CHICAGO/DEVILS LAKE, N D, Sept 01 (Reuters): Gordon Stoner, who grows wheat in Montana about a mile from the Canadian border, would like to sell his wheat to grain elevators in nearby Saskatchewan.
But due to a quirk in Canadian law, the high-protein variety he raises would be automatically downgraded by government inspectors to the lowest possible category - fit for animals only - regardless of its quality.
"When I cross the border, my wheat is automatically treated as feed wheat," said Stoner, referring to a Canadian grain classification.
The label translates to a deep discount: Saskatchewan grain elevators this month were paying about 30 per cent more for premium-graded wheat used to make breads and pasta versus feed grade wheat fed to animals.
Stoner and other northern US farmers have found sympathetic ears in the administration of US President Donald Trump, which dragged the decades-old issue of Canada categorising all US wheat as livestock feed into the North American Free Trade Agreement (NAFTA) renegotiation.
Northern US wheat growers - particularly those like Stoner who produce specialty grains like durum used to make pasta - are the sort of constituency the Trump administration has sought to protect with his "America first" policy, aimed at reviving industries such as coal and manufacturing and bringing back jobs from overseas.
The grading issue contributes to a striking imbalance in the US-Canada wheat trade: 50,751 tonnes of US wheat was exported to Canada in 2017 while 2.8 million tonnes of Canadian wheat was shipped into the United States, according to US Department of Agriculture data.
The bilateral agreement the US and Mexico announced on Monday - before Canada rejoined NAFTA talks - called for "non-discriminatory treatment in grading of agricultural products," according to the Office of the US Trade Representative.
The USTR included "eliminating discriminatory barriers and unjustified technical barriers, including to US grain and alcohol" in its objectives for renegotiating NAFTA. The USTR's chief agriculture negotiator under Trump is Gregg Doud, a Kansas native who once worked for the US Wheat Associates in Washington.
Trump addressed wheat growers' concerns at a rally in North Dakota this summer, saying fellow Republicans Senator John Hoeven and Representative Kevin Cramer had flagged the problem to him.
"Canadian wheat markets consistently discriminate against the United States's wheat by grading it as feed," Trump said at the time. "I don't know what the hell it means. I just know it's a bad deal."
Hoeven's office said the senator had spoken with the President as well as Agriculture Secretary Sonny Perdue about what he called unfair treatment from Canadian grain elevators. He brought it up with Vice President Mike Pence this week, spokesman Alex Finken said.
Canada's agriculture ministry and the Canadian Grains Council said US farmers can work out better deals for high-quality wheat directly with buyers.
"There is nothing in the current grain handling system preventing US producers from entering into contracts with grain handling companies or processors located in Canada to get a fair price for the quality of product being delivered," said Guy Gallant, spokesman for Canadian Agriculture Minister Lawrence MacAulay.
He did not respond to a question on whether the issue was part of NAFTA negotiations.
US farmers say the grain grading system effectively keeps Canada closed to the US while Canadian wheat can freely move to US flour mills.
"I suspect it will be fixed through NAFTA, assuming we don't blow it up," said Stoner.
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