More government financial support is not the solution to rural poverty, an official of the conservative think-tank C.D. Howe Institute told senators last week.
Markets, rather than government interventionist policies, should decide which rural communities survive.
“Money is probably not the answer, in other words, short-term government assistance to households,” Finn Poschmann, director of research for the institute, told the Senate agriculture committee Nov. 7.
Government programs, ranging from welfare to the 2006 Farm Family Options Program, have been designed to direct taxpayer dollars to rural poverty victims.
Read Also
Russian wheat exports start to pick up the pace
Russia has had a slow start for its 2025-26 wheat export program, but the pace is starting to pick up and that is a bearish factor for prices.
The Senate committee has launched a study of causes and solutions to rural poverty. Poschmann said he spoke for himself and not for the institute
“If you are short of cash income to feed the household, a lot of government transfers will help, but if you are worried about long-term poverty and persistence of poverty, it seems probably an unfruitful route, given what we know about the causes of poverty,” he said.
Earlier, Poschmann had told senators the base of rural poverty is lack of education and lack of employment.
He said governments should not offer assistance that tries to negate market forces in communities that no longer produce a product that the market wants or at a price it will accept.
“It is very hard to fight market signals,” said Poschmann.
He also urged that rural poverty not be considered a relative measure because even if rural incomes and living standards increase but urban standards increase more, rural poverty seems to have grown.
When asked by Nova Scotia Liberal senator Terry Mercer what he would recommend the government do for rural poverty alleviation, Poschmann reflected the C.D. Howe Institute bias toward market solutions.
“One of my bits of policy advice would be not to place a huge amount of stock in the ability of policy to deal with some of these issues,” he said. “Markets change the ability of different communities to survive change.”
However, he said governments can help by concentrating on education for rural residents and by not creating impediments for rural Canadians trying to take advantage of opportunities to move to jobs elsewhere.
The C.D. Howe Institute executive told senators that in the farm sector, the next generation of farmers should have larger operations and be better capitalized.
“There is a tremendous amount of farm consolidation that is important to making farms viable businesses,” said Poschmann. “The size of a viable farm in Canada in this decade is probably a fair bit larger than one in the last. What happens is you do have this intergenerational transfer of farm assets (and) they will probably end up being bigger than they were before.”
