It’s over now, or at least it seems like it is. Maybe now, after several weeks of mentioning the elephant in the room, we can talk about it. The next President of the United States will be former Vice President Joe Biden with Senator Kamala Harris the Vice President. Of course, our American friends are still counting votes, but it’s over. There will be a clear winner in the end. It looks like the Trump presidency is coming to an end, a tumultuous time, which many Canadian farmers will be glad to see in the rear-view mirror.
Our American friends have their own way of getting an American President elected. As I write this, President Elect Biden has an electoral college lead of 279-217, with 270 electoral votes needed to win the Presidency. Arizona, NC and Georgia are still in play, but this thing isn’t that close. For farmers going forward, it presents a geopolitical landscape completely different than the last four years.
There is a popular refrain in Eastern Canadian farm country, and that is we’re competing with American farmers who have $32 billion in a head start. That has to do with the Market Facilitation payments and other overt subsidies sent to US farmers since the US China trade war started. From a Canadian perspective, we watched as markets were fractured and destroyed by tariffs and tweets, without any substantive agricultural safety net. American farmers were paid to compensate for trade injury, which was perceived here as entirely self-inflicted. It’s been a tough time, one partially saved by a Canadian dollar, which has been low over the last 3 years.
I must say I completely missed much of this coming. When President Trump was elected, I felt much of the political bluster would disappear when he got in office. However, I was wrong. NAFTA was torn up without any warning to Canada, the Americans left the TPP largely to their own detriment and then China was slapped with tariffs. The Chinese responded with their own tariffs on American soybeans. Shortly after this Canada was slapped with aluminum tariffs and called a national security threat. Four years ago, I couldn’t even make this stuff up. As we move ahead, I’m hoping the Biden administration is more diplomatic.
Looking back, soybeans were the straw that broke the camel’s back. In the 2016-17 marketing year the US exported 59 MMT of soybeans while the Brazilians exported 63 MMT. Chinese demand for soybeans last year amounted to 98 MMT. Last year, post tariffs the US exported 48 MMT of soybeans to China vs Brazil’s 93.5 MMT to China. The average price from 2017-18 into mid 2020 was about $8.67 in the United States. For Canadian farmers do the foreign exchange math. There was no $32 billion dollars from the Canadian treasury. Markets hate uncertainty and this all started in a tweet.
Of course, soybeans are now surging after the last three years, partly because Brazil is tapped out of soybeans, dryness in the southern hemisphere growing areas and a shorter crop in the US. It can be argued now with a Biden victory, that $32 billion will be gone and everyone, including American farmers will have to learn to produce those beans without all that help. We’ll see, as Canadians, we aren’t naïve as a country. Living with our American friends is always an adventure. We move ahead with apprehension.
Apprehension might be an understatement. I’m referring to COVID 19, which still stalks the land and is getting worse, numbers surging in the US, but also in Canada. The good news came last week of a vaccine on the horizon. However, at the present time, the reality is dark again, very dark. The Canadian US border remains closed to non-essential travel. We need to hope for a better day.
That’s what I was hoping for back in March when COVID19 first manifested itself. At the time, the Canadian health minister said it was likely 70% of us would contract it. At the time, I wondered how/if I’d get a crop planted. Needless to say, that all happened and this past week I tossed my cap on another successful harvest. My wheat and soybeans were slightly above average, my corn about average, which is OK, when I look back on this tumultuous year. Let’s hope by April, things on the COVID front can lead to new perspective.
So, when it comes to elephants in the room, let’s take the American Presidency off the list now. Yes, it still looks like a bumpy ride for a few weeks, but change is coming. The geopolitical change in North American agriculture should be huge. Agricultural markets will likely return to a more mundane normalcy over the next two years. Of course, if La Nina manifests itself in South America in the next few weeks, that mundane normalcy might grow more exciting. However, I’ve had about enough added geopolitical excitement for now. Mundane and normal would be welcome.