Letter from Saskatchewan

Problems of supply management
may be a welcome improvement

By Paul Beingessner

Meet Paul

Saskatchewan farmer Paul Beingessner has missed only a handful of deadlines in writing a weekly column during the past eight years. He covers Canadian agriculture from a High Plains perspective. His straight-talk style informs readers about corporate influence in national and international agriculture, national ag politics on both sides of the border, and why some farmers do the things they do. Click here for more information about Paul.

TRUAX, Saskatchewan, Canada, November 24, 2003: A half-dozen years ago, I attended a presentation by Lester Brown, then head of the World Watch Institute. Brown was determined to convince his audience of prairie farmers that the problem of surplus food production resulting in low prices was only temporary. The key reason for this, in his mind, was the potential for China to, in Brown's words, "starve the world". Speculation was that increasing population and growing demand for meat would result in China requiring all of the grain currently traded on world markets.

Nor was the problem only limited to China. An expanding global population would eventually result in chronic food shortages and demand that could not be filled. The solution, Brown said, was first to control population growth in all countries, and second, to increase food production using all and any means available.

At least one farmer listening to Brown in that room was secretly and guiltily hoping that the predicted apocalypse would occur, and the sooner, the better.

Like most predictions of the end of the world as we know it, Brown's version of gastronomical Armageddon proved to be a bit premature. While China does import significant amounts of grain some years, it also exports significant amounts, particularly of feed grains. True, China's population is urbanizing and that generally leads to higher meat consumption and hence higher overall demands for grain, but China has by-and-large shown itself able to increase production as demand rises.

Canadian farmers once harbored the myopic notion that we were the "breadbasket of the world". One of the unfortunate results of globalization has been that we can no longer delude ourselves about our importance in the scheme of world survival. The world has many breadbaskets, some with far greater potential than Canada. Brazil, for example, is said to have one-fifth of the world arable land. It is land that is fertile and underutilized by western standards. Nor is Brazil lacking in technology. Many Brazilian farms differ little from those in Canada and the U.S.

Rather than starve, it appears that those people of the world with the money to purchase food or with economic and political structures that encourage food production will have food a-plenty. It pains me to rain on this parade of global good news, but for farmers this is hardly a happy expectation. A world with lots of food is a world much like this one – a world where low prices cause a cycle of over-production and thus make the situation worse.

The continuous talk, then, of increasing exports as the way to increase farm incomes in Canada is quite difficult to swallow. Our food exports have increased dramatically, while farm prosperity has not followed. This fact lends some credence to the argument, often made by those opposing current global trade initiatives, that focusing on exports is of great help to the transnational companies that control the world grain trade, but not of much use to actual farmers.

The solution posed by some is to focus on producing for domestic demand and relying less on trade. A country like Canada is in a difficult position under this scenario since our production capability exceeds our relatively small population's ability to consume. We do, however, have a few examples of limiting production to the domestic market. This is found, of course, in the supply managed poultry and dairy sectors.

Supply management relies on tariffs to keep out imports. Such tariff protections are coming under increasing threat from global trade agreements. Internally, in Canada, some farm groups and groups like the Canadian Agri-Food Trade Alliance think they can benefit from destroying supply management. In Ontario, one small group of dairy farmers wants to export milk to the U.S. and is fighting supply management.

As a farmer, I am not involved in the supply managed sectors, but I have always been aware that these producers generally enjoy better incomes than other farmers. Equally appealing, these incomes have been derived from consumers, rather than from governments. True, there are problems with the supply-managed sector, one being the cost of quota, which seems often to exceed the real value. However, the price of land for the rest of us also often exceeds its ability to produce.

Since the notion of exporting our way to prosperity seems as unlikely as China starving the world, it may be time for a careful examination of the benefits of controlling production. The U.S. did this for many years with its Conservation Reserve Program.

With a new leader set to take the stage in Ottawa, perhaps there is an opportunity for Canada to examine the benefits and problems associated with supply management. A single-minded pursuit of the goal of increasing exports reminds me of one definition of insanity – doing the same thing over and over and expecting different results.

© Paul Beingessner, beingessner@sasktel.net . The author is a columnist, transportation consultant and third-generation farmer in Truax, Saskatchewan.