Index
OMAFRA Budget Cuts
Although the 1999/2000 Ontario budget contained cuts to the core budget for the Ontario Ministry of Agriculture,
Food and Rural Affairs (OMAFRA) – and the media have been full of predictions of more for 2000/2001 – ministry
announcements in early December about huge cuts in specific programs still came as a rude shock.
One of the biggest cuts is to OMAFRA agricultural and rural extension services, where virtually all agricultural
and rural representative positions will be eliminated (the exception being a few in Northern Ontario) along with
regional soil and crop advisers and related positions. All that will remain will be 13 regional contact offices.
It looks like their function will be program delivery rather than agricultural and rural leadership.
The ministry is attempting to maintain a network of provincial specialists and ‘leads’ (corn extension specialist
Greg Stewart is one of the latter) at regional offices, University of Guelph campuses and at the OMAFRA head office
in Guelph. Increased reliance on the Internet and ‘800’ telephone services will be part of the new approach.
Attempts by the provincial government to portray the changes as being consistent with recommendations with those
of the Agricultural and Rural Advisory Services Study (ARASS) of 1997 are somewhat misleading. While the ARASS
report did state the need for greater emphasis on top-quality provincial specialists (‘experts’ was the term used
in ARASS) and use of the Internet, it also recognized the need for a solid array of county and regional agricultural
and rural offices to handle introductory calls and to provide local leadership – particularly in the rural area.
The ARASS report included a recommendation for more local OMAFRA support for 4-H.
So far, the response from farm organizations to the cutbacks in local extension services and office numbers has
ranged from outrage (president of Ontario Federation of Agriculture) to applause (staff of Christian Farmers’ Federation
of Ontario). Most commodity organizations, like OCPA, are busy sorting out the implications for their individual
commodities. OCPA does appreciate the fact that the position of Corn Lead, co-funded by OCPA, OMAFRA, and the University
of Guelph, was unaffected by the cuts announced in December.
In expressing reaction to the cuts, it’s important that farm groups direct their criticisms to the Government of
Ontario and not ministry staff members, even though the latter have been obliged in many cases to be the messengers.
It’s also important to recognize that there’s no reason to assume cuts announced in late 1999 will be the last.
Finally, recognition is needed that the changes represent a distinct change in the relationship between OMAFRA
and the farm and rural community of Ontario. The twentieth century began with the Government of Ontario – through
the Ontario Department of Agriculture – beginning to play a direct leadership role at the local level through the
creation of county agricultural offices and ‘ag rep’ positions. This role appeared to reach its peak during the
‘Minister Bill Stewart’ era of the 1960s, though Stewart’s legacy continued for many years to follow. The downsizing
of the 1990s, of which announcements of December 1999 are but the latest chapter, represent the reverse. We can
probably expect to see more cuts in the first years of the next decade as the farm population of Ontario continues
to decline in political significance, rural Ontario changes (less dependence on primary agriculture being one change)
and the pressure continuing to cut taxes while increasing government expenditures on health and, perhaps, education.
The other major cut in OMAFRA spending announced by the Government of Ontario in December was in contract funds
to the University of Guelph. Details were unclear at the time of writing, though the instructions from OMAFRA are
that the cuts are not to occur in research. This would seem to leave only two other areas – diploma education,
and other services such as laboratory services. (A direct role for the University of Guelph in agricultural extension,
financed through OMAFRA contract funds, ended several years ago.) Alfred College and its supporters have been particularly
vocal in their expressions of fears about potential cuts – perhaps with good reason given the far higher per-student
costs and lower tuition costs for diploma education at Alfred ($17,946/student cost for OMAFRA and $281/year tuition
at Alfred, versus about $4,000/student for OMAFRA and $1,000/year tuition at Ridgetown and Kemptville, and about
$1,500/student for OMAFRA and $1,500/year tuition for diploma training at Guelph, according to University of Guelph
budget numbers).
Government Shifting to Project
Funding
Another obvious pattern in Government of Ontario funding for OMAFRA in recent years has been a shift to short-term
project/program support, compared to the historic emphasis on infrastructure. We’ve seen a sequence of these in
recent years – Grow Ontario, the Rural Youth Job Strategy, and – most recently – the $35 million/year ‘Healthy
Futures’ program for OMAFRA announced in the 1999/2000 Ontario budget.
Although full details of the Healthy Futures program are still to be revealed, it is expected the funding will
be used to support new projects in the areas of research, food quality, environmental integrity and new market
development...reflecting Ontario budget statements of last May, and recommendations of the Farmers of Ontario lobby
initiative.
Governments like this approach because it can be coupled with more fanfare than the traditional method of continuing
to spend most money on low-profile infrastructure support. Also, it does not involve long-term financial commitments
– typically one- to three years – and it allows for a rapid change in focus where such a shift is deemed appropriate.
The project-oriented approach is less likely to allow funds to be used on programs which have outlived their need,
can increase accountability, and permits quick change consistent with the needs of a rapidly changing society.
But it can also be wasteful in that one- to two years are often needed for a program to be fully functional. As
a result, the program often becomes streamlined about the time that phase-down begins. In addition, short-term
funding tends to promote short-term thinking focused on how to use money quickly, and it discourages continuity.
Long-term support of essential programs is not impossible with this approach. For example, almost all research
at the University of Guelph (including that funded by OMAFRA) has been financed in this manner for decades – even
plant breeding and long-term tillage and crop rotation research.
However, this approach is difficult to reconcile with the traditional OMAFRA role in agricultural extension and
teaching where continuity is critically important.
Whether farmers like it or not, however, short-term project/program funding can be expected to figure even more
strongly in government budgetary plans for the future. Farm leaders need to concentrate future efforts directed
at the maintenance and enhancement of the OMAFRA budget, on the issue of how to meet farm and rural needs using
short-term budget planning. How to couple long-term vision with one-to-three year budget horizons. It appears to
be a question of not whether, but how.
Seattle and World Trade Organization
OCPA members will have been deluged with news, analyses and opinions about the failed Seattle World Trade Organization
(WTO) talks long before this newsletter is printed, so comments herein will be kept to a minimum.
All the pre-Seattle hype notwithstanding, there was no expectation on the part of OCPA directors that the Millennium
Round of negotiations would proceed any faster than the Uruguay Round – which began in late 1986 and ended in early
1994. The national leaders and ministers who signed the Uruguay agreement were generally different from those who
began the process seven years earlier. There is no reason to expect it to be different this time. Indeed, a lot
of attention is being given to the views of U.S. President Bill Clinton and on whether he’ll ‘fast track’ negotiating
approval from the U.S. Congress. In fact, the real question may be the extent to which the 2004 U.S. presidential
election will affect the Millennium Round outcome.
At this stage, it’s far from clear what the ultimate issues will be as the negotiations – at least in agriculture
and services – reach the critical stages of negotiations several years from now.
If the grain subsidy and price war continues to intensify – as it will, unless inclement weather and low crop yields
cause a temporary respite as they did during the mid 1990s – fiscal pressures may force the Europeans and Americans
to seek a truce. The same occurred part way through the Uruguay Round negotiations when the U.S. and EU reached
a bilateral ‘Blair House’ accord to limit farm subsidies and production.
The effect of the anti-trade forces and those who want trade linked to environmental, labour and all kinds of other
issues will not disappear, though it remains to be seen how dominant and persistent this influence will be. Although
anti-free-trade groups appeared as a homogenous mass during the Seattle protests, they are anything but unified.
Some groups want a strong focus on so-called soft issues in the WTO negotiating mandate. Others want exclusion,
hoping to have more influence through venues such as the ongoing international negotiations on biodiversity.
Domestically, there appear to be fewer rifts among Canadian farm groups in trade positions than was 10 years ago.
Though philosophical differences persist among those supportive of supply management versus those dependent on
international trade, these are not black-and-white differences such as those which existed in the debate about
‘Article 11’ a decade ago. In fact, it continues to appear that arguments about the future role of the Canadian
Wheat Board will be more prominent. This is particularly so, given that the EU appears to be siding with the U.S.
in its condemnation of the role of ‘state trading’ entities. However, much can be expected to change over the next
five- to seven years needed to reach a new trade agreement.
It’s encouraging to see the way all other WTO member countries were united – in opposition to the U.S. – in seeking
changes to current anti-dumping rules which permit duties to be imposed whenever goods are imported at less than
calculated cost of production (an event which occurs about half of the time, in the case of agricultural commodities).
Trade in genetically modified crops and foods, as expected, was a central agricultural trade issue on which there
was also little agreement in Seattle.
National Safety Net Discussions
As expected, there wasn’t much consensus at the meeting of Canadian agriculture ministers in Toronto in early December
on the nature of a new national federal-provincial agreement on safety net program design and the allocation of
federal funds. Ministers from Manitoba and Saskatchewan continued to argue for continuation of the status quo where
a proportionately large portion of federal safety net funds goes to those provinces. In fact, those provinces are
asking for an even larger share of federal funding, despite the absence of strong statistical support for their
case. (Prairie farm income will be much higher than early projected for 1999, thanks to bumper crops in many areas
of those provinces).
OCPA expresses appreciation to Ontario Premier Mike Harris and Minister Ernie Hardeman, Ontario Minister of Agriculture,
Food and Rural Affairs, for their aggressive position that any new national agreement must include a significantly
larger share of federal safety net spending in Ontario. It’s been surprising the amount of negative comment which
has been generated by the Ontario government’s position that, in the absence of a satisfactory national agreement,
Ontario will go its own way in safety net program design – surprising, given this approach has been used in Quebec,
with federal compliance, for years. Even with the federal Agricultural Income Disaster Assistance (AIDA) program,
Quebec merely accepted $117 million (or more) in new federal funds while depositing the money in its own ‘ASRA’
safety net program account.
As expected, no enthusiasm was expressed by any minister for the AIDA program. It is unclear if any province will
match the conditions for enhancing AIDA, announced by federal agriculture and agri-food minister Lyle Vanclief
in November.
Since OCPA’s creation in late 1982, federal-provincial relationships on safety nets have never been more fractious
than they were in the dying days of 1999.
Risk and Equity
In the present chaos of federal-provincial safety net negotiations, a federal study on equity and risk has received
remarkably little attention. This is unfortunate. The study addresses, head-on, the eastern Prairie argument that
higher federal safety net spending is merited there because farming is more risky.
The study, ‘Farm Level Income Variability,’ was completed by the Policy Branch of Agriculture and Agri-Food Canada.
It examined the variation in NISA gross margins of 88,000 farmers distributed across all Canadian provinces, for
10 years from 1988 through 1997. The measures of variability used included coefficients of variability in annual
gross margins, and the existence of ‘big spikes’ when yearly gross margin differed from the average annual gross
margin by more than 2.1 times the average annual standard deviation. (The coefficient of variability and the standard
deviation are both measures of the extent to which values in individual years differ from the long-term average.)
There was remarkably little difference across provinces in the proportion of farms which had a large year-to-year
variability in income, or ‘big spikes’ in farm income, or in which variability was trending higher with time. Averaged
across Canada, about 12 per cent of farms were classed as having large volatility, 41 per cent with small volatility,
24 per cent with ‘big spikes’, 12 per cent with growing variability, and six per cent with declining variability.
The corresponding numbers for Ontario, Manitoba and Saskatchewan were 12, 13 and 10 per cent for farms with large
volatility; 38, 43 and 44 per cent for small volatility; and 25, 22 and 24 per cent for those with ‘big spikes’
in farm income. Interestingly, the most notable divergences were for Prince Edward Island and New Brunswick, where
the number of farms classed as having big spikes or large volatility was distinctly above average – apparently
because of large volatility in potato farm income. Nationally, the portion of potato farms classed as having larger
volatility in incomes was about twice as high (30 per cent) as for any other commodity grouping.
Among farms classed as grain and oilseed farms, the proportions of farmers in various variability classes were
virtually identical for Ontario, Manitoba and Saskatchewan. However, Alberta had a larger per cent of farms with
large volatility (16 per cent, versus 11, 12 and 9 per cent for Ontario, Manitoba and Saskatchewan, respectively).
Results of the study support one dominant conclusion: The argument by eastern Prairie governments and farm organizations
that higher federal support for agriculture is justified for that region because of greater financial risk is unfounded.
Farm income is no more volatile in that region than any other part of Canada.
Ontario Safety Net
Update
OCPA expresses appreciation for the decision by the Government of Ontario to provide $30 million in additional
safety net funds to ensure that Ontario matches the federal safety net allotment for the province in the ratio
of $4 provincial for every $6 in federal funds. At press time, no decisions had been made on the use of these additional
funds. OCPA directors are pleased that Ontario has not chosen – at least to date – to mimic the federal decision
to use additional funds for negative margin coverage with the AIDA program. The federal government has indicated
that it expects this decision to increase the number of farmers receiving AIDA support by only two per cent.
Participants in the Ontario Market Revenue Insurance program will have received a net final payment of 8.81 cents/bu
on eligible corn crops grown in 1998. If you have not received a payment and you believe one is merited, contact
Agricorp or OCPA immediately.
No decision has been announced yet on the OCPA request for an interim payment of about eight cents/bu on the 1999
crop.
There is nothing new to report on NISA.
Average corn crop insurance premiums will decline by 8-15 per cent in 2000 compared to 1999. OMAFRA has stated
that it will be chopping core funding for Agricorp administration by at least five per cent for 2000/01, a decision
which will obviously affect crop insurance operations. One means of cutting costs may be an expansion of the self-declared
yields procedure used for winter wheat in 1999. With lower corn crop insurance premium costs and aggressive marketing,
the acreage of insured corn should increase again in 2000, from the record-high, 1.05 million acres insured in
1999.
Biotechnology Update
The public relations battle over the merits of genetically enhanced crops and foods continues, with the activists
continuing to scare consumers with speculation about latent dangers of genetically engineered crops – and then
using the results of surveys of alarmed consumers as ‘proof’ that the issue is one of public concern rather than
activists’ agenda. And so the fictitious stories continue of fish genes in grocery store tomatoes and scorpion
genes in commercial corn, and of the supposed absence of testing of health effects of the resulting genetic changes.
Their ‘factual’ ammunition remains the same:
- Reports of U.S. research summarized by the University of Wisconsin showing
an average yield decrease for Roundup Ready soybeans in 1998. This ignores the fact that the research actually
showed a yield range from +13 per cent to -14 per cent with Roundup Ready beans, coupled with the fact that the
near-perfect weed control in university plots does not always match that of farm fields where the big attraction
with Roundup Ready technology for many farmers is better weed control for less money.
- Repeated reference to Losey’s preliminary lab results from last May
at Cornell University suggesting negative effects of Bt corn pollen on Monarch butterflies...but no mention of
the much more numerous and detailed studies which have followed showing the reverse.
- Canonizing the results of Dr. Pusztai at the Rowett Research Institute
in Scotland suggesting negative effects of biotech potatoes on laboratory rats, even though his results were found
to be meaningless by the Royal Society and numerous other qualified researchers.
- References to mandatory labeling practices in the United Kingdom, despite
the fact that these are known to be a near-sham, targeting products of genetic engineering in North America, but
not those produced by artificial mutation and related techniques in Europe.
One advantage of this repetition and lack of new information is that
most media – and, we suspect, consumers – are becoming tired of the debate. Media coverage has shrunk substantially
in recent weeks – after having peaked during the Suzuki debacle – but a re-emergence of this as a major media issue
could occur at any time.
One exception is the Canadian Broadcasting Corporation which continues to provide one-sided coverage on this issue,
with little more than a token attempt to tell the other perspective. Those who have watched recent features by
CBC’s The Fifth Estate and Marketplace will recognize the legitimacy of this concern. The only positive part is
that viewership for these shows is generally low. On a positive note, it is pleasing to notice the manner in which
coverage by the CBC National has become much more balanced on this issue in recent weeks. And Canadians do watch
The National.
OCPA again expresses its appreciation to the members of AGCare, Doug Powell at the University of Guelph, and Gord
Surgeoner, president of Ontario Agri-Food Technologies for their tireless and skilled efforts to ensure that the
public is exposed to both sides of the debate. The lack of high-profile producer and industry support outside Ontario
has been disappointing.
Potato farmers in Atlantic Canada and Manitoba will pay heavily for their failure to speak out in support of Bt
technology for Colorado Potato Beetle control, thanks to the decision by McCain’s not to purchase Bt-enhanced potatoes.
This is probably especially true in New Brunswick and Prince Edward Island where public concerns about heavy pesticide
use in potato production continue to mount.
There is also unease about the continuing unwillingness of oilseed producers in Western Canada to speak out publicly
in support of genetically enhanced canola.
OCPA directors do appreciate the support which they have generally received
from Ontario corn farmers in support of an aggressive public relations effort to describe the good features of
genetically enhanced crops. And there is evidence that the efforts of AGCare, OCPA and other Ontario farm groups
is having an effect.
Doubtlessly, this will be a key subject of discussion at county corn producer meetings this winter.
Information presented in last month’s newsletter about Nacan’s interest in starch made from non-genetically enhanced
corn has proven to be incorrect. The demand is relatively small, and the company now feels that this can be best
supplied from a plant in the U.S. There was interest in producing non-GE starch at Collingwood, but only if the
corn could be purchased for a minimal premium cost. The figure suggested by OCPA of 25- to 35 cents/bu was judged
too high by the company. Casco continues to state that it has no intentions for the foreseeable future of switching
to the milling of non-GE corn.
The understanding from the trade and Casco is that the delivery of corn approved for importation into Europe, to
Ontario plants, is proceeding without incident. Periodic checks of corn and corn products (at about $500 per sample)
have shown no trace of non-approved hybrids.
A few small feed companies have announced intentions to purchase only non-genetically enhanced corn beginning in
the fall of 2000. It’s not clear the extent to which this will extend to a requirement for non-GE soybean meal,
or for non-GE pharmaceuticals (in the case of medicated feeds). Premiums for non-GE corn have not been announced,
nor have tolerances or testing procedures. This announcement anticipates the development of niche export market
opportunities outside North America. Since biotech plant genes do not persist in animal products (they are broken
down within seconds during digestion), it appears that an audit and paper trail process will be needed to assure
foreign buyers, just as occurs now (or so we’re told) with organic produce. Hopefully the reward for companies
involved in this initiative – and for farmers supplying them with corn – will be substantial price premiums.
Hog farmers especially need to watch this development closely, because Bt corn is known to be less likely to contain
mycotoxins than non-Bt corn. In addition, thanks to research funding being provided by OCPA, Ontario Pork, several
companies and both Agriculture and Agri-Food Canada and the Ontario Ministry of Agriculture, Food and Rural Affairs,
genetically enhanced corn is now being developed at the Eastern Cereal and Oilseed Research Centre and the University
of Guelph which is expected to be much more resistant to Fusarium mold formation. It’s conceivable the premium-priced
feed made from non-GE corn will be the feed which is most likely to contain compounds toxic to animals (and humans).
This debate has nothing to do with good science or common sense.
Finally, the national committee created by the Canadian General Standards Board (CGSB) – as a result of a request
by the Canadian Council of Grocery Distributors – to develop voluntary labeling standards for GE foods, met for
two days in mid November. A second two-day meeting occurs in January. The federal government seems content to let
all questions on GE labeling reside with the CGSB committee for now. This process will not occur quickly, and there
is much to discuss.
No food company seems interested in labeling food as containing GE ingredients – or ingredients made using GE organisms
– so the real issue involves the opportunity to label foods as not containing GE-based ingredients. This could
prove very difficult, and costly.
Some assume this is a prelude to mandatory labeling, but this is not necessarily true. There are some major trade
implications to be addressed in the institution of mandatory labels – especially for imported foods. For example,
can Canada force importers to label GE foods if there is no scientific reason for doing so (i.e., in violation
of Canadian obligations under the WTO Sanitary and Phytosanitary Agreement, which Canada has fought so hard to
defend).
The Christian Farmers’ Federation of Ontario and other groups seeking mandatory labeling seem to believe the answer
to this question is yes, but others more familiar with trade law aren’t so sure.
This will be a subject of active discussion in 2000.
Canada Grains Council
The Canada Grains Council, of which OCPA is a member, has a long history of providing opportunities for companies,
organizations and government staff interested in grain issues to meet and discuss issues of common interest. In
recent years, this organization has fallen into partial disarray as the Government of Canada has withdrawn funding
support, and the private sector has been only partially willing to make up the difference. There also has been
debate about whether the council should take positions on contentious issues, or simply serve as a vehicle for
communication.
A key December meeting in Winnipeg concluded with a recommendation that the council continue with a modest financial
base, with efforts being concentrated on communications and a couple of well-attended national conventions per
year. Canada Grains Council conventions have historically been excellent events for those interested in grain issues
to meet and talk about common interests. There is no other national forum at which such discussion presently occurs.
Bt Protein from Bt corn in Soil
In early December, the journal Nature published a report by a team of New York University researchers in which
they observed that Bt proteins could be found in fluids exuding from Bt corn roots and that active Bt toxin could
contaminate soil in which Bt corn is grown. The researchers indicate, however, much more research is needed to
determine if these exudates pose a real risk under field conditions, or in fact, might turn out to be helpful in
controlling root pests.
Some salient points merit consideration in the debate this publication will undoubtedly incite:
- Bacillus thuringiensis, the organism from which the Bt protein used
in Bt corn and the widely used organic Bt insecticide is derived, is a native soil organism and widely present
in soil.
- The potential ecological effects of Bt protein in the soil have been
thoroughly evaluated in the course of the pre-market safety assessments of Bt corn.
- The Bt foliar insecticide had been widely used in forestry and agricultural
applications (including by organic crop producers) for many years, resulting in significantly greater deposits
of the Bt protein on soils than the small amount of Bt protein incorporated into the soil in the tillage of post-harvest
Bt plant residues.
- Studies with beneficial insects that are actually found around cornroots
(e.g. earthworms) have shown there is no deleterious impact of Bt crops in soils, and,
- Experiments show that Bt proteins derived from plant material decay
rapidly in soils to a point that fails to demonstrate any impact on target (susceptible) insect pests after 7 days.
CORN PRICES (December 7,
1999)
| Period: Oct. 1 - Oct. 31 |
Approximate Tonnes Marketed
|
Average Weighted Price
|
| 1999-00 |
284,900
|
$112.76/tonne
|
| 1998-99 |
486,800
|
$119.35/tonne
|
|
1997-98
|
169,800
|
$163.25/tonne
|
| The above figures are based on levies received by OCPA for commercial
sales. |
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