The Traditions of Subsidies
It's a tough one, to be sure. Most countries maintain some form of support for their primary agricultural producers to ensure that such products are immune from challenges from foreign imports. Tariffs are imposed on imports to ensure that their end-cost to the consumer is higher than the products that emanate from the home country. And even countries that traditionally cry foul! about government-sourced support to favoured industries are themselves guilty of doing the same.
Free trade agreements notwithstanding, there is a reason why the World Trade Organization exists as a neutral body which vets trade agreements and considers complaints of unfair trade practices, releasing an opinion that generally falls to the advantage of one partner or another in a trade agreement. Of course, although the complaining partner may claim victory when the WTO brings down an opinion in support of their contention, the other partner may still appeal the decision.
Government subsidies do give the advantage to home producers. That is their original purpose. And although there are times when it makes good practical sense to support native industry, doing so does interfere with and hamper the vision of opening up trade between trading partners, and creating a level playing field. On one hand, it makes sense to protect a country's agricultural producers; what they produce is fundamental to a country's ability to fend for itself.
On the other hand, the trend has long been and is growing, to open up new global trade opportunities. In many ways subsidies are seen to be retrogressive in nature; those industries that are unprotected have to excel in a competitive world of advantage-seeking and greater trade opportunities. The pampered, tax-subsidized industries can simply rest on their laurels, they need make no extraordinary effort to excel at production-and-trade.
And then there is the supply management system in Canada. Where government goes beyond assistance to primary producers into the realm of helping them to set prices, which just happens to be detrimental to the consuming public. As has been pointed out often enough there are thirteen thousand dairy farmers in Canada, serving a population of 34-million. Dairy farmers must buy a license for each of their lactating cows.
Those licenses are expensive, and they are finite. The end result is that dairy products, from milk to butter and cheese and anything made of milk ingredients are far more expensive for the consumer to purchase than they would be under a non-supply-management system, guaranteeing dairy farmers a large return. The preponderance of dairy farms in Canada exist in Quebec, and in Ontario. The continuation of the dairy marketing board is costly, and it is highly politicized.
Canadians pay a hugely inflated price for dairy products, and dairy farmers receive a hugely inflated price for their products. It cannot be argued that mixed-vegetable and -fruit farmers are not providing as important a service to consumers, yet they must make it on their own; their annual revenues bear no resemblance to those receiving government support, and their produce is important nutritionally to the broad population.
There is the egg marketing board, the chicken marketing board, and the wheat marketing board. All controlled by a syndicate that owes itself to government tax-paid support and through laws that have been imposed to ensure marketing 'assistance' to key production industries. They are key because they are fundamental to the consuming needs of a country; basic food supplies.
Monopoly production that unduly favours an industry through the support of tax dollars, while in the process penalizing the very consumers whose taxes pay for that support makes no real good sense. Perhaps it is past time to level the playing field by either providing some degree of subsidy to all farmers to ensure the country's self-sufficiency, or to drop the support given to a favoured few.
On the other hand, as long as Canada keeps looking abroad to advance our interests through greater trade opportunities, perhaps the writing is already on the wall. And criticism from our potential free-trade partners who may themselves have had to make hard decisions and deal with their own government subsidies to key industries is seen as legitimate, urging Canada to do likewise to qualify for inclusion.
Free trade agreements notwithstanding, there is a reason why the World Trade Organization exists as a neutral body which vets trade agreements and considers complaints of unfair trade practices, releasing an opinion that generally falls to the advantage of one partner or another in a trade agreement. Of course, although the complaining partner may claim victory when the WTO brings down an opinion in support of their contention, the other partner may still appeal the decision.
Government subsidies do give the advantage to home producers. That is their original purpose. And although there are times when it makes good practical sense to support native industry, doing so does interfere with and hamper the vision of opening up trade between trading partners, and creating a level playing field. On one hand, it makes sense to protect a country's agricultural producers; what they produce is fundamental to a country's ability to fend for itself.
On the other hand, the trend has long been and is growing, to open up new global trade opportunities. In many ways subsidies are seen to be retrogressive in nature; those industries that are unprotected have to excel in a competitive world of advantage-seeking and greater trade opportunities. The pampered, tax-subsidized industries can simply rest on their laurels, they need make no extraordinary effort to excel at production-and-trade.
And then there is the supply management system in Canada. Where government goes beyond assistance to primary producers into the realm of helping them to set prices, which just happens to be detrimental to the consuming public. As has been pointed out often enough there are thirteen thousand dairy farmers in Canada, serving a population of 34-million. Dairy farmers must buy a license for each of their lactating cows.
Those licenses are expensive, and they are finite. The end result is that dairy products, from milk to butter and cheese and anything made of milk ingredients are far more expensive for the consumer to purchase than they would be under a non-supply-management system, guaranteeing dairy farmers a large return. The preponderance of dairy farms in Canada exist in Quebec, and in Ontario. The continuation of the dairy marketing board is costly, and it is highly politicized.
Canadians pay a hugely inflated price for dairy products, and dairy farmers receive a hugely inflated price for their products. It cannot be argued that mixed-vegetable and -fruit farmers are not providing as important a service to consumers, yet they must make it on their own; their annual revenues bear no resemblance to those receiving government support, and their produce is important nutritionally to the broad population.
There is the egg marketing board, the chicken marketing board, and the wheat marketing board. All controlled by a syndicate that owes itself to government tax-paid support and through laws that have been imposed to ensure marketing 'assistance' to key production industries. They are key because they are fundamental to the consuming needs of a country; basic food supplies.
Monopoly production that unduly favours an industry through the support of tax dollars, while in the process penalizing the very consumers whose taxes pay for that support makes no real good sense. Perhaps it is past time to level the playing field by either providing some degree of subsidy to all farmers to ensure the country's self-sufficiency, or to drop the support given to a favoured few.
On the other hand, as long as Canada keeps looking abroad to advance our interests through greater trade opportunities, perhaps the writing is already on the wall. And criticism from our potential free-trade partners who may themselves have had to make hard decisions and deal with their own government subsidies to key industries is seen as legitimate, urging Canada to do likewise to qualify for inclusion.
Labels: Agriculture, Culture, Government of Canada, Traditions
posted by Pieface | 6:24 PM
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