OTTAWA (Staff) — While in government, the Conservatives denied the two-price wheat system was killed as payment for the Canada-U.S. free trade deal.
But a senior Agriculture Canada official came as close as the government ever has come to conceding the connection.
In an appearance before the Commons agriculture committee, departmental trade director general Mike Gifford told MPs that one of the most illogical aspects of the U.S. farm policy is that it is trying to operate a two-price grain system in a free trade environment.
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federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
Its export subsidy program means there is one low world price and a higher domestic price.
Political pressure
The higher domestic price attracts imports from Canada and those imports have brought on political pressure for import controls which have hit Canadian sales.
Gifford said a two-price system is incompatible with free trade and Canadians have realized it before the Americans have.
During the 1987-88 free trade debate in Canada, Canadians realized the policy of having a high wheat price for domestic millers and a lower price for exports could not be sustained once the border opened to cheaper American wheat-based products.
“We realized if we were going to have a free trade agreement, we couldn’t ask our millers to pay more if they had to compete with imports of cheaper product,” Gifford said. “So we got rid of our two-price system.”
