(Resource News International) — The latest U.S. Farm Bill is expected to hurt Canada’s competitiveness in the global marketplace, but the bill’s Canadian critics also acknowledge such support for farmers would be welcome if the Canadian government could do something similar.
The U.S. House of Representatives and Senate both recently voted overwhelmingly in favour of the US$290 billion bill, overriding a veto from President George Bush.
“We’re quite disconcerted with what’s in the Farm Bill for several reasons,” said Bob Friesen, president of the Canadian Federation of Agriculture, pointing to the increase in money allocated to farm subsidies and the implementation of country-of-origin labelling (COOL).
“We think (the Farm Bill) flies in the face of some of the things they’re saying in Geneva at the Doha negotiations,” said Friesen, who farms at Wawanesa, Man.
The bill, he said, allows U.S. farmers to benefit from the “biggest insurance policy in the world,” adding that “it doesn’t make a difference whether or not the money flows, it can be very harmful to our competitiveness around the world.”
In addition, Friesen said the implementation of COOL proposed in the bill “is nothing but a non-tariff trade barrier.” He thought mandatory COOL legislation would go against the North American Free Trade Agreement (NAFTA) and severely disrupt Canadian exports of feeder cattle and hogs.
Stewart Wells, president of the National Farmers Union, said the latest Farm Bill “looks like business as usual.” He thought the underlying fundamentals of the grain and oilseeds markets would be the same, even if U.S. subsidies to farmers were reduced.
“People say the U.S. Farm Bill is responsible for overproduction, but looking at the fundamentals there is no overproduction,” he said, noting that the world has consumed more grain than it has grown in seven of the last nine years.
With that being the case, Wells questioned why grain prices in Canada were typically so low compared to those seen by their U.S. counterparts. He thought Canadian farmers would benefit from a farm bill of their own, which would put some more stability in the market.
“The U.S. Farm Bill, being five years in length, gives farmers there the ability to plan,” said Wells, who farms at Swift Current, Sask. The bill also farmers the assurance that they will get a floor price for their grain, he said.
Friesen also thought it was admirable how U.S. lawmakers look after their own industry first, before worrying about international commitments.
It’s important for Canadian policy to be closer to the U.S., he said, but he also recognized that as Canada is a much smaller player on the world stage it must always work to stay away from implementing policies that trigger trade actions.
The latest U.S. Farm Bill also includes substantial tax credits and grants for the security of essential crop inputs, such as fertilizers, something which puts Canadian agri-retailers at a disadvantage, according to the Canadian Association of Agri-Retailers (CAAR).
In a May 23 press release CAAR, together with the Grain Growers of Canada (GGC), called on the Canadian government to keep the Canadian agricultural sector competitive by sharing the burden of security costs.