The National Farmers Union says it has a solution to the farm income crisis.
The lobby group wants the world’s five major grain exporters – Canada, the United States, the European Union, Argentina and Australia – to take three percent of their land out of production each year until the price of grain doubles.
“With supplies low, small changes in supplies can have large positive effects on prices,” said NFU vice-president Fred Tait.
“Given tight supplies, a credible agreement to reduce production could lead to swift results. The mere announcement that the five major exporters were negotiating such an agreement might lead to significant price increases.”
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Under the plan, the Canadian government would pay producers $40 an acre to take land out of production. The group said it would cost Ottawa $344 million a year to induce farmers to take 10 percent of their land out of production.
New twist
Agriculture economist Richard Gray said the set-aside concept is nothing new. The U.S. has its Conservation Reserve Program and the EU operates an Arable Areas Payments Program. What is new is the idea of a multinational program.
While he likes the NFU’s creative approach, Gray said there are problems with the solution.
“The big question is how are you going to get this to happen.”
The key would be to get the Americans on-side and he doesn’t think that is likely. Beyond that, if the five biggest exporters cut production and grain prices rose, other nations may be enticed to produce more.
The five largest exporting nations produce less than half of the world’s grain, said Gray.
“A cartel means that you have all of the production under control, not just some of it.”
He also wonders how governments would control the type of land and type of crops to be taken out of production.
