Ontario farmers who shouldered the financial burden of a federal tariff on fertilizer supplies imported from Russia this spring are seeking compensation from Ottawa.
Grain Farmers of Ontario, along with farm groups in Quebec and the Maritimes - as well as the domestic fertilizer industry - also want the government to help ensure producers are not put through the wringer again for the 2023 crop.
In reaction to the Russian invasion of Ukraine in late February, the federal government in early March implemented a 35% tariff on all Russian imports, including fertilizer. Already facing sharply higher fertilizer prices due in part to pandemic-related supply chain woes, the tariff hit farmers in central and eastern Canada especially hard since the region relies almost exclusively on imports of Russian nitrogen.
With little opportunity to scramble and try secure supplies from alternative sources before the fertilizer was needed in the field, the agriculture industry was left with little choice but to simply bite the bullet and pay the tariff, which went into Ottawa’s pockets.
According to Russel Hurst, executive director, Ontario Agri Business Association, the tariff in most cases was initially paid by the fertilizer importer but then passed down the line until it eventually got to the producer. How hard individual producers may have been hit by the tariff depended on what portion of their fertilizer needs they pre-paid before the tariff was implemented, but Hurst said ‘back of the napkin’ math suggests the collective hurt was likely to the tune of $150 million to $180 million.
Of that amount, Ontario producers likely bore the brunt of about two-thirds, with the remaining one-third landing on producers in Quebec and the Maritimes, he said.
Canada is the only G7 country that has tariffs on Russian fertilizer, putting Canada’s agriculture industry at a competitive disadvantage compared to other countries around the world.
“Farmers bore the costs of tariffs which has put Canadian farmers at a disadvantage to farmers in other countries who did not have tariffs on fertilizers,” Christian Overbeek, chairman, Québec Grain Farmers said today in a joint statement with GFO and the other farm groups. “We need compensation for farmers and concrete solutions for the 2023 planting season in place this summer.”
The farm groups said they strongly support the people of Ukraine and condemn the Russian invasion. And while they also support sanctions and other measures imposed by the Canadian government and its allies aimed at quickly ending the war, the groups said Canada’s capacity to produce food should not be jeopardized, today or in the future.
“The world needs Canadian farmers to produce our best crop this year. You cannot grow crops without fertilizer, and you cannot produce food without crops,” said Roy Culberson, chairman, Atlantic Grains Council. “An additional tariff paid by farmers on a global product such as fertilizer just penalizes the farmer.”
Hurst said fall fertilizer supplies for Ontario are now essentially in place but added the 35% tariff will continue to be applied to any Russian product.
In addition to compensation, Hurst said the fertilizer industry and farmers at least want clarity and certainty from the federal government about its tariff plans for the 2023 planting season. If the tariff is going to remain in place – which appears to be the most likely scenario – he said fertilizer importers, given the luxury of time, are confident they can source the needed product from alternative sources.
"Ideally, we want the tariff removed,” Hurst said. “But based on what we’re hearing from this government, that’s just not on the table right now.”
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