Falling crop prices may be making farmers uneasy, but the decision by Canadian governments to slash future farm supports has won international praise.
The Organization for Economic Co-operation and Development says many countries are increasing agricultural subsidies after years of decline, but Canada has sharply cut supports over the years and they remain stable.
In a report published last week, it praises Conservative government deregulation and market-oriented policy changes.
Federal and provincial agriculture ministers agreed last year to significantly reduce potential benefits from AgriStability and AgriInvest programs.
Read Also
Vancouver port says it has improved efficiency
Grain movement has been strong at the Port of Vancouver due in part to a new centralized scheduling system.
Canada’s Producer Subsidy Equivalent (PSE) as a percentage of farmer income has dropped significantly in the past 25 years, and Canada remains on the low end of OECD country calculations.
Government payments contributed 15 percent of overall farm income in 2010-12 compared to 36 percent a quarter century ago.
“Overall, producer support has significantly decreased since 1986-88, and the majority of agricultural markets are competitive,” said the report.
“Approaches to support policies have become firmly established, and most reforms in the past decade have involved fine-tuning existing programs, although the recently announced five-year new policy framework stresses a more proactive and strategic programming approach towards innovation, competitiveness and adaptability of the sector.”
The OECD report said recent federal-provincial decisions to cut business risk management program support “is a favourable step to reduce program overlapping and enhance proactive risk management by farmers.”
The OECD, an organization of developed countries with a strong preference for pro-market economic policies, said Canada could create stricter rules around use of ad hoc farm support programs that could be better handled through existing programs.
It praised the Conservative decision to end the CWB single desk and change the Canadian Grain Commission mandate as “positive steps to enhance market orientation of the grain policy.”
And as usual, the OECD found the government’s continued support of protectionist, price-setting supply management offensive to its free market principles. It suggested expansion of production beyond domestic needs as a solution.
“The dairy, poultry and egg sectors continue to receive high price support, distorting production and trade and establishing high rents capitalized in the quotas established under the supply management system,” said the report.
“Increasing the amount of quota available would improve market orientation and reduce these rents which currently act as a barrier to entry into supply managed sectors.”
