How do you grow the agricultural economy?

Now that the Canadian Wheat Board is gone, just look at all the new flour mills, pasta manufacturing plants and malting facilities popping up across the Prairies.

Oh wait, there hasn’t really been a lot of expansion in secondary processing of wheat, durum and malting barley, has there?

Don’t get me wrong, only a left-wing fringe is advocating for a return to the central desk monopoly. The wheat board is long gone, and very few are shedding tears and pining for the good old days.

But perhaps the CWB wasn’t the only or even the main impediment to value-added processing in those grains.

Some similarly flawed thinking appears in a recently released report by the Advisory Council on Economic Growth. The council was established last year by the federal finance minister “to develop advice on concrete policy actions to help create the conditions for strong and sustained long-term economic growth.”

The council has identified agriculture as one of the key sectors “where Canada has a strong en-dowment, untapped potential and significant global growth prospects.” It’s great for agriculture to get this sort of high profile attention, and the council’s report has some interesting ideas, but it also has some wonky notions.

Although the report stops short of recommending the end of supply management in the dairy sector, it notes that rigid quotas curtail investment in productivity.

“Today, in contrast to Canada, New Zealand exports around 97 percent of its milk production and accounts for close to 30 percent of dairy products traded globally,” notes the report.

The report also decries the average size of dairy farms being relatively small, which it says means that few achieve the economies of scale realized in some other exporting countries.

The assumption seems to be that if we end supply management and open our border, dairy farms will become much larger with such an increase in productivity that we’ll become a dairy exporting powerhouse to rival the likes of New Zealand.

Good luck with that. It’s even more farfetched than becoming a pasta and flour exporting powerhouse as soon as the CWB monopoly ended.

The report does make some good points on expanding trade, noting that Canada lacks preferential trade agreements with three of its five highest potential markets for agriculture and food exports: China, India and Japan. In contrast, Australia benefits from a preferential trade agreement with China implemented in 2015.

Is the protection of Canada’s supply managed sector a significant impediment to developing new trade deals? That’s an important question, but not one the report tackles.

There are some insightful recommendations. Government spending, notes the report, “flows largely to farmers to smooth volatility and manage risk; it is not contingent on meeting productivity-related requirements, such as adopting new technologies.”

The report doesn’t mention it by name, but perhaps the money that flows to producers through Agri-Invest could have some strings attached.

The report also recommends modernizing regulations to streamline approvals and removing barriers to bringing new solutions to market.

The Canadian Food Inspection Agency is mentioned. The Pest Management Regulatory Agency should have been.

Notable by its absence is carbon pricing. The tax on carbon being implemented with a hodgepodge of different variations across the country could be a big impediment to farm profitability, secondary processing and agricultural exports.

It’s at cross purposes to everything we want to achieve economically and it’s likely to have little or no impact on actual carbon emissions.

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