National Post, February 4, 2000
Canada's farm crisis: the culprit is free trade
by David Orchard
There has been a good deal of attention paid to Canada's current
farm crisis, yet strikingly little analysis of its causes. We are
repeatedly told that grain prices are low because Europe and the
United States subsidize their farmers, then dump cheap grain on
the world market reducing the price for Canadian farmers.
If Europe would dismantle its agricultural policy, world prices
and Canadian farm incomes would rise, goes the line. Meanwhile provincial
governments and farm organizations call for a federal bailout while
the federal government vows to use its voice at world trade forums
to demand Europe and the U.S. "stop subsidizing."
Ottawa, after creating the worst crisis in Canadian agriculture
since the 1930s, appears to expect Europe to follow its advice to
lay waste to its own agricultural sector.
In reality factors that have nothing to do with Europe underlie
the recent devastation of western Canadian agriculture. In 1987,
as part of the Canada-U.S. free trade negotiations, Canada scrapped
its two-price system for wheat -- a policy by which farmers received
a higher price for wheat destined for domestic consumers than they
did for exported wheat. This change means an annual income loss
of up to $200 million for wheat producers.
Secondly, both the Canada-U.S. Free Trade Agreement (FTA) and
NAFTA targeted the Crow's Nest Pass freight rate as a subsidy. These
freight rates, which John Diefenbaker called "the Magna Carta of
the western farmer," had been guaranteed to western farmers "in
perpetuity" in the 1890s, in return for huge grants of cash and
public land given to the railways.
In 1995, to make CN Rail more attractive to foreign investors,
perpetuity came to an end. The Liberals abruptly abolished these
statutory freight rates on shipments of western grain to port and
sold CN on the New York stock exchange -- for a fraction of its
value. Farmers lost their Crow rate; the railways kept their public
land. The historic railway, so vital to the nation and western agriculture,
is now two thirds U.S. owned -- a figure that will rise if the Burlington
Within a year freight rates to Saskatchewan farmers soared over
300%, an added yearly cost of $15,000 per average grain farm, in
total more than $720 million in extra costs to Prairie farmers.
With these two steps the government removed almost $1-billion
annually from western farmers' hands and destroyed much of its existing
agricultural policy in the West. At the same time it slashed our
world-class agricultural research and food-safety inspection systems,
handing large parts directly to U.S. agribusiness giants.
During the Canada-U.S. free trade negotiations Canadians were
repeatedly assured that agriculture was "not on the table." When
the agreement finally appeared, agriculture was its longest chapter
-- 55 pages -- containing more than 100 commitments to harmonize
Canada's agriculture industry with that of the U.S. A decade later,
the results are in for all to see.
At the signing of the agreement loud promises were made of bigger
markets, higher prices and "secure access" to the U.S. Three years
later, one out of every three farms in Saskatchewan was in trouble,
many facing foreclosure. A long list of U.S. trade actions had been
taken against Canada. Canada's minister of agriculture of the day,
Don Mazankowski, said: "With the advent of the free trade agreement
with the United States we expected fewer hassles, not more!"
Since the FTA took effect in 1989, Canadian farmers net incomes,
adjusted for inflation, have dropped more than 50%. The Saskatchewan
figures are even more dramatic. Agriculture Canada's 1999 forecast
for total realized net income for Saskatchewan's farmers is $59-million
-- $1,000 per farm! This is 6% of what it was in 1989.
During the decade the Americanization of agriculture (like the
rest of the economy) skyrocketed. Virtually the entire flour milling
industry went from Canadian to U.S. hands. U.S. companies now completely
dominate the western Canadian beef processing industry and have
taken effective control of the United Grain Growers. U.S. genetic
engineering companies have swept the canola industry, creating a
harvest fewer and fewer want to buy. The Canadian Wheat Board, the
sole remaining institution preventing complete U.S. takeover of
the western Canadian grain industry, is under siege.
As Canada continues to dismantle its infrastructure, its research
and transportation, turning over control of whole sectors of the
economy to U.S. interests under the terms of the FTA and NAFTA,
we will see a deepening of the crisis, not to mention the loss of
Meanwhile, Canada's overall access to the U.S. market -- for agricultural
as for lumber and all other products -- is less than when we conducted
our trade with the U.S. under GATT rules.
It was a leading Liberal politician, Wilfred Laurier, who hoped
the 20th century would belong to Canada. "I want to... build a nation
that will be foremost amongst the great powers of the world," he
Do his successors in Ottawa today believe a nation can achieve
that goal by giving its railways, corporations and its agriculture
into foreign hands and turning a dignified people into beggars squabbling
On the living room mantel of my home is a plaque honouring the
heritage of our farm, founded before Saskatchewan became a province
and operated by the family ever since. Since 1985 I have predicted
the impact a Canada-U.S. agreement would have upon Canadian sovereignty,
its environment and its key industries, including agriculture, and
in 1995, I publicly refused to accept the federal government Crow
buy-out cheque of $15,000 for my farm, stating that the Crow was
not for sale and that its loss would devastate western farmers.
It is increasingly difficult to listen to politicians and farm
leaders, who tolerated or advocated the very policies currently
destroying our agricultural economy, now demand that Europeans also
dismantle their farm policies and present this as a solution to
It is not European or American farmers, fighting for their own
survival, who are to blame for the problems of Canadian agriculture.
The problems of Canada's agriculture system have been created
at home and it is here we can solve them. Madcap schemes for Western
separation -- as if Quebec or Ontario farmers are the problem --
Nor will ad hoc government bailouts designed only to quiet the
The Liberals understood what was necessary when they rode to power
in 1993 promising "an end to the Mulroney sell-outs" and "renegotiation
or cancellation" of the FTA and NAFTA. Both of these agreements
can be terminated with a simple six months notice. Vital infrastructure
can then be restored.
Instead, the Liberals have betrayed their promise and are systematically
dismantling the nation built with such vision and sacrifice.
John A. Macdonald and George-Étienne Cartier warned repeatedly
that no great nation can arise without control of its own economy.
They fought their entire lives to prevent Canada's railways and
its industries from falling into U.S. hands. They had a reason for
doing so. Perhaps we should rediscover what it was while there still
David Orchard is the author of The
Fight for Canada - Four Centuries of Resistance to American Expansionism
and was runner-up to Joe Clark in the 1998 federal Progressive Conservative
Party leadership contest. He farms in Borden, SK and can be reached
at tel (306) 664-8443 and by e-mail at email@example.com