What a difference a border makes.
The Canadian Federation of Agriculture (CFA) wants $2.6 billion in emergency farm aid due to reduced revenues caused by the COVID-19 pandemic, while the American government has already budgeted US$23.5 billion in ad hoc farm subsidies. That’s coming as part of its US$2-trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, and U.S. farm-state legislators, including North Dakota Senator John Hoeven (Rep.), are working hard to get U.S. farmers more.
“We’re going to have do more,” Hoeven, chair of the U.S. Senate’s appropriations subcommittee, told the North American Agricultural Journalists’ annual meeting, held via online platform ZOOM April 27.
He noted there’s US$14 billion available this July, at least US$30 billion approved in 2021 for the U.S. Commodity Credit Corporation, which delivers most U.S. farm subsidies. But he added that’s not enough and he’d like to see that number rise to US$50 million, something he committed to doing once lawmakers returned to the U.S. Senate in Washington, D.C.
Meanwhile, American farmers have already received at least US$14 billion in payments to offset lost earnings from the U.S.-China trade war and more than US$15 billion in regular farm subsidies.
While American farmers are soon to get billions in direct government payouts, so far the Canadian government has provided assistance for farm loan deferrals and about $1,500 per temporary foreign farm worker to offset quarantine costs before they hit the fields.
Canada’s Agriculture Minister Marie-Claude Bibeau has hinted weeks ago farm aid was coming saying “all options are on the table” but hasn’t delivered.
Why it matters: Subsidies can help those receiving them get through tough financial times, but they can also distort production and ultimately markets. Canadian farmers and economists agree U.S. subsidies make American farmers more competitive.
The consensus among Canadian agricultural economists is the Canadian government can’t match American farm subsidies. But some farmers are questioning that after Ottawa committed tens of billions of dollars in aid to unemployed workers and students and aid packages aimed at businesses.
How the Americans govern themselves helps to explain the largesse aimed at farmers, Bruce Burnett, director of markets and weather at MarketsFarm, said in a recent interview.
(MarketsFarm is owned by Glacier FarmMedia, which also owns the Manitoba Co-operator.)
Every state, no matter its size, has two senators, giving farm-state senators as much clout and political clout as urban ones, he said.
When asked what he would tell a Canadian farmer concerned about American farm subsidies, Hoeven said Canada is not without sin on subsidies or trade barriers.
“We’ve had issues with the Canadian Wheat Board and now the downgrading of wheat we send up there from our small grain producers,” said Hoeven, who noted he grew up 50 miles from the Canadian border. “When you look at some of the dairy programs. Right now with potatoes our potato growers feel very disadvantaged versus the potatoes coming in from your country and some of the assistance that y’all supply in terms of transportation and those kinds of things, which we don’t.”
The wheat board disappeared in 2012 and the U.S. wheat-grading issue is addressed in the Canada, United States, Mexico Agreement on trade soon to take effect.
The U.S. wants free trade, but it must also be fair trade, Hoeven said.
“We see it differently in the United States in terms of some of the barriers that we have putting product into Canada,” he said. “And as you know, we are an incredible market for your Canadian producers. So I think to get to it I think it’s all about perspective.
“(W)e provide a pretty big market and you’ve got to make sure you’re treating us fairly and our producers fairly too.”
The U.S. is Canada’s largest agricultural export market, but Canada is a huge market for U.S. farmers.
As for Canadian farm aid, CFA said in a news release April 30 the $2.6 billion it’s requesting is for losses so far because of the shutdown of the food-service sector, processing plant closures, other supply chain disruptions and increases in labour and associated costs in the wake of COVID-19.
“(A)dditional costs will continue to mount as farmers deal with the impacts of COVID-19, highlighting the continued importance of enhancing AgriStability support,” the release says.
“This emergency funding is for impacts which are not eligible under any of the government programs announced to date to combat the impacts of COVID-19. These extraordinary costs are also not covered by existing business risk management programs offered by Agriculture and Agri-Food Canada.”