The U.S. farm bill is the pickpocket in the room

After 35 years of service with the Ontario Federation of Agriculture, Michel Bourgon lamented that "we have never been able to solve low commodity prices" and get a consistently fair return for farmers.

The question is why? There have been numerous factors over the years but today the answer can be found on just about any patch of cropland across the expansive United States. The owner of that patch of land pockets a healthy hand out year after year and as part of the bargain he happily accepts being a perennial price taker. Meantime, the American beef, pork and dairy producers wink along with him because they all want cheap grain. Until recent events caused a price spike, almost the entire farm sector was propped up by this cheap grain. Farmers there give thanks to the multi-billion U.S. farm bill, which is like a man with a megaphone announcing cash-for-life and he’s got the suitcases full of money to prove it. To a Canadian farmer he’s the pickpocket in the room. And a damned good one because he gets everyone’s wallet every time.

Despite the fact that the Canadian agricultural industry runs almost ever rural economy, while creating a huge processing sector and spinning off an enormous amount of related business, including this newspaper, governments are not pro-farming enough to want to compete with the megaphone man. Canadian farmers have for years complained bitterly about the U.S. farm bill that allows their American counterparts to "farm the mailbox." In 2006, the U.S. government paid out $286 billion in subsidies to U.S. farmers. Ontario farmers were subsidized too. But corn producers, for instance, could calculate in 2005 that a Michigan producer would receive about $100 more per acre in a subsidy payment. That was the difference for some Ontario farmers between profit and loss.

Now things have changed. In the United States, farm profits, farm prices and farm land are at record highs. The ethanol boom wants so much corn that the price is pushing $6 a bushel. And many in the chattering classes are now more angry about American farm subsidies than Ontario farmers. In fact, Deroy Murdoch, a researcher for the U.S. think tank Hoover Institute, argues that the U.S. Congress should kill the costly U.S. farm bill. The U.S. Conservative Weekly Human Events trumpeted Murdoch’s argument on its front page.

Said Murdoch: "Farmers respond that fuel, seeds, and other inputs are costlier. True, yet net farm income grew 48 per cent between 2006 and 2007. Did you get a 48 per cent raise last year?"

Murdoch also argues that it’s not mom and pop farm operations who are benefiting. "Most U.S. agriculture involves corporate mega-farms."

The Heritage Foundation notes that 51 per cent of subsidies go to commercial farmers who have an average income of $200,000 and an average net worth of $2 million.

Murdoch calls the U.S. farm bill a multi-billion dollar taxpayer shake down.

"Since 2002’s $73.5 billion agro-bailout, farm profits have rocketed 118 per cent, from $40.1 billion to last year’s $87.5 billion," he said. "Also, farm land prices have risen 79 per cent since 2002."

The U.S. farm bill is creating food insecurity in other countries, where we’ve seen riots, Murdoch said. Conjuring up images of the French revolution, he argues that if today’s sky high incomes and sky-high subsidies were happening in France, "citizens would be at the gates of Versailles, justifiably screaming for justice."

An editorial titled "Cut welfare for farmers" in USA Today argued: "Early on, reformers had a potential ally in President Bush, who signalled that he was fed up with excessive farm subsidies and wanted tough new limits… it’s long past time to rein in the farm subsidy system." There is a plethora of similar sentiment seething from coast to coast.

While Canada doesn’t have the political will to compete with the U.S. treasury, Canadian farmers can take some comfort in knowing there are new lobbyists out there hoping to even the playing field a little. Ironically, they are American.