OTTAWA – Under new farm bill rules favored by the U.S. Congress, American farmers could be in line for a $15 – $20 billion (U.S.) subsidy windfall over the next seven years, say Canadian Wheat Board officials.
Chief commissioner Lorne Hehn said the version of a new farm bill that has won wide support in Congress would send billions of dollars to farmers that would not fall under existing farm bill rules.
Meanwhile, countries like Canada are getting out of the subsidy business.
“If that bill goes through, U.S. farmers will become the heaviest subsidized farmers in the world,” he said at the Canadian Federation of Agriculture annual meeting.
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Hehn said the irony is that American officials like to demand that other countries cut subsidies and support for farmers. “Despite what they say, they certainly are not walking the talk.”
More than $15 billion
Wheat board economist Brian Oleson said March 3 that assistant U.S. agriculture under-secretary Eugene Moos told him directly that the additional benefit to U.S. farmers under the proposed new law would be between $15 billion and $20 billion by the year 2002.
“This would be an incredible injection of subsidy money in the U.S. from a bill that is being sold as a deficit-cutting, subsidy-ending bill,” Oleson said. “It seems like a most bizarre result.”
The reason for the possible windfall is that Congress, which consists of the House and the Senate, is proposing changes to the subsidy system in a new seven-year bill.
Within days, it is expected to send to the White House for approval or veto a new farm bill that offers farmers seven years of subsidies to replace the existing system of deficiency payments when prices are low.
Every year, whether they plant or not, farmers who have historically received farm bill subsidies will be sent cheques from Washington. The payments are supposed to be phased out by 2002.
More subsidy, not less
The problem, said Oleson, is that new rules would create a subsidy that would not exist under the current rules.
The current farm bill subsidy system is designed to pay out when prices are low.
This year, and for the next several years, it is expected that high market prices would eliminate or sharply cut those subsidies.
The new payments are sent out no matter what the state of prices and the farm economy.
And they would be allowed because they fall below maximum subsidy levels set by the new world trade rules.
Terry Barr of the Washington-based National Council of Agricultural Co-ops told CFA delegates March 3 that U.S. farmers believe the maximum subsidy levels allowed under General Agreement on Tariffs and Trade rules should be their minimum.
“These are now floors and not ceilings from the point of view of the domestic constituency,” he said under questioning from Oleson.
The exchange led wheat board advisory committee chair Wilf Harder to shake his head. The Canadian government should take heed, he said.
“The message should be that if we expect the U.S. or any other government to get out of agriculture, we’re mistaken,” he said. “We should not accept at face value when our government says we have to get out of agriculture (supports) because others are.”
Ray Howe of Saskatchewan Wheat Pool said March 4 he expects the Americans to drop the idea after “sober second thought.”
