The hostility of senior Agriculture Canada officials to Canadian farm
subsidies is based in part on a study by United States Department of
Agriculture economists . It is a study that has been virtually ignored
by American producers and politicians as they march to higher subsidies.
The 2001 study by the Economic Research Service of USDA concluded that
farm subsidies help landowners and farm supply businesses rather than
farm incomes.
“Government payments benefit farm operators but they are largely
Read Also
Senft to step down as CEO of Seeds Canada
Barry Senft, the founding CEO of the five-year-old Seeds Canada organization is stepping down as of January 2026.
attached to the land,” said the report. “Consequently, government
payments accrue mainly to landowners, in the short run through rising
rental rates, and in the longer term through capitalization of future
program benefits into land values.”
The USDA economists also argued that farm subsidies help input
suppliers, who sell to farmers, and lenders who are better able to
collect from farmers and who face “reduced risk in farm loan
portfolios.”
They said average U.S. land values would fall 25 percent if farm
subsidies stopped.
For assistant deputy agriculture minister Doug Hedley, those
conclusions should act as a warning to Canada not to subsidize.
“That is a cycle where you do have direct production subsidies, quite
frankly, that increase the wealth of existing farmers, hurt beginning
farmers and create a treadmill that we would prefer not to be in,”
Hedley recently told MPs on the House of Commons agriculture committee.
“We would rather have the market set those asset values so that we can
compete on world markets.”
Ontario Liberal Paul Steckle asked why American members of congress
ignored the report when they negotiated a new six-year farm bill that
locks in significantly higher farm subsidies.
“That’s an American study. We seem to be applying it,” Steckle said.
“Why are we listening to these studies when the Americans (do not) seem
to reflect the kinds of things that they’re hearing from these studies?”
Hedley said he had no explanation. U.S. agriculture secretary Ann
Veneman understood the report and told Congress to take it into
consideration when writing a new farm bill, he said.
In fact, Veneman now is defending the new farm bill. In Ottawa May 3,
she said it simply locks in higher subsidy levels that have been
available in emergency supplementary payments for several years.
“There is every indication from our calculations that this farm bill
will be consistent with our (World Trade Organization) obligations,”
she told reporters. She made no mention of her earlier subsidy
skepticism.
The USDA report offered a clue about why that is. It noted that despite
the economic analysis about long-term effects, subsidies remain popular
with American farmers.
“Many farm groups are calling for continuation of payments near this
record level,” the report said.
