and Reuters News Agency
TORONTO – Canadians should not assume that the United States is about to launch another subsidy-rich farm program, despite a recent congressional proposal that subsidies be increased, says federal agriculture minister Lyle Vanclief.
In early October, the U.S. House of Representatives approved a new 10-year farm bill that would provide the Canadian equivalent of almost $240 billion for farm supports over the next decade.
The U.S. Senate still has to prepare its version of the new farm bill and then president George W. Bush would have to sign the final compromise version.
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federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
And that, Vanclief said, is where hope lies for more modest subsidies. The Bush administration, including agriculture secretary Ann Veneman, has been highly critical of the congressional subsidy proposals.
“The bottom line is that it’s far from over in the United States,” Vanclief told a news conference after a meeting with his provincial agriculture minister counterparts.
He said the House of Representatives farm bill proposal runs counter to the White House view that a new round of World Trade Organization talks slated to start in Doha, Qatar Nov. 9 should aim at reducing subsidies.
“It is very difficult to justify in light of what the Americans want to see happen in Doha,” said Vanclief.
“It flies in the face of what they say should happen. So we watch and wait and continue to express our views to the U.S., as do other countries.”
Total spending outlined in the House bill is $170 billion US over 10 years. This is a big increase over 1996 Freedom to Farm bill spending. Part of the extra spending is $49 billion for commodity programs, mostly to grain, soybean and cotton farmers. Money would be earmarked for the return to target prices that would trigger payments when prices fall below a set level. There is also about $16 billion in additional conservation spending.
The Bush administration has said it may try to limit farm bill spending to an additional $25 billion in the next five years.
Canada’s agriculture minister also wondered if the U.S. government will have as much spending flexibility since the Sept. 11 terrorist attacks, subsequent military action and a cooling economy.
“It’s a reality and we’ve made it clear that we cannot compete with the dollars the United States seems to have in their pockets,” said Vanclief. “Are their pockets as full after Sept. 11 and as deep as they were before remains to be seen.”
It is, however, the Bush administration’s questioning of the value of direct farm subsidies that may be the best hope for stifling the proposed increase.
An analysis of the subsidy system issued in September by the U.S. Department of Agriculture raised serious questions about the side effects of direct farm subsidies to grain and oilseed farmers.
“Direct payments do share some unintended effects with price support programs, namely the artificial inflation of farmland prices,” said the analysis issued by Veneman.
“The effect clearly has been exacerbated by the size of payments in recent years, some $28 billion in the last four years above the amount provided in the 1996 law.”
The U.S. government concluded that a more practical approach would be to respond to market signals, consumer concerns about environment and food safety, and world trade opportunities.
Domestic subsidies may not even be helping the food producers who are targeted, said the U.S. agriculture department analysis.
“Another unintended consequence of current programs stems from the increasing disconnect between land ownership and farm operation,” said the report. “While program benefits were intended to help farm operators, most support eventually accrues to landowners.”
It comes in higher rental values and higher land values in a farm economy where rental is typical for 42 percent of farmers.
“Clearly, operators farming mostly rented acreage may receive little benefit from the programs,” concluded the government report.
