Editorial: Agriculture slips through the safety net

Canadian agriculture is very proud of its prominence in the national economy, and rightly so.

As StatsCan noted in a 2019 report, agriculture and food contributed $49 billion to the nation’s GDP in 2015, or 2.6 per cent of total GDP. That’s been a target of growth too, as various projection and government plans have called for growing exports by further billions of dollars.

But for a country with a relatively small population, having an industry of that size that’s so prone to cyclical economic ups and downs can be a double-edged sword.

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The needs of that industry can be hard to balance against other demands on the public purse when trouble hits — or so the old argument goes.

It can cause more than a little subsidy envy on the part of Canadian producers, particularly when they’re looking right across the fence at one of the richest subsidy regimes in the world.

While Canadian farmers have been offered changes to the cash advance programs and good loan terms, little in the way of new direct cash has been on offer. There would seem to even be little urgency to amending the suite of business risk management programs, namely AgriStability, that have long been described as inadequate, unresponsive and unreliable.

By contrast our Allan Dawson reports in our May 7 issue, U.S. producers have enjoyed a relative tsunami of support. They’ve already budgeted US$23.5 billion in ad hoc farm subsidies, part of a US$2-trillion coronavirus relief and recovery package. By contrast the Canadian Federation of Agriculture has so far been greeted with the metaphorical sound of crickets chirping in its request for a $2.3-billion ad hoc aid package on this side of the border.

There’s little doubt the federal government, facing a possible quarter-trillion-dollar budget shortfall, isn’t looking for new and inventive ways to spend more money.

But even without those budgetary constraints there’s been long-standing bipartisan reluctance to spend like the Americans, and even Canadian farmers have quietly agreed that Canada can’t compete with those sorts of deep pockets.

The numbers do seem to back that up. Canadian federal spending in the most recently completed fiscal year was roughly $322 billion, compared to the annual U.S. federal budget of $3.8 trillion. However, agriculture and food is actually an even bigger proportion of that exponentially larger and more diversified economy, coming in at about 5.4 per cent of U.S. GDP in 2017, at US$1.053 trillion.

It would seem that Canada might have enough fiscal capacity to at least meet the Canadian Federation of Agriculture’s requested level. Using the handy factor of “multiply it by nine” that is typically used to gauge Canadian efforts against the U.S., its request would translate into $23.4 billion — before conversion to U.S. funds.

What’s clearly lacking is the political will to do so, something that’s present in the U.S. system in spades. As Dawson reports, U.S. senators from farm states ensure rural areas — and agriculture by extension — are taken seriously. Some would argue too seriously, as serious urban issues are overlooked in favour of pumping U.S. federal dollars into flyover states.

By contrast Canadian agriculture in general, and Prairie agriculture in particular, struggles to have its voice heard. While politicians are always willing to provide a handy sound bite about ‘standing with our producers,’ the dollars never seem to materialize.

In large part that’s because agriculture in Canada is among the handful of ‘shared jurisdictions’ — places where both the federal government and the provinces have an iron in the fire. Unfortunately having two governments minding the store can at times be the worst of both worlds.

In crude fiscal terms it sets up a dynamic where not one, but two, governments have to agree to come to the table for most programming to work. It also sets up a dynamic where a clever politician, or politicians, can pass and repass the buck back and forth until one grows dizzy.

It also makes the numbers much harder to make work, and it’s at the provincial level where the true fiscal constraints begin to appear. In Manitoba, for example, agriculture and food processing make up close to five per cent of the province’s annual GDP, or nearly double the federal rate, according to the province’s own agricultural statistics.

That means federal governments looking to save a few bucks are frequently met with provinces with empty pockets, and nobody pushes terribly hard for an expansion of safety nets for Canadian farmers.

For Canadian farmers it’s a very frustrating and intractable situation with few obvious solutions. Addressing it may require that one jurisdiction or the other assume full responsibility for this portfolio.

If agriculture is a Canadian keystone, it deserves someone’s undivided attention.

About the author

Editor

Gord Gilmour

Gord Gilmour is Editor of the Manitoba Co-operator.

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