MYTH BUSTER
Subsidies, not supply and demand, control crop prices: Economist

WINCHESTER — A University of Guelph economist destroyed entrenched positions of provincial and federal politicians in an hour of penetrating analysis at the corn producer’s annual meeting here.

"Our (farmers) biggest problem is we don’t mean a damn thing to these people (politicians)," Brian Doidge told the audience of 200. "We’re only two per cent of the population and we don’t cut the mustard the way we used to.

"We’re no further ahead than we were two years ago," he said, commenting on the need for a long-term safety net program. What’s more, Canadian politicians don’t understand that grain and oil seed prices are no longer determined by supply and demand but by subsidies, he added. Over the last five years, the stockpile of grain has descended well below what used to be considered critical and prices head down at the same rate as the supply on hand, he said.

He blamed much of the problem on the United States. It has five per cent of the population but produces 25 per cent of the world’s food. No longer able to compete with places like Brazil, where land costs are much cheaper, the U.S. had to go the subsidy route, he said.

One of the results of policy gone awry is that the grain and oilseed industry is subsidizing the livestock industry through cheap feed.

At the World Trade Organization (WTO) talks a decade ago everyone agreed to cut back on subsidies. But the U.S. rate is now 88 per cent higher than it was 10 years ago and situation is going to get worse, he said. Only Canada took the WTO seriously and cut back on subsidies, he said.

He criticized the argument by agricultural ministries that Canada can’t compete with the U.S. treasury. Nobody is asking them to compete with the U.S. treasury but Canadian farmers want some vision and need assistance, he said.

Doidge proceeded to expose the faulty analysis of government departments, telling producers to bombard their members of Parliament with the truth. He said that it is unfair for politicians to say they want farmers to speak with one voice as some are lifestyle farmers who use the farm to write off other expenses and "They do not like dust, smell or noise." And of the 170,719 farmers in Canada, 16 per cent are retired farmers who live off their pensions, not their farms.

The voice for agriculture, Doidge implied, should be the voice of those feeding the nation. That means the farms producing $100,000 or more in gross sales, which account for 81 per cent of what is produced in Canada, he said. Fewer than half the farms in Canada are making a profit. Ontario is a mirror image of the Canadian scene, he said.

Statistics presented by governments give a distorted picture, he opined. Grain and oil seeds producers are in financial troubles but when livestock farmers increased profits last year by 11 per cent the plight of grain farmers was lost in the overall picture. The federal Liberal government points out that farmers have a higher net income than the average Canadian family. What they don’t say is that farmers have no pensions and the statistical farm family is supported by off-farm income, Doidge noted.