The Rural Voice, 1989-12, Page 121 1
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SUPPLIES
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VETERINARY
HOG — BROILER — LAYER
TURKEY — BEEF — DAIRY
VEAL — FISH — PET FOODS
call
LUCKNOW
519-528-3000
or
1-800-265-3006
10 THE RURAL VOICE
COUNTERVAIL AND
PORK PRODUCTION
Adrian Vos, from Huron County, has
contributed to The Rural Voice since
its inception in 1975.
The depression of the 1930s
was caused mainly by protectionism.
To protect jobs, a country imposed
import tariffs. The predictable result
was retaliatory tariffs by its trading
partner. Before long, trade declined
drastically and the fat was in the fire.
After the last world war, a group of
advanced nations, among them Can-
ada, made a General Agreement on
Tariffs and Trade (GATT) to prevent
as much as possible a recurrence of
the trade doldrums of the '30s.
Almost 100 nations have since
joined this agreement. Its main aim is
to have an open trade climate with as
few barriers as possible.
It has worked well but, as with
everything conceived by men, it has
its strong points and its weaknesses.
One part of the agreement allows a
country to counteract another's gov-
ernment subsidies with a countervail
tariff if those subsidies hurt its domes-
tic industry.
In tum, if the exporting country
believes the countervailing duty is un-
just, it can protest to a GATT commit-
tee and, failing that, to the plenary
assembly of the GATT countries.
This is happening with the dispute
about pork subsidies. The U.S. has
slapped on a duty of about eight
dollars a hog to counteract Canadian
government subsidies. At the same
time, it disregarded its own subsidies
which are also, according to GATT
figures, eight dollars a head.
Canada is protesting on two fronts,
the GATT and the Free Trade Agree-
ment (FTA). The lacer may drag on
for another six years, as neither party
to the FTA has yet agreed which
subsidies are reasonable.
Pork producers' only customers,
the packers, are in a quandary. At
present there is a countervail duty on
fresh pork based on the previous half
year. When that period expires, the
U.S. will decide on a new level which
will be retroactive and based on the
present half year. No one knows what
that duty will be. Packers, responsible
as they are to their shareholders, can-
not bet on such uncertainties.
What is certain is that the next duty
will be considerably higher than the
present one. This is because tripartite
payments have been extremely high.
The Americans base their countervail
on two-thirds of tripartite payments,
because our governments pay two-
thirds of the premium.
Packers have told the Canadian
Pork Council (CPC), which represents
all of Canada's pork producers, that
they will stop exporting fresh pork
unless they get help from producers.
Every economist in the country
agrees that the loss of the U.S. pork
market (30 per cent of Canadian
production) would result in a price
drop of between $10 and $12 a hog.
The CPC has agreed to establish a
fund to reimburse packers at $2 a
hog if the expected happens. If not,
farmers will get their money back.
The CPC figures that not to make an
investment of $2 for a return of $10
would be foolhardy.
It makes so much sense that the
attitude of Huron pork producers, who
voted to oppose the fund, defies logic.
It is easy to see why Ross Small,
the OPPMB director from Wellington
County, opposed the scheme. He
figures that the loss of the U.S. market
will open the way for supply manage-
ment for hogs. He said as much at an
open meeting in Huron.
It is more difficult to see the rea-
soning of Huron's Ron Douglas. I
pushed him for his reasons in oppos-
ing the scheme. After much prodding,
he gave as his only argument the
opposition of many Huron directors.
That, in my view, is the tail wagging
the dog. A director, with all the facts
and figures at his disposal, should lead
rather than follow.0