Canadian farm policy lobbyists have changed their view of American farm subsidies.
U.S. farm bill subsidies to farmers, while still derided as distorting production, have been transformed in much of the Canadian farm debate rhetoric from villain to role model.
When Canadian Federation of Agriculture leaders argue for farm policies to help Canadian farmers compete, they mean policies that emulate American programs, if not in subsidy levels then at least in delivery strategy.
When advocates of a Canadian biofuel industry promote a government strategy to support the industry, what they mean is that Canada should look to the American model where the industry is surging and government policy is a key reason.
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It is a remarkable change in perspective.
Not so many years ago, Canadian farm leaders used adjectives like insidious to describe Uncle Sam’s largesse to his farmers.
These days, they are more likely to be described as strategic.
So what has changed?
Nothing south of the border, really, but envious Canadians now are starting to see an endgame in the U.S. farm subsidy program and they are impressed.
The endgame is that the U.S. farm program is best judged not as a stand-alone policy aimed at keeping farmers in business, but as part of the American agribusiness industrial strategy.
Profits in the food business come mainly from adding value to commodities grown on the farm, so the effect of the American farm program is to keep farmers producing cheap commodities that feed the agribusiness machine.
This gives value adders – whether feedlots, packing plants, food processors or ethanol operations – access to a cheap raw product that gives them a competitive edge.
Although there are incentives to get farmers involved in value-adding operations, those who choose not to still can make a living selling cheap produce supplemented by government cheques.
Of course, those cheap American commodities affect prices around the world. That is why Canada continues to push at World Trade Organization talks for a reduction in American subsidy levels.
But the truth is that the Americans won’t reduce subsidies by much, whatever the WTO agreement. They’ll simply deliver them to farmers another way.
The reason, simply, is that they have a system that works. Value-added is booming and most farmers are making a living. What’s to change?
It’s why some Canadian farm leaders urge the Canadian government to find a way to be policy competitive. They worry that for most farmers who do not have an ownership stake in an upstream company, value-added simply is another market in which to lose money.
And it’s why biofuel boosters were on Parliament Hill last week warning that without a government policy as supportive as the U.S., investors will bypass Canada.
Jeff Passmore of Iogen Inc. noted that one of the biggest boosters of ethanol in the U.S., as a way to reduce dependence on oil, is president George Bush, a right-wing anti-government oilman from Texas.
The unstated question was: does Canada have government leaders who can make the same leap of policy logic?
