Farm subsidies need more debate
June 15, 2002
In their latest research study on agricultural subsidies in Canada, Lawrence Solomon and Carrie Elliot report that in the past 10 years no province operated a profitable farm economy.
This comes on the heels of reports that suggest the federal government is about to announce a $5.2-billion increase in the level of farm subsidies. Even though the announcement of new billion-dollar agricultural subsidies has become an almost annual event, the issue doesn’t get debated on talk radio or merit a single letter to the editor.
Last year was a record year for the agricultural industry in Canada and yet the total profit of $3.75 billion was just under the amount of direct government subsidies. In other words, as Solomon concluded, “all we harvest are subsidies.”
According to Agriculture Canada’s Data Book, for every dollar of profit over the past 10 years that a farmer made, on average Canadians subsidized it to the tune of $3.53, and that doesn’t include subsidization through lower power rates and property taxes.
What we as taxpayers don’t know about the billions spent on agricultural subsidies seems endless. Solomon and Elliot go a long way to bring us up to speed with their research published by the Urban Renaissance Institute.
Contrary to what you might hear, the woes of farmers in Saskatchewan, for example, are not simply the result of higher U.S. and European subsidies. Ten years ago, Saskatchewan farmers received a higher level of subsidy than their counterparts in the U.S. and Europe and yet at no point did the Saskatchewan farm economy make a profit.
We’re subsidizing farms on the Prairies that are a regular bailout waiting to happen because they are set up in areas that regularly experience drought. What’s worse is that the subsidies have encouraged farmers to cultivate even more land that can’t support an economic operation.
We can also forget about the myth that these subsidies are there to help the small family farm like the one in the old Lassie movies. As Solomon points out, “the subsidies support large-scale, mechanized agriculture, and only encourage the takeover of small farms by the large ones.”
The irony is that for the most part the small farms could make a go of it but are squeezed out by the large corporate farms receiving the subsidies.
The subsidies are not distributed equally to all agricultural sectors. B.C. has the best example of a well-diversified, consumer-driven industry in which many successful operations producing a variety of products are not subsidized. In fact, B.C. is the least subsidized province in the country with $1.81 in subsidies for every dollar in profit.
The bulk of direct subsidies go primarily to help out low-value commodities like wheat, which are then exported to other markets. In other words, the lower prices that are produced by subsidization benefit consumers in other countries. In Saskatchewan’s case, American consumers are the biggest beneficiaries of the low prices afforded by Canadian taxpayers.
The issue of how best to help our farmers requires far more public debate. The familiar policy route of more subsidies to otherwise uneconomical operations will not rescue them and continues to hurt us as taxpayers and consumers.
The problem is that no federal politician, fearing the intense fall-out, would dare tackle the issue.