A Farmer Explains Capitalism
- September 28th, 2016
Karl is long gone now. I first met him when he was 75 and I was in my early 20’s. A farmer friend of mine who lived across the road from Karl’s farm introduced us. Karl was born in Denmark near the start of the last century. He had come to Canada in the mid 1920’s, an optimistic young man in his own early 20’s, lured by the government of the day’s offer of free land to farm. The land turned out to be in Manitoba, north of Winnipeg. After a few years Karl moved to Southern Ontario where the land was better and the winters were shorter and not as harsh.
When my friend and I knocked on Karl’s door it was mid-afternoon and we were ushered into the kitchen, the normal farm home visiting spot that usually has its own convenient outside door. Karl had already been a widower for a few years but some vestiges of a woman’s touch still remained in the room with its old wooden chairs and worn linoleum floor. His kids had long since grown up and left the farm, so Karl lived alone. He was wearing the standard farmer work clothes: faded green work pants and shirt, suspenders and a matching cap. Karl was old school so his cap was plain, without the logo of some seed company or tractor manufacturer.
Karl’s attitude was old school too. He came from a time when farming was a way of life rather than a job or a “career path”. He was cynical, suspicious of politicians, suspicious of the government and anything they did that resembled central planning, suspicious of bankers and businessmen that set the prices and controlled the markets. His voice had a tone of mild amusement, as did his expression and the twinkle in his eye.
We discussed the usual topics of interest to farmers: the weather, the economy, politics and current events. I then asked him some inane question about farming and how he got started and his answer has stuck with me ever since. In many ways it sums up not just farming but much about our modern world, the economy and life in general. He paused, looked at me for a while as if to ask “are you serious?” and then replied as follows:
“When I started farming I grew some corn. I got a pig and built a shed for it. I fed it the corn and shovelled the shit into a pile outside. The next year I spread the shit on the field and grew more corn, enough to feed a couple of pigs. I had a bigger pile of shit. I spread the shit on the field and grew even more corn. I got a few more pigs so I had to build a barn. The pile of shit got even bigger, so big that I had to get a tractor with a loader to move it around and spread it on the field. I grew a whole lot more corn, enough to feed way more pigs so I had to put an addition on the barn. I have been doing this over and over again every year for almost fifty years. Now I have a really big pile of shit.”
Something Old Is New Again
First Published in Island Farmer
A century ago Islanders had no choice but to buy local. In fact PEI had become a breadbasket for the Maritimes and New England. For the last fifty years, fuelled by free trade deals and international development schemes, a global supply chain that delivers extraordinary value took over and consumers became hooked on “the lowest price is the law”. Now we're seeing a change again. Large food retailers are responding to a growing interest in “local”, and provincial governments here in the Maritimes are announcing new efforts to get more consumers to think “local” when food shopping. It’s a welcome development that needs to go well beyond just promotion.
Last week PEI announced the Food Security and Food Education program. A $100,000 will be spent to supply 3 schools with fresh local products, and give students more information about the importance of nutrition, and where their food comes from. It's a start at ensuring that some of the 1 in 5 students who come to school hungry are fed. "At the same time, we want to engage Islanders in a conversation about where their food comes from and the efforts of our hard working farming and fishing families" says Minister Alan McIsaac. New Brunswick has upped its game too. N.B. minister Rick Doucet wants to see a local food culture develop in the province. “The promotion of local food and beverages has been identified as a key opportunity in the New Brunswick Economic Growth Plan” says Doucet in a release. New co-operatives are being developed to supply schools in the North-East. And “Agri-food” as it’s come to be known even got high profile recognition in the last Federal Budget.
What’s going on here? I think especially here in the Maritimes other development initiatives that held promise like the energy sector, and high tech, are stalled or failing, and governments are looking for something they think can succeed . Obviously everyone has to eat, and the logic of encouraging consumers to ensure food dollars stay local and get re-spent here rather than being whisked off to South America or China is pretty obvious, but that’s not to say that any of this is easy. Don’t forget that large food retailers, especially with in-store brands, have spent decades playing down or hiding where packaged food comes from, letting the brand and the price be the selling points. And there's this: consumers want choice and don’t like to be told what to do. As Terry O’Reilly reminds us every week on CBC Radio’s Under the Influence very smart marketers struggle to get the right mix of information and emotional content to push people to buy products. There is a hard core group of consumers with enough time and money who are determinately local, but while supporting the home team sounds good, cost will always be critical for many other families. I think Rick Doucet's idea of creating a “culture” of local food buying is important, but that will take time.
That's why I think PEI's new program is so important. A market is a very precious thing for farmers. A market that assures a fair return is even better. There's a lot of public money spent on food, not only in schools, but hospitals, prisons, nursing homes. Why not use that money to support local farmers and meet environmental goals at the same time. Make a percentage of these purchases, say 10 to 15%, from organic farmers, and increase that over time. Make crop rotations or soil organic matter a condition of purchase. “Pulling” farmers into profitable markets with environmental standards would reward those already farming sustainably, and give others more reason to change. “Pushing” farmers to change with regulations or angry letters to the editor hasn't done much but make farmers feel angry and isolated.
This will require a lot of planning and some investment. Fresh produce and fruit is mostly available when school is out, so proper storage will be important. Over time it will take groups of farmers to meet the quantity required, so some kind of “hub” will be needed. The new provincial “free trade” agreement will have language about equal access to government tenders which will complicate things. And if farmers are payed a “fair price”, as they should be, there will be complaints that taxpayers are being gouged.
Let's think about the positive side. Small and medium sized farmers will have the chance at more income security. Larger farmers will have more reason to diversify, and turn away from commodity markets if they're not getting a fair shake. Consumers and taxpayers will have a direct stake in improving opportunities in rural areas, and protecting the natural resources we all benefit from.
I don't want to seem completely naive about this. PEI's small population will always push our farmers into export markets dominated by larger players, but if consumers and governments create demand for local food and food products, there will be more food security at a time of climate change and political instability, and economic security in rural areas. The food business is ruthlessly competitive. Let's make sure as consumers we're thinking hard about where our food dollars go. It's one of the most important decisions we make every day.
Who Pays for Surpluses
First Published in Island Farmer
It was the National Post headline that finally did it for me: “After a nuclear war, only cockroaches and supply management would be left.” The vitriol coming from mainly the national business media against supply management has been astounding. It was unleashed with the bellowing of U.S. President “You Know Who” at a news conference in Wisconsin, uttering his usual mix of hyperbole (disgrace, disaster) and untruths. It will end at a NAFTA negotiating table months from now, and it matters a lot to Maritime farmers.
My interest in, and yes support for, supply management comes not from being any smarter than anyone else, but how I look at the food system. Most Canadians, and Toronto based business writers, only see the back end of the food chain, supermarket shelves, where price, competition, and variety can easily be judged. And if a Toronto journalist can’t get fancy European cheeses at rock bottom prices, then something must be wrong. I’ve spent most of my time trying to understand the front end, how economics, history, environment, government and trade policies affect primary producers. Yes farmers always complain that times are tough, but that anxiety comes from having so little control over what happens season to season. The weather, here and elsewhere, disease and insect pressures, politics, consumer tastes and so on are difficult enough to control, but the real challenge is this: thousands of small business people make decisions for markets controlled by very few. The handful of processors, brokers, wholesalers, and retailers have one interest, to pay the least they can, to support their own business interests, and convince consumers they’re getting good value, and they almost always get their way. The quickest way to assure low prices is a surplus, or at least the perception of one. If farmers are convinced prices aren’t going to improve, they’ll sell for what they can get because the alternative is even worse, getting nothing at all.
That’s what Canadian dairy farmers faced in the 1970’s when there were fierce demonstrations demanding government action. That’s what Wisconsin dairy farmers are facing right now. The Canadian solution back then (thank you Eugene Whelan) was supply management. Limit production to Canadian demand using quotas, and assure farmers a fair price (based on costs of efficient producers). And yes to make the system work high tariffs are used to keep cheaper imports out. That’s what the “free traders” and business media find so offensive. The question that never gets asked is why are these imported dairy products cheaper? Two words, taxpayer subsidies.
Wisconsin bills itself as “America’s Dairyland”. Between 1995 and 2014, Wisconsin dairy farmers received $1.2 Billion (with a B) in subsidies under a variety of programs: “Milk Income Loss Payment”, “Market Loss Assistance”, “Market Income Loss Transitional Payment”, “Dairy Economic Loss Assistance Program”, “Dairy Disaster Assistance”, and so on. They are asking for more support as you read this. The continuing problem then and now, no surprise, surplus milk in the U.S., and over the last 18 months, world wide. Wisconsin dairy farmer Sarah Lloyd told CBC, Canada isn’t the problem. "Suddenly, everyone was pointing the finger at Canada, but that's not really what's going on. We have overproduction here in Wisconsin, and we really need to address that here at home.”
Here in Canada milk producers receive no taxpayer subsidies. They get paid once by their dairy processor. Yes many dairy products are more expensive than in the U.S., but so are cars, booze, cell phones, airline tickets, I could go on.
Three more things you won’t read about in the National Post or the Globe and Mail. The U.S. already has a trade surplus in dairy products to Canada worth $400 Million (don’t forget that dairy farmers here produce to supply Canadians, not compete in export markets). Most American farmers use rBST, a controversial growth hormone outlawed in Canada, which extends the time cows can be milked before being bred again. There are human health risks, including increased levels of mastitis in these cows which leads to more use of antibiotics. And lastly, something very important I think , is how low prices are forcing medium and small dairy farmers in America out of business. 25% of U.S. farms now produce close to 90% of the milk supply. That means very large operations milking a thousand cows and more. In Canada, medium sized dairy farms (60-80 cows) can make it, especially if there’s good breeding stock for extra income. These are farms with middle-class incomes, paying their bills, taking care of their land. We need more farms like that in the Maritimes, not fewer.
I don’t expect Donald Trump to know much about anything, I do blame many in the Canadian media for their lazy, one-sided reporting on this issue. And to both, let’s not have a nuclear war to find out what’s left.