New report on farm subsidies

Food in Canada

April 24, 2003

The study, Agricultural Subsidies in Canada:1990-1999 by Lawrence Solomon and Jessica Zippin, was released June 22, 2000.

But researchers Al Mussell and Brent Ross say it’s closer to 64 per cent, in an April 16, 2001 study entitled To Tell the Truth on Farm Subsidies from the George Morris Centre.

“If it really took $3.55 in subsidies to generate $1 in net farm income as some claim,” says Mussel, “it [Canadian government] would be telling us to turn our fields back to forests and prairie. The claim is patently false.”

Mussel argues that Solomon’s study makes an error on two levels. “The data they used are wrong and the methodolgy of using the data is also wrong,” Mussell said. “They used total government transfers to agriculture, which includes money towards Research & Development and also Food Inspection & Grading – quality control. These can’t be considered subsidies because food safety is a benefit to food consumers as well as producers.

“The formula is to divide total government transfers by net farm income. So already the numerator [government transfers] in their equation is too big. In addition, they subtract direct payments to farmers making the denominator too small. This makes the outcome quite inflated.”

But Solomon told Food in Canada that the GMC appears to be excluding subsidies that are internationally recognized. “The OECD and Agri-Food Canada both consider inflated price for supply-managed products, like the cost of marketing systems that the GMC excludes” he says, claiming his analysis is on par with world standards. “We shouldn’t be keeping two sets of books, one for international regulations and one for domestic regulations – especially when Canada participates in these international trade discussions.”

In a nutshell, the GMC sites Statistics Canada figures that claim between 1990 and 1999, on average, farmers received about $2 billion from government and generated $3 billion. They claim that subsidies not only support farm incomes, but also generate additional production. However, the GMC agree that too much production lowers commodity prices and depresses farm incomes, creating the need for even further subsidies.

As it stands now, subsidies vary across the country – 28 per cent in B.C. and Nova Scotia to 70 per cent in Saskatchewan, Manitoba and Quebec. Even farmers seem to concede that there must be a more efficient way to support Canadian farming.

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