Why I Boycott Walmart

From the Island Farmer


The Big Get Bigger. Again.

I’m one of these irritating people who has never gone into a Walmart.  I know it’s self righteous crap,  and how lucky I am to have had work that paid well enough that I could take this stand.  My strong feelings about this are not because I think consumers should be deprived of good value, it’s because the business model being used finds profits by ruthlessly squeezing producers,  including farmers.  Walmart now earns more than half its revenue from selling food, and Canada’s big food retailers Loblaws (Superstores here) and Sobeys have little choice but to try to play the same game.  Now with Amazon buying Whole Foods and getting ready to take on Walmart,  Lidl, a German grocer known for low prices invading North America, Costco doing what Costco does,  and so on,  food retailing is starting to resemble The Game of Thrones, and I worry that farmers will be like those disposable armies that end up slaughtered on the field of battle.

When I studied economics at university  back in the late 1960’s (yikes) there were strong regulations called anti-trust laws to prevent companies from controlling too much marketshare. Canada lagged well behind the United States  in “trust busting”, and we allowed banks, telecommunication companies, airlines and so on  to get big in order to compete with American heavyweights.   The thing is someone was paying attention, and the ability to control markets through raw economic power  was considered wrong,  and if too extreme, illegal.  The thinking was this protected consumers by fostering more competition.  I would argue it did the same for producers. Farmers on PEI talk about a time when there were a dozen buyers. Now for most there’s 1 or 2. 

What does this mean? Research in both Canada and the U.S.  show that while food prices have gone up by about 1000%  over the last 40 years, the share that goes back to the farmer has been cut in half. It’s around 10% now. Some of that is explained by value added products that make food more convenient, bags of cleaned lettuce rather than heads for example, but the trend has been constant, and the market power of  shrinking numbers of processors, brokers, and wholesalers is a main reason why. They do it because they can.

I was reminded by an article in the U.K. Guardian how this trend began.  It started in the late 1970’s after Robert Bork, a failed U.S. Supreme Court nominee, wrote a book called The Antitrust Paradox.  He argued that legally enforcing competition allowed inefficient companies and producers to survive. He wrote that anti-trust regulations should focus solely on “the welfare of consumers.”  In other words, if consumers are getting good value because a very few dominant companies exercise their economic power, that’s just as it should be.  Court scholars acknowledge that ”consumer welfare” remains  ambiguous as a legal term, but this thinking has dominated U.S. Supreme Court rulings for decades now,  and tells us why no one is blinking an eye about the recent mergers and acquisitions in the food industry, and no one will.

And don’t look to politicians to change any of this.   With farmers now just 2% of the population politicians know they’d be crazy to question a system that promises such good value.

Farming and food prices have been central to economic development since the Second World War. As Canada industrialized government policy pushed farms to become bigger and more efficient. This freed up kids growing up on farms to become factory workers, and cheaper food gave families more spending power for industrial goods. Government programs backstopped farmers' incomes, but Canadian programs are nowhere near as generous as those in the U.S. And Europe.

More recently food prices have been discussed as social policy, especially the importance of food security for low income families.  I think steps to raise incomes through a higher minimum wage, or a guaranteed annual income are better approaches to solve this than using it to justify cheap food at Walmart.

Am I picking on Walmart? Yup.  Here's the thing. The Walton family, the main shareholders of Walmart,  has amassed a fortune of $139 Billion as of April this year not by charging consumers too much, the historical reason to worry about abusive market power,  but enforcing cheaper and cheaper prices from their suppliers.

With little market clout or bargaining power, the only defense for farmers is to work together to control over production. That's what United Potato Growers of Canada for example tries to do in open markets, and supply management achieves in regulated industries.

As for me I boycott Walmart. I’m sure it’s making a big difference.

Two Views on Farming, One a Pile of Crap (but probably true)

I'd read the first piece months ago. I didn't know whether to laugh or cry.   The others are pieces I wrote for the Island Farmer, one  to try to get a discussion going on efforts Maritime governments are making to develop new food policies. Now the Federal government has announced it wants to develop a national food policy.  Interesting times.

A Farmer Explains Capitalism

• By Rick O'brien, medium.com
• 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.

Asking the Right Questions about the Dairy Industry

There’s nothing like a few provocative if untrue  bellowings from President Trump to give supply management critics more reason to complain. 

“Dairy and poultry supply-management schemes operate as a combination of cartel and government-enforced monopoly”

Those are some of the nicer sentiments used by the national business press to talk about the regulated marketing system used by dairy, egg and poultry farmers.  Other stories are not so nice:   “If this sounds like an illegal racket, you’re half right: Any other industry…  that conspired to manipulate prices and aggregate supply in this way would be prosecuted under Canadian competition law, with jail sentences meted out to the scheme’s engineers.”  I guess this means the business know-it-alls  don’t like supply management very much.

This hostility towards supply management has been going on for years.  Critics argue that Canadian consumers and food processors pay too much because high tariffs limit the quantity of often cheaper dairy and poultry imports. What they don’t report is the enormous subsidies given U.S. and European dairy farmers that creates the cheaper imports in the first place. In Europe this includes direct payments to farmers and export subsidies when the world price falls too low.  Let’s let trade expert Peter Clark explain what’s goes on in the U.S.:

“………. the only way that US dairy farmers can sell at a loss, as they have over nearly 20 years, is for the government to subsidize and offset the losses.”

In Canada dairy farmers are paid once, based on their cost of production,  by dairy processors, with no further taxpayer funding.  

And we shouldn’t forget that American farmers have access to rBGH, a growth hormone that allows cows to produce milk for longer periods of time, often draining calcium from their bodies and causing hoof problems. That’s on top of  potential health risks to humans. This growth hormone is illegal in Canada.

In the background to this is a falling world price for milk. Reports say that dairy imports to China and Russia are down, while production quotas in Europe are disappearing, increasing the supply.   Again, because of supply management Canada is not adding to this surplus. This is the real price problem U.S. farmers are dealing with.

We’ll also begin to see the impact of the new European trade agreement, CETA.  In return for bigger market access for Canadian beef, pork and seafood, the  Europeans will be allowed to export more than 17,ooo tonnes more cheese into Canada, almost doubling what they can sell now.   Given that European dairy farmers need subsidies to cover their costs, cheese makers there benefit from cheaper milk, and are very competitive on export markets.  There’s no question that small artisanal Canadian cheese makers will be in trouble if Canadian consumers can buy European cheese for less than Canadian upstarts.

What does this mean for PEI’s big dairy ADL?  It’s an important cheese producer in Canada, with most of it going into the big central Canadian markets. If ADL loses market share because of the European imports, it will have to produce more lower valued butter and skim milk powder, which in turn means lower returns to dairy farmers.  The critical issue for ADL and other cheese makers is who gets to sell the European cheese.  In mid February Lino Saputo Jr., an executive with the big dairy processor Saputo,  told a Montreal business meeting last year: ““We’re saying that perhaps the incumbents—those that are part of the dairy industry, those that have import licences already, those that have a vested interest in the industry—should inherit those new licences,”.  The concern is that if food retailers for example control the new cheese imports, their only interest will be to undercut Canadian production.  Processors say they could meter out the imports so that consumers still benefit,  but limit the market shock to processors. 

It’s easy to give in to the hysteria around supply management (how dare farmers actually cover their costs) but don’t forget that professions from doctors to cab drivers to lobster fishermen limit who gets a licence to practice in order to protect their incomes,  and no one says they’re breaking the law.  Maybe once cheaper writers in India start competing for newspaper space with the columnists in the Globe and National Post, the business fire breathers will finally get it: the cheapest isn’t always the best.

Trump Notices Us, Now Let's Get the Story Right

There's nothing like Donald Trump hurling accusations about something he doesn't understand to get the media all excited. We saw it yesterday when he went to Wisconsin to complain about Canada's dairy industry.  Some in the media including the CBC had parts of the story wrong, implying that Canada wants to impose new duties on U.S. imports.  That's not the case. Here is a column I wrote about a year ago that gives some background to this story, and today's coverage from Daniel Dale in the Toronto Star. 


May 2016

A Shortage of Butter: Not Good News for Dairy Farmers

This is a classic case of a loophole, big business capitalizing on any chance to improve the bottom line, and serious unintended consequences.  The impact of what appeared to be a minor bureaucratic decision  is being felt in Canadian kitchens, food processing plants,  and disturbingly, could do serious economic damage to Canada’s dairy farmers.

A few years ago Federal officials were trying to decide where so called “protein isolates” would fit into the stiff tariff schedule that limits imports of cheaper dairy products like yogurt and cheese. These high tariffs maintain the integrity of Canada’s supply management system that tailors milk supply to Canadian demand using quotas, while assuring farmers a fair price.  Protein isolates are essentially raw protein, like the whey protein used as a dietary supplement. Think of whole milk with the fat and minerals stripped out.  The bureaucrats decided the isolates are a protein “substitute”, not necessarily a dairy product, so they come into Canada tariff-free.  No one paid too much attention then,  but  slowly, over time, a trickle of cheaper protein isolates, almost all from the United States,  has become a tidal wave.  Now Canada’s largest dairy processors like  Parmalat, Saputo,  and Agropur, are helping their bottom line by using the cheaper protein in their cheeses and other dairy products. But there’s a  wrinkle, the processors still need the fat from whole milk to mix with the raw imported protein to produce their cheeses.   This is happening at the same time that dieticians and doctors are telling Canadians it’s OK to eat butter again.  So over the last year  butter, and butterfat, are again in big demand, and for some, short supply.  Farmers nationally have stepped up production by more than 7% on a butterfat basis to meet the shortfall, but because there’s no additional demand for the protein in the whole milk  (usually made into skim milk powder), farmers aren’t paid the full cost of production price for this additional milk, and a lot of the surplus skim milk is being dumped or fed to livestock.

That’s unfortunate, but the more serious impact I think is that it’s given the business media a fresh opportunity to attack supply management.  “Supply management falls butter-side down”  in the Globe and Mail,  and  “Supply management is expensive, irrational — and doomed” in i-Politics amongst others.   What especially irritates me about these articles is that they blame dairy farmers (and always the articles are  accompanied by shots of Holsteins) for lobbying to protect a “broken” system, when it’s large multi-national dairy processors that have created the problem. There’s no benefit flowing back to dairy farmers from  the importation of this cheap protein (other than Quebec farmer-owned Agropur, shame on it.  Parmalat is owned by a large Italian dairy, and Saputo by a Montreal family).

Here’s some better news. As Islanders, we can celebrate the fact that PEI’s dairies, ADL and Purity, do not use this imported protein.  And let’s also enjoy the world recognition ADL cheeses have received recently:  ADL, using a recipe from Cows, produces the Avonlea Clothbound Cheddar that won SuperGold at the World Cheese Awards in England  in late November. And ADL’s own labeled cheddars won several awards at the British Empire Cheese Show in Ontario in mid-November.  I’m not an expert, but maybe the fact that only PEI whole milk, rather than a tasteless imported protein isolate, is used to make these cheeses had something to do with these successes.  

One more thing for consumers to watch for. There is a symbol:

 that says 100% Canadian milk.  That’s your guarantee too that there’s no imported protein in the dairy products. 

Unfortunately for farmers  the trade in protein isolates won’t end quickly. The U.S. dairy industry would launch a trade investigation before the ink was dry on any new government regulation trying to control it.  The big multi-national dairies themselves are playing a game of economic chicken saying they’ll stop only if the others do.  As well they’re getting ready for more competition from cheaper European cheeses if the big EU trade agreement is ever ratified.   So consumers will have to step up if there’s going to be any solution. On PEI at least that’s easily done.

April 19, 2017

WASHINGTON—Holy cow, he’s now coming after us.

U.S. President Donald Trump slammed Canada’s trade practices for the first time, vowing to call Canadian officials to demand changes to dairy policies Wisconsin farmers say threaten their livelihoods.

“We are also going to stand up for our dairy farmers in Wisconsin. And I’ve been reading about it, I’ve been talking about it for a long time, and that demands, really, immediately, fair trade, with all of our trading partners. And that includes Canada,” he said Tuesday, raising his voice to emphasize the country.

“Because in Canada, some very unfair things have happened to our dairy farmers and others.”

He did not specifically identify what he was talking about in his unscripted musings, which came during a Wisconsin speech in which he touted “Buy American” policies that are opposed by Canada. It appeared, though, that he was weighing in on an arcane but escalating bilateral dispute over ultrafiltered milk, a high-protein concentrate sometimes used to make cheese and yogurt.

Read the latest news on U.S. President Donald Trump

The Canadian dairy lobby and government say Canadian policies are not responsible for the crisis that has beset about 75 family farms in Wisconsin since a local milk-processing company cancelled their contracts April 1. But Trump joined the U.S. dairy lobby and a bipartisan group of U.S. lawmakers in attributing the problem to a Canadian reduction in prices that has made American imports less competitive.

His remarks were the latest in a series of signals that suggest Canada will not glide easily through the possible renegotiation of the North American Free Trade Agreement (NAFTA). After declaring in February that the trade relationship is “very outstanding,” his administration has floated a series of complaints.

Not until Tuesday had he called out Canada specifically.

“What’s happened to you is very, very unfair,” he told the farmers. “It’s another typical one-sided deal against the United States, and it’s not going to be happening for long. So . . . we’re going to get together and we’re going to call Canada, and we’re going to say ‘what happened?’ And they might give us an answer, but we’re going to get the solution, not just the answer, OK, because we know what the solution is, all right?”

He did not say what he believes the solution is.

Trump had been urged to take action on the dispute by politicians from both parties, including Republican Wisconsin Gov. Scott Walker and Democratic New York Gov. Andrew Cuomo. In an October letter to Prime Minister Justin Trudeau, Cuomo said the policy amounts to a trade barrier that flouts international agreements.

Trudeau’s government did not respond to Trump on Tuesday. Instead, Ambassador David MacNaughton wrote a letter to Walker and Cuomo, urging them to “not lay blame where it does not belong.”

MacNaughton said Canada “does not accept” the contention that dairy policies in Canada are causing financial hardship in the U.S. “The facts do not bear this out,” he wrote, citing a U.S. government report that says global and U.S. overproduction is the root of the U.S. dairy industry’s struggles.

“As made clear in the report, Canada is not a contributor to the overproduction problem,” MacNaughton said. He argued that Canada’s dairy industry is less protectionist than America’s.

Like most things related to Canada’s milk policy, the dispute is complicated.

At the beginning of April, Wisconsin’s Grassland Dairy Products informed 75 local farms that it would no longer purchase their milk. Grassland said it made the decision because it had just lost tens of millions of dollars worth of Canadian business as a result of the policy change in Canada.

The Canadian dairy industry, tightly regulated under a system of “supply management,” has long been protected from foreign competition by tariffs on imports. But ultrafiltered milk from the U.S. had been allowed to enter Canada tariff-free, and Canadian processors often preferred to import rather than pay higher prices to buy from Canadians.

A year ago, though, Ontario changed the rules: it allowed local processors to buy ultrafiltered milk and other kinds of skim milk from Canadian farms at world prices rather than the higher Canadian prices. All of a sudden, the need for U.S. imports evaporated.

Canada is now adopting a similar policy across the country, further alarming the U.S. industry already beset by a supply glut. In Wisconsin, some of the family farmers say they will have to sell off their cows if they can’t quickly find another processor.

The Canadian dairy industry says the entire issue has been misconstrued by the Americans. A spokesperson for the Dairy Farmers of Canada told the Washington Post in a front-page article Tuesday that the Wisconsin farmers were using inaccurate “alternative facts,” a phrase popularized by a Trump aide.

In the Canadian industry’s version, the real culprit for the U.S. woes isn’t Canadian policy but the U.S. supply glut.

“When too much milk is produced, prices crash and there is no incentive to invest in increased processing capacities. The end result is job loss, loss of income for farmers, and in some cases, farmers having to shut down their farms,” a Dairy Farmers of Canada official wrote in early April.

“No matter how one views the situation, exports to a comparatively small Canadian market — one that is already filled with Canadian milk — are a drop in the bucket that will not solve the problems currently impacting the U.S dairy industry. It is wrong to use Canada as a scapegoat for the situation in the United States.”

The Dairy Farmers declined to respond to Trump on Tuesday, referring questions to the Canadian government. A spokesperson said they are “very confident” Trudeau will “protect our industry.”

Trump has not criticized supply management more broadly. But in a draft letter to Congress that expressed a preliminary NAFTA wish list, his administration hinted that it wants to raise the subject during the upcoming talks.

Trump signed an executive order on Tuesday to crack down on exemptions to Buy American policies, which are supposed to require U.S. government projects to buy from American firms. Canadian Finance Minister Bill Morneau will raise objections to the order at this week’s meeting of G20 finance ministers in Washington, The Canadian Press reported.

With files from Bruce Campion-Smith

Rural PEI Demise Challenging but Can Be Understood

I was pleased to be asked to speak at a rally for Rural PEI on Islander Day. And remember it's for speaking rather than reading so it may seem a little awkward....



We all know why we’re here….. my feelings about Belfast school are no different than yours…. My son went there in those critical early school years where our kids have that one chance to become curious.. and engaged… make friends… feel part of something bigger than themselves… I saw cos do all of those things and was grateful… to the teachers and everyone else he interacted with at Belfast elementary… and it wasn’t until he went to the much bigger high school in montague that I realized how the size of classes.. the close interaction of teachers and students.. teachers and parents.. the security that comes from being in a community where everyone knows your name were so important…. Belfast has given him a leg-up.. the success he’s enjoying today.. the pleasure he gets from solving problems… working and accomplishing things in a group…. had their origins at Belfast elementary.. I want to make sure that many many more children have that same opportunity.. that’s why I want these smaller schools to stay open…..

And yes there is over crowding in some urban schools that needs to be fixed… zoning will accomplish some of that… but taking away the opportunity for community based education at the elementary level… making primary education for some rural children worse to solve a problem for other children…. Is not fair… it’s no solution….

So what’s going on here….

I spent most of my professional career at cbc .. and as a belfast resident… watching with alarm the hollowing out of rural pei…… and there are obviously strong linkages between why rural communities have been in decline… and now what follows from that… the accountant’s case that the government can no longer afford to keep these small school’s open…. And the education department’s argument that students will be better off bussed to bigger schools outside the community….

Our farmers and fishermen are facing powerful economic forces… from free trade deals internationally… to consolidation in the food wholsale and retail business… many fewer buyers than there were 15 years ago… we as consumers have benefited from all of this.. … But primary producers have not…. these economic forces send a message to farmers… get bigger to compete.. or get out.. and that’s just what happened… we’ve seen farm numbers decrease from around 3000 farms in the mid’80’s… to half that now….

But here’s the thing…. our provincial governments from angus maclean through jim lee.. joe ghiz…. pat binns and yes Robert ghiz and wade maclaughlin have been at their best in my opinion… when they help farmers and fishermen work against these powerful economic forces…. this trend of get big or get out… the lands protection act does this…. the beef plant is a good example… political support for supply management and the success of adl… support for plants owned by fishermen in tignish and the Evangeline… the easy thing is to give in to those economic forces . let deep pocketed corporations run things… but our best politicians over the years have shown courage.. and yes risked provincial dollars…. To keep these industries in community control…. And we need that kind of courage and commitment now when it comes to keeping our schools open….

Now we… the rest of us.. we have to do our part too… look I’m as guilty as anyone when it comes to school board elections.. my son grew up left home…. And I let election after election slip by without paying any attention… and the control of our schools slipped away… that’s on us.. and we need a new governance model that keeps not just school age parents involved… but all community members interested in education….

And we have more work to do… a lot of which has begun already…. to try to make use of empty classrooms until school age numbers increase again which they will…

I’ve seen first hand what a community based development corporation can do in Belfast to supply goods and services that otherwise wouldn’t be there… it takes commitment.. and lots of volunteer time and effort…. We in belfast and all other communities are prepared to take on that challenge…. It could lead to community development opportunities…. Even to generate some income… at local schools to help with the redistribution of resources the department says it needs….

We will do that work.. you have our full attention… the work has already begun… but premier mclauchlan we need something from you…. Time… this can’t be done in weeks or a couple of months…. We need a moratorium on school closures.. for at least another year….. it will also give the education department a chance to get up to date on the impact of re-zoning and real bussing costs…. your education department has an obligation to get this information…. we have the right to do more than just comment on what’s already been decided…. we’re ready to do that work….

Premier mclauchlan… I went to the Georgetown conference in the fall of 2013.. the one you chaired…... and I didn’t hear anyone suggest that closing rural schools.. bussing young kids to bigger ones miles down the road..… would help with community development…. We know if these schools close… they’ll never open again…. Don’t let this happen on your watch…… give us a chance to make these small communities a welcoming place for new families… not a place to avoid because there’s no local school….

It’s interesting that when pei wants to show off what’s it’s most proud of… what it wants others to think about… we don’t use a picture of the Wal-Mart in Charlottetown.. or the royal bank building…. It’s cultivated fields… fishing harbours….. cattle grazing in fields….. but behind these shots are the people who shape the landscape with their work… take risks on the open water… or the frozen bays to harvest oysters and mussels in the winter…. People who have chosen a life not many do these days… we should celebrate them… thank them… these are the people who will drive the exports you’re looking for premier mclaughln… invest the money… do the hard work…. But they deserve to be seen as more than just workers or entrepreneurs…. They have families and communities around them.. that’s what sustains and maintains their committment…. and schools are at the heart of these communities… Don’t do anything that would take away that opportunity to give their children the best start to their lives… the kind of opportunity my son had at belfast….

is keeping these schools open the hard choice??? it shouldn’t be but apparently it is…. is counting on community development in the future risky??? yes… but premier mclauchlan… it’s the right thing to do…..

Getting Carbon Pricing Right

I've been doing a fair bit of writing which ends up elsewhere than this blog... I saw something today in i-Politics that matched up with a column I did on carbon pricing and agriculture. Here are both:

Getting Carbon Pricing Right

We’ve all heard this one: "If a tree falls in a forest and no one is around to hear it, does it make a sound?"  Don’t think too hard about this, it will make your head hurt, but consider this:  “Can a tree left standing, rather than cut, generate some income?”  This is the more important question now as we wrestle with climate change, and the first steps  of raising the cost of burning carbon.

All Canadian provinces (three are resisting)  have been told by the   Federal Government to start pricing carbon no later than  next year.   PEI is joining the majority of provinces and implementing a carbon tax,  while Quebec and Ontario, are using what’s called a cap and trade system. Both approaches have their strengths and weaknesses.  I think that PEI should do more with carbon trading.  

Most economists like a tax. It’s simple. There’s just the question of how much,  who pays, and how to spend the newly raised money.  The policy goal is straightforward, make burning carbon more expensive, and people will use less of it.   A cap and trade system is certainly more complicated.  Governments set pollution limits for different sectors, and then from that,  individual companies are given mandates. Those that produce too much greenhouse gasses have to buy credits.  Over time governments can lower industry thresholds  to meet policy goals. Many complain this allows big companies to carry on business as usual and just buy their way out of doing anything.  They can,  but eventually competitors would gain market share with lower costs and prices.   I’d like to focus on the other side of the ledger. Those that produce less carbon than allowed clearly benefit, but there could be more to this.  In many jurisdictions enterprises that capture carbon, or remove it from the atmosphere,  are also rewarded.  That’s where that tree in the forest comes into play.   

There are carbon trading systems in countries like Australia (they’re as controversial there as anywhere else) that pay landowners to maintain forests to capture carbon as they grow. The rules are strict, forests must stand for decades, up to a century, and people are paid based on the types of trees.  About 50% of the dry weight of  tree roots, trunks, branches and leaves is carbon.   Australian farmers can also benefit from establishing permanent pastures, grasses and forages that capture carbon while growing, and lock it up underground until the soil is disturbed again.  Research (https://judithcurry.com/2013/06/07/soil-carbon-permanent-pasture-as-an-approach-to-co2-sequestration/ ) shows these grasslands capture CO2 at a rate of 20 tons per hectare.  Carbon credits for these programs are then sold to big emitters like power companies.  

Farmers across Canada are now coming to terms with carbon pricing including here on PEI.  Last week potato growers were given a broad outline of the impact of climate change, and how carbon pricing will work.  The head of the Climate Change Secretariat Todd Dupuis said, like other provinces,  marked gas used on farms will not be included, but that didn’t stop farmers from asking questions. Many said marked fuel is just a small part of their input costs.  Transportation costs will increase, bulk trucks used to move produce, and so on will now all cost more.  Farmers have good evidence that they can’t pass on these extra costs to consumers, but for a trading province like PEI there are more worries.  With Donald Trump, and a Republican controlled Congress there is little concern or interest in the United States now to tackle climate change, and certainly no chance of a carbon tax. Supermarket prices are generally determined by U.S. markets, so there’s a real risk that Canadian farmers will be uncompetitive with their American counterparts.  A low Canadian dollar will certainly help, but price spreads could increase over time as the carbon tax increases, and the Canadian dollar recovers.   This will offer some protection to consumers, but could severely impact Canadian farmers.  

And consumers enjoy something else,  choice. We’re now supposed to think twice about buying a pick-up truck rather than a four cylinder station wagon, turning on the air conditioner in the summer.  Farmers on the other hand are generally facing fixed costs that can’t be avoided, but if we added carbon credits to the mix then at least landowners who leave trees standing,  or put sloping land into permanent pasture are rewarded rather than made to feel like bad managers.

Todd Dupuis did tell farmers that the government is considering these kinds of carbon credits. Could it be included with a carbon tax? Would PEI join Quebec, Ontario,  and California in a larger carbon trading system?  Manitoba had also been part of this mix, but its new Conservative government says it will do something different.

PEI has more to lose as a province than any other from climate change,  both land erosion and the risk to high priced real estate and waste treatment facilities.  We will do our part by starting to price carbon. We could do even more with a carbon credit scheme.   

Want fair carbon pricing? Embrace carbon trading

Paul Boothe Published Friday, February 10th, 2017

Yesterday in this space, I used B.C. Premier Christy Clark’s call for carbon pricing “fairness” across provinces as a springboard to talk about what constitutes fairness in carbon pricing. I ended up concluding that, depending on your definition, the quest for ‘fairness’ could result in equalizing carbon prices across the provinces, or equalizing per capita emissions — or neither.
Premier Clark’s argument for equal prices is a simple one: that everyone should face the same carbon price regardless of where in Canada they live, and so, the federal government should require that carbon prices be equalized across the provinces.
In fact, even if your personal definition of fairness requires that everyone face the same carbon price, it doesn’t follow that price equality should be dictated by the federal government. How carbon price equality is achieved can have an important impact on economic growth.
To understand why, it’s worthwhile to go back to the rationale for using carbon pricing as a key tool in our efforts to reduce GHG emissions. Putting a price on carbon emissions creates an incentive for us to reduce them. There are many ways to reduce emissions. For example, we might drive our cars less by planning our trips to the store better, or by walking or cycling for short trips. Or we could take advantage of the latest technology to switch to more fuel-efficient vehicles.
A key benefit of carbon pricing is that it combines the incentive to reduce emissions with flexibility in how we do it. That flexibility allows firms and individuals to find less expensive ways to meet our GHG reduction targets and thus reduces the impact on consumers’ incomes, firms’ profits and economic growth.
This isn’t the end of the story, however. To take full advantage of the flexibility that carbon pricing offers, we need markets. Carbon pricing gives individuals and firms the ability to choose among different actions they can take by themselves. Trading in carbon markets allows them to access to the full range of possible emission-reducing actions in the economy. This added flexibility has the potential to lower the cost of reducing GHGs even further.
A simple example can illustrate the point. Suppose a firm operates in a province where the carbon tax is $30 per tonne. In the course of producing their products they emit one tonne of CO2. The compliance choices they face are to pay the carbon tax or invest in CO2-reducing technology. The option they choose will depend on how much the new technology costs. If it costs more than $30 to eliminate the tonne of carbon they produce, the firm will comply by paying the tax.
If it costs less, the firm will invest and avoid the tax. Let’s assume the new technology reduces emissions at a cost of $20 per tonne and so the firm invests.
But what if the firm had the option to pay a company in another province to reduce emissions by one tonne at a cost of $15? It could then reduce total national emissions by the same amount at a lower cost, thus increasing their profits (and taxes) or investments in growth and jobs by $5.
The downside, from the point of view of that company’s provincial government, is that money may flow to reduce emissions elsewhere rather than into the provincial economy and treasury.
The flexibility to reduce emissions at the lowest available cost is exactly what carbon trading allows. Indeed, the ability to trade reductions with California is why Quebec and Ontario can meet GHG reduction targets that are more ambitious than the national one (both in terms of absolute per capita reductions and per capita levels of emissions) at a lower cost than the national carbon price.
Carbon trading is not only efficient, but it may also help improve the perceptions of relative ‘fairness’ of provincial carbon pricing regimes. For example, individuals and firms in all provinces could participate in a pan-Canadian trading system, and allow the reductions generated from these projects to be counted towards their obligations in both cap-and-trade and carbon tax systems. A pan-Canadian market would provide a degree of linkage between provincial systems to give access to the lowest cost reductions and promote greater equality of carbon prices across jurisdictions.
Both efficiency and fairness are important considerations when designing an emissions-reduction scheme, but there are efficient and inefficient ways to achieve fairness. An inefficient way is to have a common carbon price dictated by government. An efficient way is to let markets provide everyone with access to the lowest-cost options for meeting our GHG targets.
The views, opinions and positions expressed by all iPolitics columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of iPolitics.

Benefits From Fighting Wireworm

I wrote this two years ago now, and was glad to hear this week that more and more farmers are trying what are called bio-fumigants. Here's the CBC story, and the column from 2014.

How mustard could be the 'golden ticket' to stopping potato pest

Think all those bright yellow fields are canola? They're not.
Island farmers are growing about 15,000 acres of mustard this summer as part of an ongoing battle against the wireworm, a pest that cost the the P.E.I. potato industry $6 million in 2014.
"It's been one of our biggest battles growing potatoes here," observed Willem VanNieuwenhuyzen of Vanco Farms.
"For years it seemed like it was getting worse and worse, and it's a bit of a helpless feeling knowing there's not a lot out there that we can use to battle it.
"Hopefully this mustard is our golden ticket, that's kind of what we're all banking on."

Wireworms dig holes in potatoes as they grow, making them unfit for sale.

'We buy with our eyes'

The farmers don't harvest the mustard, but mulch it and plough it into the soil. As it breaks down, the mustard gives off a bio-fumigant into the soil that kills wireworm and other pests.
Wireworms live in the ground, beyond the reach of insecticides sprayed on the surface. The insects dig holes in potatoes as they grow, making them unfit for sale.

'We buy with our eyes and when you see a potato that's been damaged by wireworm, people just don't want to buy that.' - Dan MacEachern

"It's been pretty substantial to the industry. We buy with our eyes and when you see a potato that's been damaged by wireworm, people just don't want to buy that," said Dan MacEachern with the P.E.I. Department of Agriculture.
Vanco Farms, for example, had one field last year that was hit hard by wireworm and cost them half of the crop. That's why Vanco has planted more than 2,000 acres of mustard this year in all the fields where potatoes will be planted next season.

A crew from Vanco Farms mulches and ploughs a field of mustard that will be planted in potatoes next year. (Nancy Russell/CBC)

Keeping an eye on the enemy

"We're calling ourselves mustard farmers now because we seem to grow more mustard than anything else," joked VanNieuwenhuyzen.
Mustard doesn't generate any revenue but VanNieuwenhuyzen hopes it will pay off.

'We're calling ourselves mustard farmers now because we seem to grow more mustard than anything else.' - Willem VanNieuwenhuyzen

"The potatoes we pack are expensive and wireworm damage is hard to pick out," added VanNieuwenhuyzen.
"We're hoping that the benefits of the next year's crop will justify this."
Vanco Farms also has a summer student monitoring traps in its fields that capture click beetles. Female click beetles can lay 100 to 200 eggs that produce the destructive wireworm larvae.
For VanNieuwenhuyzen, it's all about "knowing the enemy."
"I think we're seeing some improvements. I hope we're getting it under control. That's our goal and I think we're getting there."

Willem VanNieuwenhuyzen of Vanco Farms says the company has more than 2,000 acres of mustard this year. (Nancy Russell/CBC)

Fields of gold

The amount of mustard being grown this season is up 25 per cent and MacEachern expects that number to remain stable.
"I don't see them decreasing any time soon — if anything maybe acres will increase a bit just because it's a nice, natural way to help improve the soil," said MacEachern.
The fields of bright yellow mustard have been attracting attention.
"The department has received a lot of calls this summer and they're inquiring as to why there's so much canola being grown on the Island this year," explained MacEachern.
"And it turns out it's actually mustard."

Dan MacEachern thinks the amount of mustard being grown is going to remain stable or possibly even increase in coming years. (Nancy Russell/CBC)

Fighting Wireworm May Save the Potato Industry

August 2014

Wireworms are nothing but trouble for farmers. Voracious worms that feast on grain , fruit,  grasses, root crops, and whatever else farmers have planted. The damage is usually enough to keep produce from being acceptable on blemish free supermarket shelves.  Wireworms have forced some families to quit farming, costing others thousands of dollars.  Depending on the species they emerge as click beetles every 2 to 5 years and can fly somewhere else to do extend their damage. So Petrie have you lost your mind??

It’s how farmers are being forced to fight wireworm that I find interesting, maybe hopeful.  In Canada Thimet is the only insecticide that works, but after several extensions it’s supposed to lose its registration in 2015, with nothing in the pipeline to replace it.  So farmers are being forced to look at crop rotations with brown mustard and buckwheat, which have proven to be quite an effective way to control wireworm numbers. The crops are cut and plowed under, not harvested, and release bio-toxins that kill and control wireworm populations.   Here’s the thing. Thinking about crop rotations as a way to improve the quality of the “money maker”  crop in the second, third or fourth year of  a rotation is a welcome return to how farmers used to  think about crop rotations.  More recently, because farmers have been paid so poorly for table and processing potatoes, the second and third years of a rotation have to be money makers too, so soybeans, and corn have become popular rotation crops. They are certainly more valuable than barley or hay, but they’re harvested late with little chance for fall cover crops, and do little to improve organic matter levels  in the soil. And I can’t think of anything that’s more important to reversing the negative cycle of nitrate and pesticide leaching, anoxic rivers,  sedimentation, and now the growing need for irrigation,  than improving soil quality. And that just won’t happen unless crop rotation is taken seriously, and rotation crops are viewed as ways of improving soil structure and health,  not of keeping farmers from going bankrupt.

I had the privilege  of interviewing many of the old hands in the potato industry, the movers and leaders through the 60’s, 70’s and 1980’s (the videos can be seen on the Youtube channel of the PEI Potato Board).  They all worry about the brutal economics in the potato industry, prices they’d seen in the ‘60’s and ‘70’s while the cost of production has skyrocketed. Many worry about the shortcuts farmers have been forced to take to survive, the growth in farm size as farmers chase economies of scale. All worry about the future of the industry.  Several spoke passionately about  the crop rotations that worked for them. Yes, they’d say,  there would be a lot of sod to wrestle with in the potatoes grown after a hay crop, but you had to do it to keep the soil healthy.  Some talked about the importance of keeping cattle to have the manure to put back on the land.  All accepted that if you could break even on a rotation crop, generate a little cash at the elevators delivering grain,  that was fine, because it was the potatoes that had to pay the bills,   and quality and yield came from good soils.  These guys know what they’re talking about.

I’m not saying this is an issue on every farm, and these concerns are hardly new. The latest came from the group looking at the series of fishkills in Barclay’s Brook in West Prince:

“The Action Committee found that soil in some land

backing onto the Barclay Brook has low

organic matter levels as a result of intensive farm

management practices leading to a greater

likelihood of soil erosion and increased surface

runoff. The Action Committee understands

similar circumstances probably occur at locations

throughout the province making watercourses more

vulnerable to contaminated surface runoff.”

I really wish wireworm wasn’t the reason for farmers to think again about the proper use of crop rotations. Unfortunately wireworm is particularly fond of grass which should be an important part of rebuilding soil organic levels,  but mustard and buckwheat are both good sources of organic matter too.  All of this requires more research, some regulatory backbone to enforce crop rotation rules (including common sense and flexibility, increasing organic matter should be the yardstick), and big buyers like Cavendish Farms not counting  on rotation crops to keep farmers solvent. They’re needed  to rebuild soil quality, not backstop cheap potatoes.