Policy makers didn’t have access to the proper tools when they built Canada’s agricultural policy framework, says the Canadian Federation of Agriculture.
Missing was a fundamental understanding of how U.S. agricultural policy affects Canadian producers. Until that education process takes place, Canadian farm programs will always be ineffectual, said CFA vice-president Marvin Shauf.
With parliamentary agriculture secretary Wayne Easter touring the country to find a long-term fix to faltering farm incomes, there is no better time to address that shortcoming, said Shauf.
“It is the first time I’ve seen where everybody in the industry had a problem with income. If there is ever a time when we are going to seriously examine what we need to do to begin to repair this industry, right now is that time.”
Read Also
August rain welcome, but offered limited relief
Increased precipitation in August aids farmers prior to harvest in southern prairies of Canada.
Shauf, who is also the policy manager for Agricultural Producers Association of Saskatchewan, said federal politicians and bureaucrats must realize what’s at the core of farmer woes.
“We have failed in our policies to mitigate the damage that the U.S. policies are causing in Canadian agriculture.”
Most people realize U.S. farmers are more heavily subsidized than their Canadian counterparts. What they don’t understand is how those subsidies encourage overproduction and what a severe impact that has north of the border, Shauf told delegates attending Saskatchewan Agrivision Corp.’s annual meeting.
U.S. farmers receive a floor price for many of the crops they grow, which shields them from the risk of plummeting commodity prices. It encourages them to plant a crop even when the market signals dictate they shouldn’t.
That leads to overproduction, which exerts further downward pressure on prices. Canadian growers, on the other hand, have no protection from slumping markets.
Overproduction also sucks value-added projects south of the border, where developers can have easy access to cheap product.
For instance, if a Canadian livestock operation wanted to import cheap corn from Iowa, it would pay $50 per tonne in transportation fees that an Iowa feeder wouldn’t have to pay.
“You can take an animal to the corn for less money than it takes to bring the corn to Canada,” said Shauf.
That is why two-thirds of the Canadian hogs shipped to the U.S. are weaner pigs.
Grain companies are also affected by U.S. overproduction. A company like Archer Daniels Midland will always have better margins than Saskatchewan Wheat Pool as long as it has access to a cheaper grain supply.
Shauf doesn’t have all the answers when it comes to developing an appropriate response to U.S. agricultural policy, but he applauded the federal government for its recent announcement of a $50 million program for finding markets for beef outside of the United States.
“That’s a step in the right direction.”
It is a more visionary approach than providing more money to value-added initiatives like livestock feeding ventures that don’t stand a chance of competing with American operations that have access to subsidized grain.
“Virtually anything that is embedded in that U.S. farm bill will struggle for profitability in Canada unless it has a strategy to go around the U.S.,” said Shauf.
A new national agriculture policy needs to focus on market development and finding unique solutions to the farm income problem such as selling Kyoto credits rather than dwelling on ineffectual farm aid programs, he said.
Instead of going to the government with hat in hand, farm groups need to “do their homework” and spend some time educating the folks in Ottawa about where the real solutions lie.
“We’ve been trying to convince politicians in 20-second sound bites. Good luck with that,” said Shauf.
