OTTAWA – If the government is serious about helping farmers be competitive, it should investigate the reasons for soaring farm input costs that are eating profits, Canadian farm leader Jack Wilkinson told MPs last week.
And it should realize that subsidy cuts, regulations and cost recovery policies designed by governments contribute to the problem.
However, the president of the Canadian Federation of Agriculture refused the invitation of several Reform MPs to say that he believes corporate collusion or price fixing are to blame.
“I have no evidence of it so I couldn’t suggest it,” he told members of the Commons agriculture committee Oct. 19. “All we know in farm country is that there were substantial increases in input costs that at times seemed out of line.”
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He said only the government has the resources to investigate why fertilizer, chemicals and fuel costs have been increasing so much.
If evidence of price fixing was found, then charges could be laid.
Wilkinson was the first witness called before the agriculture committee as it launched a study of input cost increases requested by federal and provincial agriculture ministers.
Later in the hearings, industry representatives will be called to defend or explain the increases.
The federation presented figures indicating that input costs last year on average increased 4.8 percent, twice the rate of general inflation.
In the first half of 1995, fertilizer prices rose an average 20 percent.
He said chemical and fertilizer price increases likely are the result of market forces, as farmers increase production to take advantage of high product prices.
Fuel cost increases are harder to explain, he told MPs.
Government adds to problem
Added to the problem now is the fact that governments are cutting support and adding costs, he complained.
Canadian governments have gone much further than other countries in cutting support since new world trade rules were worked out. He accused the Canadian government of being too zealous in cutting even in spending areas allowed under the World Trade Organization.
The European Union and the United States are spending as much as they are allowed under the rules, said Wilkinson. “I think it is pretty clear we are disadvantaging Canadian producers.”
And he said government cost recovery efforts make it harder for Canadian farmers to compete. “It’s fair to say it will come out of farmers’ back pockets.”
Only high prices for grains and oilseeds have masked the full impact of cost increases and government cuts, said Wilkinson.
