Agriculture and agricultural policy regularly dominate the news. In a country like Canada which exports most of our farm production, domestic agricultural policy always gets entangled in trade policy, rural policy and the subsidy practices of our trading partners. The closure of the U.S. border to Canadian beef because of one random case of mad cow disease Alberta has brought home to us the importance of trade. If that border is not open soon, the consequences for the prairie economy will be dire indeed.
Western Canada’s salvation lies in the complete freeing of agricultural trade on a worldwide basis, coupled with the abandonment of any and all production-based subsidies and price supports. All that the latter do is flood markets with cheap agricultural commodities that in turn drive “real” prices down even further. We simply cannot compete with the treasuries of Europe and the United States.
Agriculture is front and centre in the current round of multilateral trade negotiations at the World Trade Organization. Dubbed the “Doha Round,” this effort has also been called “the development round” because its purpose is to ensure that the world’s poorest people are helped by trade liberalization in agriculture. Given their low cost structures, the Third World can compete in foodstuffs, but rich countries throw up such a wall of tariffs that the world’s poor cannot benefit from their competitive advantage.
European policies are especially reprehensible, in light of their oft-stated concern for the world’s poor. Ironically, 80% of the European Union’s subsidies go to the 20% of the Union’s farmers who have the biggest farms. Add in Europe’s anti-market views to its export subsidies and you get a picture of a global bully determined to have its way with the world’s agricultural producers, no matter how much damage is done.
The European Union is ahead of North America in one respect, their support for their “countryside.” Rural areas are home to all manner of so-called “public goods.” These include water, wildlife, scenic beauty and fish, to name a few. Production subsidies, in addition to their effect on markets, can devastate these public goods. Wheb farmers are paid to produce as much as they can, sub-marginal land comes under the plow.
The European Commission recently proposed a cut in the link between farm subsidies and production and a new direction in farm support programs. They will increasingly be directed towards environmental protection and rural development. A breath of fresh air has finally been injected into a pretty sterile debate.
Supporting these public goods is not only the right thing to do, but it would provide common ground for both rural and urban communities. Canada has yet to embrace this approach and a full-fledged agricultural conservation policy has yet to be articulated at the federal level. The United States has come a long way with their Conservation Reserve Program, but still retains production subsidies.
Canada should embrace this new wave of agricultural environmentalism and support farmers to deliver “ecological services” to a society that is demanding them. Manitoba’s Keystone Agricultural Producers has developed the Alternate Land Use Services policy, an innovative idea that should be supported. We all would be better off for it.