and yet US dairy industry groups bring this up often, how Canada is this is usually the second largest export market next to Mexico for US dairy. And so the word from the president travels far sometimes before people understand that it's not all not all based in fact.
Well, the face of complexity, we make stuff up, Kelvin. But you know, why not, As the stalemate continues and uncertainty grows, one question rises above the rest: who is bearing the brunt of the impact? When looking at the resounding outcomes of immediate decision making with long-standing consequences, out of those most affected
prepare for such an unknown landscape? For Canadian agriculture, resilience, patience, and adaptability have to be at the forefront of every action moving forward. Is diversification even a practical farming strategy in times where the future looks so ambiguous?
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The difficulty we have is the confidence has been broken rather badly and and that's that's a long term matter. It's interesting to to listen to people s you know, s some of what you hear is well we we shouldn't be retaliating against the US or much larger economy than we are and you know, how how could this stack up? And conversely, we depend on them so much we simply need to get back to the bargaining table as soon as possible.
It's all true, but it ignores the fact that we simply can't trust these people. Look at the record. I mean it what what we've tried to do in and you know, go back to the digital services tax, go back to the Gordiao Bridge. These were concessions made and and you know, when you make concessions, some people will hound you for it a little bit, but they're made with the intent that this is how we build goodwill, greater good. And what seems to happen with this group of people is they view that as weakness. So
Okay, well we got to give on that. Let's show murders and we'll get some more. So yeah, I mean y you you can you can see, as I said, the the long term nature of that lack of confidence and how that's developing and you know, I guess the most recent indication of that is the prime minister's interest in having some sort of status with the EU. Some of us in Canadian agriculture can say, Wow, we're wow, we're what, we're we're
Getting close to the EU. I heard an an interesting line the other day from fellow professor at Carleton University and he's he said the US innovates, China replicates, and the EU regulates. I'm not sure I agree with the US and China on the innovation and replication, but the EU regulates. So the I mean it's the same group of people we've had a terrible time trying to export meat to. You know, now we're gonna
They want to mirror their own MRLs on imports of grain and and and so on. Well, when we're prepared to say, you know, yeah, actually that's the next best game in town, it just goes to show you how badly this really has degraded. And it's and it's hard for a lot of people to get their mind around. It's a huge adjustment. You know, we've we've treated export transactions and price determination done through the US as all but analogous to a domestic transaction.
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The fact that that is changing abruptly is, you know, I guess maybe the last part of it is testament to it is we see no outrage in the US that their leadership is making them a pariah internationally, nor that they're attacking Canada. Now, I mean that's not completely true. You know, watch the Sunday morning talk shows and so on. There's some people there that are very concerned about how this is affecting the US status internationally and and how they're treating allies, Canada in particular.
But find a a democratic politician, you know, for whom that's the you know, that's the highest point on their platform. I haven't seen it. And moreover, as you know, I think Kelvin made reference to this before. We have to assume at this point, you know, if there was an election tomorrow, including for the president, even if you got a democratic administration, it would be protectionist. You know, it might mightn't have quite the you know, the whatever motivated by grievance style that this group of people has, but
It would be protectionist and not in our interest. I think agriculture and and food as a whole, we haven't been the hardest hit sector, similar to to energy in in a lot of ways, because even if it's a no-rules market system, we have leverage in Canada because we export and grow what the world wants. And the US administration realizes that there's things from Canada that they can't cut off and that they need to to keep buying. And so in some ways we've been sheltered from this.
loss of confidence or loss of a a rules based trading system in agriculture compared to other sectors. You look at autos or manufacturing, for example, in in Ontario are much more vulnerable to the loss of confidence in a in a rules based system. That's in the short term. In the medium to long term though, we suffer in agriculture and and other parts of the Canadian economy due to loss of investment. We we have investments that could be happening in value added processing in our country, in our backyard, and instead they're happening in the US because there is
Ultimately that's where the market is and
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People aren't confident that their value add in Canada is going to that the profitability, viability will be there in the in the long term. And so those decisions are delayed. And ultimately that means our agricultural production in the country, whether we're growing canola or hogs or other sectors, we get less, we're less profitable because we have less value add happening, less demand locally in our backyard for these products. And so then then we become even more dependent on on exports of raw commodities to the US or China or India. I'd say two things. You need another
Market that wants what you grow, and in a lot of cases, that does exist. You need to establish those relationships to make those connections in terms of trade. But maybe the bigger thing that needs to exist is the logistical capacity, the infrastructure to access that. And that takes major investment. There is there's lots of talk about that from the Kearney government over the last year or so as they've ramped up this discussion about diversifying exports. But at the same time, the Port of Vancouver is still a major bottleneck in terms of exporting Canadian agriculture.
commodities from Alberta, from Saskatchewan, Western Canada to Asian markets that we know want the things that that we grow. So I'd say that's the main reason we have such a close rel one of the big reasons we have such a close relationship with the US market is the simple
logistical ease of loading a train or sending a truck across the border. It's much more complicated to send a a ship, first of all, get a product through the Rocky Mountains or the Canadian Shield and then across the Pacific or Atlantic Ocean to a market overseas. And so the logistics infrastructure needs to be in place for diversification to grow. The journey from farm to table involves many steps.
Cultivation to testing, to export, to import, to packaging to sale. It's a refined and specific process that ensures quality, consistency, and flexibility. However, in times like these, sometimes rescaling or downsizing procedures as an attempt to save money can be a common step against the uncertainty of tariff imposition.
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Though restructuring such large scale processes is difficult. Establishing what is and what is not replaceable in that supply chain is an important decision to make. I think it's land, probably, you know, thinking about the fact that you can put up processing plants or take them down, but what doesn't move is the land. The other thing that I worry about very much is the matter of price discovery.
That's part of the US Canada relationship. So you know, we have a Canola Futures market that's based in Winnipeg but but aligned with Minneapolis, of course. Just about anything else that's in the ag commodity sphere. You know, we're looking at Chicago, maybe Kansas City.
Minneapolis, and then that becomes a price reference because that's where you find the liquidity and the financial capital to to facilitate that whole efficient price discovery process. And I wonder how we would ever manage the liquidity to effectively discover ag prices in Canada. That's a good point, Fael. I would add another thing tied to land, and that is nutrients that come from the land, aka potash, potassium from Saskatchewan, and phosphorus that
We rely on in Canada phosphorus fertilizer that comes from the US in a in a big way. There's also a lot of nitrogen fertilizer that Canadian farmers rely on that comes through the US up the Mississippi barge system. And so
I think fertilizer would be one incredibly irreplaceable link in agriculture production on both sides. When a tariff is imposed, the nation who imports is left with very few options. Trade agreements help ensure and maintain relative equity between nations and can re-establish a baseline when put in a position like the one we face today. Despite U.S. decision making, what does diversification of exports look like for Canada, especially when attempting to not
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weaken international relations. You think about the situation that we we have been in relative to Canada US trade and agricultural products, depending on how close to the border you live, you know, you can you can load up a truck in the morning and head south, make a delivery and you'll have your truck, your driver home by nighttime with a check in their hand, and and you know you can pretty well count on that check. When you're in a situation where you're diversifying effectively that
means that we're putting product on a boat. You're looking at containers or you're looking at bulk vessels, that's timing, that's financing, that's obviously in the commodity grain trade. We already do a fair bit of this in terms of accumulating bulk volumes to facilitate all that. But it's very different. Can it move more toward that? Does it weaken the US-Canada relationship? I I don't know if there's an easy answer to that other than, you know, the the US-Canada
relationship matters much more to Canada at at least initially on the surface than it does the US. So you know how we proceed if we're pivoting away from the US to some degree, it's it's you know sort of a a cost benefit or a risk benefit type of a move. But it is a big change. There are many opportunities for Canada to diversify without weakening the US relationship. The issue is with the second largest market in the world for Canadian exports and that is China and of course
the US doesn't appreciate right now when Canada establishes closer ties with with China. We saw that back in January when Prime Minister Mark Carney met with President Xi and it doesn't matter whether the Trump administration is is establishing closer ties with China. They don't like to see other other countries doing that. And so ultimately Canada is caught between a rock and a hard place when it comes to the US versus China and
We will always do to geography, due to culture, we will always end up on the US side of that head to head geopolitically between the two superpowers. But in the meantime, this is a this is why Prime Minister Carney is looking to the European market, looking to other parts around the world, l other Asian countries, others, especially yeah, you get into Southeast Asia. There's been a major push into the into that part of the world for Canadian export markets diversification there. And in a lot of cases, that's not as offensive to the US administration.
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If Canada is working at increasing sales there. At the same time, agriculture again, I believe, flies under the radar. It's not seen as one of these items at the top of the list, like steel or airplanes or critical minerals when it comes to national security sensitivity. And so in many ways I
believe agriculture will continue to we will continue to have opportunity to diversify. The US isn't going to be as upset about Canada selling canola to China as it would be if we were selling computer chips or something like that to China where it's a a national security issue in a in a much more overt way. So in that way I believe there's lots of potential still to diversify. It's just a matter of price. Al alluded to the timing issues, the costs of
getting things into a container, getting it across the ocean, the timing, all that adds expense. And so you need to have prices overseas that to justify that added cost relative to the cost of shipping it much cheaper into a US market. I worry about retaliation via export controls on products that the US knows its its deficit in and the top of that agenda I guess would would be potash and and oil.
I do sometimes w well, I'm I'm not gonna say anything that that's that's gonna shock anyone here, but the strategy behind all this, we know that that the president is, you know, fairly motivated by by personal grievance, but he's commonly says we don't need anything from Canada. Does he understand that the United States is trade deficit in agri-food products as a whole to the tune of s somewhere I'm just going out of memory here, I think it's somewhere in the range of twenty four billion dollars.
And something just shy of half of that is with Canada alone. And and it's almost like he doesn't understand or or or maybe care about opportunity costs. It's it's it's kinda like, yeah, we can do absolutely everything better than everyone else all the time. And that and that's that's true of no one. So that's what you're up against. We try and craft strategy accordingly, but it's challenging.
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To me there are several items where if we're looking at this from a a Canadian perspective, where if Canada retaliated on something that could create un unintended consequences, I'd probably look at the livestock sector. If all of a sudden we restricted flow of American feeder cattle into western Canada, the slaughter plants at Brooks and and High River suddenly are looking less viable.
And Canadian producers and ranchers would pay a huge price if any if either of those shut down. And so that's where as soon as you get into all this retaliation and the back and forth, there's all kinds of opportunity for unintended consequences that when we have such integrated complementary supply chains where one side of the border producers that are good at certain things have specialized in that, and the other side of the border they're good at other things and have specialized in that. And ultimately that's how trade is supposed to work. And the current administration in the US, if you've
Read Robert Leitheiser's book, No Trade is Free. It it in many ways sums up the perspective of Jameson Greer, the current US trade representative. He, of course, was worked under Robert Leitheiser when when Leithheiser was Trump's first USTR. And so there's a lot of emphasis put into national security and bringing back
jobs and and so far the evidence of the Trump two point administration on this policy is a lot of economic indicators that show that the theory in that book that Lightheiser laid out isn't working and so there are unintended consequences all over the place as as US manufacturing, there's been no rebirth in that. And sure a lot of it the national security lens makes sense, especially if you get into like China versus US global showdown in the long term.
But in the meantime, agriculture and food, everybody needs to eat around the world. And so that's where the national security arguments, I believe, fall short when it comes to applying them and extending that protectionist thought of from a national security bent to agriculture. I would, you know, sort of focus on potentially what we in Canada could do. I have very limited influence over the US at the moment. And and I I think the short answer is we just bear down on innovation.
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This is where I I think and and productivity. This is where our our gap has been. And and you know, I I I think the Prime Minister has said, you know, for example, we have fiscal capacity.
What that means is to be honest with her, our our balance sheet isn't great, but it's considerably better than the US. And I guess that's that's the benchmark that we're looking at. So we compared to the US, we do have fiscal capacity. We've got natural resources, quite apart from whether this year turns into something akin to the Soviet wheat crop failure of 1972 playing itself out over again. Quite apart from that, the products that we have are in demand and they're strategic in nature. So it's energy, it's
Earth, minerals, it's water, and it's food. The world is hungry, food prices are high, and Ken is a high quality supplier. The issue is can we navigate that situation better and protect ourselves from some of the shenanigans that the U.S. or others may throw at us through having a much more productive and innovative agriculture? And people like me have, you know, my careers in agricultural research. You know, we really believe that amazing things are.
possible through research and innovation and and productivity improvement. And and I wish we could double down on it. If we had a magic wand that could change one policy lever externally, I'd say we need to bring back some sort of rules based, enforceable system of of trade around the world. Canada would benefit from that, whether that's through the World Trade Organization bringing back
The WTO that is now dysfunctional in a lot of ways when it comes to dispute resolution between countries. That's out of our control though and not gonna happen. But so I'd say further to Al's comment, something that's under our control, lean into competitiveness, productivity. We have seen Prime Minister Mark Carney announce this mega tax deduction, trying to increase competitiveness relative to US and attract more investment in processing and value added in manufacturing in Canada, that type of thing.
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basically get out of our own way wherever possible when it comes to unlocking investment and getting the capital that is sitting on the sidelines when
Carney talks about fiscal capacity. A lot of that is not only in the public sector, it's also in the private sector. There is fiscal capacity in in Canada and find ways to have that investment deployed in the country into research, development, drive that innovation and unlock the potential there in terms of what we're capable of of producing and and developing here at home. Along with that, of course, you need diversification, you need to find markets elsewhere. But yeah, it's I'd say get out of our own way in terms of holding back productivity and and competitiveness in agriculture.
Assuming we find a resolution in the near future through redefined trade agreements or a shift in US leadership perspective, it's hard to say what a new normal will feel like. In a year's time, what will reflections look like for Canada's relationship to the United States? And how will we know when it feels like we've returned to some form of normalcy?
Yeah, I guess the starting point and and the handoff on that is looking a couple of months. So, I mean what's obvious that's in a couple of months is a US midterm election, not to get too far into the politics of these things, but if the Democrats in the US can take both houses of Congress, then I would imagine that the threat of the bombastic version of protectionist US trade policy probably comes to an end and and
One would hope that we get a reversion back to more of a constitutional model for how this proceeds. That doesn't mean necessarily better for us, because again, I I think the US is taking a fundamentally protectionist bent. But it is better for us from the standpoint of some of the crazy uncertainty that we're dealing with today, probably goes away as a result of that. Then secondly, you know, the progress of the war in in the Middle East, which
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The moment seems to be deepening and also the you know the conflict in Ukraine and and the threat of spillover into particularly the Baltic republics or elsewhere into NATO territory.
One of the consequences of both of these conflicts, of course, is destruction of oil export facilities and destruction of refinery facilities. And as that proceeds and you know, with the timeline to repair some of that capacity, if indeed it is repaired, because you know some of these places have just become very dangerous to operate. So I'm not sure that the investment capital goes right back into to fix them regardless. We could be in a very precarious situation of just just straight flat out short.
shortage or lack of availability of, you know, what's top mine right now is diesel fuel. And that could last for a while and you know
How important could that be, right? But the whole petrochemical complex and what flows from there. So going back to idea what would look like better world or success or something something like that, it would be the US behaving in more of constitutional manner and we get some resolution to these conflicts. The frequency of memes and posts referencing Canada on on social media has declined, the late nights, overnight posts.
If the frequency is declined, that's probably a good indicator that something else is at least a priority. But further to what Al was talking about, I'd s say a return of power to the other arms of the US government, where Congress actually has some backbone and it's not the person in the White House driving the entire agenda. That way you get the senator from Nebraska who's a affected by these tariffs and who has jobs lost in in his district due to it. You get them speaking up. You get
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people across the US a more democratic process of government, a more constitutional type of process, like Al referred to, happening where it's not just the White House dictating things. And that's where Trump has been unprecedented in terms of the amount of power he has been able to accumulate in the White House. And it's difficult to imagine, maybe not totally impossible, but difficult to imagine another party leader coming along and holding that same amount of power that he has managed to to hold over the entire Republican
party and and and apparatus in the US. And so that would I think be healthy for Canada US trade as many Congresspeople understand the close ties. They understand why this trade back and forth is important for their riding and for people in in their areas, but they've been overridden and and in a lot of cases unwilling to stick their neck out and risk getting primaried. And so as a result, the president has been able to run roughshod on on a lot of this type of policy. So you know what you just discussed, Kilden
I think those would be elements of success or a better world. But we're not going back. I mean what we've what we've learned here is that in fairly short order, the the US can manage to go down from our perspective a very bad road and it could happen again. The other thing which, you know, maybe maybe I'm contradicting myself here a little bit, but there is some thought that you know, if you elected a democratic president in twenty twenty eight
They will be under great pressure to set things right in the minds of whomever very quickly. And and as a result, maybe won't be as prepared as one might think to go back to
The constitutional norms. I hope that's not true, but but you can you can understand some people in the U.S. thinking that if you had a change of leadership, like okay, well, we started all these fires, we need to put them out right away, and we may need to suspend some elements of the Constitution or due process. In other words, continuation of what we have now for the purposes of doing that, and we never quite get right back to the Constitution and the rule of law as we've experienced previously. You know, the the world's not in a
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in a great state at the moment. But it it's it's remarkable to me the degree to which Canada has strengths that the situation plays to. One of the things that Kelvin, you you and I haven't talked about much is climate change and particularly extreme weather. And we now know that while the the French corn crop is expected to be off something in order of 30%. So and and just you know just for everybody's reference, France in corn is larger than Ohio is.
So that I mean that that is one heck of a big loss. And and and there's some aspects of of European agricultural policy that that seem to miss that context, that that their agricultural system is actually in big trouble more than just a drought. But you know, climate change, as far as I can tell, and and and we have a recent report dealing with climate in Canada. Canada has warmed, but you know, here we are at the northern fringe of feasible agriculture, warming
provided we've got the moisture for it. Warming's good. So a lot of these things actually
play in our favor. And I I I'd hate to think that you know we're a country of ambulance chasers or something like that. But as these adverse circumstances affect others to the degree that our situation's actually improved and we have a lot of these resources and we're prepared to develop and share them, this plays well for us. Overall Canadian agriculture, sure, there's a lot of challenges and uncertainty and chaos on on the trade front, but Canadian agriculture I I and I'd say Canada as a whole is in a good spot. Water would be another example further to Alzheimer's
comments of how we have water in Canada and a lot of countries are increasingly facing s scenarios where aquifers are drying up and irrigated areas are are not going to be able to they're having to work harder to find water to irrigate and becoming less competitive as a result. And so in the long term, the world needs the things that Canada is I I hate to quote a politician or or reference one of his talking points, but the world needs what what Canada produces and so that bodes well for Canadian agriculture. And ultimately I believe we should also be
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Cheering for US to pull through this and to figure out to get things in in order because our success in Canada in many ways, much more than anything else, depends on the US economy being healthy. And ultimately, that will determine the direction of the Canadian economy in in many ways. And sure, that's something that President Trump has acknowledged. But it's in fact, and if the US economy enters major trouble, that could be much more detrimental for Canadian agriculture than tariffs and protectionist practices.
much for having me the opportunity. Thanks for having me. always up for discussing these topics as they continue to evolve and we'll stay tuned to what happens in the coming weeks here as lots to talk about on this front.
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At the end of the day, we look to our resiliency within ourselves and our communities to make our collective futures as bright as possible. All it will take is conversations like these, some vulnerability, and a little digging.
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Thanks to the support of UFA Cooperative, we're able to share stories from those who live and breathe agriculture. Thanks to Alan Kelvin for giving us insight into this current trade war and what it means for all of us. For more information on today's episode, please visit UFA.com. With listeners like you, we'll continue to dig a little deeper here on Digging In with UFA. I'm Don Schaefer. Thanks for listening.
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