The Question of Equity
Is Ontario Agriculture Gaining or Losing?

For most of its 16-year history, the Ontario Corn Producers’ Association (OCPA) has been engaged in an epic struggle to secure a more equitable allocation of federal agri-food financial support for Ontario agriculture. Remember the 1980s, and the association’s struggles to secure ad hoc financial assistance – and then revamped “permanent” safety net programs (NISA, GRIP) – which treated grain farmers in a near-equivalent manner in all provinces?

Some progress has been made since then. NISA is now a national program where government support is directly linked to relative economic contribution. The $650 million Western Grain Transportation Act (WGTA) annual subsidy program is gone, as have its negative effects for Ontario farmers. And while GRIP has disappeared in most provinces, it’s legacy has been a system of allocating federal safety net funds which is somewhat more balanced than what existed before – pending decisions to be made by Canadian agriculture ministers in early 1999.

However, inequities still exist. Ontario continues receiving less safety net support and total agri-food financial investment from Ottawa (expressed as a percentage of agricultural output) than almost any other province. Programs continue to exist for other provinces for which there are no equivalents for Ontario. Examples are the Prairie Farm Rehabilitation Administration with its $40- to $70-million (depending on the year, and which figures are used) annual budget, and the agricultural component of the $5-billion Western Diversification Office budget.

Granted, some of the imbalance in federal safety net spending is caused by the relatively greater portion of eastern prairie farm income from grain crop sales – and the much higher level of global subsidization which exists for grains compared to most other farm commodities. But the reasons are much more basic. And the imbalance could well grow again, if and when a new national disaster relief support program is introduced for which longer-term funding will tend to flow to farmers and farming regions with the least-diversified agriculture.

So what has been accomplished? Is OCPA wasting valuable time – and producer checkoff funds – in this battle? Is it wrong to think Canadian government funds should not be used, over extended periods of time, to distort natural differences in inherent competitive advantage (and disadvantage)? Are the repeated representations made by OCPA on this issue simply a sign of mean-spiritedness – as some have suggested – and a sign of lack of sympathy for those in “greater need”?

Every Canadian has seen the message conveyed in recent months by almost every media outlet in the country: There is a farm income crisis in Canada – for pork farmers nationally – and for grain farmers in Saskatchewan and Manitoba.

But why the grain income crisis for just two provinces?

Some price projections released in late 1998 by the Market Analysis Division of Agriculture and Agri-Food Canada are most interesting. Compared to the average for marketing years 1996/97 and 1997/98, crop prices are projected to be down by the following percentages for 1998/99 – durum wheat, 22-33 per cent; all wheat except durum, 0-8 per cent; barley, 8-23 per cent; canola, 1-8 per cent; flaxseed, 8-16 per cent; corn, 13-34 per cent; soybeans, 14-22 per cent. Curiously, price declines in 1998/99 are expected to be no greater for the major prairie crops than for corn and soybeans which dominate in Ontario. Why then the greater anguish in two Prairie provinces?

There could be several explanations. Crop failure is one, though that occurs somewhere in Canada every year, and it’s why crop insurance exists. It’s certainly no reason for a special crisis in 1998/99.

Another possibility is the loss of the WGTA subsidy (wheat and Western oilseed price data used here are mostly “in-storage” at Vancouver or Thunder Bay). But this loss was the reason for $1.9 billion in compensation to Western agriculture, and the subsidy had to go in any case because it was illegal under international trade rules. Further, if this is the basis for the crisis, why is there no apparent grain farm crisis in Alberta which also lost the WGTA subsidy? And does this mean a “crisis” every future year because of the need to pay full freight charges?

The final reason makes more sense – short-sighted decisions made by two Prairie governments a few years ago to end GRIP without any replacement program. This occurred despite continuing large, production/trade-distorting grain subsidy programs in the U.S. and Western Europe.

Ontario grain farmers understand the plight of their eastern Prairie counterparts. They know what it’s like to compete in a global market dominated by U.S. and EU farm programs. They remember what it was like before GRIP. That’s why they’ve fought to maintain GRIP in Ontario – and why they don’t understand the decisions made in two Western provinces a few short years ago.

Something must be done in the near term. Quite frankly, it’s not rosy for many Ontario grain growers, either, even with the prospect of 1998/99 benefits from GRIP – or market revenue insurance, as it’s called within Ontario.

But how can a national government complain about international inequities in levels of producer support, when the imbalances are large here at home? Is it the role of the Government of Canada – and Canadian taxpayers – to continue to provide disproportionately greater financial support and investment for agriculture in some regions of the country rather than others?

1