Everyone feels sorry for farmers when they are hit with a disaster like this summer’s drought. Politicians are called on to do even more to supplement government’s generous support programs, and no one much questions it.
Maybe large expenditures of public money could be justified if they were only triggered by rare events, but Canada’s farming sector is in a permanent state of need. The federal government has given farmers $1.4 billion over the last five years in Ontario alone. Nationally, it has spent $10 billion on farm support programs over the same period of time.
The Ontario Federation of Agriculture says annual farm losses amounted to $330 million in 2009 and about $500 million in 2010. More recent numbers are not available, but it’s a safe bet that this year’s losses will be much greater.
Agricorp, the Ontario government agency whose job is to help farmers collect, had revenue of $208 million in 2010, the last year for which it has released financial information. Just over one-quarter of its income came from farmers in the form of premiums. The federal and provincial governments pay the rest. It certainly gives new meaning to the term cash crop.
If they choose to buy government insurance, Canadian farmers can get nearly 100-per-cent coverage in the event of a crop failure. If they don’t buy the insurance, they are still eligible for another government program to help bail them out. Is that reasonable?
This is only part of the picture. Sectors like chicken and dairy farming have supply management, a system where government controls the supply to keep prices up. Barring a catastrophe, profits are assured. Only livestock producers operate in a somewhat normal market, and even they can get government insurance for hay fields and pastures.
Then there are the relentless government programs informing us that buying fresh local produce is a virtuous act. No doubt other industries would like to get similar free ads.
There is a vast array of agriculture assistance programs, but the underlying philosophy is that government and farmers should share the risk of growing food. This might make sense of we lived on a remote island with no source of food other than which we grow ourselves.
Every type of business faces a variety of risks. What’s so different about farming? The stewards of the land argument that farmers offer only goes so far.
Farming does contribute significantly to the provincial economy, but it’s a smaller industry than its influence would suggest. The Ontario Federation of Agriculture represents 36,000 farm family businesses and 80,000 Ontarians make their living directly on farms.
The idea of a family raising nutritious food on 100 acres is mostly a thing of the past. Farms are corporations now, even if they are still family-owned. The land and equipment investment easily runs into the millions. These are mostly big, sophisticated businesses. Why should the risks they take be so significantly mitigated by taxpayers? It’s not as if the public shares in the profits in good years.
The agriculture industry seems to have mixed feelings on the virtues of the market. When food is in short supply, we’re told that prices will go up. That’s what economics would dictate, but taxpayers are paying twice. We pay more for food and we pay again to make up the farmers’ losses.
The current farm support program expires next March, and farm organizations are concerned that the federal government will provide less money to tide them over in bad years.
That’s likely true, and it’s long overdue. The federal government is still interested in spending lots of money on farmers, but the new priority is to get Canadian farm products a bigger market share, both here and abroad. Spending money on that has a lot more economic benefit than using the same dollars to bail out farmers.
Like most every other industry in Canada, agriculture needs to focus on innovation and exports. That’s where it will deliver the most value to Canadians. The purpose of the industry is not so much to feed Canadians as it is to create jobs, and that’s best done by expanding its markets.
There is no doubt that farmers are an effective lobby group and the large number of rural ridings gives them political clout out of proportion to their numbers. That makes changing farm support programs difficult, but even with the likely changes, most farmers will still have access to programs where government absorbs the majority of the business risk.
Other than the recession-driven bailout of the auto industry, it’s difficult to think of another sector of the economy that gets this kind of special treatment. When changes are announced this fall, you can bet that farmers will still have a deal that other business people can only imagine in their dreams.