OTTAWA – Canadian MPs returned from Washington last week with enhanced fears that American farm legislation is giving U.S. farmers at least a short-term advantage over Canadian producers.
Members of the Commons agriculture committee spent two days in the U.S. capital, holding hearings on the new seven-year American farm bill.
“It is a bit scary, I’ll admit,” said Liberal Lyle Vanclief, committee chair. “We have led them in our cuts. That could be a problem for our farmers in the short term.”
Fellow Liberal Wayne Easter was even more blunt.
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“Unless we change some policies here, then I think we’re leaving our producers in a bit of a hole.”
Alarm bells went off for the MPs when they heard the full details of the American plan to send $35 billion in “transition” subsidies to U.S. farmers during the next seven years, unconnected to what or whether they plant a crop.
U.S. farmers will be able to receive their cheques from Washington and still cash in on strong commodity prices.
More land farmed
Meanwhile, more flexible rules for the U.S. conservation land reserve probably means between eight and 10 million acres of set-aside land will be put back into production during the next few years.
And the Americans still can rely on an export subsidy program if they need it to win foreign market share.
Meanwhile, the Canadian government has been eliminating subsidies and cutting support to farmers, claiming it must be for budgetary and trade rules reasons.
“The two systems are not really comparable but it is true that we have gone much further than them in cutting,” said Reform MP Elwin Hermanson.
Keep cuts in tune
Added Ontario Liberal Murray Calder: “I think our view is that when we are cutting, we should be in lock-step with the Americans and not way ahead of them. That is not happening and they are our competitors.”
In interviews, the MPs said the rich American subsidy program could hurt Canadian farmers in several ways.
If U.S. farmers, benefiting from both the subsidy and record high crop prices, use the money to buy equipment or expand production, they could drive the price of machinery and inputs up for all North American farmers.
Then, when the next economic downturn occurs, they will have better equipment and perhaps more savings to fall back on than do Canadian farmers.
Easter said in the long run, it will mean Canadian farmers who survive without the subsidies will be “more lean and mean, better managers” than Americans. But getting there could be tough.
He said Canadian governments should consider building a better safety net for farmers to compensate for the unfair competitive advantage Americans will have for the next few years.
The new farm bill is supposed to be the final transition period from the traditional American subsidized system to a market-based system after 2002.
But the Canadian MPs returned from Washington unconvinced that when the seven years end, politics will not dictate that a new subsidy regime be created.
