There was a small, obscure story almost two weeks ago that has a lot of resonance here on PEI.
http://www.nationalpost.com/news/Protection+property+basic+right/4344344/story.html
Two Conservative politicians (one an MP, the other an MLA) from Ontario will introduce resolutions in their respective legislatures to promote the idea that "property rights" are badly needed in Canada. Most Canadians probably don't know it isn't part of the Charter, mostly because it's so widely talked about in the U.S. media.
The way the National Post tells it, there were dastardly "left-wing" forces at work preventing "property rights" joining the other rights and freedoms we enjoy. In fact it was a couple of Conservative politicians from PEI who played a central role in keeping "property rights" out of the document.
Before coming to my senses, I worked for CBC Radio in Ottawa and clearly remember grizzled national reporters covering federal/provincial meetings (1980) on repatriating the constitution being impressed with a "kindly gentleman farmer/premier", and a young bright attorney-general from PEI. Some said they were the only two in the room who made any sense.
Angus MacLean was the farmer, and Horace Carver (not so young anymore) was the attorney-general. Both argued passionately that property rights would badly damage the social and economic interests of PEI. There is the whole history of absentee landlords, but more importantly, that "the land" was the only real resource the province had, so the provincial government had to maintain the ability to control who owned how much of it, and how that land could be used. These common sense ideas appealed to many of the national journalists, when so much else about the Constitutional discussions was abstract and theoretical.
Property Rights didn't make the cut, and it's given columnists with the National Post, and researchers with the Fraser Institute lots to complain about over the years.
What's more interesting (and to some, including myself, frustrating) is what Islanders have done with this hard-won political victory. Not much. There is the Lands Protection Act (pushed through the PEI legislature by the same Carver and Maclean in 1981) which limits corporate land ownership, foreign-controlled beach frontage, and so on. It's had several amendments, and continues to confound and irritate many. But ownership is one thing, "land use" it appears is something quite different.
The last time someone made the effort to address this was just over a year ago with the release of a report by retired Justice Ralph Thompson called the Commission on Land Use and Local Governance. The opening of a newspaper report on the release spoke volumes.
"Prince Edward Island has been advised for the fourth time since 1973 to adopt a comprehensive policy on land use."
http://www.journalpioneer.com/Living/Environment/2010-01-08/article-1389999/P.E.I.-commission-recommends-comprehensive-land-use-policy-for-province/1
(No recent sightings on how much dust has settled on the Thompson report.)
Thompson argues that PEI has a limited land base, and if economic forces (essentially real estate sales people and developers) are left to determine how land is used, Islanders won't be happy with the end result.
""When you see prime agricultural land being turned into subdivisions, it doesn't speak well for the agriculture industry or the province as a whole down the road," Thompson says.
Thompson recommends a timeline of three years for the development, public consultation and final adoption of a comprehensive land-use plan by 2012."
There are a lot of farmers, forest contractors, and other big landowners who see this kind of discussion on land use as uninformed meddling by "landless intellectuals" who work in government and educational institutions, and will comfortably live out their old age on a government pension. (A CBC pension isn't quite as good as that, and I paid in a hell of a lot of money to get it, and at least I can argue that I own land)
Thompson, and Elmer MacDonald before him, and Doug Boylan before that, were all acutely aware of what land means to farmers and foresters. It provides the equity they use to keep going through difficult economic times (see an earlier post on that), and most importantly, after a decade of negative incomes, and loss of millions of dollars of equity on Island farms, a chance to walk away with more than a tin cup to pee in. We may not like it, but we shouldn't be surprised that farmers resist restrictions on shore front development, or the right to clear cut forests. I would argue that developing proper land-use policies has to go hand in hand with a realistic policy to get farm incomes into the black again. If farmers are making money (having some fun?) then farmland producing income generating food will be much more valuable to them, and to the rest of us.
Over the years provincial governments of all stripes have talked the talk (and generated lots of discussion and paper to prove it) but walking the walk is something else again. There are jurisdictions (New Jersey for one) that use money from "urban" developers to pay farmers the development "premium" on shore frontage for example. In return the land can never be developed in the future. I'll talk more about that in future posts.
Thursday, 10 March 2011
Wednesday, 9 March 2011
Something Hopeful?
As we all know, there's a blizzard of information and opinion out there on the interweb (thank you Brett Butt). This little blog is one more snowflake. But there is something amazing to be able to sit out here in rural PEI and have access to stuff from all over the world. I remember how excited Peter Gzowski was when he first got on the interweb, like a kid in the candy store.
It means you come across hopeful stories like this one:
http://opinionator.blogs.nytimes.com/2011/03/08/sustainable-farming/?ref=opinion
Here's the full report:
http://www.srfood.org/index.php/en/component/content/article/1174-report-agroecology-and-the-right-to-food
Essentially the report says that smart farming practices (traditional practices really) can do a lot more to increase yields, and protect the environment in poor, undernourished, developing countries, than transferring what we do here in the developed world. The term being used is agro-ecology.
"GENEVA – Small-scale farmers can double food production within 10 years in critical regions by
using ecological methods, a new UN report* shows. Based on an extensive review of the recent
scientific literature, the study calls for a fundamental shift towards agroecology as a way to
boost food production and improve the situation of the poorest."
This is the part I like the best:
“Knowledge came to replace pesticides and fertilizers."
A growing concern for me covering farming on PEI over the last decade was the loss of experienced independent advice for farmers here because of government cutbacks. One of the first farmers I ever talked to here in the early '80's said there were three people he listened to: his priest, his banker, and his potato inspector. (Given that we've just come through International Women's Day, I admit I was remiss about not asking him about his wife's advice). . The banker and the priest (and hopefully his wife) may still hold sway, but federal food inspectors now are seen more as the enemy than a friend. When they do get to a farm, it's usually because there's a problem, and now CFIA inspectors have to be specialists at everything, from fish plants to dairies. The kind of on-going, trusted advice from the old "potato inspector" is long gone.
What's worse is that the advice farmers do get now usually comes from fertilizer and farm chemical sales people. Now these company representatives are just doing their job, and some are quite knowledgeable, but the bottom line is they want to move product.
It's not all negative. There's growing interest in "nutrient management", and "integrated pest management" that get farmers to think first, before firing up the tractor. Both mean doing soil tests, or bug counts before taking any action. That's smart.
Some of this involves patience and trust. A researcher once told me that he was trying to convince potato growers to use a safer soil bacteria called Bacillus thuringiensis or BT to control potato beetles. It attacks the beetles when they're first born as larvae, and is very effective, but the timing of the spray has to be just right. The researcher said farmers had grown used to seeing beetles, spraying, and then hearing the crackle of dead beetle bodies walking up and down the rows. Spraying BT, and having to wait ten days or so to know everything is alright, was just too difficult.
Farmers have extraordinary investments to protect every summer, and the urge for certainty is understandable. Weather in itself throws enough curve balls for the average person, and the growing occurrence of "extreme weather events" just adds to the anxiety. But let's leave room for thinking and experience, and knowledgeable independent advice wherever farmers can get it, even off the interweb.
It means you come across hopeful stories like this one:
http://opinionator.blogs.nytimes.com/2011/03/08/sustainable-farming/?ref=opinion
Here's the full report:
http://www.srfood.org/index.php/en/component/content/article/1174-report-agroecology-and-the-right-to-food
Essentially the report says that smart farming practices (traditional practices really) can do a lot more to increase yields, and protect the environment in poor, undernourished, developing countries, than transferring what we do here in the developed world. The term being used is agro-ecology.
"GENEVA – Small-scale farmers can double food production within 10 years in critical regions by
using ecological methods, a new UN report* shows. Based on an extensive review of the recent
scientific literature, the study calls for a fundamental shift towards agroecology as a way to
boost food production and improve the situation of the poorest."
This is the part I like the best:
“Knowledge came to replace pesticides and fertilizers."
A growing concern for me covering farming on PEI over the last decade was the loss of experienced independent advice for farmers here because of government cutbacks. One of the first farmers I ever talked to here in the early '80's said there were three people he listened to: his priest, his banker, and his potato inspector. (Given that we've just come through International Women's Day, I admit I was remiss about not asking him about his wife's advice). . The banker and the priest (and hopefully his wife) may still hold sway, but federal food inspectors now are seen more as the enemy than a friend. When they do get to a farm, it's usually because there's a problem, and now CFIA inspectors have to be specialists at everything, from fish plants to dairies. The kind of on-going, trusted advice from the old "potato inspector" is long gone.
What's worse is that the advice farmers do get now usually comes from fertilizer and farm chemical sales people. Now these company representatives are just doing their job, and some are quite knowledgeable, but the bottom line is they want to move product.
It's not all negative. There's growing interest in "nutrient management", and "integrated pest management" that get farmers to think first, before firing up the tractor. Both mean doing soil tests, or bug counts before taking any action. That's smart.
Some of this involves patience and trust. A researcher once told me that he was trying to convince potato growers to use a safer soil bacteria called Bacillus thuringiensis or BT to control potato beetles. It attacks the beetles when they're first born as larvae, and is very effective, but the timing of the spray has to be just right. The researcher said farmers had grown used to seeing beetles, spraying, and then hearing the crackle of dead beetle bodies walking up and down the rows. Spraying BT, and having to wait ten days or so to know everything is alright, was just too difficult.
Farmers have extraordinary investments to protect every summer, and the urge for certainty is understandable. Weather in itself throws enough curve balls for the average person, and the growing occurrence of "extreme weather events" just adds to the anxiety. But let's leave room for thinking and experience, and knowledgeable independent advice wherever farmers can get it, even off the interweb.
Monday, 7 March 2011
There Are Happy Farmers Out There
As provincial Federations of Agriculture in the Maritimes held their annual meetings over the last couple of months, the message and the mood hadn't changed much from a year ago. The livestock industry continues to be in serious decline, the regions Federally inspected slaughter plants for beef and pork hang on by a thread, and wet weather during harvest had severely cut into the quality of important oilseed and grain crops. One important change, the potato industry, because of drought in Russia and flooding in Holland, is enjoying much better returns.
What a difference at annual meetings in the United States. The challenge there, should farmers fight to maintain their billion dollar subsidy programs now that commodity prices are rising..
From: "Good Times Spur Policy Challenges for Corn and Soybean Growers"
http://www.farmmarketer.com/home/news/?storyid=3074
"Skyrocketing commodity prices, soaring federal deficits, and increases in food prices have created a serious policy challenges for corn and soybean growers. At issue: if direct payments to farmers should be continued or modified."
And from
http://www.farmmarketer.com/home/news/?storyid=3060
"While grain producers are seeing prices rise, cattle producers are enjoying climbing prices as well.
"The cattle market is real, real good," said Lynn Perry, manager at Western Livestock Auction.
The market usually starts to slide in October and November. "This year it just held steady and got stronger," Perry said. "
Why the difference in tone between farmers in the U.S. mid-west, and Maritime producers? For starters, American farmers get to split a direct to the farm mail box subsidy pie of about 5 Billion dollars.
( $37.6 BILLION dollars in direct payments between 1995 and 2009)
From:
http://farm.ewg.org/progdetail.php?fips=00000&progcode=total_dp®ionname=theUnitedStates
Interestingly, many of the fire-breathing, deficit cutting, Republican Senators that were recently elected in the U.S., come from these mid-west agricultural states and are determined to maintain subsidy levels in the new Farm Bill. (Right now it looks like the 2012 Farm Bill will include $30 Billion dollars in subsidies.) And with 2012 a presidential election year, you know how that will go.
Canada, the boy scout of trading nations, stays away from what are called commodity-specific subsidies (grow this crop and we'll send you a cheque) because they're not really allowed under international trading rules. Canada does offer financial help when there are serious weather or market disastors (like mad-cow). And what we heard over the weekend from PEI MP Wayne Easter is that budget estimates show farmers here will see a sharp decrease in these kinds of programs in the years ahead.
What makes this important is that there is essentially a North American market for most of what's produced on Maritime farms. Livestock prices are established through trading at the Chicago Mercantile Exchange. Futures markets there set prices for the major grain, and oilseed crops. And with those direct subsidies, longer growing seasons, free or cheap irrigation, cheaper transportation and energy costs, and so on, the North American price may well be profitable for the U.S. farmer, but not pay the bills in the Maritimes. The high Canadian dollar has just made this worse. That's why you hear farmers speak so often about competitiveness.
Canada can't (won't) compete in the farm subsidy game with the U.S. or Europe. It will use international trade negotiations to try to even the playing field, and of course run into questions about Canada's support for Supply Management. (see yesterday's posting).
And maybe it doesn't matter just at the moment. If all the news reports are right, Maritime farmers look to be heading for a stretch of better prices. The only fly in the ointment will be input costs, what the higher price for fuel, fertilizer and farm chemicals will do to the bottom line. So just maybe Maritime farmers will be in a much happier mood when the 2011-12 annual meetings roll along.
What a difference at annual meetings in the United States. The challenge there, should farmers fight to maintain their billion dollar subsidy programs now that commodity prices are rising..
From: "Good Times Spur Policy Challenges for Corn and Soybean Growers"
http://www.farmmarketer.com/home/news/?storyid=3074
"Skyrocketing commodity prices, soaring federal deficits, and increases in food prices have created a serious policy challenges for corn and soybean growers. At issue: if direct payments to farmers should be continued or modified."
And from
http://www.farmmarketer.com/home/news/?storyid=3060
"While grain producers are seeing prices rise, cattle producers are enjoying climbing prices as well.
"The cattle market is real, real good," said Lynn Perry, manager at Western Livestock Auction.
The market usually starts to slide in October and November. "This year it just held steady and got stronger," Perry said. "
Why the difference in tone between farmers in the U.S. mid-west, and Maritime producers? For starters, American farmers get to split a direct to the farm mail box subsidy pie of about 5 Billion dollars.
( $37.6 BILLION dollars in direct payments between 1995 and 2009)
From:
http://farm.ewg.org/progdetail.php?fips=00000&progcode=total_dp®ionname=theUnitedStates
Interestingly, many of the fire-breathing, deficit cutting, Republican Senators that were recently elected in the U.S., come from these mid-west agricultural states and are determined to maintain subsidy levels in the new Farm Bill. (Right now it looks like the 2012 Farm Bill will include $30 Billion dollars in subsidies.) And with 2012 a presidential election year, you know how that will go.
Canada, the boy scout of trading nations, stays away from what are called commodity-specific subsidies (grow this crop and we'll send you a cheque) because they're not really allowed under international trading rules. Canada does offer financial help when there are serious weather or market disastors (like mad-cow). And what we heard over the weekend from PEI MP Wayne Easter is that budget estimates show farmers here will see a sharp decrease in these kinds of programs in the years ahead.
What makes this important is that there is essentially a North American market for most of what's produced on Maritime farms. Livestock prices are established through trading at the Chicago Mercantile Exchange. Futures markets there set prices for the major grain, and oilseed crops. And with those direct subsidies, longer growing seasons, free or cheap irrigation, cheaper transportation and energy costs, and so on, the North American price may well be profitable for the U.S. farmer, but not pay the bills in the Maritimes. The high Canadian dollar has just made this worse. That's why you hear farmers speak so often about competitiveness.
Canada can't (won't) compete in the farm subsidy game with the U.S. or Europe. It will use international trade negotiations to try to even the playing field, and of course run into questions about Canada's support for Supply Management. (see yesterday's posting).
And maybe it doesn't matter just at the moment. If all the news reports are right, Maritime farmers look to be heading for a stretch of better prices. The only fly in the ointment will be input costs, what the higher price for fuel, fertilizer and farm chemicals will do to the bottom line. So just maybe Maritime farmers will be in a much happier mood when the 2011-12 annual meetings roll along.
Saturday, 5 March 2011
Surprise: Some Food Costs Aren't Going Up
Supply management in a handful of agricultural commodities in Canada (dairy, eggs and poultry) has the same allure as the designated hitter in baseball. Those that care, care a lot. The rest, not so much. How about if it could save you money at the supermarket in the months ahead?
It's a highly regulated marketing system designed initially to tackle a decades long struggle to stabilize the dairy industry. The first scheme was set-up in 1974 by the godfather of supply management, Eugene Whelan, Minister of Agriculture under Pierre Trudeau. The government had been offering price subsidies to dairy farmers throughout most of the last century, but like the Americans and Europeans now, found that a subsidy, on its own, generally leads to huge surpluses. (see http://www.jstor.org/pss/20001616 if you want to know more.)
Whelan was determined to try something very different: limit the production of milk to what the market demands through the use of quotas , and in return guarantee farmers a fair return. Hence the term supply management. By law the cost of production formula must use the most efficient farmers. Table milk we use on our cereal is given the highest price, milk used for butter the lowest. The government would no longer be involved in propping up the price, it would flow through the dairies to the supermarket, and be paid by consumers. .
To make the system work, Canada had to bring in strict import controls. If say New Zealand butter, or American yogurt was selling for 10% less than Canadian dairy products, the system would quickly break down. Canada uses high tariffs, and other restrictions to keep most, but not all, imported dairy products out.
Many, many dairy farmers hated the idea at the time, sold their herds and went into pork production. Even Trudeau (so the story goes) had to tell the Liberal Cabinet, you may not like what Whelan's going to propose, but we're going to do it anyway.
Whelan later introduced supply management into egg and poultry production. All three benefit from being able to control production through management practices, unlike many other crops which are weather dependent, and production fluctuates year by year.
The business press hated it then, and hates it now. Columnists in the National Post, Globe and Mail, etc. repeatedly argue that Canadians pay too much at the checkout, that supply management only survives because of its importance to the huge Quebec dairy industry, and that it should have disappeared during past trade negotiations like the Americans wanted, but federal politicians didn't have the guts to kill it.
To an economist's eye, supply management is far from perfect. Whelan initially insisted that the quotas would belong to the people of Canada, and be free. Now the piece of paper with the quota contract is the most valuable thing on the farm. Banks allow farmers to use the quota as collateral to borrow money. More on what's wrong with supply management here: http://www.iedm.org/files/fev05_en.pdf
Other people, including myself, think that supply management is similar to what Churchill famously said about democracy: "Democracy is the worst form of government, except for all those other forms that have been tried from time to time."
Yes consumers pay more than what an American does for cheese and chicken, but unlike Americans, as taxpayers, Canadians don't pay again with a subsidy check sent to the farmer in the mail.
There are a couple of other overlooked benefits. A PEI dairy farmer can manage a herd of seventy to a hundred cows and make a reasonable living. A dairy farmer in Maine would need two to three times that number of cows to make the same living. Supply management also leads to a much more even split of the consumer dollar between the farmer, the food processor, and the food retailer. Farmers usually get what's left over from the consumer dollar after everyone else has been paid.
Supply Management has most recently been vilified in the news because Canada has been refused a seat at on-going trade negotiations called the Trans-Pacific Partnership. It's an ambitious trade deal that includes important growing Asian economies. The hangup, those import restrictions on dairy products, but don't forget that Japan too is insisting it has to protect some parts of it farming community as well.
See: http://www.embassymag.ca/page/view/transpacific-01-06-2010
Now maybe there's a small reason that Canadians can get behind supply management. Throughout this week (March 1-5, 2011) there have been many alarming stories about rising food prices. Climate catastrophes in Russia, Australia, Western Canada, are driving up the price of wheat, cooking oil, sugar, and, wait for it, dairy products.
http://www.bloomberg.com/news/2011-03-01/milk-powder-prices-jump-15-4-to-record-amid-asian-demand-fonterra-says.html
But here's the thing. Supply management means dairy prices are established here by domestic rules and regulations, not by international trading forces.
So when you hear (as you will, even on CBC) or read, that dairy prices are going up because of global climate and insecurity issues, you can think, that's not true. When the dust settles it will be interesting to see where Canadian dairy prices are in relation to those on the world market. It might not look so bad. Remember that when you read Terence Corcoran in the National Post, or Jeffery Simpson in the Globe and Mail, and a host of other business writers lecturing about the evils of supply management. They probably stopped thinking about this issue twenty years ago. You can bring them up to date.
It's a highly regulated marketing system designed initially to tackle a decades long struggle to stabilize the dairy industry. The first scheme was set-up in 1974 by the godfather of supply management, Eugene Whelan, Minister of Agriculture under Pierre Trudeau. The government had been offering price subsidies to dairy farmers throughout most of the last century, but like the Americans and Europeans now, found that a subsidy, on its own, generally leads to huge surpluses. (see http://www.jstor.org/pss/20001616 if you want to know more.)
Whelan was determined to try something very different: limit the production of milk to what the market demands through the use of quotas , and in return guarantee farmers a fair return. Hence the term supply management. By law the cost of production formula must use the most efficient farmers. Table milk we use on our cereal is given the highest price, milk used for butter the lowest. The government would no longer be involved in propping up the price, it would flow through the dairies to the supermarket, and be paid by consumers. .
To make the system work, Canada had to bring in strict import controls. If say New Zealand butter, or American yogurt was selling for 10% less than Canadian dairy products, the system would quickly break down. Canada uses high tariffs, and other restrictions to keep most, but not all, imported dairy products out.
Many, many dairy farmers hated the idea at the time, sold their herds and went into pork production. Even Trudeau (so the story goes) had to tell the Liberal Cabinet, you may not like what Whelan's going to propose, but we're going to do it anyway.
Whelan later introduced supply management into egg and poultry production. All three benefit from being able to control production through management practices, unlike many other crops which are weather dependent, and production fluctuates year by year.
The business press hated it then, and hates it now. Columnists in the National Post, Globe and Mail, etc. repeatedly argue that Canadians pay too much at the checkout, that supply management only survives because of its importance to the huge Quebec dairy industry, and that it should have disappeared during past trade negotiations like the Americans wanted, but federal politicians didn't have the guts to kill it.
To an economist's eye, supply management is far from perfect. Whelan initially insisted that the quotas would belong to the people of Canada, and be free. Now the piece of paper with the quota contract is the most valuable thing on the farm. Banks allow farmers to use the quota as collateral to borrow money. More on what's wrong with supply management here: http://www.iedm.org/files/fev05_en.pdf
Other people, including myself, think that supply management is similar to what Churchill famously said about democracy: "Democracy is the worst form of government, except for all those other forms that have been tried from time to time."
Yes consumers pay more than what an American does for cheese and chicken, but unlike Americans, as taxpayers, Canadians don't pay again with a subsidy check sent to the farmer in the mail.
There are a couple of other overlooked benefits. A PEI dairy farmer can manage a herd of seventy to a hundred cows and make a reasonable living. A dairy farmer in Maine would need two to three times that number of cows to make the same living. Supply management also leads to a much more even split of the consumer dollar between the farmer, the food processor, and the food retailer. Farmers usually get what's left over from the consumer dollar after everyone else has been paid.
Supply Management has most recently been vilified in the news because Canada has been refused a seat at on-going trade negotiations called the Trans-Pacific Partnership. It's an ambitious trade deal that includes important growing Asian economies. The hangup, those import restrictions on dairy products, but don't forget that Japan too is insisting it has to protect some parts of it farming community as well.
See: http://www.embassymag.ca/page/view/transpacific-01-06-2010
Now maybe there's a small reason that Canadians can get behind supply management. Throughout this week (March 1-5, 2011) there have been many alarming stories about rising food prices. Climate catastrophes in Russia, Australia, Western Canada, are driving up the price of wheat, cooking oil, sugar, and, wait for it, dairy products.
http://www.bloomberg.com/news/2011-03-01/milk-powder-prices-jump-15-4-to-record-amid-asian-demand-fonterra-says.html
But here's the thing. Supply management means dairy prices are established here by domestic rules and regulations, not by international trading forces.
So when you hear (as you will, even on CBC) or read, that dairy prices are going up because of global climate and insecurity issues, you can think, that's not true. When the dust settles it will be interesting to see where Canadian dairy prices are in relation to those on the world market. It might not look so bad. Remember that when you read Terence Corcoran in the National Post, or Jeffery Simpson in the Globe and Mail, and a host of other business writers lecturing about the evils of supply management. They probably stopped thinking about this issue twenty years ago. You can bring them up to date.
Friday, 4 March 2011
Reading the Food Price Tea Leaves
As of early March the 4th, if you put food prices and Loblaws into a search engine and asked for news, there was nothing. But you know you heard something, somewhere. Try George Weston Ltd. instead.
Weston is a large food processor, baking products mostly, and the majority owner of Loblaws which owns the Superstores in the Maritimes. Weston is very straightforward. The price of wheat, oil, and sugar has been on the rise for months, and it has to pass these added costs on. Prices for baked goods will go up by 5% in April. Weston would be a wholesale supplier to Loblaws-Superstore, Sobeys and the rest, and it will be up to these big food retailers to determine how much of this increase to pass on to consumers.
In an earlier post I had said that the big retailers would squeeze their suppliers to maintain the bottom line rather than ask consumers to pay more. I was wrong. There are just too many climate catastrophes in important agricultural producing areas like Russia, Australia, Western Canada, now China. Throw in hedge fund speculators (who view food commodities as nothing different from copper or oil), rising demand for Western-style food in Asia, and food prices had to go up. Douglas Porter, the deputy chief economist at BMO Nesbitt Burns told the Globe and Mail that Canadian food prices could go up by 5 to 7% this year. That compares with less than a 2% rise last year.
The big food retailers themselves are cautiously warning consumers that higher prices are coming, but in a fiercely competitive marketplace, each will wait for the other to blink first. Having a big baking giant like George Weston deliver the news first will give the retailers some public relations cover.
There's some excellent reporting on the many factors behind world food prices going up here:
http://www.farmmarketer.com/home/news/?storyid=3045
What does this mean for Maritime farmers? There isn't large production here of the commodities that have been quickly rising: milling wheat, oilseed, and certainly not sugar, coffee, or rice. Livestock prices are slowly increasing, but so is the cost of feedgrains. There is a general upward momentum to commodity prices, but that means fertilizer, fuel, and farm chemicals costs will also be on the rise, so it's hard to pin down the net benefit to farmers right now.
Weston is a large food processor, baking products mostly, and the majority owner of Loblaws which owns the Superstores in the Maritimes. Weston is very straightforward. The price of wheat, oil, and sugar has been on the rise for months, and it has to pass these added costs on. Prices for baked goods will go up by 5% in April. Weston would be a wholesale supplier to Loblaws-Superstore, Sobeys and the rest, and it will be up to these big food retailers to determine how much of this increase to pass on to consumers.
In an earlier post I had said that the big retailers would squeeze their suppliers to maintain the bottom line rather than ask consumers to pay more. I was wrong. There are just too many climate catastrophes in important agricultural producing areas like Russia, Australia, Western Canada, now China. Throw in hedge fund speculators (who view food commodities as nothing different from copper or oil), rising demand for Western-style food in Asia, and food prices had to go up. Douglas Porter, the deputy chief economist at BMO Nesbitt Burns told the Globe and Mail that Canadian food prices could go up by 5 to 7% this year. That compares with less than a 2% rise last year.
The big food retailers themselves are cautiously warning consumers that higher prices are coming, but in a fiercely competitive marketplace, each will wait for the other to blink first. Having a big baking giant like George Weston deliver the news first will give the retailers some public relations cover.
There's some excellent reporting on the many factors behind world food prices going up here:
http://www.farmmarketer.com/home/news/?storyid=3045
What does this mean for Maritime farmers? There isn't large production here of the commodities that have been quickly rising: milling wheat, oilseed, and certainly not sugar, coffee, or rice. Livestock prices are slowly increasing, but so is the cost of feedgrains. There is a general upward momentum to commodity prices, but that means fertilizer, fuel, and farm chemicals costs will also be on the rise, so it's hard to pin down the net benefit to farmers right now.
Thursday, 3 March 2011
The Elephant in the Room
There's lots that farmers and non-farmers agree with on PEI: that producing food is important, that a working landscape is crucial to the province's tourism industry (people come here expecting to see the PEI described by Lucy Maude Montgomery and Kevin Sullivan). Where there are real differences and distrust is on the environmental impact of agriculture. Non farmers worry that the air and water is being poisoned every time a sprayer takes to the field, and farmers feel increasingly isolated and misunderstood, as the harsh reality of demographics and economics means a tiny percentage of people (even here on PEI) are expected to produce vast quantities of cheap food.
I got to see and hear both sides of this daily in my thirty years covering resource stories for CBC, and I welcome hearing more through this blog in the days and months ahead. It's an issue that's too important to ignore, and unless there's a better understanding on both sides, farmers and non-farmers will continue to stay in their mental bunkers and regard each other with resentment and suspicion, and that's not good for anyone.
So here's my reality check, and I welcome hearing from others about theirs.
Potato growers have to acknowledge that the quick expansion in their industry following the construction of two new french fry plants in the mid 1990's was bad for the environment. The government of the day (Joe Ghiz liberals) pushed for these new plants after the devastating loss of lucrative seed potato markets because of the discovery of an obscure, but prohibited potato virus called PVYN. Potato growers desperately needed new buyers, and the Irving family had developed an appetite for food processing, some say to compete with the McCain family who had moved into Irving turf, the trucking business.
There was also the prospect of hundreds of new jobs (Cavendish Farms remains the biggest private sector employer in the province). And even better, the McCains said they too wanted to build a new plant. This appeared too good for the province to pass up, but I think there were some shortcuts taken.
The government changed the approval rules for these kind of projects. No one now could appeal the building permits to what was called the Land Use Commission, and tie them up in hearings for several months. Instead projects would be studied by government officials under an Environmental Assessment Process. There was an EAP on the footprint of the plants, how much water they'd need, air pollution, waste management and so one, but nothing on where the potatoes would come from. Government officials had hoped that potato growers would simply shift production on the same land from seed potatoes (where markets had been lost) , to the french fry business. Instead farmers saw an opportunity and quickly expanded acreage from seventy plus thousand acres, to a hundred and twenty thousand acres by 2004, and some of that expansion was on sloping land around water ways (land that would never have had potatoes on it before). This in turn led to fishkills a few years ago, and an increase in nitrates, especially in some heavily farmed watersheds in Prince County. There has been a rearguard action to establish proper buffer zones, get sloped land out of row crop production, and at least some study and discussion on nitrates and crop rotations. What if these things had been dealt with properly fifteen years ago following a real environment assessment? The plants probably still could have been built, the jobs created, but the environmental impact, and all of the negative publicity that's gone along with it here and elsewhere, might have been avoided (or mitigated as the scientists like to say). We needed an honest discussion back then, we need it now.
But non-farmers have to come to grips with some realities too. All farmers, organic or otherwise, use pesticides to produce food. Organic pesticides come from natural sources (plants, soil bacteria, and so) and generally breakdown more safely after being used, but organic fungicides (kocide for example) are just as lethal to fish as the synthetic fungicides that are widely used. Organic farmers use many more management tools like longer crop rotations, physical barriers, promoting wild insect habitat for predators, and so on, but they too have to fill up the sprayer with something that will kill bugs and control disease.
So the issue isn't (as we often hear in the media) "to spray or not to spray". It's what compound is being used, and how is it being used. And I can promise you that farmers don't view spraying their crops as some kind recreational activity. They have huge investments in time and money in their crops (banks are often more interested in what kind of spray rotation a farmer is on than anyone else). Pesticides are expensive, and there's little incentive to using more than is needed. Farmers do get very defensive when it comes to pesticide use because they feel that most of the people driving by think they're doing something "wrong". The defensiveness can sound arrogant and bullying in public meetings and in the media.
Maybe both sides in this debate need to listen to Rachael Carson. She was the author of a seminal work on the environment called Silent Spring. If you haven't read the book and know her by reputation you would think that she's totally opposed to pesticide use. In fact she says something quite different...
From Silent Spring:
"It’s not my contention that chemical pesticides must never be used. I do contend that we have put poisonous and biologically potent chemicals indiscriminately into the hands of persons largely or wholly ignorant of their potential for harm... "
http://www.box.net/shared/static/0gro9c6g3b.mp3
So she's saying pesticides must not be indiscriminately used.. and when they are, they should be used by people who are trained and very aware of the risks involved. She was also concerned about the unknown impact of mixing various compounds, and these days you could had a longer list of household cleaning products, plastic residues, solvents and so on to the environmental stew.
But I think her bottom line on pesticide use is something everyone could get behind. Farmers could back away from the idea that the public doesn't want them spraying at all, and the public could gain confidence that farmers are doing something because they absolutely have to, but are going to do it as safely as they can.
There is much else to talk about on this topic, including how other countries pay farmers a lot of money to protect the environment. I'll look at that in the days ahead.
I got to see and hear both sides of this daily in my thirty years covering resource stories for CBC, and I welcome hearing more through this blog in the days and months ahead. It's an issue that's too important to ignore, and unless there's a better understanding on both sides, farmers and non-farmers will continue to stay in their mental bunkers and regard each other with resentment and suspicion, and that's not good for anyone.
So here's my reality check, and I welcome hearing from others about theirs.
Potato growers have to acknowledge that the quick expansion in their industry following the construction of two new french fry plants in the mid 1990's was bad for the environment. The government of the day (Joe Ghiz liberals) pushed for these new plants after the devastating loss of lucrative seed potato markets because of the discovery of an obscure, but prohibited potato virus called PVYN. Potato growers desperately needed new buyers, and the Irving family had developed an appetite for food processing, some say to compete with the McCain family who had moved into Irving turf, the trucking business.
There was also the prospect of hundreds of new jobs (Cavendish Farms remains the biggest private sector employer in the province). And even better, the McCains said they too wanted to build a new plant. This appeared too good for the province to pass up, but I think there were some shortcuts taken.
The government changed the approval rules for these kind of projects. No one now could appeal the building permits to what was called the Land Use Commission, and tie them up in hearings for several months. Instead projects would be studied by government officials under an Environmental Assessment Process. There was an EAP on the footprint of the plants, how much water they'd need, air pollution, waste management and so one, but nothing on where the potatoes would come from. Government officials had hoped that potato growers would simply shift production on the same land from seed potatoes (where markets had been lost) , to the french fry business. Instead farmers saw an opportunity and quickly expanded acreage from seventy plus thousand acres, to a hundred and twenty thousand acres by 2004, and some of that expansion was on sloping land around water ways (land that would never have had potatoes on it before). This in turn led to fishkills a few years ago, and an increase in nitrates, especially in some heavily farmed watersheds in Prince County. There has been a rearguard action to establish proper buffer zones, get sloped land out of row crop production, and at least some study and discussion on nitrates and crop rotations. What if these things had been dealt with properly fifteen years ago following a real environment assessment? The plants probably still could have been built, the jobs created, but the environmental impact, and all of the negative publicity that's gone along with it here and elsewhere, might have been avoided (or mitigated as the scientists like to say). We needed an honest discussion back then, we need it now.
But non-farmers have to come to grips with some realities too. All farmers, organic or otherwise, use pesticides to produce food. Organic pesticides come from natural sources (plants, soil bacteria, and so) and generally breakdown more safely after being used, but organic fungicides (kocide for example) are just as lethal to fish as the synthetic fungicides that are widely used. Organic farmers use many more management tools like longer crop rotations, physical barriers, promoting wild insect habitat for predators, and so on, but they too have to fill up the sprayer with something that will kill bugs and control disease.
So the issue isn't (as we often hear in the media) "to spray or not to spray". It's what compound is being used, and how is it being used. And I can promise you that farmers don't view spraying their crops as some kind recreational activity. They have huge investments in time and money in their crops (banks are often more interested in what kind of spray rotation a farmer is on than anyone else). Pesticides are expensive, and there's little incentive to using more than is needed. Farmers do get very defensive when it comes to pesticide use because they feel that most of the people driving by think they're doing something "wrong". The defensiveness can sound arrogant and bullying in public meetings and in the media.
Maybe both sides in this debate need to listen to Rachael Carson. She was the author of a seminal work on the environment called Silent Spring. If you haven't read the book and know her by reputation you would think that she's totally opposed to pesticide use. In fact she says something quite different...
From Silent Spring:
"It’s not my contention that chemical pesticides must never be used. I do contend that we have put poisonous and biologically potent chemicals indiscriminately into the hands of persons largely or wholly ignorant of their potential for harm... "
http://www.box.net/shared/static/0gro9c6g3b.mp3
So she's saying pesticides must not be indiscriminately used.. and when they are, they should be used by people who are trained and very aware of the risks involved. She was also concerned about the unknown impact of mixing various compounds, and these days you could had a longer list of household cleaning products, plastic residues, solvents and so on to the environmental stew.
But I think her bottom line on pesticide use is something everyone could get behind. Farmers could back away from the idea that the public doesn't want them spraying at all, and the public could gain confidence that farmers are doing something because they absolutely have to, but are going to do it as safely as they can.
There is much else to talk about on this topic, including how other countries pay farmers a lot of money to protect the environment. I'll look at that in the days ahead.
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.
http://ictsd.org/i/news/bridgesweekly/101373/
http://opinionator.blogs.nytimes.com/2011/03/01/dont-end-agricultural-subsidies-fix-them/?ref=opinion
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.
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.
http://ictsd.org/i/news/bridgesweekly/101373/
http://opinionator.blogs.nytimes.com/2011/03/01/dont-end-agricultural-subsidies-fix-them/?ref=opinion
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.
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