OTTAWA – In the name of weaning American farmers off government support, the U.S. Congress last week approved legislation that will send subsidies worth close to $50 billion (Cdn) to farmers in the next seven years.
Canadian critics charged that it represents a multi-billion subsidy windfall to American farmers that gives them a continuing advantage over Canadian farmers.
“I get emotional about this, it makes me angry,” Can-adian Wheat Board chief commissioner Lorne Hehn said in an interview. “This is not in the spirit of subsidy reduction and I don’t think it gives our producers a level playing field. Long-term, the American industry will be healthier because they are getting this infusion of funds.”
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He said there also is a danger other nations will see the Americans subsidizing as much as they can, and interpret it as a signal to slow down in their own subsidy cutting.
Under the so-called freedom to farm bill approved by Congress last week, the traditional system of subsidies, which is paid based on the type of crop grown and compensated for low market prices, is replaced by a less restricted subsidy system.
Farmers who have benefited in the past from the subsidy program can for seven years apply for annual grants of up to $40,000 (U.S.), no matter what their revenue, crop prices or market condition.
Subsidies would total $5.57 billion this year, $5.4 billion next year and decline gradually to around $4 billion by 2002, when a new farm program is supposed to be designed.
Some reservations
President Bill Clinton, although complaining the new system leaves farmers too vulnerable to sharp market drops, is expected to sign the bill into law this week.
American legislators last week described the new system as a major move toward ending farm subsidies because for the first time, there will be a cap on spending.
Canadian critics noted that with almost record-high grain prices this year, the old farm bill would send out few if any subsidy dollars.
The new system will send out billions more to farmers already making good incomes from the market.
Even congressional budget-makers agreed the new system will be $4 billion richer during the next two years than the old system would have been. They say it is a “transitional” price that must be paid to start weaning farmers off subsidies.
Canadian agriculture minister Ralph Goodale last week saw it in a different light.
While he said the new bill is complying with world trade rules which require subsidy limits, Goodale said American farmers have become more like welfare recipients.
“The U.S. farm bill appears to be consistent with those (trade rules) commitments thus far,” he told reporters in Regina. “They are putting this other gob of money into the system in a way that I think sounds more like a social services payment than an agricultural payment.”
The new farm bill also limits the amount of land that can be put into the U.S. conservation reserve program at the current 36 million acres and makes it easier for farmers to withdraw land from the reserve.
“It is unclear the long-term implications of that, although some analysts in the U.S. think some of those acres will be brought into production to cash in on high prices,” said Agriculture Canada U.S. analyst Phil Douglas. “We’ll have to wait and see.”
