Wednesday, 2 March 2011

Be Patient: A Bit About Why

To call it ironic might be too fancy an idea, maybe just dumb. There's a snowstorm of opinion and information out there, but each story, idea, opinion, whatever has been shrinking. I read that no one does blogs anymore, you've got to tweet, 140 characters is all anyone has time for.

When I started in broadcast news in the 1970's radio and television news stories might be two and half, or three minutes long. Clips (what people actually think) thirty or forty seconds.  Now the TV/Radio doctors who advice the big networks say radio news stories (the whole thing) shouldn't be more than thirty to forty-five seconds, television stories a minute and a half.  This at a time when most newsrooms are trying to fill up more time or space with fewer people.  What happens is the poor souls left (and I do sympathize) are expected to produce more, but shorter stories.   There's no time for research, a cup of coffee with a source, and even if you do get more and better information, no format to use it.

When it comes to the farm financial crisis, it's simply old news. The people living through it already know, and for everyone else it's just white noise. For the brave people still with me, let me offer a few thoughts (and yes it will be longer than 140 characters) on what happened (in my opinion).

It's not every Canadian farmer that's in trouble, but producers  in the Maritimes have been disproportionately hard hit and I think there are three main reasons.

During the second world war, with farm boys overseas fighting, Europe's agriculture in ruins,  the Canadian government decided to ramp up food production here through the use of a very "canadian" kind of policy.  Western Canadian livestock farmers had always enjoyed lower feed costs because of the economics of growing grain in  the wide-open prairies. Ottawa decided to set up a program called "feed freight assistance", which guaranteed Maritime livestock farmers feed grain at the same price as their Western counterparts. As well there was a transportation subsidy that helped move products from the Maritimes to Canada's big consumer markets in Quebec and Ontario. Some would argue this created a sense of fairness in food production that gave Maritime farmers as much chance to succeed as anyone else (something kind of Canadian about that isn't there). This was the cost structure most of the regions farmers grew up in. No one got rich, but you could stay in the game.

It all changed in 1995. Paul Martin brought in the most sweeping government cuts ever to try to slay the deficit dragon, and these transportation incentives became subsidies the country could no longer afford.  Hog and to a lesser extent cattle farmers in this region never really recovered. Potato shippers now had to add two to three cents a pound in shipping bills to the cost of production, and on a commodity that's only worth eight to tens cents in an average year, that's a substantial hit on the bottom line. Canada was definitely better off after Paul Marin balanced the budget, Maritime farmers weren't.

Let's take one more look into the past and drag up the name Earl Butz. He was Richard Nixon's agriculture secretary in the 1970's, and a man who probably did more to change agriculture, and what people eat in North America, than anyone else.

Before Butz, the U.S. government played a very useful role in moderating commodity prices. When grain or oilseed crops were abundant, and prices falling, the government would buy up the surplus as a way to support farmer's incomes. If there was a shortage, these stored commodities would be released, as a way to keep prices from spiking.

Earl Butz (and others no doubt)  decided to do something different.   His message to U.S. farmers famously became: "I want you to plant fence post to fence post", and there was a huge incentive. .The U.S.  government would send a cheque in the mail to every farmer, guaranteeing a profit no matter what the market price.  This led to an explosion of low cost corn and soybean., and in turn  the creation of cheap soft drinks, chicken mcnuggets, and you know the rest. Besides making Americans fat, what it did was put Canadian farmers at a competitive disadvantage.  The Maine potato producer gets a cheque in the mail when he grows a grain rotation crop, the Maritime potato farmer doesn't.  U.S. farmers in fact have just come through some of their best years (the ethanol subsidies really helped), while Canadian farmers really struggled.  There were two important stories this week on U.S. farm subsidies.

The third thing is more current. There's been a huge consolidation in the food retail business. In Eastern Canada Loblaws and Sobeys have bought up most of the competing supermarket chains, and just as important their purchasing and wholesale arms. A decade ago Maritime farmers might have had a dozen possible buyers, some of them even local, to sell to. Now there may be two or three, and they'll most likely be working at a desk in Toronto.  This has  certainly benefited consumers, because these Toronto buyers have access to meat and produce from around the world, and can assure their customers the best prices available. 

Farmers say the impact of this goes a bit further than money. It's relationships that have been lost. The idea that a farmer and buyer would look out for each other over time. Sometimes the buyer gives the farmer a break, sometimes it's the other way around. Now farmers find themselves talking to people they've never met, and price is the only currency on the table.

None of these issues will be fixed anytime soon, if ever, and they certainly won't be talked about in the news. They're way too complicated for a minute and a half.  

1 comment:

  1. I'm really enjoying your blog Ian. Twitter and Facebook might be useful to help drive more readers here, but this is the appropriate venue for educating people, like me, who have always found the business of farming a bit of a mystery.