Canadian Agricultural Policy
Following World War 2, agriculture and the rest of the economy
were
going back
to a normal relationship between government and
private
business in a free
enterprise economy. The movement had three
stages.
1)
Emphasis on the productivity of individual resources. Ex:
yield per
acre, output per animal.
2)
Marketing – promote the sale of agricultural products.
3)
Stability in prices and incomes. (by price supports, direct
subsidies,
strengthening farmer’s bargaining power and crop
insurance.
This emphasis on farm incomes is due to the fact that agriculture had
to
adjust it’s resources during economic growth.
The failure of an increase in net farm income per person is a major
concern expressed Federally in 2 ways:
1)
Canadian Federation of Agriculture
2)
National Farmer’s Union
Their main aim was to maintain and stabilize the incomes for the
commercial sectors of agriculture. Out of this came price supports,
market boards and crop insurance.
Outlook Conference
-Postwar institution
-Formation of agriculture policy
-Government (provincial & federal) and farm representatives
-Focuses on commodities by reviewing supply-demand status of major
agriculture commodities.
-Overall planning of agricultural production in Canada.
Transition From War to Peace
In September 1941, an Advising Committee on Reconstruction was set up
consisting of a sub committee on agricultural policy outlining major
problems in agriculture and a comprehensive program for the re growth
of
agriculture.
1)
Emphasis is on export trade to agriculture by: promoting
adoption of
international policies leading to trade expansion. They figured that
wartime to peacetime trade relations would improve if the government
had
relationships of export agreements with Britain and other importers.
2)
Action should be taken in the domestic field to get stability
at
reasonable price levels during their transition period to encourage
cooperative activities in agriculture, research in the industrial
utilization of farm products to be extended, and to raise nutritional
standards.
The sub committee recommended that government provide financial
assistance
to agriculture for research, teaching and extension work in rural
economies and rural sociology. It also insisted on agricultural
training
and financing of it to be shared federal and provincial.
Also said that land settlement should be preceded by a soil survey and
land classification and sub marginal lands not to be involved in crop
production but rather for reforestation and community pastures.
Improvement of Farm Credit (sub committee)
Extension of loans through the Canadian Farm Loan Act by:
1)
Liberalizing conditions under which loans were made
2)
Costs of administration to be reduced.
Government policy towards agriculture after 1944 reflected these ideas
of
the sub committee, giving rise to:
-The Agricultural Supports Act
-Farm Improvement Loans Act 1944 (extended credit under the Veteran’s
Land
Act)
-National Emergency Transitional Powers Act 1945 (continuation of meat,
dairy products, agricultural supplies and special products board)
-Agricultural Products Board Act 1952
Agricultural Products Act
Enabled the federal government to fulfill it’s obligations in export
agreements and mutual aid. By doing this, it maintained economic
stability and an orderly transition for war to peace.
Agricultural Products Act, Prices Support Act and Export Licensing Act
gave price support programs for farm products.
1947 – Amendment of Canadian Wheat Board Act gave the government
authority
to fulfill post war marketing agreements with respect to wheat and had
powers of the board which had previously been authorized by Order in
Council.
1948 – Wheat Board became the sole selling agency for barley and oats.
1950 - Board had powers for 3 more years. (government)
The government achieved stability in the transition through contacts
with
the United Kingdom, ex: five year Canada – United Kingdom Wheat
Agreement.
Export Credit Insurance Act
Protection for Canadian exporters against risk of loss from extending
credit in a foreign market.
Agricultural Products Marketing Act 1949
Improvement of marketing agricultural products and gave producers more
powers over marketing and export trade.
Government’s Push for Agricultural Occupants
During the war, the government insisted on an agriculture labor force.
They did this by: assigning a high priority on agriculture labor and
directing labor to seasonal employment on farms.
Veteran’s Land Act 1942
Subsidized the entry into agriculture of returning service men.
Government also gave a subsidy to immigrants intending to settle into
agricultural occupants.
Productivity and Marketing
Productivity and marketing held strong in the public policy for agriculture.
Programs were created so productivity and marketing policies were put into effect. There
were many great programs for the market promotion and resource productivity, but did
not make a good contribution due to the fact these programs were to trivial, even though
they were thought as remarkable programs. The agriculture industry wanted to keep their
organized family-sized units, so that the programs could offer them assistance, which is
significant to small business units.
Substantial programs, both federal and provincial, were created so the resource
productivity and competitiveness of the industry would increase. Substantial programs
include:
-research
-extension
-formal education
-control of disease and improvement of crops and livestock
-price stabilization
-assistance to marketing nationally and internationally
-and aid in resource adjustment
Agriculture productivity and competitive advantages have had major contributions
towards them due to the Substantial programs.
Maintaining and Stabilizing Prices and Incomes
As peace was trying to be accomplished after the war, agricultural policies have
been highly influences due to the fact that the industry’s net income was still at a low
rate. These low rates were caused by three factors:
1. Primarily it has been viewed as resulting from the unfavorable relationship
between buying and selling prices and yields
2. It has been attributed to instability and uncertainty in prices and yields
3. Caused by underutilization and misuse of land, labor and capital.
Measures were created in the result of these factors due to the low income rates, which
were to respect commodity prices and lesser extent to resource use. These Principal
measures include:
-price support programs which grew after 1958
-some direct subsides by the Federal and Provincial Governments
-encouragement and promotion of producer marketing boards and government milk
boards by the Provincial government
-the federal –provincial program under ARDA
-and to the Federal-provincial crop insurance plans
Federal Policy“The Federal policy in respect to income and prices has been carried out
primarily through the instrument of price support.” The Federal policies main goal was to
support prices and maintain farm income.
On several different occasions, before 1930, producers were given financial assistance.
This assistance was given to them mainly to:
-encourage expansion and efficiency in production
-and to improve the quality of products
The economy’s force on supply and demand was what determined prices and incomes.
However, during the 1930’s, the low rate in wheat caused the government assistance be
given towards prairies, so their entire economy wouldn’t be ruined by these drastic low
rates. This kind of farm income assistance known as the government’s price support was
now spreading in all areas and many new products and becoming more known to farmers
as normal then it being used as an emergency.
In 1944, the Agricultural Prices Support Act announced support prices where now
going to be used in only emergency situations. At this time, major fear of another
depression in prices and incomes was going to start again after the war, allowing the
government to create a price floor for the producers.
However, prices were only supported with the Price Support Boards approval,
determined by merits and the government’s attitude to towards the situation. If the Board
did approve, it was applied conservatively, wanting to support producers from major
production losses. The Price Board had no goals or objectives they had to follow, which
in 1946 to 1958 only used 100 million dollars in the first act.
The Agricultural Stabilizing Act replaced the legislation of 1944 in 1958. The
new act was concerned in supporting prices then the first act was. During the Korean
War, Canadian farm products increased in demand. But this demand was gone by 1952
causing severe downward pressures, making selling prices to fall and buying prices to
increase. In 1955 and 1956 the Canadian net income declined to 1.3 and 1.5 billion
dollars from 1.9 billion dollars.
The Farmers now felt that the price support should be put more into action, so that
there wouldn’t be such an offset in farm income. The Federal election campaign of 1957
used this idea as part of their election, by promising to increase price support for
agriculture. The new Stabilizing Act chose commodities which there prices would be
held to minimum level of 80 per cent of the average price. Price supports now became
more permanent then temporary.
Provincial Policy“Provincial governments have promoted marketing boards and milk
boards as a means of coping with the farm price and income problem.”
Producers are allowed to plan the marketing boards with the provincial legislation which
is under the Natural Product’s Marketing Acts. Fluid milk marketing is under the
jurisdiction of government boards. These boards both strengthen farmers bargaining
power which allows them to have orderly marketing. It also helps the federal price
support program and maintains prices and incomes.
The two-price plan is a technique to help raise prices, used by the boards.
Examples of the plan would be with butter and winter wheat produced in Ontario. The
plan was encouraged by the government who provided legislation.
The Multi–price plan was under the provincial government focused on
manufacturing and fluid milk sales. The boards will set the high price, limiting the
number of shippers.
Cooperatives
To maintain prizes and income Federal and Provincial Policies have
encouraged voluntary cooperative marketing .The Provincial government
have
been particularly active in giving assistance but a great deal of help
has
also come from Federal Department which maintain a unit of cooperative
in
economic branch.
The Policy to encourage cooperative includes the
Agricultural Products cooperative marketing Act, to
promote the orderly marketing and to protect producers
against a decline in the price of the product. Any
Cooperative Organization which represents a
sufficiently large protection of producers may enter
into an agreement with government under the act for
all farm products except for wheat grows in west. The
cooperatives agree to make an initial payment to
producers not exceeding 80%of average price of the
previous three yrs; government undertake to guarantee
the initial payment as a minimum price .It permits
them to pursue their main objective of orderly
marketing, by making it possible to improve the timing
of sales, to avoid distress selling and to increase
the bargaining power of the producers.
Direct Subsidies: It is national interest to maintain producers income.
These payments are the direct subsidies to income rather than
deficiency
payments to raise the level of prices. An example of direct subsidy to
income was the Federal govt.payment in the Prairie Province of one
dollar
per acre on the first two hundred acres under the cultivation for three
years, 1958-59,1960-61,1961-62,at the cost of $40 million per year.
These
payments were particularly significant as a supplement to the income of
the lower income marginal producers.
Minimum Prices for wheat: In connection with marketing of Canadian
wheat
an initial price is established at the start of each crop year;
currently
the initial payment no.1Northern, basis the Lake head is $1.50 per
Bushel.
It is always confidently expected that the final realized price will be
above the initial payments. There can never be certainty that this will
be
the case.
The Agricultural Rehabilitation and Development Act:(ARDA):It was
passed
in June 1961.It deals with depressed rural areas adjustment problems
especially were the chronic rural poverty is involved. The chief
purpose
of the act is to assert in reorganizing human and natural resources in
rural areas where income is low.
There are three main types of project in ARDA program:
1.Relates to ways and means of making more efficient use of the land,
which is presently regarded, as marginal or sub marginal in its use.
2. Relates to rural development project concerns with developing
improved
income and employment opportunities in those rural agricultural areas,
which are characterized by low income and living standards.
3.ains to develop and concern water supply and soil resources.
A significant feature of ARDA is that it requires
the
joint Participating of Federal and the Provincial
govt. with initiative for research and action
programs coming from the Provincial government.
Crop Insurance: The federal crop insurance act 1959permits the Federal
govt. to make the direct contributions towards the cost of providing
crop
insurance in a scheme set up by province. Up to the Present time, the
Federal treasury has contributed up to 50% of administrative cost
incurred
by a province and 20%of the amount paid in the premiums in any year.
Farmers who are insured are not eligible to receive payments or
subjects
to the levy under the Prairie Farm Assistance Act.
Daljit Randhawa
Grant:
The Canadian agri-food sector is Canada’s largest industrial sector.
This
Sector is mad up of farming, input suppliers, food manufacturing, food
retail, distribution, and wholesaling, food service, food trade, and
consumers.
The Canadian agri-food sector generates food and beverage purchases of
$82.6 billion and accounted for 9% of Canada’s Gross Domestic Product
in
1996. This sector also provides around 1.9 million jobs.
For many decades, we have seen a major change in the farm sector.
Farms
have become larger and their numbers are shrinking. As a result, there
has been a significant decrease in farm population. In 1951, there
were
2.9 million people living on farms, whereas in 1991 there were only
867,
000.
Food System Facts, Canada 1995/1996
The average Canadian consumed 1,430 pounds of food while only spending
13.7% of their disposable income on food. This is the second lowest
percentage in the world. Food and Beverage manufacturing is Canada’s
third largest manufacturing industry, with $51.6 billion in sales. In
1996, 83% of the farming industry sales were generated by only 30% of
the
commercial farms.
Since 1951, farm numbers have declined rapidly from 623,091 farms to
only
218,043 in 1991. In 1996, Ontario had the largest number of farms,
with
67,520 (which are 24.4%). Collectively the Prairie Provinces have the
most farms, accounting for half of all Canadian farms. The average
farm
size has increased from 237 acres in 1941 to 608 acres in 1996. The
largest of the farms are in the prairies, where they average 974 acres.
With many of these acres being farmed extensively, whether for small
grains or pasture with little intensive livestock production, their
gross
sales are quite similar to eastern and B.C. farms.
Even at the production level, Canadian agriculture is a capital
intensive
industry. In 1996, Canadian farms averaged $565,793 in capital. Of
that
investment, $420,266 was invested in land and buildings. Capital
investments in commercial farms are even higher.