WHAT’S wrong with Canadian agriculture? On the heels of a huge crop and a multi-decade history of prodigious productivity growth, the answer on the basis of this fundamental measurement is clearly that there is nothing wrong.
Indeed, in many ways Canadian agriculture is a spectacular success. Labour productivity in agriculture grew at an annual average rate of 5.8 percent from 1997 to 2002, the fastest rate of all industrial sectors and more than double the Canadian average.
Agriculture and food production account for about eight percent of Canada’s economy and one in seven jobs. Agri-food exports have more than doubled since 1990 and total about seven percent of our exports.
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So why, amid so much success, can’t the Canadian farmer, particularly the grain producer, make a living?
Hartley Furtan, agricultural economics professor at the University of Saskatchewan, asked this question last week at a Saskatchewan Institute of Public Policy seminar.
Looking at farm financial statistics for 2003, he said that on average, grain producers lost money on their farming operation. With market income insufficient to cover production costs, only off- farm jobs and government support kept their heads above water. And in many cases, even government support was not enough to avoid losses.
Even the largest revenue farms, supposedly the most efficient, lost money if depreciation costs are included. The situation since 2003 has changed little and may have gotten worse.
Furtan also noted that in Saskatchewan, land, the farm family’s major asset that acts for many as the retirement fund, has consistently declined in value since 1998 once inflation is counted.
The standard responses to this malaise are not working.
The Canadian Agricultural Income Stabilization program is inadequate because it attempts to even out years of rising and falling income but can’t cope with consistently falling income or multiple years of negative income like those grain farmers have experienced over the last three years.
Value-added processing is often cited as a way to improve farm income. But while processing may create jobs and income for shareholders, it does not increase returns to the farmers who supply the raw products. The World Trade Organization is concerned only with improving the flow of products, not with improving the income of those who produce them. It holds little promise of addressing power inequalities in the market or grain production overcapacity.
Nor does it tackle the grain farmer’s key problem, a commodity pricing system divorced from the cost of production, denying him the ability to pass on rising input costs to the buyer.
The public must recognize that, faced with such challenges, Canada’s system of family farm grain production cannot long endure. There is a real danger the system could collapse and those who have society’s agricultural knowledge base will move to other pursuits.
This might not be a great worry for Canadians who, for generations, have not known hunger. For some, committing their tax dollars to fund special support for what is arguably just another business might seem foolish.
But what of the future? With the uncertainties of global climate change, soaring energy prices and other unknowns, will Canadians always be secure in their food supply?
Furtan suggests Canadians must decide what they want of grain farmers. If they want to maintain the farm family system, then the strategy needs articulation.
There are a host of choices: agricultural support programs tied to the cost of production; farm family income guarantees; and as Keystone Agricultural Producers has suggested, payments for land stewardship, to name a few.
In Canada, creating such programs is a matter of will, not affordability.
The federal government annually posts multibillion-dollar surpluses so it clearly can spend more on farming if it has the political will.
There is also ability to act at the provincial level. Consider the programs in Quebec and Alberta that give their producers a fighting chance.
None of this is to say that farmers deserve a free ride. Marketing and management skills could improve and innovation must be encouraged.
But we cannot expect farming families to work extra jobs and forgo retirement security so the rest of us can enjoy cheap food and a buoyant economy.
