The Rural Voice, 2003-01, Page 18OUTLOOK 2003: GENERAL VIEW
Policy issues fog
picture for 2003
There's potential for
improvement in the income of
farmers in many segments of
the industry in 2003 but there are
also so many determining factors that
are beyond the control of the farming
community. from weather to politics
to international trade. That seems a
summary of various speakers on
different elements of agriculture in
recent meetings.
From the declining level of farm
support for Canadian farmers versus
their competitors to the ramifications
of the U.S. Country of Origin
Labelling legislation. to the growth
of South America in reshaping world
grain markets, Ontario's farmers
have more than just weather beyond
their control in the third year of the
new millennium.
Take the declining level of farm
support by the Canadian government
compared to the U.S. and Mexican
governments. our partners in the
'North American Free Trade
Agreement as an example. Speaking
recently in Stratford at a Farm
Business Management Seminar,
Brian Doidge, economist and market
analyst with the Ontario Corn
Producers Association pointed out
that in 2001 for the first time ever
U.S. food exports to Mexico and
Canada exceeded exports to the
European Union and Japan
combined. In 1995 Mexico and
Canada combined for only half the
amount exported to Europe and
Japan. "North America has emerged
as a trading block dominated by the
U.S.," Doidge said. "The borders are
transparent and we are therefore
dominated by U.S. farm policy."
Since 1988's negotiation of the
Canada -U.S. trade agreement,
Canadian exports have increased 300
per cent which has the federal
government boasting of success but
farm income is flat and farm debt has
increased 200 per cent. "Some of us
in this room would not say that this is
a raging success."
Both Mexico and Canada support
their farmers less than the U.S. "So
14 THE RURAL VOICE
while we're in the world Trade
Organization and we're aiming at
reducing subsidies and supports,
within NAFTA we need to keep in
mind that it's an open playing field
and we have to keep pace with our
partners."
In 2000. U.S. support to
agriculture was 1.07 per cent of its
Gross Domestic Product while in
Canada it was 0.78 per cent.
For grain and oilseed producers
the problem is even worse, Doidge
said. In the U.S. 95 per cent of
American support goes to grain and
oilseed producers but Canada, afraid
of WTO rules, insists on whole -farm
programs that give 70 per cent of
support to areas of farming other than
grains and oilseeds. the area most
hurt by the U.S. farm policy.
When the Market Revenue
Insurance program ends on April 1
the situation for producers will get
even worse, Doidge predicted. There
must be counter -cyclical support
programs for when prices drop, he
said and Canada must spend at least
one per cent of GDP on agricultural
support if Canada hopes to stay
competitive with the U.S.
Agriculture Canada holds up New
Zealand as a model but New Zealand
doesn't compete with the U.S. in its
primary commodities and doesn't
share a border like Canada. "It's a
totally different world," Doidge said.
Meanwhile for pork and beef
producers it's the political actions on
the other side of the border that are
causing concern, specifically the
Country of Origin Labelling (COOL)
program, set to become mandatory in
December 2004.
Even Americans are starting to
question the legislation which was
slipped through in bargaining for
other aspects of the Farm Bill, said
Doug Richards, senior field
representative for Ontario Pork at the
same seminar. Some commodities
like pecan producers are upset that
their products were not included
while processors and retailers are
wondering how they'll meet ,the
requirements to put a label on the
products that not only says where the
product was grown or raised, but
requires a documented tracing of the
history of the animal.
Then there's the definition of what
food outlets must comply.
Restaurants and food service
establishments are exempt from the
regulations. So are butcher shops and
fish markets and small stores.
Pork, beef and lamb are covered
by the legislation but chicken isn't
because the industry is so vertically -
integrated that there. is little need to
label origin.
For a meat to be labelled "U.S.
Country of Origin" it must be derived
exclusively from animals that are
born, raised and slaughtered in the
U.S. Production stages must also be
labelled. If a farmer imports
Canadian weaner pigs the label
would have to say "Born in Canada,
raised and processed in the U.S."
Mixed products are even worse,
Richards said. If there is some non -
U.S. born and raised meat mixed into
a burger, the ingredients have to be
listed by weight.
The headaches really start with
verification, Richards said. Self-
certification doesn't meet the
requirement. You have to be able to
verify the birth and raising of the
animal. For beef, this could mean big
problems because of the two-year
growth period that will have to be
traced. Because of the cost of the
program, nobody is going to jump in
until they have to, Richards
predicted. "We're not sure where
they're going to get their hamburger
for the first couple of months" of
mandatory labelling, Richards said.
The point of enforcement will be
at the retail level (fines of up to
$10,000 per offence) but costs of the
program will no doubt be pushed
back through the wholesalers and
processors to the producers, he said.
The effects will cross the border
to Canada. U.S. packers may not be
interested in buying any slaughter
pigs and U.S. producers used to
buying Canadian weaner pigs could
think twice, Richards said.
The hassle involved in labelling
might make U.S. retailers say no to
selling Canadian beef altogether,
suggested Anne Dunford, market
analyst with Canfax when she spoke
to Beef Symposium 2002 at Brussels.
Currently Canadian exports go 51