Canada drops mustard from retaliatory tariff list while ketchup remains a target

Canada may have declared war on American-made ketchup, but has given its sidekick, mustard, a reprieve.

Mustard made the proposed list of retaliatory tariffs on U.S. goods, but the federal government dropped it just before the tariffs took effect July 1, cutting Canadian mustard seed farmers a break.

Several industry groups petitioned Ottawa to get certain items taken off its hit list. And while boats, dishwashers and ketchup imported from the U.S. still face a 10 per cent tariff, the cries of Canada's mustard lobby were apparently heard. (The government wouldn't comment on the specifics of its decision.)

The industry feared the mustard tariff could have driven down prices for mustard seed exports to its biggest customer, the U.S. — or, even worse, that the United States would retaliate with tariffs on Canadian mustard seed.

"The people who would be hurting as much as anyone in all of this would have been the Canadian farmers," said Dave Macfarlane, a board member with the Canadian Special Crops Association.

"We were quite relieved to see that it came off the list and that the government listened to our logic."

Tops in mustard seed

Canada is the world's largest producer of mustard seed, thanks to ideal growing conditions in the Prairies. It's also the world's biggest exporter. In 2017, Canada sold $120 million worth of mustard seed abroad, more than half of it going to the U.S.

We then buy back the finished product. French's — the top-selling mustard brand in Canada — is manufactured in the U.S., but it's made entirely with Canadian-grown mustard seed.

Maryland-based McCormick, which owns French's, declined to comment on Canada's move to drop the mustard tariff. But mustard seed farmers are talking, expressing relief the condiment is no longer a trade war target.

"It's very good news," said Kevin Hursh, who has a farm near Cabri, Saskatchewan.

"They could have hurt us a lot more with a tariff on raw mustard seed than we are ever going to affect them with a tariff on prepared mustard."

Why don't we make more?

Considering the Prairies are overflowing with mustard seed, why is Canada sending so much of it abroad instead of processing it at home?

"We're good at growing it and then we're very good at shipping it away," said Ross McKenzie, a retired research scientist with the Alberta government. "We buy it back at a nice premium after it's all been manufactured."

Canada is home to just a handful of boutique mustard makers.

We do, however, have large-scale ketchup production in Canada.

When Heinz sold its Leamington, Ont., plant in 2014 and moved its ketchup operations to the U.S., McCormick scored a public relations win by sourcing Leamington tomatoes and eventually setting up a French's ketchup processing operation in Toronto.

However, the company hasn't moved any mustard production to Canada, even though its 2017 Canadian retail sales for French's mustard were $43.9 million — almost four times its ketchup sales, according to market research company Euromonitor International.

"It is something we will continue to assess," McCormick Canada spokesperson Stefan Harvalias said in an email, adding that the company only recently acquired the French's brand.

What about the French?

According to Euromonitor, Canada's second-best-selling mustard brand is Maille. It's produced in France — with 60 per cent Canadian mustard seeds.

The brand said it's necessary to make the mustard in France because of the country's expertise and ingredients. "For more than 270 years, La Maison Maille has been producing Dijon mustards and vinegars with a know-how, craftsmanship and human touch," said Maille in an email. 

Kozlik's Mustard — manufactured in Toronto — is known for flavours such as triple crunch which is made with three types of Canadian mustard seeds and domestic whisky. The company has eight full-time employees, and its product can be found in stores across Canada, including Whole Foods.

Owner Jeremy Kessler says cracking the Canadian market is tough, especially when big grocers demand thousands of dollars in fees just to get one product line on store shelves.

"The bigger manufacturers, the guys who have been in business a lot longer and are a lot bigger, can afford to pay all these fees."

Kessler says he wishes the Canadian government offered more help for small players like him in the form of marketing or financial assistance.

"I don't have a reason why more isn't done," he said.