Every farmer knows the truth of it. Canada’s farms are getting more and more different from each other, not less. East-west geography is to blame. So are different market cycles, like the way hogs and beef self-destructed while grains held firm. And of course a huge chunk is due to different marketing systems, like supply management versus the wheat board.
Agricultural economist Ken Rosaasen of the University of Saskatchewan wants you to think about a different culprit.
It’s the fact that Canada’s farm programs try to treat all farmers the same, says Rosaasen. That’s what is actually driving them further apart. Programs that treat farmers equally are right near the top of the list with the country’s greatest contributors to farm inequity.
Read Also
Riding the tariff rollercoaster
Farmers are accustomed to roller-coaster years. But the current geopolitical windstorm is something else entirely. On his cattle operation near…
That’s because such programs fail to take into account things like the varying fiscal capacities of the provinces, or the different weighting of the various commodity sectors from region to region. “They’ve adopted a one-size-fits-all agriculture policy,” Rosaasen says. “The problem of course is that it never does really fit all.”
Equality institutionalizes inequality, Rosaasen says, because there are regions and sectors that are winners and losers. Programs are designed to run coast-to-coast and sector-to-sector regardless of economic realities on the ground, so they just reinforce this year after year. Any better path forward, he says, needs to recognize that a dairy farm on the outskirts of Montreal and a large grain farm in the Peace River region of northern Alberta are very different kettles of fish and can’t be treated identically.
Incredibly, such “equal” policies end up swamping the one thing that all Canadian farms actually do have in common: the need to think shrewdly and strategically about their businesses, and use the best business tools to achieve their objectives.
Instead, such policies feed into what may be Canada’s greatest farm weakness. Retired University of Guelph economist George Brinkman says his prescription won’t come as a surprise to anyone who knows him or has heard him speak on the topic. His concern is that our agriculture policies — be they supply management, whole-farm income support programs or even ad hoc disaster payments — share a common failing, which is that they go to the wrong line of the balance sheet.
“More than any other country, Canadian farmers, for whatever reason, seem to capitalize the values of these programs into quota value in supply management, or farmland values in cropping,” Brinkman says.
Brinkman says he’s not exactly sure what future programs should look like, but he’s convinced that eventually this failure must be addressed.
“Canadian farmers are much more indebted than American farmers and European farmers, and that makes them very vulnerable to rising interest rates,” Brinkman says. “It wouldn’t take much of a rise in interest rates for a lot of farmers would find themselves in trouble.”
Does “Canadian agriculture” even exist?
We talk a lot about “Canadian agriculture” as an industry, but when we try to dig down a bit and define what that actually means, we quickly run into a roadblock.
There really doesn’t seem to be any such thing.
Rather it looks a lot more like a microcosm of our country, where competing regional and provincial industries jostle for solutions to divergent needs, while somehow the centre miraculously holds and the whole thing hangs together.
That’s not surprising when you’re talking about a near continent-sized country that’s one of the largest agricultural producers and exporters in the world. But just how much can you really expect a Quebec apple grower, an Ontario cash-cropper or an Alberta beef producer to have in common?
That’s led to a lot of difficulties over the years when formulating national agricultural policies. Can strong support for supply management, for example, really exist at the same time Canada vigorously pursues a trade agenda that would benefit Western grain growers?
How much money?
In the drama of politics, farmers are seen as sympathetic characters. They’re small and independent businesspeople who would otherwise be entirely exposed to the vagaries of the market. They’re seen as honest and hard-working, and they’re acknowledged to be in a business with a key difference. “They have a weak hand,” Brinkman says. “They do not normally have the ability to set prices — they’re price takers.”
All that adds up to the political will to support farmers. In Canada, it’s actually a fairly hefty annual transfer. Statistics Canada calculates it at around $4 billion annually, says Brinkman, and that’s just the funds that come directly out of the budgets of various levels of government.
It excludes supply management, and the effect of what are known as “producer subsidy equivalents” which come from consumers but are mandated by government. Calculating exactly what that adds to the total overall bill is a lot like trying to nail jello to the wall, but suffice to say it’s not an insignificant number.
The international trade group the Organization for Economic Cooperation and Development (OECD) calculates that it runs into billions of additional dollars annually. Brinkman says he’s got some questions about how the OECD calculates those numbers, but he also readily concedes there’s definitely an additional transfer to farmers through these programs.
Which of course raises the next question — what are the consequences, intended and otherwise, of these transfers, and how do they affect farmers throughout our geographically and economically diverse industry?
A crossed country
In Quebec, farmers are held in extremely high regard. They’re seen as a key pillar of the province’s society, and evidence of that can be seen in their farm policy. While other provinces rely heavily on federal dollars to support their farm sector, the Québécois reverse what’s become the standard funding formula.
While most provinces have a 70/30 or 60/40 split, with the feds picking up the biggest portion, in Quebec it’s the provincial government that picks up close to 70 per cent of the tab.
The reason, observers say, can be found in the unique fabric of Quebec, the controversial “distinct society.” And while that phrase might set your teeth on edge, at least one observer says there’s something to it. Richard Phillips comes from a farm in northeastern Saskatchewan, but these days he’s the point man for many farmers on Parliament Hill as the executive director of the Grain Growers of Canada.
In this capacity Phillips has become familiar with agriculture across the country, and how it’s perceived by the wider society in that region. Quebec really is a unique case, he says. In many ways it’s a more European than North American way of looking at farms. Farms are seen as an important social pillar that provide more than just food and fibre.
“I can see why they find this important,” Phillips told Country Guide recently. “When you drive out of Montreal and see nicely kept farms, it really is quite attractive. You could never roll back the clock and remake Western Canada like this, but it’s not hard to see why they like it and value it in Quebec.”
The open question, of course, is just how sustainable this largesse is. The province is facing a looming fiscal crisis and an election is on the horizon. Surely sooner or later someone is going to pull in the purse strings? Perhaps, but with agriculture such a central part of the province’s identity, it becomes extremely difficult to do so.
The Parti Québécois, for example, is the likely successor to Jean Charest’s Liberals. And their power base is — rural Quebec. And even the upstarts that occasionally come along tend to be identified with farms. Mario Dumont, the former leader of the ADQ, which for a time was the official opposition, benefited hugely from his public image as a farmer who returned to the land every summer.
But not everyone in the East gets such benefits. No matter how hard it tries, it seems that agriculture in Ontario just can’t get the public to take notice. And exactly why that’s so is an interesting problem.
In big part it’s because when most people think of Ontario, and its economy, other things quickly leap to mind. There are the big wheels on Bay Street, cooking up investment deals while feverishly checking stock quotes on their BlackBerrys. Or the auto-workers of the industrial heartland punching in at the plant every morning. And a bit farther to the north, there’s the vast rule factory that is Ottawa.
Eventually someone might think of the province’s agricultural sector, but that image is a long way down the list. But on another list — the relative size of the agriculture sector by province — Ontario would be right near the top.
There may be no justice in it — after all, in terms of market receipts, Ontario is tied for first as Canada’s number-one ag province — but because it happens to exist within the largest and most diverse economy in the country, it’s an afterthought to most Ontarians.
Out West, agriculture has long been a much more prominent part of the provincial and regional scene, at least historically. But even there, in the region that’s long been seen as the breadbasket of the country, agriculture is becoming less and less central to the economic and political life of the Prairie provinces.
Any farm family there can tell you. The region is quickly becoming as urban as any other in the country. And when that trend is combined with the new-found economic growth fuelled by the resource sector, agriculture is beginning to slip a bit down the list of regional and provincial priorities.
Incoherent
So while we might have agricultural policies, and the people who pay attention to these things can even tell you what they are, there’s one thing most of them will confess if they’re pressed a bit on the issue — they can’t really tell you what the final goal of these policies are.
In large part, that’s because agriculture is one of the few areas of shared federal-provincial responsibility. University of Saskatchewan’s Rosaasen says these provincial effects are some of the most clearly seen in the industry. Wealthier provinces, or those with greater political will, have in recent years been able to enhance their sector’s chances for success, he says.
“If you look at it, it becomes clear that Alberta and Quebec have benefited more than any other provinces from this,” says Rosaasen. “They’ve gotten more out because they’ve put more in.”
And while speechwriters in the federal department of agriculture might love to refer to the “historic” 60/40 shared responsibility, this is clearly a recent wrinkle, Rosaasen insists. It was first implemented by then-agriculture minister Don Mazankowski, then later enthusiastically endorsed by the Liberal ministers who came after him, like Lyle Vanclief, so it’s really only about 20 years old.
“I’m of the opinion that the federal bureaucrats felt that they were hemorraging money to the Prairie grain economy and it had to stop,” says Rosaasen. Others suggest that the decision was made at the ministerial, rather than bureaucratic, level. But in the end the how isn’t as important as the what — as in what the long-lasting impact has been. In many cases it’s been an increased level of economic disparity from province-to-province as governments with less fiscal capacity haven’t signed up for programs their neighbours could afford.
“It’s really hit smaller provinces like Nova Scotia, Manitoba, and to a lesser extent in recent years, Saskatchewan,” says Rosaasen.
Then there are the impacts of some other historic policies that have also picked winners and losers, such as supply management. Over the past four decades, that policy has cleary had an ongoing effect on how dairy, egg and poultry production has been allocated provincially and regionally, says economist Karl Mielke of the University of Guelph.
“We can’t say for sure how it would have developed, because it’s been locked up for 40 years, but I think you can safely assume that it would have evolved differently,” Mielke says. “What’s less clear is exactly how it would change if the lock were taken off.”
For example, a few years ago there was a short-lived experiment that allowed trading dairy quota interprovincially — which delivered some unexpected results.
“What started to happen is that the production began to flow to Atlantic Canada,” Mielke says. “I’m quite certain that none of us predicted that in advance.”
Critics of supply management — frequently from Western Canada — say that the system has prevented the growth of production in lower-cost areas like Saskatchewan. They point to the large beef and swine herds of the province, and then to the miniscule size of the chicken industry, for example, as clear evidence. Proponents counter that dairy and egg production makes more sense near large population centres because eggs and fluid milk are tough to transport. Either way it’s clearly an issue that breaks down on regional rather than national lines.
Another key piece of the puzzle has been the rather strange nature of interprovincial trade in Canada. While the country has signed free trade agreements around the world, there have been historic trade disputes, frequently in agricultural products, from province to province. The classic case is Western oilseed growers attempting to ship their margarine into Quebec and Ontario, where dairy producers have protested that if they want to do that, it can’t be yellow, like butter.
The most recent case, in Ontario, was resolved in favour of the western growers, and observers say it may never recur. That’s because a new chapter of Canada’s Agreement on Internal Trade covering agriculture is set to come into effect shortly, and when it does there will finally be some real penalties attached to setting up these sort of trade barriers. However, those same observers also admit that they’re expecting the supply managed commodities to be the most likely source of continuing irritation going forward.
Mission impossible?
The complex nature of these debates inevitably leads a casual observer around in a long and convoluted circle to the starting point — does the goal of a national agricultural policy make sense in a country like Canada?
Can you have one policy that adequately addresses the core needs of commercial farmers throughout the nation? Or would a more regional approach make more sense? Or would that just further entrench regionalism and provincialism and ensure even more inequity amongst Canadian farmers?
At least one person COUNTRY GUIDE spoke to thinks it’s a path that continues to be worth pursuing. When we suggested to the Grain Growers of Canada’s Richard Phillips that it might be a mountain too high, he quickly spoke up in favour of Canadian nationalism.
“Now you’re talking like a Bloc Québécois MP,” Phillips said with a wry chuckle. “I don’t think it’s impossible, but it certainly won’t be easy.”CG
———
“ Alberta and Quebec have benefited more than any other provinces…because they’ve put more in.”
— Ken Rosaasen
