Urban Renaissance Institute

National Post
June 17, 2002

Letters to the Editor

Re: Record Harvest of Profits All Came From Subsidies, by Lawrence Solomon, June 13.

It seems inconceivable that farming in Canada generates barely enough income to cover the subsidies it receives from federal and provincial governments. Of course, if you got your news from the CBC, that sobering fact would never be mentioned. Instead, you would see Peter Mansbridge announcing “trouble down on the farm” and showing hapless farmers surveying their stunted crops.

I propose a sunset law for farmers. Each farmer, and each piece of land, would be eligible for a subsidy three times. The third subsidy would have to be used for wrapping up the operation and retraining in another field. Three strikes and you’re out.

As the army officer exclaimed after watching British soldiers blow up a bridge that British POWs had just built in the film Bridge Across The River Kwai – “Madness!”

Larry Lloyd, Sooke, B.C.

Read Larry Solomon’s article, “Record Harvest of Profits All Came From Subsidies.” 

Lawrence Solomon’s theories on what should be done about our cities mirror what I’ve been saying for some time, especially his recommendation about what to do with the provinces (Advice to Cities: Take Control of Your Province, June 7).

Cities, which provide all the services that are most important to people and have the most immediate effect on their daily lives, are by far the most important of all levels of government. How ironic that they have virtually no power.

The only other really important level of government is federal, since it provides the big overall stuff like defence and foreign relations.

The provinces, set up for a rural economy, have become like all those bloated layers of middle management that were swept away through the 1990s – and they should suffer the same fate.

Imagine what Ontario’s cities could do with the vast amounts of money that are wasted on our provincial bureaucracy.

The only provincial governments that still make any sense are those in the north, where populations are primarily rural, and make their living from the land.

What this highlights, of course, is the need for true democratic representation, and an end to the rural bias in representation. How do we make this a political issue, and what needs to be done to correct this endless gerrymandering?

Thank you for an excellent article. I hope a few other people are listening.

Michael Visser, Toronto

Read Larry Solomon’s article, “Advice to Cities: Take Control of Your Province.”

Farm subsidies need more debate
Vancouver Sun
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.

Lawrence Solomon
National Post
June 13, 2002

Last year was a bumper year for farmers, Statistics Canada reported recently: “Farmers’ net cash income rose 29.8% from 2000, as both cash receipts and operating expenses hit record highs.” Agriculture Canada was just as upbeat: “Agricultural Exports Reach All-time High,” it announced. Said federal Agriculture Minister Lyle Vanclief: “It looks like 2001 will be a year for the record books.”

Farmers did do well for themselves. Whether the record they set does Canada proud is another matter.

Before expenses, Canada’s farmers pulled down approximately $36-billion in revenue from the sale of their crops and livestock, and the receipt of direct government subsidies. After subtracting their expenses, they were left with the handsome sum of $3.75-billion to put in the bank. The direct government subsidies? They amounted to $3.752-billion. Subtract those subsidies and Canada’s farmers contributed not a penny in profits to the Canadian economy. All they harvested were subsidies. It gets worse.

Farmers not only received direct payments from governments, they also received inflated payments from consumers for staples, such as the artificially high prices that governments forced Canadians to pay for our milk and cheese. And farmers also benefitted from payments that the government made to support farming, such as trade promotion activities.

All told, according to Agriculture Canada’s Data Book, Canada provided close to $5-billion in farm subsidies. It was a record year, all right. In Nova Scotia, for every dollar of profit that a farmer made, society kicked in $3.46. In Quebec, we provided $5.76. In Alberta, $16.76. It was also a record decade for farmers. For every dollar of profit, Canadians provided $3.53. Not one province operated a profitable farm economy over the last 10 years.

When faced with criticism over the subsidies that they receive, farm lobby groups claim that the subsidies help consumers by lowering the price of food. The lobbies don’t explain that the consumers who benefit don’t live in Canada – we’re the ones who get to pay the inflated prices. The consumers who do benefit from Canadian subsidies live chiefly in rich countries whose citizens don’t need Canadian help to pay their grocery bills.

Take Saskatchewan, whose farmers received more than $1-billion last year in direct government payments, the most of any province. Little that Saskatchewan produces is meant for the local economy. Americans are Saskatchewan’s biggest customers by far. Next come the Japanese, then the Europeans. The more we sell to foreigners, the more we lose. In a good year, Saskatchewan exports $4-billion in agricultural products at a loss, in a bad year, $5.5-billion.

These days, Saskatchewan farmers blame high U.S. and European subsidies for their trouble. But several years ago, American and European subsidies were at their lowest levels in recent times. A decade ago, Canadian farmers received greater subsidies than either American or European farmers. At no point did the Saskatchewan farm economy turn a profit.

Because the federal government knows that most Prairie grain farmers have no prospects of standing on their own two feet, regardless of the level of U.S. subsidies, our federal government this week agreed to bend to their demand for more handouts. When we provide them, Americans and other rich-country consumers will get more of our taxpayer-provided farm commodities, and Third World farmers – who legitimately complain that our subsidies undermine their ability to earn a decent living – will continue to be put out of business.

There is a better way. Instead of using our farm subsidies to weaken the economy at home and in poor countries, we could use the existing subsidies to generously buy out Prairie farmers and others willing to sell their farming operations. The compensation packages could average in excess of $1-million per family – more than enough to give young farmers an opportunity to start a business in the real economy, or to provide a comfortable nest egg for those who wish to retire – and taxpayers would still be ahead.

The unproductive farms tend to produce for the export market, and they disproportionately lie in the semi-arid Prairies, which have historically received too little rainfall to support farming. After these farms are bought out, and after we removed subsidies from the remaining farms – those able to make an honest living off the land – Canada would be left with numerous small operations, mostly in the farm belts around cities. These farms, close to markets and producing high-value fruits, vegetables and other perishables, are largely immune from foreign competition and viable without subsidies. In fact, these small farmers already turn down the government’s very largest subsidy, heavily subsidized crop insurance, because they can self-insure more economically by diversifying their crops. The farms that overwhelmingly latch on to subsidized crop insurance are the large mechanized farms producing low-value commodities – without subsidized crop insurance, they would go out of business.

More subsidies won’t save Canadian agriculture, they will only harm taxpayers and consumers. Agriculture Minister Vanclief understands this: “The high level of subsidies depresses prices and effectively shuts out producers from developing nations,” he told the United Nations World Food Summit earlier this week. Mr. Vanclief was complaining about U.S. subsidies. His complaint is no less valid in Canada.

FARM SUBSIDIES PER DOLLAR OF FARM PROFIT (1992 – 2001):

Nfld: Transfers from taxes, Transfers from consumers = 4.77

PEI: Transfers from taxes, Transfers from consumers = 2.38

NS: Transfers from taxes, Transfers from consumers = 3.02

NB: Transfers from taxes, Transfers from consumers = 4.47

Que: Transfers from taxes, Transfers from consumers = 4.60

Ont: Transfers from taxes, Transfers from consumers = 6.10

Man: Transfers from taxes, Transfers from consumers = 2.83

Sask: Transfers from taxes, Transfers from consumers = 3.41

Alta: Transfers from taxes, Transfers from consumers = 2.66

BC: Transfers from taxes, Transfers from consumers = 1.81

Canada: Transfers from taxes, Transfers from consumers = 3.53

Source: Urban Renaissance Institute

June 13, 2002

* : indicates negative ratio
Adjusted total net income: Total net income – Net payments to producers

June 13, 2002