The Rural Voice, 1991-09, Page 20GUEST OPINION
THE BUCK STOPS HERE: THE REASON
OUR FARMERS ARE GOING BROKE
by John Franklin
(John Franklin is a writer who lives
near Forest, Ontario.)
Subsidies paid or not paid to Can-
adian farmers as opposed to our com-
petitors have captured the public's
auention. The cost -price squeeze is
seldom mentioned except for state-
ments that Canadian costs are higher
and this requires higher prices. Why
are Canadian costs high? The cost of
government at all levels has to be a
prime culprit.
Every product and service pur-
chased by Canadian farmers is loaded
down with costs of taxes and govern-
ment programs. A partial list includes
corporate and income taxes, U.LC.,
health taxes, property taxes, fuel taxes,
licences, permits, and sales taxes.
Farmers pay many of these directly,
and they also pay the cost of all of
these and every other government cost
passed on to them by their suppliers.
The inability to recover these costs
from market prices is responsible for
much of the loss of equity experienced
by the farm sector.
Although this excessive cost of
government has had a devastating
effect of farmers, very little criticism
is heard. There are two probable
reasons for this.
First, people do not realize the
cost. Although figures are often pub-
lished showing the high percentage of
taxes on gasoline, the oil companies
are still blamed for high pump prices.
The whole story is not told, as out of
the few cents per litre the oil com-
panies receive, all the taxes and em-
ployee benefits levied against all
business must be paid.
Another example of the hidden
cost of government may be illustrated
by the independent telephone com-
pany serving this area. Over 38 per
cent of gross receipts goes in direct
payments to the three levels of gov-
emment. This does not include the
cost of federal and provincial taxes on
inputs nor the cost of government
passed on by the suppliers of those
inputs.
This means that around 40 cents of
every dollar paid on the customers
telephone bill goes to the government.
How much is there on pesticides,
hydro, insurance, banking, etc. etc?
The other reason the cost of gover-
nment receives little concern, is be-
cause most businesses, unlike farmers,
can pass them on. The banks, insur-
ance companies, feed manufacturers,
utilities, fuel suppliers, etc., etc., do
not really pay U.I.C., Employer Health
Tax, education taxes, etc. They
simply pass them on to their
customers, adding on the cost of ad-
ministration. They also pass on corp-
orate income taxes in order to achieve
a rate of return for shareholders.
Government regulated utilities are
allowed a rate of return usually
comparable to the prime rate of
interest to ensure a viable business.
Higher taxes require higher prices to
maintain the rate of return for any
business. Farming is a glaring excep-
tion, since farmers cannot pass on
their costs.
This is what the real battle over
supply management is about. Food
processors, dependent on products
whose price is set by supply manage-
ment., and facing foreign competition,
are in the same squeeze as farmers
producing non-regulated products.
They are realizing faster than farmers
that this leads to bankruptcy. Event-
ually this will catch up to the supply
managed producers.
If Canadian agriculture, supply
managed or not, is to stay in business,
costs must be brought in line. Princi-
pally the cost of government. This
applies, of course, to all Canadian
business. Most of our population is
within easy driving distance of the
United States and Canadians are
flocking over the border to buy. Free
trade is the convenient scapegoat but,
of course, it has nothing to do with it.
Some advocate closing the border to
shopping, but walls and fences be-
tween countries are decidedly out of
fashion. Those fenced in became very
restive as they see their standard of
living deteriorate alarmingly.
Unfortunately, many agricultural
spokepersons in this country advocate
some form of fence building. Do they
not realize that Canadian consumers
will not stand for paying more?
Appeals to patriotism and pleas to
save Canadian farmers fall on deaf
ears. Even Canadian farmers cross the
border to buy tires, appliances, chem-
icals, seed corn, and yes, turkey,
chicken, milk, and eggs. Leadership,
instead, should fight against the high
costs in this country, and point out tha
government is largely to blame.
Labour unions, teachers' federations,
doctors' and nurses' associations all
exacerbate the situa ion with demands
for higher and higher pay. Granted,
governments keep taking more and
more of their pay cheques too, and is
continually eroding the buying power
of their take-home portion by increas-
ing prices with increased costs. But
surely they must realize that their
increased wages will be passed on to
the producing sectors of our economy;
agriculture, mining, manufacturing,
and forestry. Rather than causing
everyone in these sectors to go broke,
wouldn't it be far better to demand a
decrease in prices and taxes?
Supply management producers,
who state flatly that Canadians must
pay more because our costs are higher,
rate no higher in constructive
behaviour. They would be better to
consider the consumer, the producer
outside supply manageme^.t, the food
processor, and their own future.
Much of the economic, political
and social turmoil in this country
cannot be addressed properly until
Canadians come to grips with compe-
titiveness. The cost of government
will then come under scrutiny.
The problem of subsidies and trade
wars cannot be solved by Canada
alone. The problem of the cost of
government is in our own hands.0
16 THE RURAL VOICE