Subsidy cheques not the answer for grain producers

The announcement of direct payments to the country’s nearly 11,000 dairy farmers has some in the grain sector calling for comparable support.

Individual dairy producers will receive a significant amount of money. A total of $1.75 billion has been earmarked over eight years. In the first year, payments of $345 million will be made to dairy producers in proportion to their quota.

The average payment works out to around $31,000 per farm. The government example is that an 80-cow dairy farm will receive $28,000 in the first year. No payment cap was announced so an 800-cow dairy will receive about $280,000.

Terms and conditions for subsequent years are yet to be determined, but five times more money is yet to be distributed. If direct payments are again deployed, that 80-cow dairy could expect to receive a total of $140,000 over the eight years. A big 800-cow dairy would receive $1.4 million.

This is compensation promised for Canada signing onto the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Even more compensation is promised if the new trade agreement with the United States and Mexico ever comes into force.

You can debate the merits of supply management. You can also debate whether government compensation is warranted and what level of compensation is appropriate. These debates are ongoing. People have opinions whether or not they actually understand any of the intricacies of how supply management works.

Some in the grain industry are drawing parallels to the trade woes affecting canola, pulses and durum with China, India and Italy. If the dairy industry is getting government money over trade issues, why not grain farmers?

Interestingly, many of the grain farmers who want to be treated like dairy farmers are opponents of supply management. In fact, grain producers who consider themselves free enterprisers seem to be beating this drum the loudest.

Actually, the situations are not analogous. Canada signed onto trade agreements knowing the dairy industry would be disadvantaged. Compensation was promised all along. In grains, you might argue with how the Canadian government has handled various issues, but the restrictions have been imposed by other nations.

South of the border, the American government is making compensation payments to its grain producers. This also fuels the argument for Canadian subsidies, but again the situation does not parallel the Canadian experience.

U.S. President Donald Trump is embroiled in a trade war with China and American farmers have become collateral damage. A straight line can be drawn from the actions taken by Trump and the huge decline in American exports of soybeans and other commodities to China.

For sake of argument, let’s pretend there was some appetite for direct compensation to Canadian grain farmers over all the trade woes. If one or two billion was announced as compensation, can you imagine all the debate and fighting there would be in trying to decide how to divvy up the money?

Who has been hurt more, canola farmers or lentil producers? And what’s the basis for making payments — acres seeded, average gross grain revenue or some other complicated formula?

It’s natural to be envious of others receiving substantial government cheques. The Canadian government, whatever its stripe, needs to continue working on trade access issues and the improvement of farm safety nets. Any sort of ad hoc subsidy scheme should be a non-starter.

Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at kevin@hursh.ca.

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