Dairy aid was reasonable, but grain sector needs help

Grain farmers looking at the $1.75 billion compensation package for Canada’s dairy farmers can understandably be dismayed.

After all, grain farmers in Canada are facing extraordinary trade issues and there is no such compensation for them.

Dairy farmers, who own quotas for production under Canada’s supply management system, lost about eight percent of their market under two new trade deals — one with the European Union and one with 10 Pacific nations. The agreements allowed more imports of dairy products, as well as supply-managed products, such as poultry and eggs.

There is understandably a degree of cynicism around this announcement.

Quebec and Ontario have more than 70 percent of the country’s 11,000 dairy farmers, and when they organize and vote in a block they can have a powerful impact, as we saw in the Conservative Party of Canada’s leadership race.

Those two provinces will have a major impact on the pending federal election, so accusations of electioneering, especially with the timing of the announcement, are understandable.

Nevertheless, the decision to trade off supply managed market share to secure trade deals was government policy. It is not unreasonable to compensate those who are affected. And while dairy farmers have not yet lost all of that market because importers have yet to take full advantage of the trade deals, farmers might well argue that they governed their operations — investment in quotas (and thus herd size) and modern equipment — based on projected revenues, which may now not materialize. And more market share will be lost under the new U.S.-Mexico-Canada trade agreement.

The Western Canadian Wheat Growers Association has been outspoken about compensation for dairy farmers. Why compensate farmers with a guaranteed income, albeit at a lower level, while the government has only allowed grain farmers to borrow more money, with no direct payouts?

The challenges facing grain farmers mostly arose out of market issues, rather than Canadian government policy.

The WCWGA says grain growers have lost up to $4 billion over the last three years because of trade issues with China, India and Italy, among others.

Italy is using country-of-origin labelling and a degree of public shaming over tiny (and safe) amounts of glyphosate residue to protect its domestic market, essentially killing Canada’s major market for durum.

India is likewise protecting its domestic market for impoverished farmers by placing an import tariff on peas and stressing fumigation rules that make no sense in Canada.

And China is thought to be refusing to accept Canadian canola — and now possibly pork and beef — as an economic weapon after Huawei executive Meng Wanzhou was detained for extradition at the request of the United States.

Regardless, the federal government has a role to play. Italy should be dragged to the World Trade Organization over country-of-origin labelling and China’s actions, which affect about $2.7 billion in canola seed exports annually, should be countered not by tinkering with programs, but by strongly supporting farmers with a backstop to show China that Canada will not let its farmers be used as pawns.

The U.S. has done this through $28 billion in support payouts to farmers.

Grain farmers are being affected by the actions of other governments, and while support programs are normally the appropriate mechanism to address this, the federal government’s actions could and should be stronger.

Karen Briere, Bruce Dyck, Barb Glen, Brian MacLeod and Michael Raine collaborate in the writing of Western Producer editorials.

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