Governments can be ham-fisted and tone deaf, a symptom of their huge, creaking architecture. They throw new coats of paint out to different areas of the economy just before elections.
That lack of tact was in full display recently when Marie-Claude Bibeau, Canada’s minister of agriculture and agri-food, announced a $1.75 billion, eight-year program for dairy farmers at the same time as grain and other livestock farmers are being hammered by international trade messes not of our making.
It’s ill timing.
Dairy farmers have been promised some sort of compensation package since the government started giving away access to the dairy market in the CETA free trade deal with Europe. That was the former Conservative government of Stephen Harper, who made such a promise before the 2015 election. Its financial value is similar to what the Liberals announced, although, the Conservative plan, rough policy as it was at the time, promised to use the money to stop any decline in quota values. I’m not sure quota value would have actually declined, so I’m not sure much would have been paid out under that plan.
The Liberal plan, which will pay a farm with 80 cows about $28,000 (about the value of a kilogram of quota, which at today’s production levels is less than one cow’s worth), is more of a direct subsidy.
A previous Liberal compensation plan for trade losses was aimed at making dairy farmers more competitive, especially through investment in technology. The trope loved by anti-supply management economists is that Canadian dairy farmers are behind the times, they have to be because they don’t have to compete on pure bottom line. But the reality is that Canadian dairy farmers are rapid adopters of technology and can’t grow as quickly as they might want, so are forced to find efficiencies.
Technology investment made some sense, but when a program gets to a select 3,300 dairy farmers instead of all of them (more than 11,000), it’s a program that creates haves and have-nots among the industry.
That’s likely why the latest program is a direct subsidy. I expect someone threw up their hands and said “well we tried to be targeted (in the last program) and look at the backlash that got us.”
I wonder if they were prepared for the new backlash.
It’s been tougher on dairy farms the past couple of years, with declining milk prices and then a lack of new quota growth. But it hasn’t been what crop and hog farmers are experiencing, precipitated by United States President Donald Trump’s trade war with China. Canada has been pulled into it with China halting all imports of Canadian canola. Ontario soybean growers benefitted last year when China cut off American soybean imports and lots of Ontario soybeans were pulled eastward. Don’t count on that happening again because Canada is now also on China’s naughty list due to the arrest of a Chinese executive on an American extradition request. Hog and beef trade has also been disrupted.
If anyone needs the trade-mitigating funds, it’s the grains and non-supply managed livestock sector. That doesn’t mean that the promised program shouldn’t have been delivered to dairy farmers, but the optics are discouraging for the large number of other farmers, who have a claim to some support as well.
The strength of the dairy lobby continues to astound. On a day when billions of dollars were being given to a relatively limited number of Canadians — a potential for a Conservative leader to cry misspent money — there was Andrew Scheer saying the program should have been delivered sooner. Of course, dairy farmers helped elect Scheer as Conservative leader and he continues to remember that fact. Dairy farmers continue to have a fond place for him.
The dairy money, of course is appearing shortly before the next election and the base of support for Liberals is Quebec and Ontario, where the vast number of dairy farmers are based. It’s likely there’s a bit of base-building by the Liberals in this announcement. A support program for western farmers wouldn’t have had nearly the same vote potential.