HALIFAX – The Canadian Cattlemen’s Association last week found itself involved in a subsidy debate that would be unremarkable in many farm groups but was unfamiliar terrain in the traditionally anti-subsidy CCA.
Should past BSE-related subsidies since 2003 be added to cattle producers’ Canadian Agricultural Income Stabilization program reference margins to help increase chances of a payment being triggered in future when income falls?
At the CCA domestic policy committee meeting during the association’s semi-annual meeting, the debate pitted Saskatchewan and Ontario delegates against Alberta.
On Aug. 16, the committee approved a resolution moved by Curtis Royal from Ontario that BSE payments be counted in the reference margin to improve chances that producers could receive money from CAIS or its successor in future low-return years.
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The next day, the CCA board voted to reject the proposal.
“It was a decisive vote, I would say,” CCA president Hugh Lynch-Staunton said Aug. 18. “The majority thought it would make us more susceptible to countervail actions. That was the biggest rationale for rejecting it.”
During the committee debate, the argument for boosting reference margins by counting BSE payments would be familiar to many in the grain sector. Cattle producer margins are falling and CAIS is less likely to trigger payments because it is based on income drops below a falling average income standard.
It is one of the key arguments low-margin grain farmers have made against CAIS over the years.
CCA supporters of the idea argued that other sectors benefit from government payments being reflected in their reference margin and this puts cattle producers at a competitive disadvantage.
“When a quarter of land comes up, the grain guy has a little more jingle in his pocket because he has access to the program,” said Saskatchewan CCA board member Lynn Grant. “The cattle guy gets the short end of the stick.”
Royal noted the Alberta government unilaterally invested money to raise the low margins of its cattle producers. Other provinces do not have those resources or have not made them available to help their producers.
“If Alberta has higher reference margins because of provincial money, we in Ontario have to compete with Alberta in the business and we are at a disadvantage,” he said.
But Alberta members of the committee insisted it was a bad idea to use previous subsidies to increase the chances of future subsidies because the industry traditionally has argued that it wants its living from the market and not the government.
Erik Butters, president of Alberta Beef Producers, noted the CCA has long complained about the government position of supporting protectionism for supply management sectors at the World Trade Organization while still arguing for greater access for Canadian exports. It would be hypocritical to approve a CCA policy that calls for more subsidy, he said.
Producer Travis Toews conceded that the Alberta government investment in the industry had raised his reference margin but he argued that a further move in that direction nationally would “clearly elevate our trade risk.”
Committee chair Ernie Willis from British Columbia said the debate exposed an industry divided.
“It’s balancing the risk of countervail against the reality of declining margins,” he said. “We’re divided here almost 50-50.”
The committee vote showed a 7-4 advantage for the idea of counting BSE payments as income to increase margins.
By the next day, the opponents mustered their arguments about potential trade challenges to win the day at the board.
