The lobby group Grain Growers of Canada is promoting a new national safety net program that would see the federal government spend millions of dollars a year to compensate farmers directly for price-depressing foreign subsidies.
The group is using government-generated analysis to argue its point that foreign subsidies cost Canadian farmers hundreds of millions of dollars.
Based on a study presented to the Grain Growers by Agriculture Canada economists, the lobby group estimates foreign subsidies have cost Canadian grains and oilseeds producers more than $1.2 billion in lost revenue during the four years to July 31, 2000.
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During that time, the average price of non-durum wheat slid from $255 per tonne to $168. Canola prices fell from $434 to $288, according to Grain Growers.
The department “reached a conclusion that 25 percent of the price reduction per tonne for grains and oilseeds between the 1995-96 peak to the 1999-2000 trough is attributed to foreign subsidies,” said a Grain Growers discussion paper prepared for an early December meeting of the national safety nets advisory committee.
The group said the answer is a national program aimed specifically at compensating farmers for these losses. It said the proposed “trade injury compensation program” would have a payments system based on a combination of historical yields, prices and acreage, and would be detached from production.
This formula would make it WTO-compatible and less susceptible to American countervail, said the group’s paper.
The subsidy program would have a built-in sunset clause requiring that it disappear when Ottawa succeeds in using international trade talks to reduce subsidies in competitor countries.
A new program is needed, said the group because existing programs such as the Net Income Stabilization Account and the Canadian Farm Income Program compensate for variations in earnings between years, but do not take into account income not earned because of external distortions.
“Farmers cannot be held accountable or responsible for what they cannot reasonably control,” said the GGC proposal to the safety nets committee.
Its proposal is one of a number of ideas floating around as governments, farm groups and the safety net advisory committee consider ways to revamp support programs that even federal agriculture minister Lyle Vanclief says are not working as well as they should.
