Federal budget cuts will have big impact on farms

Western Producer staff

Let’s assume for a moment that Paul Martin is serious in his resolve to fight the deficit. That means his February budget must contain some sharp cuts for agricultural spending, this year and in future years.

For individual farmers, it means a reduction in the support they can expect from Ottawa.

For thousands of federal public servants, it could mean their jobs.

But for the federal government, such cuts will have much broader implications.

Much to the joy of the growing free-market lobby, a smaller budget will undermine a century-old tradition of government being able to influence the behavior and direction of the food industry. The government’s influence has been based on two factors – its ability to regulate and its ability to throw money at problems.

Read Also

Producers face the reality of shifting grain price expectations

Significant price shifts have occurred in various grains as compared to what was expected at the beginning of the calendar year. Crop insurance prices can be used as a base for the changes.

These days, deregulation is all the rage. That is no longer much of a power source. The ability to throw money at anything is almost a thing of the past.

“The lack of money is a lack of power for government,” says Dennis Laycraft, executive vice-president of the Canadian Cattlemen’s Commission.

“Since the government no longer has the money to intervene, the industry is logically insisting that the government give up some of its power as well.”

It is a development Laycraft welcomes in an age when governments also are being constrained by internationally-approved trade rules.

“It is time to let the market rule.”

In some government offices, the message is being heard.

“It’s difficult for a government to drive an agenda when you don’t have the financial wherewithal to drive it,” concedes Saskatchewan agriculture minister Darrel Cunningham.

“It is a definite limit on our ability to influence the debate.”

That isn’t always a positive prospect.

With apologies to the growing legions of anti-government types out there, government influence or intervention is not, by definition, always bad.

Had it not been for government financial intervention in the 1980s, thousands of grain farmers whose crime was to be farming on the Prairies and not in Europe or America, would have gone bankrupt.

Had it not been for the longer-term outlook brought to research by publicly-funded scientists, Canadian agriculture may well have missed some of its greatest success stories. Privately-funded research has a much shorter, profit-driven horizon.

But perhaps the greatest effect of declining government leverage will be felt in the environmental area.

Many industry observers see environmental and stewardship rules imposed on farmers by society as being the next big battle for the industry.

Consumers want environmentally-sensitive farmers and are prepared to use their voting power to see that it happens.

Governments in Canada and the United States have talked about using financial incentives to encourage farmers to improve their environmental practices without the need for restrictive laws.

They are fast losing that ability to influence.