Manitoba farmers brace for lower profit margins to live off as tariff war begins

Kara Burrell's family has been farming south of Brandon since the 1900s but as the tariff war with the U.S. is expected to deal a major blow to the trade system that funnels billions into Canada's agrifood sector yearly, she is worried about the future of her livelihood.

Starting Tuesday, the White House will levy a 25 per cent tariff on virtually all Canadian goods, including grains. In response, Canada has imposed retaliatory tariffs on $30-billion worth of American imports.

"Input costs could be higher, and then the value we would get for our grain could be lower, and that leaves a lot less prospect margin for paying equipment costs or just living off," Burrell said. 

Her family's grain farm sprawls across roughly 2,300 acres of land in Dunrea, Man., a rural community about 70 kilometres south of Brandon. 

Their product is sold to grain elevators which broker deals for some of it to be exported into the U.S. But if the product becomes more expensive for the American customer, Burrell said farmers could bear the brunt with lower profit margins.

She said her farm might delay the purchase of equipment this year.

"It is not a great situation for us," she said. "There's a risk that it could affect how much we have for our living expenses ... definitely a lot of uncertainty."

Toban Dyck, a grain farmer north of Winkler, Man., is also concerned about how tariffs could ripple into the global competitiveness of his crop prices. 

He said farmers can't dictate what they get from their harvest but rather take whatever price the grain elevators set for their commodities based on buyer demand.

Counter-tariffs imposed by Canada might also increase the cost of inputs his farm needs in order to function, like machinery and fertilizer.

"That'll be really hard. I think a lot of people are on the edge right now," Dyck said. 

Canola oil exports to the U.S. alone represented at least $1.3 billion for Manitoba's economy in 2023, one of the top five exports that year, according to a Manitoba Bureau of Statistics summary.

The Canola Council of Canada expects the tariffs to have a widespread impact throughout the value chain, given how the U.S. is by far the largest market for exports from this sector of the Canadian agro-industry. 

"Certainly farmers will unfortunately feel the impact," said Chris Davison, president of the council.

"We anticipate it will touch virtually all facets of their operations, including cash flow and profitability."

Sylvain Charlebois, professor and director of the Agrifood Analytics Lab at Dalhousie University, said tariffs will make agricultural commodities less competitive in the U.S., pushing buyers to ask Canadian farmers to reduce their prices. 

Charlebois said it will take time for the grain industry to find other options for where to export, and at the moment farmers are honouring contracts signed for the last harvest. 

He believes the grain sector could adapt to the tariffs by absorbing the shock and reducing profit bottom lines to avoid losing U.S. customers. But tariffs will be "devastating for the entire agrifood sector from farm gate to store or restaurant."

Given the agricultural sector's slim revenue margins, Charlebois said that a 25 per cent tariff on that industry is akin to a 200 per cent levy on a car manufacturer.

If Canada can't find new markets, the agrifood sector will have to "right size" to a smaller industry, he said. But after the industry sector is trimmed down, building it up again will "take a tremendous amount of time," Charlebois said.

"It means losing jobs, losing farms, losing plants. To be honest, this is an economic crisis for Canada."