Mr. Speaker, in the past two weeks, I have twice asked the government why there is still a 35% tariff on Russian fertilizer when it is clear that this is not causing a net decline in Russian exports, nor a fall in the price paid worldwide for Russian product.
The purpose of the tariff, when it was imposed in the spring of 2022, was to punish Russia for the invasion of Ukraine. That year, a total of $115 million in tariff revenue was collected on fertilizer and fertilizer precursors, but because the contracts with Russian suppliers had already been signed and the fertilizer had already been loaded onto ships, the cost ended up being borne not by the Russians but by the Canadian farmers who were on the hook for these purchases. This debacle prompted one contemporary analyst to observe in December 2022, “Sanctions should be punitive. But for tariffs on fertilizers, there was no evidence that Russian companies were affected at all.”
By the start of 2023, Canadian agricultural organizations were calling for the tariff to be lifted, pointing out that Canada was alone among G7 nations in imposing tariffs on Russian fertilizer. I do not see any evidence that our farmers are any less supportive of Ukraine than the rest of Canadians, but I think they wondered, quite reasonably, why in this country, unlike the rest of the world, farmers were being singled out to pay a vastly disproportionate share of the financial burden for supporting Ukraine.
Since 2023, direct Canadian imports of Russian fertilizer and fertilizer precursors like urea have largely dried up, but this has not had the hoped-for effect of driving down the total worldwide demand for Russian urea or monoammonium phosphate. Here is what has happened instead. Canada now imports about 50% of its urea and about 60% to 70% of its monoammonium phosphate from the United States, up significantly from four years ago. In the meantime, the U.S. has increased its own direct imports from Russia, making up the demand shortfall.
A position paper prepared earlier this year by the Grain Farmers of Ontario reports as follows on the implications of what I just described:
Granular, fertilizer grade urea is an indifferentiable commodity, meaning individual tons are very difficult (if not effectively impossible) to trace. The vast majority of US urea exports to Canada enter the country through inland border crossings, but that doesn’t mean the urea received can't be a blend of imported Russian tons with domestically produced American tons.
The report goes on to observe that even when Russian product is not being transited to Canada via the U.S., the need to import from our southern neighbours hurts Canadian farmers and enriches American middlemen without actually reducing the net North American demand for Russian product. It states, “American companies are essentially able to benefit from both sides—importing cheap Russian urea and exporting expensive American urea.” It then says, “the Canadian farmer ends up being the one to foot the bill”.
If the foregoing is correct, why on earth are we retaining the tariff on Russian fertilizer and fertilizer precursors? Surely, Canadian farmers do not need to be further impoverished by a completely ineffective policy that does not make any difference at all to Russia or Ukraine.