I read with some interest an analysis of the potential for supply management in the cattle industry from John Masswohl, the Canadian Cattlemen’s Association director of government and international relations. He is certainly correct in his assessment of the impact on the cattle industry and undoubtedly the impact would be similar to any agricultural sector that is export oriented. However, that does not mean that other market structures should not be considered.
The model used in the processing potato industry through the United Potato Growers of North America is one that bears some consideration. It is about making sure producers have adequate information about production and consumption and working with processors to make sure they too have adequate supplies. The model focuses on “managing the supply” to make sure that we do not get wild swings in production that can devastate the market for us all.
There has also been a lot of interest in price insurance for cattle and hogs. This too is a good concept that can protect against price variations either from normal markets or from trade “tinkering” which we see becoming increasingly common. The reality is that price insurance cannot guarantee profit. If we are lucky it is more likely to protect our variable costs, anything over that generally comes with a steep premium cost.
In addition to this we need to find premium markets for Canadian export products. We are no longer low-cost producers for many commodities, partly because our inputs are more expensive than almost anywhere else in the world. There is also a hidden cost in social and environmental standards that our Canadian farmers have to bear, and that is not true in all competing countries. On the positive side, the new Market Secretariat has been showing very positive results in many marketplaces.
The bottom line is that we need to find new ways to get better returns from consumers, not from government. But government has a role to play in achieving that.
Let us look at market tools like “managing the supply,” and act on correcting market risk through price insurance. We also must act on rewarding producers for good environmental management through environmental goods and services and aggressively pursue new valuable export opportunities.
The world wants Canadian agricultural exports, but we need to make sure that our farmers can make a fair living in the process. Achieve this and rural communities will thrive again.
Ian Wishart is president of Keystone Agricultural Producers. He farms near Portage la Prairie.