Wheat prices have fallen from their spring peaks by a plungiful bunch, and the world is beginning to hear pleas for subsidies by creative farmers and exporters.
The Russian Grain Union was last week calling for subsidies of up to $60 or $70 per tonne to get their big wheat crop onto the world market. Apparently farmers and grain companies are being hurt by the credit freeze-up (which is lesssening over here, but who knows about what it’s like inside Russia) and want moola to lubricate the road to the world market.
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It’s likely to be just political posturing by the Russian Grain Union and the Russian government will probably have to pretend to take it seriously. But whether it can afford to subsidize grain exports now that oil prices have tumbled and the Russian stock market has gone into free fall is a big question.
However, farmers in Canada can be justifiably concerned about hearing calls already by some farmers in some competing nations for export subsidies. Prairie farmers were crippled for years by depressed world prices exacerbated by subsidies for competitors in the European Union and the United States. With crop prices going up in recent years, and semi-real attempts being made at world trade talks to reduce export subsidies, subsidies have mostly evaporated in recent years.
But let’s hope a few months of lower – but not terrible in historical terms – prices don’t bring out all the subsidy hogs again, and don’t find governments in a mood to buy favour with grain-dumping policies.
The one good thing about the present world financial crisis is that most governments don’t see a lot of money coming into their coffers. If we’re lucky, calls for export subsidies will be scarce, and foreign governments won’t have the cash to throw around this time.
