Great Plains: Federal & Provincial Policies

Federal and Provincial Policies

The vision of the future of agriculture presently shared by both the federal and provincial governments is one that is more responsive to the market; which exhibits greater self-reliance; which recognizes regional diversity; and which provides increased environmental sustainability (the four pillars of reform)¹. This vision has proven to be difficult to put into practice. Changes in policy subsequently introduced are not necessarily consistent with the vision of environmental sustainability as related to agriculture. Federal and provincial legislation does not necessarily have a common thrust. While federal legislation continues to have the greatest impact on agriculture, provincial legislation also exerts an influence.

Much of the federal legislation is designed to address real or perceived problems arising in the grains industry. By inference, other legislation which would encourage development of a more sustainable agriculture, such as an expanded livestock industry, is given a lower priority. This shortcoming reflects the relative importance attributed to grain, particularly in the prairie region. At the same time, the legislation tends to support an agriculture based on the production of grain largely for export. Some federal legislation, however, is of a general nature, such as farm rehabilitation and farm credit. Other legislation, for example the Farm Income Protection Act, has broad application. Additional legislation has bestowed the right for imposition of import controls for producers of specific products for the purpose of regulating the supply available to the market. However, this legislation must be amended to be consistent with the new GATT agreement.

Government policies by commodity tend to have a regional thrust exhibiting a predilection to support the dairy industry in Eastern Canada and the grains industry in Western Canada. This is reflected in the aggregate level of support given to these two industries. The presumed need for these expenditures suggests that these industries require structural adjustment. Maintenance of the status quo through price support gives rise to questions of the impact of these programs upon equity amongst producers ². Prairie livestock producers with minimal program support are able to compete in the international market. A transfer of resources on the prairies into the livestock industry therefore appears desirable. It presents the possibility of making agriculture on the prairies more sustainable while reducing financial vulnerability to the international grain market.

The effect is to enhance local prices for grain on the prairies and thereby adversely affecting the livestock feeding industry, much of whose output must compete in the international market. Other transportation assistance programs such as branch line rehabilitation, the system improvement reserve and the financing and leasing of hopper cars are also directed toward assisting the movement of grain. While the "method of payment" of the transportation subsidy remains a contentious issue, the direction of change which would arise if the subsidy were paid to producers is not in doubt. Cattle production would increase on the prairies enabling an expansion of the feeding industry while hog production also would increase. These activities would diversify agriculture and ostensibly make it more sustainable. It should be noted also that the present "method of payment" is considered inconsistent with the new GATT agreement and will therefore have to be modified.

Under the Constitution, responsibility for agriculture is shared between the federal and provincial governments. The former provides programs national in scope while the latter provides provincial programs, although both cooperate in fields of joint jurisdiction. There is no guarantee that either federal or provincial programs will not be counterproductive to sustainable agriculture. On the other hand, provincial programs can be expected to relate particularly to the concerns of local constituents.

One illustration of an area where the federal and provincial governments have separate policies is that of farm credit. This duplication has been replete with problems. While the thrust of these policies has been to lower the borrowing costs of producers when purchasing assets, particularly for land, the result has been to increase the price of land and thereby raise the costs of production. At the same time, other lenders giving greater recognition to the cash flow of the farm business are discouraged from full participation in the farm credit field.

Provincial legislative programs with respect to agriculture fall into specific categories. These include farm assessments and property tax exemptions; provision of tax credits and exemption from sales taxes; credit; commodity price stabilization; land improvement and development; and training programs. Most of these programs were introduced before any concern was expressed as to their impact on sustainable agriculture. One program impacting on sustainability adopted by all provinces is the rebate or non-applicability of taxes on fuel used for agricultural production. While the thrust of the program is to enhance farm income, it also fosters additional use of a non-renewable resource, fossil fuel. Some of the gains from the provincial programs are capitalized into land values thereby increasing production costs and consequently are not conducive to sustainability. Other programs are of a "beggar my neighbouring province" type designed to enhance local production. Some programs interfere with comparative advantage in production between provinces.

Even where price stabilization plans have been introduced in cooperation with the federal government, "topping up" of such programs on a provincial basis distorts natural comparative advantage. Each province has a land development program. However, not all the projects are consistent with desirable land use from the point of view of sustainability. All provinces have programs fostering agricultural education in recognition of the fact that the well being of agriculture depends upon the management capabilities of those engaged in the profession.

While much publicity has been given to adoption by governments of programs which foster sustainability, progress in this respect remains slow. Internal reviews of programs with respect to their impact on sustainability continue. The relative lack of progress thus far towards development of policies and programs consistent with sustainability reflects the political process in a democratic society.

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