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Farmers for economic freedom
Updates from the Prairie Centre/Centre for Prairie Agriculture in Regina, Saskatchewan.
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web posted January 28, 2002
A different view of U.S. farm subsidies
U.S. farm subsidies have been a thorn in the side of Canadian producers for years. The subsidies promote over-production, lower prices, and reduced profitability.
But while the U.S. has claimed that the subsidies are necessary and beneficial to their farm sector, not all Americans agree. Steve Cates, who writes for the North Dakota Bismarck Tribune, is one of them.
In a recent editorial, Cates strips the veneer off the subsidy issue, claiming that it is doing more harm than good to American producers. Following are some of his comments:
- - - - - - -
In the year 2000, farm subsidies in North Dakota exceeded net farm income. A major portion of our primary industry is living on agricultural subsidies.
With this development has come the steady but certain incremental shift in attitudes in our rural areas.
A profound sense of entitlement has emerged. Farmers are beginning to demand the right to farm, regardless of whether anyone wants to buy what they grow; and they are demanding that money be taken from other American citizens so that they can live a comfortable, middle-class life in the countryside, regardless of their ability or exertion.
While the politicians claim to be protecting the family farm, consider the facts:
* Direct government payments to farmers went from $9.3 billion in 1990 to $22.9 billion in 2000. Huge increases are being demanded for 2002 through 2007.
* Forty percent of federal farm payments go to the 8 percent of the farms with highest incomes.
* Producers of just five crops -- wheat, corn, soybeans, rice and cotton -- receive 90 percent of federal farm subsidies.
* Fifty-eight percent of farmers -- vegetable, fruit, beef, hog and poultry producers -- survive in the market economy without taking any unearned money from any other American.
* In North Dakota 79 percent of all farmers are receiving subsidies. Many of these have moderate-to well-paying, full-time jobs, but continue to receive agricultural subsidies.
If our farmers envision themselves as self-sufficient, independent people, perhaps they need to look again. Latching onto the federal mammary gland protects marginal farms and farmers. Farm decisions are driven by government polices, not market forces. Like urban welfare recipients, farmers increasingly view themselves as victims.
They are victims of giant food processors, victims of foreign competition, victims of oversupply and victims of foreign agricultural subsidies. They are to some degree correct about these circumstances beyond their control. But now they view themselves as victims. They are victims who are less and less inclined to take self- responsibility. They are victims who must be saved by the government.
They are victims less likely to innovate and adapt, but more likely to organize, so that politicians will fill their outstretched, palm-up hands with money that must be taken from other Americans. I challenge any reader to give a single example of government policy that gives money to people that they have not earned by the production of goods or services that has had a positive long-term effect on society.
Years of a national agricultural policy of out-of-control subsidies is failing. The culture of small farms and small towns continues its downward slide. Rationally unsustainable, this policy of decoupling rural life from true market forces results in small rural communities not being happy places. Young people continue their exodus in pursuit of better education and opportunity, and the graying people who remain are left needing more and more of the shrinking services.
Until the people of rural America face the fact that they are losing
control of their own destiny and becoming welfare clients in the process,
they will be doomed. Their children will not nurture the family farm and
follow the footsteps of their grandparents. Their children will move away
to places where there is hope in the future.
web posted January 14, 2002
Looking for answers
By Craig Docksteader
Lynda Swanson is to be commended. Few people put in the kind of effort that she has over the last couple of years, attempting to find answers to the problems facing prairie farmers.
Lynda is not employed by a grain company, farm organization, or the government. She is a grain farmer from Elnora, Alberta. Frustrated by the lack of solutions to the struggling farm economy, she decided to do some digging of her own and began informing herself about the operations of the Canadian Wheat Board.
For the better part of a year, Lynda dug into CWB annual reports, Treasury Board Estimates, Reports of the Auditor General of Canada, and the Public Accounts of Canada. Little did she know that her research would uncover an element of CWB operations that was virtually unknown to prairie farmers.
For many years it has been common knowledge that the CWB sells grain on cash terms or on credit. When a grain sale is made on credit, the CWB goes out and borrows the amount owed so that the associated expenses and payments to farmers can be paid on time.
In 1999-2000, the CWB had to cover $7.3 billion in credit sales, of which all but $500 million was for unpaid credit sales made in previous years. But while the CWB's public financial statement reports $7.3 billion in borrowing, Lynda found a different number in the Public Accounts of Canada. Here the CWB reported borrowings of more than $85 billion.
After making her findings public, she received a detailed explanation of the discrepancy from the CWB. Apparently, instead of taking one big loan, the CWB borrows money through many smaller loans ranging from $1 million to $50 million. These loans mature anywhere from overnight to one year, requiring the CWB to repay the loan and borrow the money again.
If the borrowed money is not immediately needed to pay farmers or cover expenses, the CWB invests the money, usually at a higher rate of interest than it was borrowed. Like the loans, these investments are also short-term and consequently are often redeemed and reinvested several times before the money is finally paid out in payments to farmers or expenses.
As a result of both the borrowing and investing, the CWB regularly earns more interest on its investments than it pays for borrowing. It also moves a tremendous amount of cash.
In 2000, the $7.3 billion needed was borrowed, repaid, borrowed again, invested, redeemed and reinvested enough times that the total came to $85 billion in and $79 billion out. In 1998, it came to $185 billion in and $185 billion out. That works out to almost three-quarters of a billion dollars in and out every working day of the year.
But despite the CWB's explanation, many producers remain concerned about the discovery. Why wasn't the information made available in the CWB's annual report? Why are many numbers "netted out", reporting only the difference between income and outgo, rather than the total amount of the transactions? Why is detailed financial information not available to producers?
According to the CWB finance department, the solution to these concerns is simple, as explained in their letter to Lynda Swanson:
"We recognize that this [existing] level of disclosure can create confusion and misunderstandings about the CWB's borrowing activities... We have concluded that the inclusion of investment activity within the accounts is not consistent with the way other Crown Corporations and Government Business Enterprises report on their borrowing activity. We have discussed this matter with the Receiver General of Canada and will be changing the presentation of the numbers in the 2001 - 2002 Public Accounts to include only borrowing activity."
The CWB's solution? Give less information to farmers, not more.
Craig Docksteader is Coordinator of the Prairie Centre Policy Institute.
web posted January 7, 2002
A sign of the times
By Craig Docksteader
When Saskatchewan Wheat Pool announced the sale of The Western Producer in late 2001, there were few ripples. The sale had been anticipated for months as part of the Wheat Pool's ongoing efforts to restructure and resume profitability.
But despite the lack of fanfare, the transition is significant. Once the unapologetic public policy arm of Saskatchewan Wheat Pool and the media darling of the agricultural left, the change of ownership marks the final severing of the paper's ideological roots and the end of an era.
The history of the publication reaches back to 1918, twelve years before it was acquired by the Wheat Pool. As documented by Keith Dryden, former editor of The Western Producer, two war veterans and Saskatoon residents, Pat Waldron and Harris Turner, recognized newspapers as an instrument for effecting change in society. They set out to establish their own paper in order to remould "some of the traditional political ideas and prejudices."
For almost two years, the paper struggled to get a foothold in the market, before being forced out of business by the rising cost of ink and paper. Over the next few years, the partners operated a printing business, but kept looking for an opportunity to get back into newspaper publishing. When the Saskatoon Star was sold to a new owner who believed in the open market, they got their chance.
Previously, the Saskatoon Star had served as a friendly voice for the surging wheat pool movement. When it changed hands, wheat pool advocates were left without a daily newspaper in the province which was sympathetic to their cause. Turner and Waldron, who had been trying to get support from pool organizers for years, suddenly had an open door. Pool organizers put up money to put the publication back into business as long as it would editorially support wheat pooling.
When Saskatchewan Wheat Pool acquired The Western Producer in 1930, the existing editorial policy was formally ratified. Over the next few decades, the newspaper would go on to play a dominant role in shaping beliefs and attitudes in the prairie region. Through it, the proponents of compulsory pooling would unapologetically promote an end to open markets, an increase in government regulation, an animosity toward private enterprise, and a fear of large corporations. To this day, the prairie region struggles to shake itself free from the attitudes and beliefs which found a voice in The Western Producer.
It wasn't until Saskatchewan Wheat Pool became a publicly-traded company in the mid 90's, that many observers noticed a perceptible shift in The Western Producer's tone and content. Reconfigured as a business-oriented company, the Pool's stance on certain public policy issues had switched as well.
Although it was never formally acknowledged, the transition appeared to leave The Producer in a type of temporary editorial limbo. Any illusions of being able to maintain an arms-length relationship with the Pool would later be dispelled with the firing of the Producer's editor for not quoting Saskatchewan Wheat Pool in an important news story. It was apparent that the publication's role as a public policy arm for the Wheat Pool was rapidly coming to an end.
Careful examination reveals that the paradigm of 20th century ideas in prairie agriculture was no accident. It was planned, initiated, and carefully communicated. As the ideas took root on the prairies, they eventually moved into mainstream political thinking in Canada. The announced sale of the Western Producer is significant because it suggests that the voices of the old paradigm are fading, which will make room for a new one. You could call it a sign of the times.
Craig Docksteader is Coordinator of the Prairie Centre Policy Institute.
Prairie Centre/Centre for Prairie Agriculture, Inc.
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