According to the Organization for Economic Co-operation and Development (OECD), Canada remains either a leader or laggard in the realm of support for its agriculture sector, depending on how one approaches the problem.
A free market idealist who favours letting the invisible hand sort it all out might think less support to producers is a good thing. But a grain farmer competing against better-supported producers in other jurisdictions might find it tough to remain a true believer.
No matter how you approach it, the numbers are stark, as contributor Alex Binkley reports from Ottawa in this issue. He details a recent OECD report on producer supports that confirms Canada remains a global Boy Scout when it comes to agriculture subsidies.
From 2016 to 2018, the last period full numbers are available, Canada saw “producer subsidy equivalents” average nine per cent of gross farm receipts, down from 18 per cent in 2000 to 2002 and 36 per cent in 1986 to 1988.
The report went on to note that “Canada’s PSE has been consistently below the OECD average over the period.”
Despite these numbers the organization couldn’t help but chide Canada for its supply-managed agriculture commodities, noting the decline “would be even greater” were it not for this indirect producer support.
It shouldn’t be surprising that the OECD takes this approach, as promoting and extending the long-running market consensus is its reason for being since its inception. But it and other free market advocates are becoming a bit harder to take seriously as the winds shift.
Much like the market consensus swept away the postwar liberal consensus in the 1980s, the new paradigm itself is starting to look a bit shop worn after close to 40 years at the centre of virtually every significant international policy consideration. It also now finds itself increasingly under siege internationally.
In the United Kingdom, the entire postwar project of uniting Europe has been repudiated with the Brexit vote. On the other side of the Atlantic Trump’s election has cast doubt on the willingness of the former champion of market liberalism to take things further. As a new player, China, who signed on to the WTO to access western markets while furiously foot-dragging on its own reforms, casts even further doubt.
Against this backdrop, one must wonder exactly how long it’s going to take our domestic policy-makers to cotton on to the fact things have changed, and they’ll need to govern themselves accordingly.
The prevailing wisdom is that Canada, as a trading nation, must rely on a rules-based system to iron out disputes, which would allow our prowess as a producer to shine. More colloquially, we were hoping to become the global agriculture Wayne Gretzky, skating rings around our opposition and putting the puck into the back of the net while they were flat footed.
But that only works for a relative lightweight like Gretzky (and Canada) when you’ve got a Marty McSorley waiting in the wings to flatten Doug Gilmour at the blue line then take on Wendell Clark when he skates to the rescue.
Today’s trading environment, led by Donald Trump, is more like professional wrestling than hockey. Somehow the referee is always distracted and the folding chairs and brass knuckles have, metaphorically, come out.
Canada must grasp this reality if it is to fight the coming fight. We won’t likely hit any export growth targets unless our government, regardless the party leading it, is willing to understand this and formulate policy for it.
That policy isn’t likely to be a blank cheque, but it should include real support for producers when necessary, and it shouldn’t involve agriculture groups trekking to Ottawa, hat in hand, seeking ad hoc payments.
The Grain Farmers of Ontario has, for example, advocated for a smarter policy that includes a “trade war chest” that would see farmers through market volatility.
That would be an excellent start, but it should only be the start. What’s needed is a complete reconsideration of the paradigm behind our current agriculture policy.
Do we in fact remain on a ‘team of rivals’ that’s at least working toward a shared goal of greater trade? Or has the world quietly slipped back into a ‘beggar thy neighbour’ model where only the domestic effects enter the minds of those making the decisions? It may be this is just a passing phase and in fact things will eventually revert to the old normal. But it could also be the start of the new normal and if that’s so, the faster we’re ready for that, the better.
Otherwise we may find ourselves laid out on the ice, wondering if anyone caught the number of that truck.