By Ed White
WINNIPEG, Manitoba (Reuters) – Canadian farmers are renegotiating livestock contracts with U.S. buyers and finding local markets for crops they previously planned to sell south of the border to minimize the economic hit from potential new U.S. tariffs.
U.S. President Donald Trump’s threat to impose 25% tariffs on Canada and Mexico as soon as Saturday would hurt Canada’s export-dependent economy and raise prices for goods on both sides of the border.
Canadian farm exports to the United States include millions of piglets, as well as meat and crops such as wheat, oats and soybeans.
Ontario hog farmer Stewart Skinner, who sells 95% of his 40,000 pigs per year to U.S. buyers, said he has renegotiated some sales agreements so U.S. buyers take delivery of the pigs in Canada and pay the tariffs themselves when they cross the border.
“It’s the uncertainty of not knowing that forces you to completely rethink that (business) model,” said Skinner, who produces specialty hogs that have humane treatment certification required by high-end pork sellers such as Whole Foods. “The market for our pigs is in the USA, not here in Canada.”
If the U.S. imposes tariffs for the long term, he plans to stop feeding pigs to slaughter weight and to instead ship all his piglets to the U.S. Piglets sell for much less than fattened hogs, so the tariff hit is lower.
Canadian farmers and companies that sell livestock, crops and food products into the U.S. are trying to tariff-proof their businesses. Nobody wants to make a sale and be required or pressured to pay a hefty tariff, or to find U.S. buyers backing out of deals.
Canada, the world’s eighth-largest beef exporter and third-biggest pork shipper, exported C$3.5 billion ($2.43 billion) of beef and C$1.65 billion ($1.14 billion) of pork to U.S. buyers from January through November last year. About 2.6 million pigs are shipped annually from Manitoba alone to U.S. hog feeding operations, mostly in Iowa and Minnesota.
Canadian and U.S. cattle pass back and forth across the border at various ages.
Manitoba piglet producers are now having uncomfortable conversations with U.S. buyers about who picks up the tariff bill.
“These pigs can’t stop flowing,” said Manitoba Pork Council Chair Rick Prejet, adding that there are not enough Canadian farms to fatten piglets to slaughter weight.
SHARING TARIFF COSTS
Prejet said American farmers need Canadian piglets because there are not enough born in the U.S. That means the piglet trade will likely continue in the short term even if tariffs are imposed.
“There will have to be a negotiation between buyer and seller,” said Prejet.
The U.S. National Pork Producers Council did not respond to a question about renegotiating contracts. The council said the U.S. pork industry, which exported $875 million worth of pork to Canada in 2023, worked hard to establish mutually beneficial trade between the countries.
Some U.S. buyers have already pulled back from buying Canadian farm products. In December, Manitoba farmer David Laudin sold soybeans to a U.S. buyer for delivery in March.
The next day, his broker told him there would be no further sales to that buyer because he was worried about tariffs.
“He completely cut it off the day Trump announced (possible tariffs),” said Laudin.
The rest of his crop will be sold to buyers north of the border.
($1 = 1.4425 Canadian dollars)
(Reporting by Ed White; Editing by Caroline Stauffer and Rod Nickel)
