Whether it represents posturing for the upcoming round of trade talks, defiance of each other, or a poor job of market intervention, the subsidies being offered by Europe and the United States are unacceptable.
Canadian farmers are being hurt. The next few months appear bleak.
Wheat, durum and barley stocks are expected to remain high and prices to be low.
Foreign government policies are skewing the marketplace and an already bad situation for farmers is heading towards disaster for some.
The scenario: large international stocks, expected record harvests from the U.S. and Europe, and prices at their lowest level in four years.
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World wheat production for 1998 is estimated at 591 million tonnes – the second largest crop on record. Ditto for durum, at 32 million tonnes.
Government intervention has come into play. European policies support their farmers and encourage more wheat production despite a glutted market; the U.S. offers direct subsidies to its farmers for covering severe income losses, and targets countries through “food aid” allocations to get rid of its surplus grain.
Meanwhile, other farmers in the world face dramatic drops in prices. Canada, South America and Australia are protesting the subsidies and warn of the impact on their farmers.
Anyone who farmed through the 1980s must be feeling deja vu as they hear once again of subsidy wars, depressed world markets, and ultimately farmers leaving the land.
Some people may argue markets should be left to the economic theory of supply and demand. Others may point to the 1980s and show most farmers survived that crisis, why should there be more concern now?
Why? Because, in the last decade, the situation has grown more intolerable.
The last round of trade talks was supposed to end subsidies and trade barriers, and move countries to a level playing field. This has not happened.
Second, farmers have been pushed to the limit in efficiency and mass production. The latest in technology and science all comes at a cost, and the margin for profit remains slim.
Third, farmers have experienced large increases in input costs ranging from fertilizer to fuel prices to machinery.
The value of our grains is seriously undervalued. Considering they are necessary to help feed the world, they should not be allowed to dip to price levels of a decade or several decades ago. It is time the world re-evaluated the worth of farmers and compensated them properly for their hard labor.
