When world agricultural subsidy figures for 2000 are published later this spring, they likely will show Canada’s “producer subsidy equivalent” inched upward, narrowing the gap between Canadian and American subsidies, says a senior Agriculture Canada official.
The PSE, compiled by the Paris-based Organization for Economic Co-operation and Development, calculates what percentage of the value of production goes to the farmer through either subsidies or regulated prices. It is widely used to compare subsidy levels between countries.
Lars Brink, chief of the department’s foreign agri-food analysis unit, expects the analysis for 2000 to show Canada’s PSE increased from the 20 percent value assigned for 1999.
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The main reason will be increased grains and oilseeds subsidies last year, he said.
“When the new numbers come out at the end of May, I expect they will show Canada up a percentage or two,” said Brink.
Meanwhile, the United States PSE of 24 percent may not go up because the U.S. has been spending lavishly in grains and oilseeds for several years. The 2000 increase may not be enough to move the American numbers.
If so, it would mean the gap between Canada and the U.S. could narrow to no more than two or three percentage points. The European Union level is more than double.
However, the overall PSE number masks great disparities between commodities.
Canada’s overall support calculation is more than 20 percent because the OECD counts supply managed dairy and poultry prices as a form of subsidy. Canada’s dairy PSE was calculated in 1999 as 58 percent.
In the troubled grains and oilseeds sector, the picture is much different.
In 1999, Canada’s wheat PSE of 11 percent compared to 46 percent in the U.S. and 58 percent in the EU. The Canadian barley PSE of nine percent contrasted to 35 percent in the U.S. and 65 percent in the EU.
Canadian farm groups lobbying for more aid have calculated that a federal-provincial commitment of $1.5 billion for this year would make Canadian supports proportional to American levels. Ottawa has pledged just $500 million of that, to be supplemented by $330 million from the provinces.
The federal government insists the gap would cost significantly more to fill.
An Agriculture Canada analysis of the OECD numbers concluded that while the U.S. and Europe concentrate supports in the crops sector, Canada’s supports are “balanced across all commodities.” This leads to pressure for more Canadian grain subsidies, said the departmental analysis.
“To match the U.S. would cost over $4 billion more annually.”
Meanwhile, MPs on the Commons agriculture committee reacted angrily last week to a CBC television report that compared government farm support promises against predictions of realized net farm income. The reporter concluded that for the years 1999, 2000 and 2001, taxpayers would be providing 57 percent, 66 percent and 75 percent respectively of farm income.
MPs complained March 22 that it unfairly made farmers seem more government dependent than they are.
