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Editor’s Take: Agricultural support funding a political football

When one ponders the recent round of AgriStability negotiations, it’s hard not to think of a group of college friends out to dinner for the first time at a fancy restaurant.

Federal Agriculture Minister Marie-Claude Bibeau can fill the role of trust-fund baby, mindlessly ordering seafood appetizers, with the intention of splitting the bill at the end.

Ontario and Quebec are the disaffected rich kids, perhaps slightly piqued by the antics of the feds, but ready to begrudgingly pay their share of the bill.

Meanwhile the Prairie provinces, and Manitoba in particular, are the scholarship kids who are ordering appetizers as entrees and quietly counting their pennies under the table.

The feds are willing to put up more money, it’s true, but they’re doing so while being fully aware of the financial constraints the other governments are under, as our Allan Dawson reports.

They’ve proposed scrapping AgriStability’s reference margin limit and boosting the compensation level to 80 per cent of historic margins, rather than the current 70 per cent. That’s going to increase the funds flowing to farmers by 50 per cent, Bibeau said.

This was greeted positively by most farm groups, though many added they want to see a return to the 85 per cent trigger of the early years of the program. As one agricultural economist noted when speaking to Dawson, the increased payments are only good if they’re triggered.

That same economist, Al Mussell of Agri-Food Economic Systems, also said provincial governments, even those facing fiscal constraints, should consider the merits of the proposal.

In the end it’s going to take at least one Prairie province to sign on to make these changes reality, and right now that’s looking unlikely.

As Manitoba’s Blaine Pedersen noted, the province already spends $150 million, on average, on farm supports, and the proposed changes would add $15 million onto that bill.

Out of a provincial budget of $15.1 billion, as per the province’s 2020-21 expenditure estimates, that’s just 0.009 per cent of total provincial government spending. But taken another way, the province estimates it will spend a total of $239 million on agriculture and resource development, making that same $15 million about 6.3 per cent of Pedersen’s own budget.

So clearly the problem isn’t so much that the government doesn’t have the funds to leverage those federal dollars — it’s that it doesn’t have any funds earmarked for agriculture.

Some observers have noted that the federal government could well be playing politics, using this to outline the stark realities of its shared jurisdiction over agricultural spending.

Since Bibeau took office as agriculture minister in March of 2019, she’s repeatedly said that the provinces themselves, and their reluctance to further fund such programs, are the real stumbling block.

The more cynical observer could suspect that this is a way to underline where commodity group lobbying efforts would be better aimed.

The provinces counter they’d like to see the feds pick up a bigger part of the bill, and that’s understandable. The harsh budgetary math for the western provinces is their economies are more resource dependent, and are especially agriculture heavy.

Commodities move in cycles, and when they’re down in the dumps, so too are the Prairie economies, and therefore provincial tax revenues. What emerges, over time, is a vicious cycle where governments are forced to eventually fund ad hoc programs that are even harder to budget around.

But changing that funding formula would open a huge can of worms as the 60/40 formula is the customary funding split in so many areas of shared expenditure. It’s extremely unlikely any government would want to take that on.

Meanwhile, farmers in Manitoba find themselves in an all-too-familiar position. They’re once again caught between the federal and provincial governments in this area of shared jurisdiction, with both parties pointing at the other and claiming they’re the real problem here.

Clearly, something has to be done to fix the farm support situation in Canada. Farmers aren’t participating in the existing programs because they don’t see the value in them. But the risk hasn’t gone away, and the risk goes well beyond any single farm, and well beyond just the primary agriculture sector.

As agriculture economist Mussell further noted in his discussion with Dawson, “… there’s the protection of the capacity of our overall ag and food system… ”

Boiled down, what he means is that without successful and reasonably stable primary producers, it’s very hard to grow an agriculture processing and food export sector.

If Canada really wants to grow its food exports, the provincial and federal governments need to sort out the farm support landscape quickly.

About the author

Editor

Gord Gilmour

Gord Gilmour is Editor of the Manitoba Co-operator.

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