We’ve watched extended media coverage of the “farm crisis” in Manitoba and
Saskatchewan, accentuated since May with pictures of flooded fields and farm rallies. By comparison, all has seemed
quiet in Ontario and Alberta.
Federal statistics show provincial farm income has declined more in the eastern Prairies than elsewhere in Canada.
Apparent conclusion: Economic conditions are worse there than here.
But is it really different there? If so, why?
First, there are the wet fields and inability to plant. Ontario farmers know this problem well. But when it has
happened here the response has been crop insurance – specifically the unseeded acreage benefit (USAB). Why isn’t
it the same now in the West, especially since Manitoba and Saskatchewan recently revamped crop insurance, and governments
pay a higher percentage of premium costs there than in other provinces?
USAB is part of basic crop insurance in Saskatchewan, but not in Manitoba, where it’s an option very few farmers
purchase. To us, that means the cries for special assistance in Manitoba are a result of flawed crop insurance
and/or non-usage by farmers, and a provincial government seeking re-election.
The other component of income for crop farmers (who dominate agriculture in both Manitoba and Saskatchewan) is
crop prices. When crop prices are down, total provincial farm income is down proportionately more there than in
other provinces. And prices are sure down now.
But is it any different for a grain and oilseed farmer in those provinces than in Ontario? Grain and oilseed prices
everywhere in Canada are affected by the same global price trends – and by the same American and European subsidies.
Agriculture and Agri-Food Canada projects Canadian average wheat prices to be down by 10.5 per cent in 1998/99
and 12.5 per cent in 1999/2000, versus 1997/98; barley down by 12.3 per cent and 14.2 per cent respectively; and
corn by 21.4 per cent and 17.9 per cent. Average canola prices are projected down by 9.5 per cent in 1998/99 and
26.2 per cent in 1999/2000, versus 1997/98; and soybeans by 20.4 per cent and 30.9 per cent. It’s the same pattern
for major eastern and western crops. No greater decline in the West.
So what is the difference? Aren’t grain and oilseed farmers in similar straits everywhere?
GRIP is one obvious difference. Prairie governments foolishly abandoned their GRIP programs in the mid 1990s, suggesting
that low grain and oilseed prices were a thing of the past. Money saved was put into NISA accounts and/or revamped
crop insurance (see above), or returned to government coffers. Despite pressures from Ottawa to do the same, Ontario
kept GRIP. It was a smart decision.
A disaster-relief program based on 70 per cent of three-year-average farm income was promoted by western and national
farm groups, as the program needed – despite warnings from OCPA that this formula would fail to meet grain and
oilseed producer needs. Western farm rallies triggered by inadequacies of the new program began soon after its
announcement. It’s no replacement for GRIP.
A second factor is the loss of the Western Grain Transportation Act (WGTA) subsidy, formerly worth about $700-million
per year. WGTA had to go; it’s illegal under international trade rules, and it badly distorted Canadian grain production
and marketing. Prairie farmers got $1.6 billion in compensation (plus $300 million for infrastructure), classed
as capital, to compensate for associated land value losses. The present pricing environment better reflects true
global market realities, and will lead to greater diversification in farm income in the eastern Prairies – changes
to be encouraged. But compensation money is spent, and grain and oilseed prices are lower. In the short term, losing
the WGTA subsidy has meant less Prairie grain farm income.
The media are a third factor. They love Prairie farm disaster stories. And news bureaus located in Winnipeg and
Regina are more likely to do farm stories than their counterparts in Edmonton, Calgary or Toronto (especially Toronto).
So what lies ahead? Further fixes in Manitoba crop insurance are an obvious need. Government money to compensate
for the loss of the WGTA has already been provided. The return of GRIP, or some mechanism to address the specific
income depression for grain and oilseed producers caused by U.S. and E.U. programs (larger than for most other
ag commodities) is required – coupled with continuation of Market Revenue Insurance in Ontario – at least until
rich U.S. and E.U. subsidy programs end. Bad safety net decisions made in the West a few years ago need to be reversed.
But such change cannot occur by channeling disproportionately more federal agriculture money to two provinces.
Manitoba and Saskatchewan already receive a much larger portion of federal ag spending, relative to provincial
ag or agri-food output, than other provinces – an imbalance which must be corrected. More efficient usage (or reallocation)
of existing funds is what’s needed.
Until such adjustments occur, however, we’ll see more Prairie protests. Indeed, if the Government of Canada does
not move quickly to provide assurances for the continued stability of Market Revenue Insurance in Ontario, those
rallies will occur here too – whether covered by national media or not.
It may be different in the West. But not by much.
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