Garry Breitkreuz, M.P. Yorkton-Melville

Column

For Immediate Delivery

October 22, 1998

There is a crisis in agriculture and action must be taken now. Over the last 6 months commodity prices have taken a nosedive. Wheat, barley, oats and peas have all hit rock bottom. Farmers are now feeling the effects of these low commodity prices. The Prairie Pools have stated that in 1997 total net farm income on the prairies has dropped by 35% in Alberta, 40% in Manitoba and 84% in Saskatchewan. Across Canada, net farm income dropped 55% last year and will drop about 50% this year, which means Canadian farm income is about one quarter of what it was two years ago.

Many producers I have talked to are considering getting out of farming because they can no longer afford to operate. Auctioneers are already booked solid for next spring. The impact of losing so many farmers is going to be devastating to Canada’s economy, because agriculture is the backbone of this country. Indeed agriculture accounts for about one quarter of our annual exports.

So where does the problem lie? The reason for the low commodity prices is two fold. One factor is the down turn in the world economy. The other factor is that heavy subsidies are being given to farmers in the United States (U.S.) and the European Union (E.U.).

Producers in Western Canada are susceptible to the ups and the downs of the international market. However, because of subsidies, our competitors in the U.S. and the E.U. are not as vulnerable to world market prices. In the E.U., farmers receive on average $175 per acre (Canadian funds) just for planting a crop. In addition, they are guaranteed a price for their production. That price was $205 per tonne for wheat (Canadian funds).

In the U.S., farmers are also guaranteed a price for their production. However, it is not as substantial as the European Union. Under the new U.S. farm bill, wheat producers are receiving $24 per tonne (U.S. funds) in direct support payments. The American government is also committing an extra 6 to 7 billion dollars this year in farm assistance.

The problem with these types of subsidies is that the market place becomes distorted. Farmer’s plant their crops, not based on the demands of the market but on the level of subsidy. For example, the E.U. and U.S. farmers planted huge amounts of wheat. That wheat has flooded the market place and as a result we see the extremely low prices that are currently in place.

I don’t like subsidies, but when other countries are protecting their farmers we have no choice but to do the same. Our producers have had their support programs taken away (ie. Crow Rate subsidy on transportation). As a result, they have become more diversified and are more responsive to what the market place is doing. However, when other countries are subsidizing and driving down world prices, our producers cannot compete. More action needs to be taken by this government to lobby the E.U. and the U.S. into reducing their subsidies and leveling the playing field for all farmers.

Input costs have sky rocketed, rising between 3 and 4% a year, while grain prices have plummeted. Much of our problem in Canada has been caused by government mismanagement over the last 25 years and has resulted in an extremely high tax burden for all Canadians. There needs to be some type of broad-based tax cut, which would help to reduce the cost of fertilizer, chemical, seed and implements. The fuel excise tax should also be reduced.

User fees are also unfairly charged to farmers and should be reduced. Farmers pay the cost of coast guard navigational aids and pilotage services for ships filled with grain. Farmers also pick up the tab for mandatory services at the Canadian Grain Commission and the Pest Management Regulator Agency. It is estimated that all of these types of cost recovery programs impact farmers to the tune of $138 million dollars. The government should take some responsibility for programs that benefit all of society and not just farmers.

Our federal government needs to realize that we have a crisis on our hands. The Minister of Agriculture keeps saying that NISA and crop insurance are enough. Western producers know that is simply not true. I think it’s time for the government to hear the truth about what’s happening to our farmers on the prairies. I’m pushing for an emergency debate in the House of Commons, but really the time for talk is over and we need some action. For some it may already be too late. What do you think?

I would be very interested in knowing how the farm income crisis is affecting you and your families. Please call my office at 1-800-667-6607.